Hochul Wants Revisions on Insurance Disclosure Law; Signs PBM License Bill

New York Gov. Kathy Hochul this week signed into law an insurance disclosure bill that many insurance agents had staunchly opposed, but not before asking lawmakers to soften the measure’s impact on businesses and insurers.

Senate Bill 7052, the Comprehensive Insurance Disclosure Act, was passed on the final day of the 2021 legislative session. It took effect Saturday, upon the governor’s signature, and requires defendants in lawsuits to divulge information about their insurance coverage. But, perhaps in response to those who had complained that the law would require disclosure of personal and confidential business information, such as gross revenue, Hochul “redlined” the bill with numerous proposed changes.

“I agree with the intent of the bill and have reached an agreement with the Legislature to ensure that the scope of the insurance coverage information that parties must provide is properly tailored for the intended purpose, which is to ensure that parties in a litigation are correctly informed about the limits of potential insurance coverage,” Hochul said in a statement.

The New York Legislature meets today, Jan. 5, and could approve the changes in the next few weeks.

The Professional Insurance Agents of New York had spoken out against the original bill, noting that it gave defendant businesses little time to gather insurance documents. It also would have required information about insureds who were covered by a policy but who are not part of a lawsuit, the PIANY said in a blog posting last summer.

“Essentially, this bill would allow a plaintiff’s attorneys to engage in an unreasonable fishing expedition for any potential insurance coverage, and could result in inflated demands based on the dollar amount of policy limits, regardless of whether those policies even provide coverage in a particular case,” the association wrote.

Now, Hochul’s proposed revisions seem more palatable, although insurance industry activists still have some concerns. In a LinkedIn posting this week, Buffalo insurance defense attorney Roy Mura outlined some of Hochul’s proposed changes in the law:

• The disclosure of insurance information would have to be made within 90 rather than 60 days of service of the disclosing party’s answer.
• Copies of the insurance policy application, showing the defendant’s gross revenue and other information, would no longer be required.
• The “policies, contracts or agreements” that must be disclosed would only be those that “relate to the claim being litigated.”
• Only the name, not telephone number, and email address of “an assigned individual responsible for adjusting the claim at issue” must be disclosed.

The governor also signed into law S3762/A1396, requiring that pharmacy benefits managers be licensed and registered with the state. The law, which takes effect in 90 days, also spells out the duties and obligations that PBMs must follow, and assigns the state Department of Financial Services the responsibility of enforcing the law and fielding complaints from consumers and pharmacies.

“PBMs are widely recognized as major players in driving up drug costs,” state Assemblyman Richard Gottfried, D-Manhattan, said in a statement. “They’ve been a black box operating in secret without effective regulation, and PBM mistreatment of independent pharmacists is getting worse as health plans merge with chain pharmacies. This new law will provide effective oversight and transparency in this sector of the health care system.”

PBMs were created to help insurers obtain the lowest price on prescription medications. But some states have charged that a number of PBMs have failed to do that, and ended up costing government and private insurers, including workers’ compensation carriers, millions of dollars.

Independent pharmacies also lobbied for the bill, contending that the prescription middlemen have required pharmacies to sign contracts to stay in a network in order to sell medications, according to New York news reports.