S3544-2013 Actions

• Feb 5, 2013: REFERRED TO INSURANCE

S3544-2013 Memo

BILL NUMBER:S3544

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 insur-
ers 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by  the  legislature  when  they  originally enacted the no-fault system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 handl-
ing  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 quar-
ter 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.

S3544-2013 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         3544
 2013-2014 Regular Sessions
 I N  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

*By contributing or voting you agree to the Terms of Participation and Privacy Policy and verify you are over 13.

Discuss!