An intermediate appellate court in New York has ruled that the state’s Prompt Pay Law affords claimants a private right of action against insurance carriers to recover payment for health care services based on a violation of the law.
Maimonides Medical Center, a not-for-profit hospital in Brooklyn, New York, furnished services to six patients who had supplemental Medicare insurance coverage policies, known as “Medigap” policies, with First United American Life Insurance Company. The patients assigned their benefits under their respective First United policies to Maimonides, and Maimonides billed First United more than $19 million for services rendered to these six patients. In response, First United allegedly paid Maimonides slightly more than $4 million.
Maimonides sued First United to recover the balance it claimed it was owed for its care of the six patients on theories of breach of contract, violation of the Prompt Pay Law, and unjust enrichment. The complaint detailed the service dates and the amount of the bills issued by Maimonides to First United for each of the patients and alleged that, despite repeated demands for payment in full, First United had failed to pay the balance owed. Maimonides also alleged that First United never had provided written notice, as required by the Prompt Pay Law, that it was not obligated to pay in full the amounts billed by Maimonides for services furnished to the six patients.
First United moved to dismiss the six causes of action that alleged violation of the Prompt Pay Law, arguing that there was no private right of action under the law. The trial court denied the insurer’s motion, and it appealed.
The appellate court’s decision