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By Scott Middleton

A recent New York State Court of Appeals decision, Aetna Health Plans v. Hanover Insurance Company (NY Slip Op 04658, June 14, 2016), creates yet another worry for doctors and patients with respect to medical billing and ultimate responsibility for those bills.

The issue presented is whether a health insurer that pays for medical treatment that should have been covered by the insured’s no-fault automobile insurance carrier may maintain a reimbursement claim against the no-fault insurer within the framework of the Comprehensive Motor Vehicle Reparations Act (New York Insurance Law section 5101).

The insured in this case, Luz Herrera, sustained personal injuries while operating a vehicle insured by defendant Hanover Insurance Company. At the time of the accident, Herrera had private health insurance through plaintiff Aetna. The Aetna plan was an ERISA-based plan, which means that any payments made by the plan are subject to a lien against any third party recovery.

Some of Herrera’s medical providers submitted bills to her Aetna health plan as opposed to the Hanover no-fault insurance policy. Aetna wrote to Hanover seeking reimbursement for medical bills erroneously paid by Aetna that should have been billed to the no-fault carrier. Simultaneously, Aetna filed a lien for reimbursement should Herrera be successful in resolving the personal injury case. Herrera herself sent bills that were erroneously paid by Aetna to Hanover demanding reimbursement. Hanover did not respond to either request.

Herrera demanded arbitration pursuant to her policy with Hanover, claiming that she was entitled to no-fault benefits based upon Aetna’s lien. The arbitrator ruled against Herrera, stating that she lacked standing because Aetna paid the bills and Aetna’s lien was unsatisfied at the time.

Initially, medical bills totaling over $19,000 were incorrectly submitted to Aetna. Herrera’s medical providers continue to submit additional medical bills to Aetna, incorrectly, totaling another $23,500. Herrera then assigned her rights against Hanover to Aetna. Aetna then commenced the action against Hanover seeking reimbursement for the amounts paid on Herrera’s behalf.

Aetna conceded that as a health insurer or plan, it was not a provider of health services as contemplated by the insurance regulations, which permit only an insured or providers of health services to receive direct no-fault payments. Because Aetna is not a healthcare provider, Herrera could not assign her rights.

The court concluded that because Aetna is not a healthcare provider under the no-fault statute, it was not entitled to direct payment of no-fault benefits. Furthermore, the court held that Aetna was “not in privity of contract with Hanover and had not shown that it was an intended third-party beneficiary of Hanover’s contract with Herrera.” Finally, the court determined that Aetna could not sustain a cause of action under subrogation principles because there was no authority permitting a health insurer to bring a subrogation action against the no-fault insurer for sums the health insurer was contractually obligated to pay its insured.  Judge Stein aptly points out in her concurring opinion that Aetna should have denied and not paid the benefits.

The decision does not go into any detail with respect to whether Herrera satisfied the lien out of any third party recovery relating to her personal injury case. This decision, however, raises interesting questions. Assuming Herrera was successful in her personal injury case, she would be contractually obligated to repay Aetna based upon the lien. Does she now have a claim against her no-fault carrier for reimbursement or does she have a claim against her medical providers for incorrectly billing her health insurance plan? Judge Stein asked a similar question in her concurrence. Does Aetna now have a cause of action against the providers who incorrectly and improperly billed Aetna as opposed to the no-fault carrier?

In any event, the medical providers, due to a mistake in billing practices, may be exposed to litigation. Doctors, healthcare providers, and medical billers are therefore cautioned to obtain the appropriate information from the patient when it comes to submitting bills to the proper insurance carrier or health plan. It would appear that even an honest mistake could expose the medical provider to otherwise unnecessary litigation.

By Christine Malafi

Fireworks.  Barbecues.  Lemonade.  A refreshing dip in the pool.  Summer has a way of bringing out the “sunshine” in everybody.  Hosting a summer event is a fun, enjoyable way to thank employees for their efforts and celebrate the pleasures of summer on Long Island.  But before you dive in, it’s important to consider potential legal issues that could quickly make you forget the fun.

Serving alcohol is always a risk, raising the potential for accidents and injuries, as well as inappropriate behavior and lawsuits.  But employers can reduce risk through advanced planning.  While liability generally does not attach to “social hosts” for accidents or injuries suffered off-premises by third parties as a result of alcohol served by the host, at least in New York, if an employee leaves an office party and travels directly to another state, New York law may not prevent liability.  Additionally, no one under the age of 21 may be served alcohol at a party, or the host may be held liable if someone is injured by that underage drinker.  The safest way to prevent potential liability relative to physical injuries involving alcohol use at a summer office party is to hire bartenders to serve the alcohol and ensure that alcohol is not served to underage party guests.

Another risk associated with alcohol consumption is the level of “celebration.”  As an employer, you do not want managers and/or supervisors acting inappropriately or provocatively, or flirting, with your staff.  The warm weather and laid back atmosphere of summer can make some people feel it’s okay to act inappropriately in a party setting.  It’s not.  The same workplace standards of a non-hostile work environment and non-harassing conduct apply to and should be enforced at all office gatherings.  On a related note, if the party will have music, employers should check the song list for offensive material.

Employers are also advised to carefully consider the nature of the party itself.  Depending on the size and dynamics of your group, it may not be worth the headaches and potential exposure (literally) to have a pool party, which comes with its own set of issues involving appropriate clothing/swimsuit choices, as well as safety risks.  An outdoor picnic with a casual dress code may be a better option.  You don’t want to return from July 4^th weekend facing a lawsuit alleging a hostile work environment or discrimination.

Additionally, it is probable that a court would find that employees’ attendance at an office party relates to their employment, even if attendance is voluntary, potentially triggering workers’ compensation benefits for injuries sustained during the party (and potentially afterwards).  To avoid potential wage claims, if attendance is required, the party should be held during normal work hours.  Employers must take reasonable steps to protect their employees and guests from injury, whether at the workplace or an off-site location where the party is held.

To help set your mind at ease before your summer event, consider doing the following:

• Skip pool-related events
• Have transportation to and from the party available
• Hire a professional bartender or caterer with sufficient liability insurance
• Provide non-alcoholic drinks
• Have management/supervisors at the party on the lookout for excessive drinking and/or inappropriate behavior
• Invite employees’ family members to participate
• Make sure employees know that they are not required to attend

A little advance planning can go a long way.  If you have any questions, please feel free to contact us.

 

Whether documents or communications are subject to the attorney-client privilege (and thus not subject to disclosure) is a frequently litigated issue.  Given the various factual scenarios that can affect what is or isn’t protected, such matters often require judicial interpretation.

Generally speaking, once someone shares a privileged communication with a third party, the privilege is waived and the communication becomes fair game.  However, as with most general rules, there are exceptions.  One of the most frequent exceptions is the so-called “common interest doctrine.”  The basic premise is that a third party may be privy to an attorney-client privileged communication without losing the privilege if the communication is made for the purpose of furthering a nearly identical legal interest shared by the client and the third party. Hyatt v. State of Cal. Franchise Tax Bd., 105 A.D.3d 186, 205 (2d Dep’t 2013).  Courts have interpreted the “furthering a nearly identical legal interest” portion to require that the communication be made in pending litigation or in reasonable anticipation of litigation where the client and third party have a common legal interest. Id., Aetna Cas. and Sur. Co. v. Certain Underwriters at Lloyd’s London, 176 Misc.2d 605 (N.Y. Sup. 1998), aff’d, 263 A.D.2d 367 (1^st Dep’t 1999).

In June, the New York Court of Appeals, in Ambac Assur. Corp. v Countrywide Home Loans, Inc., 27 N.Y.3d 616 (N.Y. 2016), overturned a decision of the Appellate Division, First Department and ruled that the threat of litigation is a necessary element of the “furthering a nearly identical legal interest” portion of the common interest doctrine.  The Court refused to expand the doctrine to privileged documents shared between companies during a pending merger.  Back in 2013, the New York County Supreme Court refused to expand the common interest doctrine.  Subsequent to that decision, Bank of America/Countrywide appealed to the Appellate Division, which reversed the trial court and found that the documents exchanged during the course of a merger between Bank of America and Countrywide were, in fact, protected.  The First Department found at the time that business entities often have important legal interests to protect even without a potential lawsuit.

Specifically, Ambac challenged Bank of America’s withholding of approximately 400 communications between Bank of America and Countrywide after the signing of the merger plan in January 2008 but before the merger closed that July. Bank of America identified the communications in a privilege log and claimed they were protected from disclosure by the attorney-client privilege because they pertained to a number of legal issues the companies needed to resolve jointly in anticipation of the merger, such as filing disclosures, securing regulatory approvals, reviewing contractual obligations to third parties, maintaining employee benefit plans, and obtaining legal advice on state and federal tax consequences.  The parties were represented by separate counsel but the merger agreement directed them to share privileged information related to these pre-closing issues and purported to protect the information from outside disclosure.  Bank of America argued that the merger agreement evidenced the parties’ shared legal interest and the fact that the parties sought to maintain confidentiality, thus protecting the relevant communications from discovery.

Ambac, however, argued that the voluntary sharing of confidential material before the merger waived any privilege because Bank of America and Countrywide were not affiliated entities at the time of disclosure and did not share a common legal interest in actual or anticipated litigation.

The Court of Appeals, in refusing to expand the common interest doctrine, held: “We do not perceive a need to extend the common interest doctrine to communications made in the absence of pending or anticipated litigation, and any benefits that may attend such an expansion of the doctrine are outweighed by the substantial loss of relevant evidence, as well as the potential for abuse.”

The Court noted that while mandatory disclosure would inhibit the exchange of privileged information between parties who share a common legal interest in pending or reasonably expected litigation, “the same cannot be said of clients who share a common legal interest in a commercial transaction or other common problem but do not reasonably anticipate litigation.”

The Court added, “Put simply, when businesses share a common interest in closing a complex transaction, their shared interest in the transaction’s completion is already an adequate incentive for exchanging information necessary to achieve that end…Defendants have not presented any evidence to suggest that a corporate crisis existed in New York over the last twenty years when our courts restricted the common interest doctrine to pending or anticipated litigation, and we doubt that one will occur as a result of our decision today.”

This decision provides important clarification not only for litigants.  Businesses need to have a clear understanding of when they could be waiving the attorney-client privilege and when they could be required to turn over privileged communications. The Court of Appeals has now confirmed that if there is no pending or reasonably anticipated litigation and you share communications that otherwise would be protected by the attorney-client privilege with a third party who you think shares a common legal interest, you will be waiving the privilege.

Jeffrey Basso, a senior attorney at Campolo, Middleton & McCormick, LLP, represents business owners, corporations, corporate officers, shareholders, and investors in a variety of litigation matters in state and federal court involving business and contractual disputes.  An aggressive litigator, Jeff has vast experience prosecuting and defending matters on behalf of clients in actions involving employment contracts, non-compete agreements, trade secrets, fiduciary duty, breach of contract, hour and wage disputes, real estate transactions, investments, and construction matters.