DFS Addresses Insurers’ Discriminatory Practices With Respect to Certain Prescription Drug Use
The public health crisis in the United States in connection with opioids and drug overdoses has led to the New York State Department of Financial Services’ (“DFS”) issuance of Circular Letter No. 9 on September 6, 2019, directed at New York State life insurance and accident and health insures in regards to overdose reversal drugs such as Naloxone/ Narcan. The Circular Letter was issued in response to DFS’ investigation into denials of applications for life insurance, disability income insurance, and long-term care insurance solely based on the applicant having been issued a prescription for an opioid-reversal drug such as Naloxone.
By way of background, Insurance Law § 4224 prohibits a life insurer from unfair discrimination practices. As such, issuers of life insurance, disability income insurance, and long term care insurance are prohibited from refusing to insure or continue to insure, or limiting the amount or extent of coverage, or charging different rates for the same coverage, “solely because of the physical or mental disability, impairment or disease, or prior history of the disability or disease of an insured or potential insured except where the refusal, limitation or rate differential is permitted by law or regulation and is based on sound actuarial principles or is related to actual or reasonably anticipated experience.” (Emphasis added).
DFS examined underwriting guidelines and practices where an applicant who applies for life insurance, disability income insurance, or long-term care insurance has a prescription for an opioid-reversal drug but is not at risk of an opioid overdose. In reality, prescriptions for Naloxone may be issued by nurses or medical professionals to assist another individual who has overdosed on opioids, or to first responders such as firefighters or police officers. It may also be prescribed to other individuals who have a family member or friend who is at risk for an overdose. This accessibility to prescriptions for Naxolone is consistent with the public health and safety and the need for prevention of opioid overdoses. According to the Center for Disease Control and Prevention, there were 47,600 opioid related overdose deaths in the U.S. in 2017.
According to DFS guidance, an adverse underwriting decision based solely on an applicant having a prescription for an opioid-reversal drug, violates Insurance Law § 4224. Thus, DFS cautions that any insurer that has improperly denied an applicant for life insurance, disability income insurance, or long-term care insurance based on the applicant having been issued a prescription for an opioid-reversal drug should immediately provide the applicant the opportunity to re-apply for coverage based on an underwriting assessment that complies with the New York Insurance Law.
DFS’ Circular Letter No. 9 comes shortly after the July 23, 2019 Supplement to Circular Letter No. 21 reminding insurers to strictly comply with all requirements concerning the issuance of prescription drugs at no cost-sharing to reduce the risk of contracting HIV. The underlying Circular Letter No. 21 was evident of DFS’ desire to protect “consumers who are taking prudent steps to protect their health by reducing the risk of contracting HIV will be able to purchase life insurance, disability income insurance and long-term care insurance at fair and reasonable prices and without fear of unfair denials.” It is in the public interest for individuals to take steps to mitigate the risk of contracting HIV and those individuals should not be penalized as a result.
It is evident that DFS will continue to investigate discriminatory and/or unfair practices of life and health insurers in order to promote the safety and health of the public and to ensure compliance with all statutory and regulatory requirements.
