Department of Financial Services Fines Insurers $2.7 Million for Failing to Notify Small Businesses of Mental Health Coverage Options

Press Release

May 8, 2012


DFS Investigation Uncovers Widespread Violations, Consumers Left In Dark

Benjamin M. Lawsky, Superintendent of Financial Services, today announced that 15 insurers are being fined $2.7 million because they failed to notify small businesses that they were eligible to buy special insurance coverage for mental illnesses and children with serious emotional disturbances.

Oxford was fined $1.3 million, Empire almost $500,000, and HealthNet and MVP more than $200,000 each.

The insurers are being fined for violating notification requirements under Timothy’s Law. The law states that insurers must give small employers the option of purchasing the extended mental health benefits when they buy or renew their basic health insurance plans.

“Mental illness can have devastating consequences for families. It’s essential that people understand that insurance benefits are available for treating mental illnesses and that businesses know this option is available,” Superintendent Lawsky said.

“We are very pleased that the Department of Financial Services has taken our concerns seriously. Superintendent Lawsky and his team are to be commended for upholding the right of small groups to purchase the complete Timothy's Law mental health benefit as required by the statute,” said Shelly Nortz, Deputy Executive Director with Coalition for the Homeless and Steering Committee member of the Timothy's Law Campaign.

The Superintendent said the violations were discovered after the Department of Financial Services investigated complaints from a number of small businesses. The businesses said they would have purchased the coverage for their employees, but were never advised of that option when they purchased or renewed their basic health insurance plans.

Under Timothy’s Law, insurance plans – for both large and small employer groups -- are required to provide 30 days of inpatient treatment and 20 days of outpatient visits for mental health treatment.

Large group plans with more than 50 employees are mandated to provide coverage for treating biologically based mental illnesses and children with serious emotional disturbances at a level that is comparable to coverage for non-mental health conditions.

The law requires insurers to offer small groups the option of buying this level of comparable coverage as an extended benefit. Small groups are those with fewer than 50 employees.

Timothy’s Law is named for Timothy O’Clair, a 12-year-old boy from Schenectady County who tragically took his own life in 2001 when his family was unable to obtain adequate mental health treatment needed for their son.

Timothy’s Law became effective in 2007. The fines being levied against the 15 insurers are the first fines ever against insurers for violations of the law.

The Department’s investigation found that the violations occurred during calendar years 2009 and 2010. In addition to the insurers fined, Department examiners also polled additional insurance companies, but those companies were not found to have failed to provide the required written notifications.

The insurers being fined said the violations were not the result of conscious intentions to evade the requirements of the law. They all agreed to take steps to prevent the recurrence of violations in the future.


Amount of Fine



Empire HealthChoice








Independent Health






Stipulations signed by the companies can be found at the Department’s website at: