OGC Op. No. 11-08-04
The Office of General Counsel issued the following opinion on August 8, 2011 representing the position of the New York State Insurance Department.
Re: Electronic Storage of Medical and Administrative Documentation Possessed by an Independent Adjuster
1. May a licensed independent adjuster electronically store medical records and administrative documents received from its clients, other documents generated by its office, and paperwork received from medical service providers, all of which the adjuster collects in order to adjust medical claims?
2. Does ABC’s proposed electronic records retention plan meet the established standards for the retention of medical records and administrative documents?
1. Yes. An independent adjuster may electronically store medical records and administrative documents that the adjuster receives from its clients, other documents generated by its office, and paperwork received from medical service providers. With respect to records maintained on behalf of insurers, the records must be maintained in accordance with N.Y. Comp. Codes R. & Regs. Tit 11, Part 243 (1996) (Regulation 152), entitled “Standards of Records Retention by Insurance Companies,” which applies as to those insurance records and related documents maintained by an independent adjuster on behalf of insurers. As for other records that an independent adjuster may maintain, other than on behalf of an insurer, there is no requirement to comply with the regulation, although it would be prudent for ABC to be guided thereby.
2. Yes. ABC’s proposed electronic records retention plan, as presented, appears to meet the retention standards of Regulation 152.
ABC is licensed in New York State as an independent adjuster to adjust insurance claims on behalf of insurers. The inquirer states that ABC currently stores both electronic and paper copies of all medical and administrative documentation received from clients. It also stores original documents that are generated at the ABC office and original paperwork received from clients, along with paperwork received from medical service providers.
ABC wishes to discard its paper copies and keep all of its files electronically. The inquirer has asked that the Department review the inquirer’s proposed records retention plan to determine whether it complies with Regulation 152. The following is the proposal that the inquirer submitted to the Department:
RECORDS RETENTION PLAN
- All original documentation received from ABC’s clients is scanned upon receipt and returned to the client upon completion.
- All incoming x files are transferred to the paperless server.
- All diagnostic films are scanned upon receipt and returned to the provider or insurance company.
- All certified return receipt notices are scanned when mailed and scanned when signature card is received.
- A back up of the paperless server is performed each evening and is removed to another location.
- All records are scanned as PDF documents and cannot be altered or changed.
- All files are re-verified before destruction to insure all documentation contained in the file is in its original form within the paperless server.
1. Electronic Records Storage
With respect to the inquirer’s first question, there are no specific rules or regulations governing maintenance of records by independent adjusters, electronically or otherwise. However, Regulation 152 establishes minimum standards for records retention by insurers. Section 243.2(d) of Regulation 152 provides that “An insurer shall require, by contract or other means, that a person authorized to act on its behalf in connection with the doing of an insurance business … shall comply with the provisions of this Part in maintaining records that the insurer would otherwise be required to maintain.” Accordingly, to the extent that an adjuster maintains records on behalf of insurers for whom the adjuster renders services, the adjuster would be required to comply with the regulation. See OGC Opinion No. 00-02-01 (February 4, 2000). In regard to other records maintained by an adjuster, there is no requirement for compliance with the regulation. However, it would be prudent for ABC to be guided by the regulation because it sets forth best practices for records retention.
2. Records Retention Plan
With respect to the inquirer’s question whether the inquirer’s proposed records retention plan comports with Regulation 152, the term “records” is defined in
a medium for maintaining a record where the properties of such medium provide reasonable assurances against tampering with the information contained in the original and degradation of any reproduction generated, and where the reproduction is an exact copy of the original. The medium may include paper; facsimile; or photographic, micrographic, magnetic, optical, mechanical or electronic media.
The inquirer states that the PDF format in which ABC intends to store these records does not permit alteration. As such, it appears that PDF files constitute a durable medium. Also, in accordance with the proposed records retention plan, it appears that ABC intends to take reasonable precautions to ensure that the PDF files cannot be altered or changed. Provided that the remaining provisions of Regulation 152 are satisfied, it would appear that ABC’s records retention plan complies with Regulation 152.
Insofar as the proposed records retention plan also appears to encompass the electronic retention of medical records and related documents that may contain private and protected information concerning the insured, please be advised that the inquirer should take any steps necessary to comply with the privacy and related safeguarding obligations set forth in N.Y. Comp. Codes R. & Regs. tit. 11, Part 421 (2002) (Regulation 173) to protect the security, confidentiality and integrity of a customer’s information. See OGC Opinion No. 03-01-24 (January 13, 2003).
For further information, one may contact Senior Attorney Susan A. Dess at the New York City office.