New Laws after ‘Fasso’ Leave Health Insurer Out in the Cold

Abstract

In 2009, the Court of Appeals entertained an appeal in Fasso v. Doerr, 12 N.Y.3d 80 (2009), which was expected to resolve a Departmental split in the Appellate Division involving the question of who was the appropriate party to bear the cost of a plaintiff’s medical expenses sustained by reason of a defendant’s negligence: the plaintiff’s health insurer or the defendant’s liability insurer. The Court’s holding in Fasso, however, was largely inconclusive, and made personal injury and wrongful death actions increasingly difficult to resolve because of the tripartite conflict between the plaintiff, the defendant, and plaintiff’s health insurer. The defendant tortfeasor was unable to resolve all of its liability, even in settlement with the plaintiff, because the tortfeasor was unable to settle the health insurer’s equitable subrogation claim, which further complicated the settlement process. As a result of the complications created by Fasso, the legislature responded by enacting General Obligations Law § 5-335 (Part F of Chapter 494 of the laws of 2009), resolving a considerable amount of uncertainty in this area.

In addition to providing a brief description of the intervention-subrogation problem created by the court in Fasso, this article discusses the new legislation in detail, and examines how the law would have affected the outcome in Fasso. The article also explains the significance of the legislation, and its impact in personal injury litigation in New York.

Keywords: New York practice

JEL Classification: K10, K40