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A08006 Summary:

BILL NOA08006
 
SAME ASSAME AS S03147
 
SPONSORLavine
 
COSPNSR
 
MLTSPNSR
 
Amd §1101, Ins L
 
Provides that the sale of a non-indemnity legal service plan shall not constitute doing an insurance business in this state; makes related provisions.
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A08006 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A8006
 
SPONSOR: Lavine
  TITLE OF BILL: An act to amend the insurance law, in relation to the sale of a non-in- demnity legal service plan   PURPOSE OR GENERAL IDEA OF BILL: The purpose of the bill is to enact legislation to address treatment of modern non-indemnity prepaid legal service plan to better serve New Yorkers who utilize such plans.   SUMMARY OF PROVISIONS: Section 1 amends Article 11, Section 1101(b) of the Insurance Law by adding subparagraph (9) to provide as follows: (9)(A) Notwithstanding the foregoing, the sale of a non-indemnity legal service plan shall not constitute doing an insurance business in this state. (B) For purposes of this paragraph a non-indemnity legal service plan includes any plan, regardless of the benefits, where legal services are available to members, or their dependents, through an organization that contracts directly with independent attorneys for the provision of the legal services and the organization pays the independent attorney via a capitated arrangement and the independent attorney receives no addi- tional payment or reimbursement from the organization for specified legal services or specified legal expenses. Section 2 establishes the effective date.   JUSTIFICATION: Unlike traditional legal services insurance policies, non-indemnity prepaid legal service plans provide customers ("members") with access to an attorney ("network attorney") who has agreed to abide by a schedule of free and discounted services in return for a membership fee. While some of these plans do provide services in response to fortuitous events, the primary purpose of a non-indemnity prepaid legal plan is to provide members with certain limited services, consultation and advice and discounts for other legal services. Critically, non-indemnity prepaid legal plans do not pay or reimburse members for the rendering of specific legal services. Members seek services from network attorneys for the benefits contained within their non-indemnity prepaid legal service plan. Network attorneys are obligated to provide the services to the members. These plans should not be regulated like traditional insurance policies. This bill would remove non-indemnity prepaid legal service plans from insurance regulation while retaining regulation of traditional legal service insurance policies. At present, over 30 states no longer regu- late non-indemnity prepaid service legal plans. This small revision will align New York law with the majority of states, including Illinois and California, that do not regulate non-indemnity prepaid legal service plans and is also consistent with the Access to Justice initiative in New York and other states across the country. New York's Permanent Commission on Access to Justice was established in 2015 and continues the efforts of the original Task Force to Expand Access to Civil Legal Services in New York, established in 2010, to provide increased access to legal counsel to New York residents. This revision is consistent with the Overview on the New York Permanent Commission on Access to Justice website which states, For the Judiciary, there can be no higher priority than ensuring meaningful access to justice for all persons. The Permanent Commission on Access to Justice plays a critical role in, our institutional efforts to promote the fair and effective delivery of justice to all New Yorkers regardless of economic status." Non-indemnity prepaid legal service plans provide affordable access to New York residents for legal services in areas including, but not limit- ed to, housing (foreclosure, landlord tenant disputes), family (child custody), consumer rights (creditor/debtor disputes, garnishments), and unemployment benefits. Access to legal services for individuals, fami- lies, and businesses has never been more important. The proposed amend- ment will result in lower costs and allow greater flexibility in the pricing and the delivery of legal services to New York residents similar to that which is already available in the majority of other States in the country. Members receive no reimbursement or indemnification under non-indemnity prepaid legal service plans. Members pay a monthly fee for their plan with specific legal services that are provided directly by the provider law firm.   LEGISLATIVE HISTORY: 2023-24: A5047a   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None   EFFECTIVE DATE: This act shall take effect on the thirtieth day after it shall have become a law.
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A08006 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          8006
 
                               2025-2026 Regular Sessions
 
                   IN ASSEMBLY
 
                                     April 21, 2025
                                       ___________
 
        Introduced by M. of A. LAVINE -- read once and referred to the Committee
          on Insurance
 
        AN  ACT to amend the insurance law, in relation to the sale of a non-in-
          demnity legal service plan
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Subsection  (b)  of  section 1101 of the insurance law is
     2  amended by adding a new paragraph 9 to read as follows:
     3    (9)(A) Notwithstanding the foregoing,  the  sale  of  a  non-indemnity
     4  legal  service  plan shall not constitute doing an insurance business in
     5  this state.
     6    (B) For purposes of this paragraph, a non-indemnity legal service plan
     7  includes any plan, regardless of the benefits, where legal services  are
     8  available  to members, or their dependents, through an organization that
     9  contracts directly with independent attorneys for the provision  of  the
    10  legal  services and the organization pays the independent attorney via a
    11  capitated arrangement and the independent  attorney  receives  no  addi-
    12  tional  payment  or  reimbursement  from  the organization for specified
    13  legal services or specified legal expenses.
    14    § 2.  This act shall take effect on the thirtieth day after  it  shall
    15  have become a law.
 
 
 
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD03172-01-5
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