BILL NUMBER:S6707

TITLE OF BILL:
An act
to amend the insurance law, in relation to settlement practices under the
comprehensive motor vehicle
reparations act

PURPOSE:
To make burden of proof requirements in no-fault disputes
more equitable.

SUMMARY OF PROVISIONS:
Section 1 of this bill would make burden of
proof requirements in no-fault disputes more equitable by requiring a
medical provider to submit more than just a claim form to establish a
prima facie case.

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. Inequities in the current burden of
proof requirements for no fault cases are one of the reasons why
no-fault fraud organized crime schemes such as this are able to
              

operate and increase auto insurance costs for New York consumers.

Our civil legal system generally places the burden on the plaintiff to
prove the basic elements of their case in order to prevail. Over the
years, however, in the no-fault context, case law in New York has
shifted that burden of proof entirely to the insurer to the point
where a medical provider (as an "assignee" under an "assignment of
benefits") needs only to provide a bill to establish a claim for
benefits. The burden is on the insurer to request information to
"verify" that the services billed for are medically necessary and in
accordance with the no-fault law. Frequently, a lengthy exchange of
paperwork ensues. This off-kilter burden of proof requirement has
made it easy for medical mills and no-fault fraud crime rings to flood
insurers with bogus lawsuits in order to make it cost prohibitive for
insurers to defend these numerous lawsuits and force the insurers to
settle and pay non-meritorious claims.

No other state which has a no-fault system has burden of proof
requirements such as currently exist in New York Every
other jurisdiction requires the medical provider bringing the lawsuit
to establish that the service was medically necessary. causally
related to the motor vehicle accident and properly billed. New York
case law in this regard is completely anomalous to the authority in
every other no-fault jurisdiction, This difference in New York is one
of the reasons why New York is so attractive to fraud rings who want

to bilk the system and steal from honest New York drivers. This bill
would make burden of proof requirements in the no-fault context more
equitable and more in line with other states by requiring the medical
provider to present information that the services billed are
medically necessary and billed in accordance with the applicable fee
schedule.

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 20
10, 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.

LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None

EFFECTIVE DATE:
Immediately and shall apply to all actions and proceedings
commenced on or after such date where, as of such date
a trial of the issues has not yet commenced.