Relates to fair settlement practices under the comprehensive motor vehicle insurance reparations act; requires mandatory arbitration of no-fault disputes.
TITLE OF BILL: An act to amend the insurance law, in relation to requiring arbitration for no fault claims under the comprehensive motor vehicle reparations act
PURPOSE: To provide for arbitration of no-fault disputes
SUMMARY OF PROVISIONS: Section 1 of this bill would require arbitration of no-fault disputes Section 2 of the bill is the effective date.
JUSTIFICATION: On February 29, 2012, the Manhattan U.S. Attorney announced the indictment of 36 people for participating in a $279 million no-fault fraud scheme. One of the methods medical mills and no-fault fraud crime rings use in their no-fault schemes is flooding insurers with numerous lawsuits in order to make it difficult for insurers to defend these numerous lawsuits and force the insurers to settle and pay non-meritorious claims. In fact, no-fault fraud enterprises will often file a separate lawsuit for each bill for each treatment provided to an injured person These lawsuits are often quite small in amount and have resulted in the New York City courts being flooded with suits. The court system is not equipped to handle the caseload resulting from this practice.
It currently takes between eighteen and thirty-six months to adjudicate a no-fault case. Obviously, this protracted delay was not contemplated by the legislature when they originally enacted the no-fault system which was intended to ensure prompt payment for medical costs resulting from auto accidents. Mandating arbitration for no-fault claims would provide for the expeditious and streamlined resolution of no-fault disputes and would reduce the excessive litigation which is currently clogging courts in New York City. Unlike the court system, it currently takes only four to six months for a no-fault dispute to be handled through arbitration. It should also be noted that the arbitrators handling no-fault cases handle these cases regularly and have expertise in issues relating to no-fault disputes This expertise allows for more the more equitable and expeditious handling of no-fault disputes. Mandating arbitration would also greatly reduce litigation expenses for insurers and would significantly reduce costs in the no-fault system.
New York's no fault system is plagued by fraud and abuse which is adding significant costs to auto premiums in New York and a major contributing factor making New Yorkers pay among the highest auto insurance premiums in the nation. In fact, a recent Insurance Research Council study found that in the New York City area, about one in every five no-fault auto insurance claims closed in 2010 appear to have elements of fraud. In addition, New York's no-fault claim costs have far outpaced that of other no-fault states and the overall cost of medical care. From 2004 through the 2nd Quarter of 2010, the average PIP claim cost rose 60 4 percent in New York, nearly 42 points faster than the 18.6 percent growth rate in the Consumer Price Index cost of medical goods and
services found in the region. The cost of no-fault personal injury protection (PIP) coverage has also soared. New York's average no-fault PIP claim cost $9,007 is the third highest in the nation as of 2nd quarter 2010 Mandating arbitration of no-fault disputes would help to reduce lawsuit abuse by no-fault fraud rings and would assist in reducing fraud in the no-fault system and the costs associated with fraud.
LEGISLATIVE HISTORY: S.6708 of 2011-12
FISCAL IMPLICATIONS: None
EFFECTIVE DATE: Immediately and shall apply to all actions and proceedings commenced on or after such date; and shall also apply to any action or proceeding which was commenced prior to such effective date where, as of such date, a trial of the issues has not yet commenced.
STATE OF NEW YORK ________________________________________________________________________ 3544 2013-2014 Regular Sessions IN SENATE February 5, 2013 ___________Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to requiring arbitration for no fault claims under the comprehensive motor vehicle reparations act THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (b) of section 5106 of the insurance law, as amended by chapter 452 of the laws of 2005, is amended to read as follows: (b)
[Every insurer shall provide a claimant with the option of submit- ting any dispute]ALL DISPUTES involving the insurer's liability to pay first party benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section SHALL BE SUBMITTED to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent. Such simplified procedures shall include an expedited eligibility hearing option, when required, to designate the insurer for first party benefits pursuant to subsection (d) of this section. The expedited eligibility hearing option shall be a forum for eligibility disputes only, and shall not include the submission of any particular bill, payment or claim for any specific benefit for adjudication, nor shall it consider any other defense to payment. S 2. This act shall take effect immediately and shall apply to all actions and proceedings commenced on or after such date; and shall also apply to any action or proceeding which was commenced prior to such effective date where, as of such date, a trial of the issues has not yet commenced.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08134-01-3