Health insurance company’s claim for reimbursement for certain medical cost it incurred from a “no fault” automobile insurance carrier denied

Health insurance company’s claim for reimbursement for certain medical cost it incurred from the “no fault” automobile insurance carrier denied
Aetna Health Plans v Hanover Ins. Co., 2016 NY Slip Op 04658, Court of Appeals

In this action brought pursuant to the Comprehensive Motor Vehicle Reparations Act [Insurance Law §5101, et seq. -- the "No-Fault" Law] Aetna Health Plans alleged that it paid certain bills that should have been paid by Hanover Insurance Company, the no-fault insurer involved in this action, that were submitted to Aetna by the medical providers. Ultimately Hanover refused to reimburse Aetna for all of the payments Aetna made to the medical providers.

The resolution of this action by the Court of Appeals may, under certain circumstances, impact on the administration of General Municipal Law §§207-a and 207-c with respect to medial expenses paid by a municipality on behalf of a police officer or firefighter injured in the line of duty.

Aetna, as its insured’s assignee, sued Hanover seeking a court order directing Hanover to fully reimbursement it for all of the medical expenses it paid directly to the medical providers. Hanover, in response, moved to dismiss the complaint based upon Aetna’s “lack of standing,” contending that Aetna was not entitled to direct reimbursement because, citing 11 NYCRR 65-3.11(a),* Aetna was an insurance company and not a provider of health care services. Hanover argued that the only type of assignee permitted were those set out in the regulation and Aetna was not in privity of contract with Hanover.

The Court of Appeals agreed with Hanover, holding that that the Comprehensive Motor Vehicle Reparations Act [Insurance Law §5101, et seq. -- the "No-Fault" Law] does not contemplate that reimbursement for expenses paid by a “health insurer” is to be paid to the “health insurer” in contrast to providing for such a payment to be made to a “health care provider.”

The Doctrine of Unintended Consequences might have been be triggered by this ruling.

General Municipal Law §§207-a and 207-c, respectively, provide that the employer shall be liable for the payment of the salary or wages payable to a firefighter or police officer who suffers disability as the result of an injury or disease suffered in course of performing his or her official duties and for the cost of medical or hospital care or treatment furnished such personnel until the appropriate health authority or physician shall certify that such injured or sick fireman or police officer has recovered and is physically able to perform his or her regular duties.

Further, these sections provide that “Notwithstanding any provision of law contrary thereto contained herein or elsewhere, a cause of action shall accrue to the municipality for reimbursement in such sum or sums actually paid as salary or wages and or for medical treatment and hospital care as against any third party against whom the policeman shall have a cause of action for the injury sustained or sickness caused by such third party.”

The Court of Appeals’ ruling in Aetna Health Plans could have an impact, in whole or in part, on a municipality as the police officer’s or firefighter’s employer in situations where the municipality seeks reimbursement for medical and, or, hospital expenses it incurred pursuant to the mandates of §§207-a and 207-c in providing “medical or hospital care” for police and fire personnel in situations where the Comprehensive Motor Reparations Act would otherwise be operative.

* 11 NYCRR 65-3.1, Applicability, provides that “The following are rules for the settlement of claims for first-party and additional first-party benefits on account of injuries arising out of the use or operation of a motor vehicle, a motorcycle or an all-terrain vehicle. These rules shall apply to insurers and self-insurers, and the term insurer, as used in this section, shall include both insurers and self-insurers as those terms are defined in this Part and article 51 of the Insurance Law, the Motor Vehicle Accident Indemnification Corporation (MVAIC), pursuant to section 5221(b) of the Insurance Law and any company or corporation providing insurance pursuant to section 5103(g) of the Insurance Law, for the items of basic economic loss specified in section 5102(a) of the Insurance Law;” and

11 NYCRR 65-3.11(a) provides “An insurer shall pay benefits for any element of loss other than death benefits, directly to the applicant or, when appropriate, to the applicant's parent or legal guardian or to any person legally responsible for necessities, or, upon assignment by the applicant or any of the aforementioned persons, shall pay benefits directly to providers of health care services as covered under section 5102(a)(1) of the Insurance Law, or to the applicant's employer for loss of earnings from work as authorized under section 5102(a)(2) of the Insurance Law. Death benefits shall be paid to the estate of the eligible injured person.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04658.htm

The term “race” includes ethnicity for purposes of 42 USC 1981 and Title VII

The term “race” includes ethnicity for purposes of 42 USC 1981 and Title VII

Village of Freeport and Andrew Hardwick v Barrella, USCA, Second Circuit, No. 14-2270-cv (L) et. al.

Christopher Barrella sued the Village of Freeport and its former mayor, Andrew Hardwick, [Hardwick] alleging Hardwick violated 42 USC 1981, Title VII of the Civil Rights Act of 1964, 42 USC 2000e, and the New York State Human Rights Law, New York Executive Law §290. Barrella alleged that Hardwick had not appointed him chief of police because Barrella was a white Italian-American, and that Hardwick had instead appointed a less-qualified Hispanic candidate to the position. A federal district court judge denied Hardwick’s motions for summary judgment as a matter of law. After a trial the jury returned a verdict in favor of Barrella.

Hardwick appealed the decision. The Second Circuit affirmed the judgment of the District Court insofar as it denied Hardwick's motions for summary judgment.

The Circuit Court explained that longstanding Supreme Court and Second Circuit precedents indicated that "race" includes ethnicity for purposes of  42 USC 1981, so that discrimination based on “Hispanic ancestry” or lack thereof constitutes racial discrimination under that statute. Further, said the court, "race" should be defined the same way for purposes of Title VII.

Accordingly, the Circuit Court reject Hardwick's argument that an employer who promotes a white Hispanic candidate over a white non-Hispanic candidate cannot have engaged in racial discrimination and affirmed the judgment of the District Court insofar as it denied Hardwick's' motion for judgment as a matter of law pursuant the Federal Rules of Civil procedure.

However, the Circuit Court ruled that the District Court erred in permitting "lay opinion testimony" that speculated as to Hardwick's reasons for not appointing Barrella. This, said the court, was a violation of Rule 701(b) of the Federal Rules of Evidence and because this case was factually close, this did not constitute “a harmless error.”

The judgment of the District Court was vacated and the matter remanded for a new trial consistent with the consistent with the decision of the Circuit Court of Appeals.

The decision is posted on the Internet at:

https://casetext.com/case/vill-of-freeport-andrew-hardwick-v-barrella

Exhausting administrative remedies

Exhausting administrative remedies
Ross v Blake, USSC, Docket No. 15-339

This decision by the United States Supreme Court considered an appeal involving the federal Prison Litigation Reform Act [PLRA], 42 USC 1997e(a) requirement that an inmate exhaust “such administrative remedies as are available” before bringing suit. The Supreme Court vacated the Fourth Circuit’s “unwritten 'special circumstances’ exception” to the exhaustion of administrative remedy as being inconsistent with the text and history of the PLRA,” explaining that “[m]andatory exhaustion statutes like the PLRA foreclose judicial discretion.”*

Of special interest to public employers and employees not operating in a penal environment was the Supreme Court’s observation that “that there are certain circumstances in which an administrative remedy, although officially on the books, is not available.”

The court then provided the following examples of an administrative procedure being illusory or unavailable:

1. Where the procedure operates as a dead end;

2. Where the appointing authority or the employee organization is unable or consistently unwilling to provide relief;

3. Where the administrative scheme is so opaque that it becomes, practically speaking, incapable of use; and

4. Where a grievance process is rendered unavailable should an appointing authority thwarts the employee from taking advantage of it through misrepresentation, or intimidation. 

Courts, as a general rule, will not consider lawsuits filed by public employees protesting some administrative determination unless the individual has exhausted his or her administrative remedies. The major exception to this rule: any attempt to exhaust the available administrative remedy would constitute an exercise in futility. Typically the courts apply this exception when it is decided that the administrative decision "is a foregone conclusion."

The exhaustion rule, however, is not inflexible and need not be followed where an agency's action is challenged as either unconstitutional or wholly beyond its grant of power [Watergate II Apartments v Buffalo Sewer, 46 NY2d 52] or where it is alleged that the administrative agency or process followed by the administrative agency violates the individual's constitutional rights to due process [Levine v Board of Education, 173 A.D.2d 619].

However, questions involving proper statutory interpretation and the reasonable interpretation of an agency's own regulations must first be raised within the agency's own administrative review process before being presented to the courts [Crumb v Broadnax, 178 A.D.2d 781].

An employee’s withdrawnal of his or her grievance has the effect of exhausting his or her administrative remedy. [Vega v Department of Correctional Services, 186 A.D.2d 340].

In Wilbur v Town of Rockland, 53 F.3d 542, the Circuit Court of Appeals, Second Circuit, said an employee suing the Town for alleged violations of her freedom of association under the First Amendment pursuant to 42 USC 1983 was not required to exhaust her state administrative remedies as a prerequisite to commencing a federal action, the general rule being that federal courts may not require exhaustion of administrative remedies as a "condition precedent" to 42 USC 1983 litigation.

From time to time courts are asked to settle questions about which officials or bodies have "primary jurisdiction" and should be turned to first to resolve employment disputes. In Hessney v Tarrytown Public Schools, 228 A.D.2d 954, we learn that the Commissioner of Education "is uniquely suited" to resolve questions concerned with the similarity of the duties of teaching positions and failing to initially submit the issue to him could be fatal to an individual's claim.

In any event, in cases in which the employee is alleged to have failed to exhaust his or her administrative remedy,” the employee typically has the burden of proving his or her seeking a judicial remedy falls within the ambit of one or more of the “exceptions to the rule,” frequently a difficult task.

* The court explained that PLRA contains its own, textual exception to mandatory exhaustion. Under §1997e(a), the exhaustion requirement hinges on the "availab[ility]" of administrative remedies. Thus there must exhaust available remedies, but one need not exhaust unavailable ones.

The decision is posted on the Internet at:

https://casetext.com/case/ross-v-blake

Selected reports issued by the Office of the State Comptroller during the week ending June 11, 2016

Selected reports issued by the Office of the State Comptroller during the week ending June 11, 2016

Click on text highlighted in color to access the entire report

New YorkState Comptroller Thomas P. DiNapoli announced the following audits have been issued:

City University of New York (CUNY): Medgar Evers College: Controls Over Bank Accounts (2015-S-92)

CUNY officials provided auditors with a list of 24 bank accounts at Medgar Evers. Fourteen accounts were opened after CUNY’s bank authorization policy was established in 2008. However, CUNY did not have any of the required notification forms for these accounts. Additionally, auditors found an additional two accounts that were not on the list. These findings point to weaknesses in the monitoring of bank accounts, which increase the risk that college personnel could conduct transactions using unauthorized accounts. Of 54 payments (totaling $810,608) paid from six selected bank accounts, 26 (totaling $118,782) were either improper or were unsupported. 

Higher Education Services Corporation: Tuition Assistance Program Wagner College (2015-T-3)

Auditors determined Wagner was overpaid $97,947 because school officials incorrectly certified students as eligible for state financial aid awards. Incorrect certifications include eight students who received awards but had not met the good academic standing requirements and three students who were not enrolled at Wagner for the semesters in question. 

Higher Education Services Corporation: Tuition Assistance Program at Vaughn College (2015-T-6)

Vaughn's certification procedures for state financial aid substantially complied with the governing law and regulations. Auditors found that of the 50 awards tested, only two (totaling $3,945) were certified in error. As such, auditors concluded there is a low risk that a significant number of students certified for state financial aid were not eligible for awards. 

Office of Alcoholism and Substance Abuse Services (OASAS): Contracted Programs With Puerto Rican Organization to Motivate, Enlighten and Serve Addicts Inc. (PROMESA) (2015-S-24)

Auditors found that despite two relatively recent audits by OASAS, claims submitted by PROMESA for the two years ended June 30, 2014 continued to include costs that were not valid or consistent with state guidelines. PROMESA reported about $23 million in costs associated with contracted OASAS programs during the period. The audit examined about $9 million of these expenses and identified problems with over 90 percent – $8.2 million. 

Office of Alcoholism and Substance Abuse Services (OASAS): Drug and Alcohol Treatment Program: Provider Claiming of Depreciation Expenses (2015-S-84) 
OASAS is not effectively monitoring Drug and Alcohol Treatment program contracts to ensure provider claims do not include state reimbursement for depreciation expenses. Auditors found providers inappropriately claimed $2.7 million in depreciation expenses, of which $2.2 million was funded by OASAS. Also, OASAS could potentially use the remaining $454,238 for inappropriate increases to providers’ future program budgets. 

Office of Parks, Recreation and Historic Preservation (OPRHP): Controls Over Cash Advance Accounts (Follow-Up) (2016-F-3)

An initial audit report issued in December 2014 found OPRHP advance accounts received little scrutiny and made recommendations to improve internal controls over these accounts. In a follow-up report, auditors determined the agency made significant progress in correcting the problems identified in the initial report. Of the eight prior audit recommendations, seven have been implemented and one recommendation has not been implemented. 

State Education Department (SED): League for the Handicapped, Compliance with the Reimbursable Cost Manual (2015-S-89)

For the fiscal year ended June 30, 2014, auditors identified $4,354 in costs that were charged to the preschool special education programs that did not comply with SED’s requirements for reimbursement. The non-reimbursable costs included insufficiently documented expenses, costs for services that were not directly related to the programs, unallowable working capital interest and credit card late fees.

State University of New York (SUNY): Compliance With Payment Card Industry Standards (2015-S-65)

SUNY schools were generally knowledgeable about PCI compliance and the need to protect credit card data from unauthorized access; however, auditors identified areas where system and data controls need to be improved to meet certain compliance standards. Among a range of issues, auditors identified weaknesses in the completeness of the systems’ component inventories, network segmentation, the resolution of compliance deficiencies and the oversight of affiliated campus organizations. 

State University of New York Downstate Medical Center: Review of Collecto Inc. (2016-BSE4-02)

Auditors examined Downstate contracts with Collecto for debt collection services. Under the $2.5 million contract, Downstate pays Collecto various commission rates based on the amount collected by account type and size. Of the $29,288 examined, auditors found overpayments of $14,355 and additional potential overpayments of $2,664. The remaining $12,269 was appropriate and properly supported.

Department of Taxation and Finance: Personal Income Tax Refunds (2015-1A-001)

The department processes all New York state personal income tax returns. During the audit period, the department processed almost 7.5 million refunds totaling over $8.6 billion. From this population, auditors examined 31,978 refunds totaling almost $516.5 million. Of those, auditors identified and returned 11,469 questionable refunds totaling about $53.3 million.

New York’s Freedom of Information Law does not permit the custodian of the records to routinely charge for employee time spent searching for documents responsive to a FOIL request

New York’s Freedom of Information Law does not permit the custodian of the records to routinely charge for employee time spent searching for documents responsive to a FOIL request

Ripp v Town of Oyster Bay, 2016 NY Slip Op 04226, Appellate Division, Second Department

In a CPLR Article 78 proceeding to compel the production of certain documents pursuant to the Freedom of Information Law (Public Officers Law Article 6) [FOIL], the Town of Oyster Bay [Town], appealed that part of the Supreme Court decision that barred the Town requiring the petitioner, Robert O. Ripp, to prepay certain estimated costs as a condition of producing the requested documents for inspection.

Ripp had requested that the Town make certain documents available for inspection pursuant to FOIL. The Town conditioned the disclosure of the documents upon Ripp prepaying $1,920 to cover the estimated costs associated with producing the documents.

The Appellate Division sustained the Supreme Court’s order explaining that:

1. FOIL requires state and municipal agencies to make available for public inspection and copying all records, subject to certain exemptions;

2. Where an agency conditions disclosure upon the prepayment of costs or refuses to disclose records except upon prepayment of costs, it has the burden of "articulating a particularized and specific justification" for the imposition of those fees;

3. The agency must demonstrate that the fees to be imposed are specifically authorized by the cost provisions of FOIL; and

4. The custodian of the records must meet this burden "in more than just a plausible fashion."

In this case the Appellate Division found that the Town had failed to satisfy these requirements, noting that the only evidence in the record justifying the imposition of costs was a letter to Ripp stating that it would take a Town employee a minimum of eight weeks, at $240 per week, to review 2,500-3,000 files to identify the records available for inspection.

While an agency may charge for employee time spent extracting or segregating data from an electronic database, the court distinguished electronic “records” from “hardcopy” records and explained that FOIL does not permit an agency to charge for employee time spent searching for paper documents.*

The Appellate Division opined that the Town had failed to demonstrate that the prepayment costs it demanded were properly based upon employee time related to retrieving electronic files, rather than a manual search of hard copies for which the Town's recoupment costs are limited to 25¢ per photocopy.**

Accordingly, said the court, the Supreme Court properly directed the Town to make the paper records or documents sought available for Ripp’s inspection without the prepayment of the estimated costs.

* Weslowski v Vanderhoef, 98 AD3d 1123, provides a comprehensive review of the elements involved in the custodian of the records lawfully requiring payments attributed to complying with a FOIL request.

**The person requesting the documents may avoid this $.25 per page charge by simply inspecting the documents "on site" rather than ordering photocopies of the documents of interest.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04226.htm