This question is addressed in numerous opinions issued by the Office of General Counsel of the New York State Department of Insurance, e.g. December 14, 2000; April 14, 2003; April 8, 2005; March 27, 2008 and April 2, 2008 1. In the letter of April 8, 2005, for example, the Office of General Counsel of the Department of Insurance stated:
“As we have previously stated, a physician who as a general business practice, waives otherwise applicable co-insurance, co-payments, or deductibles, where such waiver would affect the amount the insurer would pay might be guilty of fraud…”
“For example, if an individual was insured under a health insurance policy obligating the insurer to reimburse the insured 80% of the physician’s usual and customary charges and were the physician to inform the insurer that his or her usual and customary charge for a procedure was $100, the insurer would, in anticipation that the physician would require the patient to pay him or her $20, reimburse the insured $80. If, however, the physician was to, as a general business practice, waive the $20 co-payment, the physician’s usual and customary charge would not be $100, but would be $80. Under those circumstances, the obligation of the insurer would be $64.”
The Department of Insurance went on to state, however:
“If a physician were to occasionally waive co-insurance, co-payment or deductible as a courtesy to a family member or fellow physician or for an indigent patient, he or she would not be guilty of insurance fraud. In addition, a decision in the exercise of business judgment, not to pursue the full remedies available to collect a debt would not constitute an insurance fraud.”
Accordingly, the Office of General Counsel of the Department of Insurance does not unequivocally state that the routine waiver of patient’s out-of-pocket costs constitutes fraud, but states that it “might” be fraud.
Justice Lynch’s decision in Handler v. DiNapoli does not address all the questions pertaining to waiver of patient out-of-pocket costs. Having found that the Comptroller had no authority to conduct the audit, Justice Lynch stated that he, “need not” address the question whether the Comptroller’s audit methodology was proper. The petitioner’s attorney contended that the auditor incorrectly concluded that the Petitioner “routinely waived” patient’s out-of-pocket costs because the auditor looked exclusively at the Petitioner’s financial ledgers, and failed to consider the invoices that the medical practice sent to patients. This case, accordingly, sheds little light on the Comptroller’s audit methodology. In addition, Justice Lynch states that he would express no opinion as to whether United Healthcare has the authority to try to recoup from the Petitioner what it characterizes as overpayments or suspected billing practices. Since these issues were not addressed in Justice Handler’s decision and are not the subject of the appeal, it is not likely that the Appellate Division will address these issues.