OGC Opinion No. 11-01-04

The Office of General Counsel issued the following opinion on January 20, 2011, representing the position of the New York State Insurance Department.

Re: Medical Malpractice Claim and Disposition Information

Question:

Does N.Y. Insurance Law § 315 (McKinney 2006) require a medical malpractice insurer to submit medical malpractice claim and disposition information to the Superintendent of Insurance and Commissioner of Health when a medical professional corporation (“PC”), but no individual physician, physician assistant or specialist assistant, is named in the claim or disposition?

Answer:

Insurance Law § 315(b)(1) requires a medical malpractice insurer engaged in issuing policies of medical malpractice insurance in this state to file with the Superintendent of Insurance and Commissioner of Health quarterly reports on all claims for medical malpractice made against any of its insured physicians, physician’s assistants or specialist’s assistants, including medical PCs formed by physicians, and received by it during the preceding three month period.

Facts:

The inquiry is general in nature, without reference to specific facts.

Analysis:

Insurance Law § 315 sets forth the reporting requirements for professional malpractice or misconduct and reads, in relevant part as follows:

(a) Every organization or person authorized to issue professional liability insurance policies in this state shall report any disposition, whether by judgment or settlement, or any claim made against an individual licensed pursuant to the provisions of title eight of the education law ¹ where the claim was based upon fraud, incompetence or negligence except that reports for physicians, physician’s assistants and specialist’s assistants shall be reported pursuant to the provisions of subsection (b) hereof. ²

(b)(1) Each insurance company engaged in issuing professional medical malpractice insurance in this state and the medical malpractice insurance association shall file with the superintendent and with the commissioner of health quarterly reports on all claims for medical malpractice made against any of its insureds and received by it during the preceding three month period, a report of any surcharge or merit-rating adjustment and a report of any cancellation, including voluntary cancellation by the insured and the reason for the cancellation, of its insureds professional medical liability insurance for reasons other than non-payment of premiums during the preceding three month period.

(b)(2) Each hospital, as defined in article twenty-eight of the public health law, which, and each health care practitioner licensed, certified or registered pursuant to the provisions of title eight of the education law who, is self-insured for professional medical malpractice or is insured for professional medical malpractice with an insurance company not licensed to do business in this state shall also file quarterly reports with the superintendent and the commissioner of health on all claims for medical malpractice made against him, her, or it during the preceding three month period. For purposes of this section, a hospital which, or individual who, is self-insured for professional medical malpractice shall mean a hospital, which, or individual who, is not insured for professional medical malpractice with either an insurance company engaged in issuing professional medical malpractice insurance in this state or the medical malpractice insurance association or an insurance company not licensed to do business in this state.

Insurance Law § 315(a) requires reports be made by every organization or person authorized to issue professional liability insurance policies in this state on any disposition, whether by judgment or settlement, or any claim against a licensed individual based on fraud, incompetence or negligence. However, Insurance Law § 315(b) is broader in that it requires reports on a quarterly basis on all claims for professional medical malpractice. Insurance Law § 315(b)(1) requires the quarterly reports be made by insurers issuing medical malpractice insurance in New York and the Medical Malpractice Insurance Association on all claims for medical malpractice made against any of their insureds that are received during the preceding three month period. The Insurance Department has long interpreted the “except for” provision of Insurance Law § 315(a) to limit the applicability of the § 315(b)(1) quarterly reporting requirements to insured physicians, physician’s assistants and specialist’s assistants. To interpret it otherwise would lead to duplicative reports for physicians, physician’s assistants and specialist’s assistants because the all claims reporting requirement under Insurance Law § 315(b)(1) encompasses the fraud, incompetence or negligence claims that are required to be reported pursuant to Insurance Law § 315(a). Insurance Law § 315(b)(2) requires that the quarterly reports be made by both hospitals and health care practitioners licensed under Title VIII of the Education Law that are either self-insured or insured by an insurance company not licensed in New York for medical malpractice, and is not limited to physicians, physician’s assistants and specialist’s assistants. ³

Insurance Law § 315(b) (like its predecessor, Insurance Law § 335, prior to the 1984 recodification of the Insurance Law) is intended to provide two agencies - the Insurance Department, to secure complete claims experience for rating purposes, and the Health Department, for disciplinary purposes - with relevant data concerning medical malpractice claims. However, pursuant to an agreement between the two agencies, an entity subject to Insurance Law § 315 may fulfill its reporting obligation by submitting the required information to the Health Department alone, which then furnishes information as requested by the Insurance Department. See Office of General Counsel (“OGC”) Opinion No. 07-07-27 (July 26, 2007). ⁴

In response to the present query, which asks whether an insurer engaged in issuing professional medical malpractice policies in New York is required to submit medical malpractice claim information when a medical PC but no physicians, physician assistants or specialist assistants are named in such claim, Insurance Law § 315(b)(1) applies to all reports of claims for medical malpractice that involve physicians, physician’s assistants and specialist’s assistants. However, the “insureds” referred to in Insurance Law § 315(b)(1) includes not just physicians, physician’s assistants and specialist’s assistants for whom insurers are directed to report for under that section pursuant to Insurance Law § 315(a), but medical PC’s, professional service limited liability companies (“PLLC”), and limited liability partnerships (“LLPs”) that are set up by licensed physicians. Insurance Law § 315(a), which limits the reporting requirements of Insurance Law § 315(b)(1) to claims of medical malpractice against physicians, physician’s assistants and specialist’s assistants, is not intended to exclude medical PC’s, owned solely by physicians, from the reporting requirements of Insurance Law § 315(b)(1), especially because such claims would not be reported otherwise in the situation posed by the inquiry. For public policy reasons, it is reasonable to construe Insurance Law § 315(b)(1) to require an over-inclusive rather than an under-inclusive degree of reporting. See OGC Opinion No. 07-07-27 (July 26, 2007). Indeed to construe the section otherwise would be to elevate form over substance. A claim against a PC, PLLC or LLP set-up by licensed physicians would, of necessity, involve the physician, physician’s assistant or specialist’s assistant.

For further information you may contact Associate Counsel Alexander Tisch at the New York City Office.

¹ Title VIII of the N.Y. Education Law sets forth the regulation for the admission to and the practice of certain professions inclusive of medicine as performed by physicians, physician’s assistants and specialist’s assistants along with chiropractic, dentistry and dental hygiene, veterinary medicine and animal health technology, physical therapy and physical therapist assistants, pharmacy, nursing and midwifery.

² Reports shall be made to the Department of Education pursuant to Insurance Law § 315(d)(1).

³ The opinion request references the reporting of disposition of claims as separate from the reporting of claims in general. However, Insurance Law § 315(c)(5) encompasses the reporting of the final disposition of claims as part of the general reporting requirement set forth in Insurance Law § 315(b).

⁴ However, reports of any surcharge or merit-rating adjustment and reports of any cancellation, including voluntary cancellation by the insured and the reason for the cancellation must be provided to the Insurance Department pursuant to Circular Letter No. 6 (2010).