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Quadrino Schwartz and Others Urge New York Insurance Commissioner to Act on Discretionary Clauses

Quadrino Schwartz urged the New York Insurance Commissioner to act as quickly as possible to proceed with the rulemaking process so that a rule outlawing discretionary clauses in group policies could be implemented.

A series of regional law firms were asked to join with Quadrino Schwartz in sending a letter to the Insurance Commissioner.  The response was impressive, and a formal letter signing ceremony was conducted at Quadrino Schwartz' New York Offices.

Discretionary clauses have been used by group insurers as a way of shielding the insurance company from court scrutiny if a lawsuit is filed challenging the decision on an insurance  claim.  Several States acted to ban the clauses, including New York, after the National Association of Insurance Commissioners urged action.  New York pulled back from its original approach and decided to revoke its informal Circulation Letter and proceed instead with formal rulemaking, the process used to issue formal regulations.

Since the shift in approach by the State, however, no action was forthcoming.  Led by attorney Michail Z. Hack, Quadrino Schwartz forged ahead with an effort to convince the Commissioner that with each passing month, the number of victims of these clauses mounts and thus this matter should be given priority within the Insurance Department.