Decision Issued in Maimonides Medical Center v. First United American Life Insurance Company

Brooklyn Supreme Court Justice Carolyn Demarest has issued a decision in Maimonides Medical Center v. First United American Life Insurance Company, finding a private right of action by a healthcare provider against a Managed Care Organization under New York’s Prompt Pay Law.  Insurance Law 3224-a, provides that where an insurer is clearly liable to pay a health care claim, the health care provider or patient must be paid within 30 days of receipt of an electronically transmitted claim, or within 45 days of receipt of a claim transmitted by any other means (Insurance Law § 3224-a [a]). Where liability for the claim is not reasonably clear, the insurer must pay any undisputed portion and, within 30 days of receipt of the claim, provide either written notification specifying the reasons why it is not liable or a written request for any additional information necessary to determine its liability (Insurance Law § 3224-a [b]). An insurer that fails to abide by these standards “shall be obligated to pay to the health care provider or person submitting the claim” the full amount of the claim plus interest at the statutorily authorized rate (Insurance Law §3224-a [c] [1]). The Prompt Pay Law authorizes the Superintendent Financial Services to investigate violations and assess civil penalties, both on his own accord and upon complaint from an individual health care provider or policyholder (Insurance Law § 3224-a [c] [2]).  Justice Demarest has decided that an individual patient or provider has a right to bring suit to recover the funds alleged to be due, together with the statutorily imposed interest.  We expect this decision to be appealed to the Appellate Division.