Open Bar: Update and Recap of the 2026 New York State Legislative Session

This edition of Open Bar will focus on legislative actions taken during this year’s legislative session that primarily concern the New York medical and dental professional liability marketplace. One significant legislative matter in the health care arena that became law this year is the “Medical Aid in Dying Act.” This law will be the primary topic of next month’s edition of Open Bar and accordingly will not be discussed in this edition.

The enacted 2027 New York State budget, which runs from April 1, 2026 to March 31, 2027, contained two provisions that affect physicians, dentists, hospitals and other health care providers. The first provision was the yearly reauthorization of the Section 18 excess medical malpractice insurance program. This provides an excess layer of protection, in the amount of $1 million/$3 million, to physicians and dentists insured with MLMIC, who maintain primary limits of $1.3 million/$3.9 million, have an active affiliation with a New York State general hospital, where emergency medical or dental services are rendered from time to time and have completed a New York State approved risk management course within the last two years. 

This excess layer of protection is provided at no cost to the physician or dentist because it is paid for by the State of New York. There was a proposed restructuring of this program in the Governor’s proposed state budget, which would have required Section 18 physicians and dentists to pay 50 percent of the Section 18 excess insurance premium amount. MLMIC joined with the Medical Society of the State of New York (MSSNY) and medical specialty societies in opposing this cost imposition and urged the Legislature to restore the program to previous years’ status.  Fortunately, the final enacted budget did not contain this proposal and extended the program as it has always been with the exact same funding amount as last year, namely $78.5 million. 

A second provision that specifically impacts obstetricians-gynecologists and hospitals was extension of, and funding for, the Medical Indemnity Fund (“MIF”). The MIF was established in 2011 to alleviate the extremely high costs of future economic damages in cases where a neurologically impaired infant was determined, through either settlement or a jury verdict, to have suffered from negligent care at during the delivery admission  Since 2011, the costs of the MIF have been greatly increasing as more neurologically impaired infants are brought into the fund and costs continue to increase. The 2027 New York State budget provided $155.5 million in funding for the state fiscal year ending on March 31, 2027. It is anticipated that next year’s negotiation over the State’s 2028 budget will include the status of MIF given its increasing costs.

There were two proposals by the Governor in her proposed state budget that would have impacted the medical community but were not adopted in the final enacted 2027 state budget. Currently, New York law imposes a punishingly high interest rate of nine percent on all personal injury judgments after they have been rendered. The Governor proposed, as at least 26 sister states currently provide for in their law, that the interest rate on judgments use the federal prevailing market interest rate. This would save money in the New York medical liability sphere, but unfortunately the Legislature rejected this proposal, and it is not in the final enacted state budget.

A second budget proposal by the Governor would have expanded the scope of practice for medical assistants, certified medication aides, nurse practitioners and physician assistants. Additionally, this proposal would have transferred oversight and licensing functions with respect to the professional misconduct of physicians, physician assistants and specialist assistants from the State Education Department to the Department of Health. This proposal was also rejected and left out of the final enacted state budget.

Since the 2027 state budget was not finally enacted by the Legislature until May 27 and the Legislature gaveling out of the 2026 annual session on June 5 for the year, many bills that would expand liability on the medical community were not acted on by both houses. In fact, none of the four significant medical liability-expanding legislative measures passed both the State Assembly and State Senate and are therefore inactive until the 2027 legislative session. This is very important to note as virtually every year since 2019 has seen at least one bill that would impose additional liability on the New York health care sector has passed one or both chambers of the New York Legislature.

The most significant liability-expanding bill was this year’s version of the expansion of damages in wrongful death cases, commonly known as the “Grieving Families Act” (“GFA”).  As readers will recall, four previous versions of the GFA did pass both houses of the State Legislature but were vetoed by the Governor after strenuous advocacy campaigns by the entire medical community urging these vetoes. MLMIC joined with MSSNY, the medical specialty organizations and the hospital organizations in opposing the GFA and successfully urging the four previous vetoes of the GFA. This year the GFA bill was not even put up for a vote in either house of the Legislature. However, it must be noted that the New York Trial Lawyers Association has promised a vigorous campaign to obtain legislative passage again and eventual enactment of the GFA, so 2027 is most likely to see another tough campaign both for and against the GFA.

The second liability-expanding bill that did not advance this year would have modified the current objective standard used by New York’s appellate courts to reduce jury damage awards when these awards “deviate materially from reasonable compensation.” This standard would have been replaced by a subjective one that would require the appellate court to uphold a damages award unless the award “shocks the conscience.” Such standard would greatly decrease the number of awards reduced as excessive on appeal.

A third liability-expanding bill would have greatly expanded the statute of limitations (the time an injured patient would have to bring a lawsuit for alleged negligence) in medical liability cases from the current start date for the two and one-half year deadline to bring suit as beginning when the health care provider committed the act or omission leading to the injury to a new start date that would begin when the patient knows or reasonably should have known of the alleged negligent act of the health care provider with an outside time limit of 7 years from the alleged negligent act or omission. This new start date would obviously be much later than the current law’s start date for the statute of limitations period to begin running.

Finally, a fourth liability-expanding bill was one that would allow a plaintiff to directly sue a third party defendant.

MLMIC policyholders can reach out to Marc Craw, Senior Director of Government Affairs, with any questions or comments regarding this year’s legislative session and the legislation mentioned in this article.  He can be reached at 518-786-2777 or by email at mcraw@mlmic.com.

This document is for general purposes only and should not be construed as medical, dental or legal advice.  This document is not comprehensive and does not cover all possible factual circumstances.  Because the facts applicable to your situation may vary, or the laws applicable in your jurisdiction may differ, please contact your attorney or other professional advisors for any questions related to legal, medical, dental or professional obligations, the applicable state or federal laws or other professional questions.