NY Court of Appeals: Legislature Must Amend Penal Law to Include Health Care Insurance Fraud

In a recent New York State decision, the Court of Appeals held that New York Penal Law 170.60, insurance fraud in the first degree, does not necessarily encompass a fraudulent health care insurance act.  In People v. Boothe, decided on February 24, 2011, the defendant CEO of a managed health care provider was indicted on two counts of insurance fraud in the first degree based upon his alleged submission of materially false marketing plans to Medicaid.

The defendant, in his motion to dismiss to the Supreme Court, argued that the State Legislature failed to amend the substantive provisions of the insurance fraud statute to include a fraudulent health care insurance act as an additional fraudulent act.  Despite the People’s argument that a fraudulent insurance act necessarily includes a fraudulent health care insurance act, the Supreme Court granted the defendant’s motion, and the Appellate Division affirmed.

The Court of Appeals also affirmed, finding that the State Legislature failed to criminalize the conduct at issue, despite warnings from the State Division of Criminal Justice Services that the conduct might not fall within the scope of insurance fraud.  As enacted, N.Y. Penal Law 176.10 through 176.30 does not include a fraudulent health care insurance act as a means of committing insurance fraud.

The Court of Appeals held that it is the Legislature that must repair this omission, not the courts, as was recommended to the Legislature by the Judicial Conference of the State of New York in 2003.