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New York’s Anti-Subrogation Law is Not Preempted by ERISA, Supreme Court Rules

A recent decision by the Supreme Court is expected to stop several insurers from attempting to cite the legal notion of subrogation, which is when insurance companies seek reimbursement for benefits paid for the insured. Last July, the U.S. Court of Appeals for the Second Circuit ruled that New York’s anti-subrogation law is not preempted […]

NY’s Anti-Subrogation Law is Not Preempted by ERISA

NY’s Anti-Subrogation Law is Not Preempted by ERISA

A recent decision by the Supreme Court is expected to stop several insurers from attempting to cite the legal notion of subrogation, which is when insurance companies seek reimbursement for benefits paid for the insured.

Last July, the U.S. Court of Appeals for the Second Circuit ruled that New York’s anti-subrogation law is not preempted by the Employee Retirement Income Security Act (ERISA). The court ruled that the law, which prevents private health insurers from seeking reimbursement for medical benefits paid out of a tort settlement, is applicable to health insurers providing ERISA coverage. The litigation stems from a class action lawsuit originally filed in New York State Supreme Court. The case was moved to federal court when the District Court granted the defendants’ motion to dismiss for failure to state a claim based on ERISA preemption. The case was remanded to the District Court on appeal by the Court of Appeals for the Second Circuit; the court found that the plaintiffs’ claims were not subject to complete ERISA preemption.

On February 23, 2015 the High Court denied certiorari in the case. Writ of Certiorari means that a higher court reviews a lower court’s decision. The fact that the Supreme Court refused to hear Defendants’ appeal means that the class action lawsuit is pushed forward. The suit alleges that insurers who recovered for medical benefits paid on behalf of injured plaintiffs from their tort settlements violate New York State’s anti-subrogation law.

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