The Office of General Counsel issued the following informal opinion on July 17, 2002, representing the position of the New York State Insurance Department.

Re: Emergency Department Treatment, Health Insurance Coverage

Questions Presented:

1) Does the "prudent layperson" standard of New York Insurance Law § 4303(a)(2) (McKinney 2000) only apply to facility charges or must all services rendered in the emergency department be paid in accordance with this standard?

2) Would a denial such as "physician billed emergency room services are not covered, except for CPR when performed in the emergency room" be in contravention of this Department’s Regulation 62, N.Y. Comp. Codes R. & Regs tit. 11, Part 52 (1999)?


1) Yes, the same standard should be applicable to all services. However, since the statute, by its terms, only regulates coverage decisions in policies and contracts insuring in-patient hospital care, the standard does not serve to provide coverage that would not otherwise exist.

2) Whether such a denial would be in contravention of Regulation 62 is dependent upon the coverage provided under the policy or contract.


A firm audits, on behalf of insureds and beneficiaries, both insurers and self-funded plans. The local health insurer has asserted that it is only obligated to pay for the hospital charges incurred by individuals treated in emergency departments and not charges for any physician’s services.

In the particular claim that generated the inquiry, the patient was covered by three contracts, all issued by the same insurer. One contract covered only in-patient hospital care, the second provided coverage for physician’s services, and the third was a "wrap-around" major medical contract. The insurer asserts that the "prudent layperson" standard is only applicable to the first contract.



Some years ago, medical service in a hospital emergency department was provided by physicians employed by the hospital. Accordingly, when the hospital billed for the services of the emergency department, the bill included, in addition to the charges for the equipment and supplies of the emergency department, charges for the services of hospital employees, such as physicians and nurses.

Subsequently, hospitals determined to contract out the rendering of medical care in emergency departments to independent groups of physicians. Therefore, at present, the bill from the hospital represents the charge for the equipment and supplies of the emergency department and the services of hospital employees, such as nurses. The independent group that furnishes the physicians submits a separate bill for such services.

Statutory Provisions

The inquirer has represented that, while the contracts in question complement Medicare, 42 U.S.C.A. § 1395 et seq. (West 1992 and 2001 Supplement), in that Medicare is primary over the contracts because they cover treatments services or procedures that would not be covered by Medicare, none of them are "Medicare supplement insurance", as defined in N.Y. Comp. Codes R. & Regs. tit. 11, § 52.11(a):

Medicare supplement insurance is an individual or group policy or certificate of accident and health insurance which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare. This definition is applicable regardless of whether the policy form is labeled as Medicare supplement insurance.

The inquirer has further represented that because the local health insurer’s "complementary" contract covers out-patient care by a physician, it is not "basic medical insurance", as defined in N.Y. Comp. Codes R. & Regs. tit. 11, § 52.6:

Basic medical insurance is an insurance policy which provides coverage for services rendered by a physician or, in the case of article IX-C corporations, a participating physician, to each covered person for sickness or injury for:

(a) Surgical services, consisting of operating and cutting procedures for the treatment of a sickness or injury, and endoscopic procedures, including any pre- and post-operative care usually rendered in connection with such operation or procedure, . . .

(b) Anesthetic services, consisting of administration of necessary general anesthesia and related procedures in connection with covered surgical service rendered by a physician, other than the physician performing the surgical service or his assistant, . . .

(c) In-hospital medical services, consisting of physician services rendered to a person who is a bed patient in a hospital for treatment of sickness or injury other than that for which surgical or pregnancy care is required, . . .

Coverage for physician’s services is also provided under "major medical insurance", as defined in N.Y. Comp. Codes R. & Regs. tit. 11, § 52.7:

Major medical insurance is an insurance policy which provides coverage for each covered person . . . for at least: (a) daily room and board . . . (b) miscellaneous hospital services . . . (c) surgical services . . . (d) anesthetic services . . . (e) in-hospital medical services . . . (f) Mental health care . . . (g) out-of-hospital care, consisting of physicians" services rendered on an ambulatory basis, where coverage is not provided elsewhere in the policy, for diagnosis and treatment of sickness or injury, including the cost of drugs and medications available only on the prescription of a physician, and diagnostic X-ray, laboratory services, radiation therapy, chemotherapy and hemodialysis ordered by a physician; and (h) prosthetic appliances . . . .

It is presumed, for the purpose of this opinion, that coverage for physicians employed in the emergency department is present in at least one of the applicable contracts.

N.Y. Ins. Law § 4303 (McKinney 1995), specifying benefits that were required in contracts of both Not-For-Profit Health Service Corporations, which includes this local health insurer, and Health Maintenance Organizations, formerly provided:

(a) Every contract issued by a hospital service corporation or health service corporation which provides coverage for in-patient hospital care shall also provide coverage:

* * * *

(2) For emergency medical services in hospital facilities. For the purpose of this provision, emergency medical services in hospital facilities shall mean emergency care for a sudden, unexpected onset of a medical condition of such a nature that failure to render immediate care could reasonably result in deterioration to the point of placing a patient’s life in jeopardy or cause serious impairment to bodily functions of the patient. Coverage for emergency care need not be provided unless such care is rendered within twelve hours after the first appearance of the symptoms of the illness or within seventy-two hours after an accident.

N.Y. Ins. Law §§ 3216(i)(9) and 3221(k)(4) (McKinney 1995), dealing with policies of commercial health insurers, had identical requirements.

Based upon numerous complaints concerning actions of health insurers, including HMOs, the Legislature, in 1996, enacted a substantial increase of the rights of insureds and health providers vis a vis insurers. 1996 N.Y. Laws 705. Among the modifications to existing statutes, N.Y. Ins. Law §§ 3216(i)(9), 3221(k)(4), and 4303(a)(2) were amended to require coverage:

For services to treat an emergency condition in hospital facilities. For the purpose of this provision, "emergency condition" means a medical or behavioral condition, the onset of which is sudden, that manifests itself by symptoms of sufficient severity, including severe pain, that a prudent layperson, possessing an average knowledge of medicine and health, could reasonably expect the absence of immediate medical attention to result in (A) placing the health of the person afflicted with such condition in serious jeopardy, or in the case of a behavioral condition placing the health of such person or others in serious jeopardy, or (B) serious impairment to such person's bodily functions; (C) serious dysfunction of any bodily organ or part of such person; or (D) serious disfigurement of such person.

On January 18, 2002, the Department issued Circular Letter No. 1 (2002), in explication of these statutory changes, which provides, inter alia:

It has come to our attention that insurers, Article 43 corporations and HMOs may be denying coverage for emergency services based upon the final diagnosis code, such as ICD [International Classification of Diseases] 9 or CPT [Current Procedural Terminology] 4 codes, assigned to the emergency room visits. Although the diagnosis code may be used to approve coverage of emergency services, its use as the basis for denial of coverage is improper. The standard by which to evaluate whether a denial of coverage is supportable is the ‘prudent layperson’ standard required by the Insurance Law.


The determination by the insurer that it need not pay for the services of the physician, where such services are within the coverage of the policy or contract, is a determination that the services were not medically necessary. Accordingly, pursuant to N.Y. Ins. Law § 4910(b)(1)(A) (McKinney 2000), the insured would have a right to an external appeal.

While N.Y. Ins. Law §§ 3216(i)(9), 3221(k)(4), and 4303(a)(2) specifically establish a standard only for a determination with relation to services provided for in the hospital’s bill, this Department agrees with your conclusion that it would be illogical not to apply the same standard to the hospital services of the physician, especially when this would be the standard utilized, in accordance with N.Y. Ins. Law § 4900(c) (McKinney 2000), if there were an external review. This conclusion is bolstered by the former unbundling of emergency department services and charges.

While this opinion only deals with the situation where coverage for the services was split between two contracts issued by the same insurer, the same logic would lead to an identical conclusion where either the coverage for the services was provided by one policy or where the coverage for the services was split between two insurers.

It should be understood that N.Y. Ins. Law §§ 3216(i)(9), 3221(k)(4), and 4303(a)(2) only provide a rule for determinations on already existing coverage and may not serve to provide coverage where it is not already provided by policy or contract, such as a policy that does not provide benefits beyond those mandated by N.Y. Comp. Codes, R. & Regs. tit. 11, § 52.6.

As to the query concerning the denial language utilized by the insurer, whether such language would be in contravention of Regulation 62 is a fact specific determination. Where an insurer has contractually provided benefits that go beyond those mandated by N.Y. Comp. Codes R. & Regs. tit. 11, § 52.6, such as covering cardiopulmonary resuscitation (CPR) in an emergency department, but where the services provided are not covered under the policy or contract because the policy or contract does not meet the definition of major medical insurance, such language would not be in contravention of Regulation 62.

For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.