senate Bill S7787

2011-2012 Legislative Session

Relates to limits on certain supplementary insurance

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Archive: Last Bill Status Via A10784 - Vetoed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Dec 17, 2012 tabled
vetoed memo.179
Dec 05, 2012 delivered to governor
Jun 21, 2012 returned to assembly
passed senate
3rd reading cal.1426
substituted for s7787
Jun 21, 2012 substituted by a10784
Jun 20, 2012 ordered to third reading cal.1426
Jun 18, 2012 referred to rules

Votes

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S7787 - Bill Details

See Assembly Version of this Bill:
A10784
Law Section:
Insurance Law
Laws Affected:
Amd §3420, add §5109-a, Ins L

S7787 - Bill Texts

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Relates to limits on certain supplementary insurance; permits insured to refuse supplementary insurance; requires certain disclaimer; relates to payments to durable medical equipment providers.

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BILL NUMBER:S7787

TITLE OF BILL:
An act to amend the insurance law, in relation to limits on certain
supplementary insurance; and in relation to payments to durable
medical equipment providers

PURPOSE:
The purpose of this bill is to provide for increased SUM coverage and
to allow the Superintendent of Financial Services to decertify
providers of durable medical equipment from providing services under
no-fault.

SUMMARY OF PROVISIONS:
This bill would change the required amount of supplementary
uninsurediunderinsured motorist (SUM) coverage from a maximum amount
that is the same as bodily injury to a minimum amount that is the same
as bodily injury, In addition, this bill would automatically require
the purchase of SUM coverage but also give the insured the option
decline SUM coverage or to purchase lower amounts than the statutory
minimum. The insurer or agent would be required to disclose to the
insured what SUM coverage is and how much the insured may purchase. If
the insured declines to purchase SUM coverage, he or she must
acknowledge the declination in writing.

In addition, this bill would allow the Superintendent, after notice
and hearing, to prohibit a fraudulent provider of durable medical
equipment from demanding or requesting payment under the no-fault law.

JUSTIFICATION:
This bill would amend the insurance law in relation to unknowingly
waiving supplementary insurance coverage. Supplementary insurance,
also known as uninsured or underinsured motorist insurance, protects
motorists who suffer severe and devastating injuries in accidents with
drivers who carry inadequate or no insurance. Few drivers are aware of
the value of supplementary insurance and insurance companies rarely
offer supplementary insurance coverage above the statutory minimum.
This bill will ensure that drivers are fully protected by
supplementary insurance, equal to the bodily injury liability
insurance coverage they select, unless they affirmatively elect lower
coverage.

The bill also allows the superintendent of financial services to
establish a mechanism to decertify providers of durable medical
equipment from the no-fault system if they have engaged in fraudulent
activities or billing practices. This is similar to provisions of the
insurance law enacted in 2005 to decertify physicians who engage in
no-fault fraud. In recent years an increasing portion of the no-fault
fraud has been observed in the area of durable medical equipment
(DMF). In many instances the DME wholesaler is involved in the scam
and the provider is committing fraud in conjunction with the medical
supply companies. Many of these DME frauds occur in the following
manner.

Many items are subject to the fee schedule. Items not subject to the
fee schedule are billed at a rate of 50% profit. For example, TENS and
EMS machines (which emit electrical impulses) perform nearly the same


functions. Until last year TENS machines were not subject to the fee
schedule, so TENS and EMS billing was relatively equal. However, last
year TENS machines were put on the fee schedule. It is no coincidence
that no-fault fraudsters are reducing TENS billings and EMS billings
have dramatically increased so that those fraudsters can fabricate a
price and then add in the 50% profit on top.

As is readily seen by these cases, this area of no-fault fraud is
rampant and growing at a tremendous rate producing the fastest and
most cash profit of any fraud. Since January I, 2009, there have been
739 new DME providers registered in NYS. There were 340 new facilities
registered in Brooklyn alone but only 10 in Buffalo. In one especially
egregious case one patient's DME billing included 16 different items
totaling over 56,000 including a luxury turbo bath spa an infrared
heat wand, a wand massager, two different post-op knee braces a back
support seat, a TENS belt and others. The patient reports that they
never used any of the items which were billed for.

LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act will sake effect on the 180th day after it shall have become
a law.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7787

                            I N  S E N A T E

                              June 18, 2012
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

AN ACT to amend the insurance law, in  relation  to  limits  on  certain
  supplementary  insurance;  and  in  relation  to  payments  to durable
  medical equipment providers

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 2 of subsection (f) of section 3420 of the insur-
ance  law,  as separately amended by chapters 547 and 568 of the laws of
1997, is amended to read as follows:
  (2) (A) Any such policy shall[, at the option of  the  insured,  also]
provide  supplementary  uninsured/underinsured  motorists  insurance for
bodily injury[, in an amount up to] IN THE SAME  AMOUNT  AS  the  bodily
injury  liability insurance limits of coverage provided under such AUTO-
MOBILE INSURANCE policy[, subject to a  maximum  of  two  hundred  fifty
thousand  dollars  because of bodily injury to or death of one person in
any one accident and, subject to such limit for one person, up  to  five
hundred  thousand dollars because of bodily injury to or death of two or
more persons in any one accident, or a combined single limit  policy  of
five  hundred  thousand  dollars because of bodily injury to or death of
one or more persons in any one accident. Provided  however,  an  insurer
issuing  such  policy,  in lieu of offering to the insured the coverages
stated above, may provide supplementary uninsured/underinsured motorists
insurance for bodily injury, in  an  amount  up  to  the  bodily  injury
liability  insurance  limits  of  coverage  provided  under such policy,
subject to a maximum of one hundred thousand dollars because  of  bodily
injury  to  or  death  of one person in any one accident and, subject to
such limit for one person, up to three hundred thousand dollars  because
of bodily injury to or death of two or more persons in any one accident,
or  a  combined  single  limit  policy of three hundred thousand dollars
because of bodily injury to or death of one or more persons in  any  one
accident, if such insurer also makes available a personal umbrella poli-
cy  with  liability coverage limits up to at least five hundred thousand
dollars    which    also    provides    coverage    for    supplementary

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15532-07-2

S. 7787                             2

uninsured/underinsured  motorists claims].   THE COVERAGE REQUIRED UNDER
THIS PARAGRAPH IS NOT APPLICABLE WHEN, OR TO THE EXTENT THAT, AN INSURED
NAMED IN THE POLICY MAKES A REJECTION OF THE COVERAGE ON BEHALF  OF  ALL
INSUREDS  UNDER THE POLICY.  SUCH REJECTION SHALL BE MEMORIALIZED BY THE
INSURER THROUGH A SIGNED WRITING, AUDIO RECORDING, ELECTRONIC  SIGNATURE
OR  ANY OTHER MEANS EVIDENCING THE INSURED'S REJECTION OF SUCH COVERAGE.
Supplementary uninsured/underinsured motorists insurance  shall  provide
coverage,  in any state or Canadian province, if the limits of liability
under all bodily  injury  liability  bonds  and  insurance  policies  of
[another]  ANY  OTHER  motor  vehicle liable for damages are in a lesser
amount than the bodily injury liability  insurance  limits  of  coverage
provided  by such policy. Upon written request by any insured covered by
supplemental uninsured/underinsured  motorists  insurance  or  his  duly
authorized  representative  and  upon  disclosure  by the insured of the
insured's bodily injury and supplemental  uninsured/underinsured  motor-
ists insurance coverage limits, the insurer of any other owner or opera-
tor  of  another  motor  vehicle against which a claim has been made for
damages to the insured shall disclose, within  forty-five  days  of  the
request,  the  bodily  injury liability insurance limits of its coverage
provided under the policy or all bodily injury liability bonds. The time
of the insured to make any supplementary uninsured/underinsured motorist
claim, shall be tolled during the period the insurer of any other  owner
or  operator  of another motor vehicle that may be liable for damages to
the insured, fails to so disclose its coverage. As a condition precedent
to the  obligation  of  the  insurer  to  pay  under  the  supplementary
uninsured/underinsured  motorists  insurance  coverage,  the  limits  of
liability of all bodily injury liability  bonds  or  insurance  policies
applicable  at the time of the accident shall be exhausted by payment of
judgments or settlements.
  (B) [In addition to the notice provided, upon issuance of a policy  of
motor vehicle liability insurance pursuant to regulations promulgated by
the  superintendent,  insurers shall notify insureds, in writing, of the
availability of supplementary uninsured/underinsured motorists coverage.
Such  notification  shall  contain  an  explanation   of   supplementary
uninsured/underinsured  motorists  coverage  and the amounts in which it
can be purchased. Subsequently, a notification of availability shall  be
provided  at  least  once a year and may be simplified pursuant to regu-
lations promulgated by the superintendent, but must  include  a  concise
statement  that  supplementary uninsured/underinsured motorists coverage
is available, an explanation of such coverage, and the  coverage  limits
that  can  be purchased from the insurer.] IF THE REJECTION OR SELECTION
OF LOWER SUPPLEMENTARY UNINSURED/UNDERINSURED MOTORISTS COVERAGE  IS  IN
WRITTEN OR ELECTRONIC FORM, THAT REJECTION OR SELECTION SHALL BE MADE ON
A FORM PROVIDED TO THE INSURED AT THE TIME THE POLICY IS SOLD, PURCHASED
AND/OR  NEGOTIATED  THAT SHALL FULLY ADVISE THE INSURED OF THE NATURE OF
THE COVERAGE AND SHALL STATE THAT THE COVERAGE IS EQUAL TO BODILY INJURY
LIABILITY LIMITS UNLESS LOWER LIMITS ARE REQUESTED OR  THE  COVERAGE  IS
REJECTED.  WHERE SUCH SELECTION OR REJECTION IS MADE VERBALLY, A MEMORI-
ALIZATION  IN  WRITING  OR  ELECTRONIC  SIGNATURE MAY BE RECEIVED BY THE
INSURER SUBSEQUENT TO THE SALE, PURCHASE AND/OR NEGOTIATION OF THE POLI-
CY.  THE FORM SHALL BE IN 12-POINT BOLD TYPE AND SHALL STATE:   "SUPPLE-
MENTARY   UNINSURED/UNDERINSURED   MOTORISTS   COVERAGE  (SUM  COVERAGE)
PROTECTS AGAINST THE POSSIBILITY OF AN ACCIDENT INVOLVING ANOTHER  MOTOR
VEHICLE WHOSE OWNER OR OPERATOR WAS NEGLIGENT AND WHO MAY HAVE NO INSUR-
ANCE  WHATSOEVER;  OR  EVEN  IF INSURED, IS ONLY INSURED FOR THIRD-PARTY
BODILY INJURY AT RELATIVELY LOW LIABILITY LIMITS, IN COMPARISON  TO  THE

S. 7787                             3

POLICYHOLDER'S  OWN  LIABILITY  LIMITS  FOR  BODILY  INJURY SUSTAINED BY
THIRD-PARTIES. BY PURCHASING SUM  COVERAGE,  THE  POLICYHOLDER  AND  ANY
INSURED  UNDER  THE  POLICY  CAN BE PROTECTED FOR BODILY INJURY TO THEM-
SELVES AND RECEIVE FROM THE POLICYHOLDER'S OWN INSURER PAYMENT FOR BODI-
LY  INJURY  SUSTAINED DUE TO THE NEGLIGENCE OF THE OTHER MOTOR VEHICLE'S
OWNER OR OPERATOR. SUM COVERAGE SHALL BE EQUAL TO BODILY INJURY  LIABIL-
ITY  LIMITS  UNLESS  LOWER  LIMITS  ARE  REQUESTED  OR  THE  COVERAGE IS
REJECTED. A POLICYHOLDER IS URGED TO CONSIDER PURCHASING THE MAXIMUM SUM
COVERAGE AVAILABLE." IF REJECTION OR SELECTION OF LOWER LIMITS  IS  MADE
VERBALLY,  THE  INSURER  OR  THEIR  AGENT  SHALL  READ  THE IDENTICAL OR
SUBSTANTIALLY SIMILAR LANGUAGE AS IS IN THE ABOVE REJECTION OF  MATCHING
LIMITS  FORM  AND  CONFIRM THE CLIENT HAS HEARD AND UNDERSTOOD THE SAME,
AND SHALL RESTATE THE ABOVE INFORMATION AS OFTEN AS IS  NECESSARY  UNTIL
THE  INSURED HAS VERBALLY CONFIRMED THAT THEY FULLY UNDERSTAND THE SAME.
THE INSURER SHALL NOTIFY THE NAMED INSURED AT LEAST ANNUALLY OF  HER  OR
HIS  OPTIONS  AS  TO THE COVERAGE REQUIRED BY THIS PARAGRAPH PURSUANT TO
REGULATIONS ISSUED BY THE SUPERINTENDENT, IF ANY,  AT  THE  TIME  OF  OR
WITHIN  SIXTY  DAYS PRIOR TO THE RENEWAL OF THE POLICY.  RECEIPT OF THIS
NOTICE DOES NOT CONSTITUTE AN AFFIRMATIVE WAIVER OF THE INSURED'S  RIGHT
TO  UNINSURED  MOTORIST  COVERAGE  WHERE  THE  INSURED  HAS NOT SIGNED A
SELECTION OR REJECTION FORM.
  S 2. The insurance law is amended by adding a new  section  5109-a  to
read as follows:
  S 5109-A. UNAUTHORIZED PROVIDERS OF DURABLE MEDICAL EQUIPMENT. (A) THE
SUPERINTENDENT MAY PROHIBIT A PROVIDER OF DURABLE MEDICAL EQUIPMENT FROM
DEMANDING  OR  REQUESTING PAYMENT UNDER THIS ARTICLE FOR DURABLE MEDICAL
EQUIPMENT FOR A PERIOD TO BE DETERMINED BY  THE  SUPERINTENDENT  IF  THE
SUPERINTENDENT DETERMINES, AFTER NOTICE AND A HEARING, THAT THE PROVIDER
OF DURABLE MEDICAL EQUIPMENT:
  (1)  HAS ENGAGED IN A PATTERN AND PRACTICE OF FRAUDULENT, EXCESSIVE OR
UNLAWFUL BILLING OF INSURANCE COMPANIES FOR DURABLE MEDICAL EQUIPMENT;
  (2) HAS ENGAGED IN A PATTERN AND PRACTICE OF BILLING INSURANCE  COMPA-
NIES FOR DURABLE MEDICAL EQUIPMENT WHICH WAS NOT PROVIDED;
  (3)  HAS ENGAGED IN A PATTERN AND PRACTICE OF BILLING INSURANCE COMPA-
NIES FOR DURABLE MEDICAL EQUIPMENT WHICH WAS NOT NECESSARY;
  (4) HAS COMMITTED A FRAUDULENT INSURANCE ACT  AS  DEFINED  IN  SECTION
176.05 OF THE PENAL LAW;
  (5)  HAS  BEEN  CONVICTED OF A CRIME INVOLVING FRAUDULENT OR DISHONEST
PRACTICES;
  (6) HAS REFUSED TO APPEAR BEFORE, OR ANSWER ANY QUESTION UPON  REQUEST
OF,  THE  SUPERINTENDENT OR ANY DULY AUTHORIZED OFFICER OF THIS STATE OR
REFUSED TO PRODUCE ANY RELEVANT INFORMATION CONCERNING  THE  CONDUCT  OF
THE  PROVIDER  OF  DURABLE  MEDICAL EQUIPMENT IN CONNECTION WITH DURABLE
MEDICAL EQUIPMENT PROVIDED UNDER THIS ARTICLE; OR
  (7) HAS VIOLATED ANY PROVISION OF THIS ARTICLE OR REGULATIONS  PROMUL-
GATED THEREUNDER.
  (B)  A  PROVIDER  OF  DURABLE  MEDICAL  EQUIPMENT  SHALL NOT DEMAND OR
REQUEST PAYMENT UNDER THIS ARTICLE FOR DURABLE MEDICAL EQUIPMENT  DURING
THE  TERM  OF  THE PROHIBITION ORDERED BY THE SUPERINTENDENT PURSUANT TO
SUBSECTION (A) OF THIS SECTION.
  (C) THE SUPERINTENDENT SHALL MAINTAIN A DATABASE CONTAINING A LIST  OF
PROVIDERS  OF  DURABLE MEDICAL EQUIPMENT PROHIBITED BY THIS SECTION FROM
DEMANDING OR REQUESTING PAYMENT FOR DURABLE MEDICAL  EQUIPMENT  RENDERED
UNDER  THIS  ARTICLE  AND  SHALL  MAKE  THE INFORMATION AVAILABLE TO THE
PUBLIC.

S. 7787                             4

  (D) NOTHING IN THIS SECTION SHALL BE  CONSTRUED  AS  LIMITING  IN  ANY
RESPECT  THE  POWERS  AND DUTIES OF ANY OTHER STATE OR FEDERAL AGENCY OR
INSURERS TO INVESTIGATE  INSTANCES  OF  MISCONDUCT  BY  DURABLE  MEDICAL
EQUIPMENT  PROVIDERS  AND  TAKE APPROPRIATE ACTION PURSUANT TO ANY OTHER
PROVISION OF LAW.
  S 3. This act shall take effect on the one hundred eightieth day after
it  shall  have  become a law, and shall apply to insurance policies and
contracts issued, entered into or renewed on and  after  such  effective
date.

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