Senate Bill S4949

2011-2012 Legislative Session

Limits remedies for overdue first party claim under no-fault automobile insurance and authorizes refusal to pay for treatment by certain health care providers

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Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 04, 2012	referred to insurance
May 02, 2011	referred to insurance

2011-S4949 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §5106, Ins L; amd §§176.15, 176.20, 176.25, 176.30, 176.35 & 460.10, add §§176.36 & 176.37, Pen L; amd §846-m, Exec L
Versions Introduced in 2009-2010 Legislative Session:: S6449

2011-S4949 (ACTIVE) - Summary

Clarifies remedy for overdue first party claim under no-fault automobile insurance and increases penalties for insurance fraud.

2011-S4949 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4949

TITLE OF BILL:
An act
to amend the insurance law, in relation to the payment of first party
benefits which are overdue;
to amend the penal law, in relation to
insurance fraud offenses; to amend the executive law, in relation to the
use of the motor vehicle theft and insurance fraud prevention fund; and
to establish the temporary panel on medical care and treatment under
the no-fault system

PURPOSE:
To reduce auto insurance premiums by enacting measurers to reduce
no-fault fraud and requiring that any savings resulting from such
measures be passed along to consumers.

SUMMARY OF PROVISIONS:
This bill would enact measures to reduce no-fault fraud in New York
State including the following:

ENHANCE OPPORTUNITY TO CHALLENGE FRAUD:
Recent court decisions have required insurers to payor deny a claim
within 30 days and insurers are precluded from raising fraud as a
defense to payment after this time frame. It is often difficult for
insurers to determine within 30 days whether fraud exists,

particularly when bills are often accumulated for six months prior to
being submitted to the insurer.

Section one of this bill would allow insurers to raise defenses after
this thirty day period. Any claims not paid within this 30 day period
would bear interest at 2% per month and claimants would be entitled
to recover reasonable attorney's fees for securing payment of overdue
claims. Twenty-four percent interest per year plus attorney's fees is
certainly an adequate deterrent to failing to pay claims in a timely
manner. Prohibiting insurers from challenging claims after this time
period only makes it easier for those committing fraud to get away
with it if the insurer is unable to detect tile fraud within thirty
days.

INCREASING PENALTIES FOR INSURANCE FRAUD:
Sections 2 through 7 of this bill would increase penalties for
insurance fraud, particularly for repeat offenders, so as to give
prosecutors more incentive to prosecute these cases and to ensure
that those committing
insurance fraud will be put behind bars where they belong.
Specifically, to facilitate the prosecution of these crimes, this
bill would cut in half the value of property obtained through fraud
in order to be convicted of insurance fraud in each degree and would
add two new degrees of aggravated insurance fraud to get tough on
repeat offenders.

TEMPORARY PANEL ON MEDICAL CARE AND TREATMENT UNDER
NO-FAULT:
Section
10 of this bill would establish a temporary panel on medical care and


treatment under the no-fault system to consider and report on issues
relating to medical treatment under the New York no-fault system in
order to identify ways to further improve the system by reducing
fraud and abuse, eliminating disputes, and speeding payments for
legitimate injuries.

PASSING ALONG SAVINGS TO CONSUMERS:

Section 11 of this bill would require the Superintendent of Insurance
to consider the impact of these fraud fighting measurers when making
determinations about future rate filings for no-fault insurance and
will require that savings resulting from these measures be reflected
in rates.

JUSTIFICATION:
According to the Insurance Information Institute, no-fault fraud cost
New Yorkers more than $204 million last year, a cost absorbed by all
policyholders in the form of increased premiums. While recent efforts
to Combat fraud have improved this situation somewhat, no-fault fraud
Continues to be a very serious problem in New York.

Most of no-fault fraud costs result from the fraud perpetuated by
organized crime rings and a small number of unscrupulous doctors and
attorneys.
Participants in fraud rings are often paid to stage accidents, feign
injuries and receive bogus treatments from medical mills. One staged
accident with more than one claimant can result in hundreds of
treatments including such services as aroma therapy and massage
therapy all on the tab of the insurer.

This bill would enact measures which will ensure that insurers are
able to challenge fraud and ensure that criminals profiting off this
activity are put in jail where they belong, this bill would also
ensure that consumers benefit from the savings resulting from these
measures.

LEGISLATIVE HISTORY:
S.4371 of 2007-08
S.6449 of 2009-10

FISCAL IMPLICATIONS:
None to the State.

EFFECTIVE DATE:
Immediately.

2011-S4949 (ACTIVE) - Bill Text download pdf

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

                                  4949

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               May 2, 2011
                               ___________

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 the payment  of  first
  party  benefits which are overdue; to amend the penal law, in relation
  to insurance fraud offenses; to amend the executive law,  in  relation
  to  the  use of the motor vehicle theft and insurance fraud prevention
  fund; and to establish the temporary panel on medical care and  treat-
  ment under the no-fault system

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

  Section 1. Subsection (a) of section 5106  of  the  insurance  law  is
amended to read as follows:
  (a)  Payments of first party benefits and additional first party bene-
fits shall be made as the loss is incurred. Such benefits are overdue if
not paid within thirty days after the claimant  supplies  proof  of  the
fact  and  amount  of loss sustained. If proof is not supplied as to the
entire claim, the amount which is supported by proof is overdue  if  not
paid  within  thirty  days  after  such  proof  is supplied. All overdue
payments shall bear interest at the rate of two percent per month. If  a
valid  claim or portion was overdue, the claimant shall also be entitled
to recover his  attorney's  reasonable  fee,  for  services  necessarily
performed  in  connection  with  securing  payment of the overdue claim,
subject to limitations promulgated by the superintendent in regulations.
PAYMENT OF THE INTEREST PENALTY  AND  REASONABLE  ATTORNEYS  FEES  TO  A
CLAIMANT WHEN PAYMENT OF A CLAIM IS OVERDUE SHALL BE THE EXCLUSIVE REME-
DY  WHEN  AN  INSURER  FAILS  TO  MAKE TIMELY PAYMENT. THE FAILURE OF AN
INSURER TO MAKE TIMELY PAYMENT OR ISSUE  A  DENIAL  WITHIN  THIRTY  DAYS
AFTER PROOF OF CLAIM HAS BEEN SUBMITTED TO AN INSURER SHALL NOT PRECLUDE
SUCH  INSURER  FROM  ISSUING  A  DENIAL OR ASSERTING A DEFENSE AFTER THE
THIRTY DAY PERIOD HAS ELAPSED.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05840-01-1

S. 4949                             2

  S 2. Section 176.15 of the penal law, as amended by chapter 515 of the
laws of 1986, is amended to read as follows:
S 176.15 Insurance fraud in the fourth degree.
  A  person is guilty of insurance fraud in the fourth degree when he OR
SHE commits a fraudulent insurance act OR ACTS  and  thereby  wrongfully
takes,  obtains  or withholds, or attempts to wrongfully take, obtain or
withhold property with [a] AN AGGREGATE value in excess  of  [one  thou-
sand] FIVE HUNDRED dollars.
  Insurance fraud in the fourth degree is a class E felony.
  S 3. Section 176.20 of the penal law, as amended by chapter 515 of the
laws of 1986, is amended to read as follows:
S 176.20 Insurance fraud in the third degree.
  A  person  is guilty of insurance fraud in the third degree when he OR
SHE commits a fraudulent insurance act OR ACTS  and  thereby  wrongfully
takes,  obtains  or withholds, or attempts to wrongfully take, obtain or
withhold property with [a] AN AGGREGATE value in excess of  [three]  ONE
thousand FIVE HUNDRED dollars.
  Insurance fraud in the third degree is a class D felony.
  S  4.  Section 176.25 of the penal law, as added by chapter 515 of the
laws of 1986, is amended to read as follows:
S 176.25 Insurance fraud in the second degree.
  A person is guilty of insurance fraud in the second degree when he  OR
SHE  commits  a  fraudulent insurance act OR ACTS and thereby wrongfully
takes, obtains or withholds, or attempts to wrongfully take,  obtain  or
withhold property with [a] AN AGGREGATE value in excess of [fifty] TWEN-
TY-FIVE thousand dollars.
  Insurance fraud in the second degree is a class C felony.
  S  5.  Section 176.30 of the penal law, as added by chapter 515 of the
laws of 1986, is amended to read as follows:
S 176.30 Insurance fraud in the first degree.
  A person is guilty of insurance fraud in the first degree when  he  OR
SHE  commits  a  fraudulent insurance act OR ACTS and thereby wrongfully
takes, obtains or withholds, or attempts to wrongfully take,  obtain  or
withhold property with [a] AN AGGREGATE value in excess of [one million]
FIVE HUNDRED THOUSAND dollars.
  Insurance fraud in the first degree is a class B felony.
  S  6.  Section 176.35 of the penal law, as added by chapter 635 of the
laws of 1996, is amended to read as follows:
S 176.35 Aggravated insurance fraud IN THE THIRD DEGREE.
  A person is guilty of aggravated insurance fraud in the [fourth] THIRD
degree when he OR SHE commits [a fraudulent insurance act]  THE  OFFENSE
OF  INSURANCE  FRAUD  IN  THE  FIFTH  DEGREE,  and  has  been previously
convicted within the preceding five years of any offense,  an  essential
element of which is the commission of a fraudulent insurance act.
  Aggravated  insurance  fraud in the [fourth] THIRD degree is a class D
felony.
  S 7. The penal law is amended by adding two new  sections  176.36  and
176.37 to read as follows:
S 176.36 AGGRAVATED INSURANCE FRAUD IN THE SECOND DEGREE.
  A  PERSON IS GUILTY OF AGGRAVATED INSURANCE FRAUD IN THE SECOND DEGREE
WHEN HE OR SHE COMMITS THE OFFENSE OF  INSURANCE  FRAUD  IN  THE  FOURTH
DEGREE,  AND  HAS  BEEN  PREVIOUSLY  CONVICTED WITHIN THE PRECEDING FIVE
YEARS OF ANY OFFENSE, AN ESSENTIAL ELEMENT OF WHICH IS THE COMMISSION OF
A FRAUDULENT INSURANCE ACT.
  AGGRAVATED INSURANCE FRAUD IN THE SECOND DEGREE IS A CLASS C FELONY.
S 176.37 AGGRAVATED INSURANCE FRAUD IN THE FIRST DEGREE.

S. 4949                             3

  A PERSON IS GUILTY OF AGGRAVATED INSURANCE FRAUD IN THE  FIRST  DEGREE
WHEN  HE  OR  SHE  COMMITS  THE  OFFENSE OF INSURANCE FRAUD IN THE THIRD
DEGREE, AND HAS BEEN PREVIOUSLY  CONVICTED  WITHIN  THE  PRECEDING  FIVE
YEARS OF ANY OFFENSE, AN ESSENTIAL ELEMENT OF WHICH IS THE COMMISSION OF
A FRAUDULENT INSURANCE ACT.
  AGGRAVATED INSURANCE FRAUD IN THE FIRST DEGREE IS A CLASS B FELONY.
  S  8.  Paragraph  (a)  of subdivision 1 of section 460.10 of the penal
law, as amended by chapter 405 of the laws of 2010, is amended  to  read
as follows:
  (a)  Any  of  the felonies set forth in this chapter: sections 120.05,
120.10 and 120.11 relating to assault; sections 121.12 and 121.13 relat-
ing to strangulation; sections 125.10 to 125.27  relating  to  homicide;
sections 130.25, 130.30 and 130.35 relating to rape; sections 135.20 and
135.25  relating  to  kidnapping; section 135.35 relating to labor traf-
ficking; section 135.65 relating to coercion;  sections  140.20,  140.25
and  140.30  relating  to  burglary;  sections 145.05, 145.10 and 145.12
relating to criminal mischief; article one  hundred  fifty  relating  to
arson;  sections  155.30,  155.35,  155.40  and 155.42 relating to grand
larceny; sections 177.10, 177.15, 177.20 and 177.25 relating  to  health
care  fraud;  article  one  hundred  sixty relating to robbery; sections
165.45, 165.50, 165.52 and 165.54 relating  to  criminal  possession  of
stolen  property; sections 165.72 and 165.73 relating to trademark coun-
terfeiting; sections 170.10, 170.15, 170.25, 170.30, 170.40, 170.65  and
170.70  relating to forgery; sections 175.10, 175.25, 175.35, 175.40 and
210.40 relating to false statements;  sections  176.15,  176.20,  176.25
[and],  176.30,  176.35,  176.36 AND 176.37 relating to insurance fraud;
sections  178.20  and  178.25  relating   to   criminal   diversion   of
prescription  medications  and  prescriptions;  sections 180.03, 180.08,
180.15, 180.25, 180.40, 180.45, 200.00, 200.03, 200.04, 200.10,  200.11,
200.12, 200.20, 200.22, 200.25, 200.27, 215.00, 215.05 and 215.19 relat-
ing  to  bribery; sections 187.10, 187.15, 187.20 and 187.25 relating to
residential mortgage fraud, sections 190.40 and 190.42 relating to crim-
inal usury; section 190.65 relating  to  schemes  to  defraud;  sections
205.60  and  205.65  relating to hindering prosecution; sections 210.10,
210.15, and 215.51 relating to  perjury  and  contempt;  section  215.40
relating  to  tampering with physical evidence; sections 220.06, 220.09,
220.16, 220.18, 220.21, 220.31, 220.34, 220.39, 220.41, 220.43,  220.46,
220.55,  220.60  and  220.77 relating to controlled substances; sections
225.10 and 225.20 relating to gambling;  sections  230.25,  230.30,  and
230.32  relating  to  promoting prostitution; section 230.34 relating to
sex trafficking; sections 235.06, 235.07, 235.21 and 235.22 relating  to
obscenity;  sections  263.10  and  263.15 relating to promoting a sexual
performance by a child; sections 265.02, 265.03, 265.04, 265.11, 265.12,
265.13 and the provisions of section 265.10 which  constitute  a  felony
relating  to  firearms  and other dangerous weapons; and sections 265.14
and 265.16 relating to criminal sale of a firearm; and  section  275.10,
275.20,  275.30,  or  275.40  relating  to  unauthorized recordings; and
sections 470.05, 470.10, 470.15 and 470.20 relating to money laundering;
or
  S 9. Paragraph (a) of subdivision 2 of section 846-m of the  executive
law,  as  amended  by  section  6 of part T of chapter 57 of the laws of
2000, is amended to read as follows:
  (a) The moneys received by the fund shall be expended in a manner that
is consistent with the plan of  operation,  pursuant  to  appropriation,
only  to reimburse costs incurred by provider agencies for pilot program
activities relating to the detection, prevention or reduction  of  motor

S. 4949                             4

vehicle theft and motor vehicle insurance fraud; PROVIDED, HOWEVER, THAT
COMMENCING  ON  JANUARY FIRST, TWO THOUSAND TWELVE, AT LEAST ONE-HALF OF
THE MONEYS RECEIVED BY THE FUND SHALL BE  USED  EXCLUSIVELY  TO  SUPPORT
EFFORTS  UNDERTAKEN BY DISTRICT ATTORNEYS TO DETECT, IDENTIFY AND PROSE-
CUTE FRAUD PERTAINING TO ARTICLE FIFTY-ONE OF THE INSURANCE LAW.
  S 10. Temporary panel on medical care and treatment under the no-fault
system. (a) The superintendent of insurance, in  consultation  with  the
commissioner of health, is hereby directed to convene a special advisory
panel  on  medical care and treatment provided pursuant to article 51 of
the insurance law to examine and assess  ways  to  further  improve  the
no-fault  system.  Such  panel  shall  study and report on the following
issues within one year of the effective date of this section:
  1. an evaluation of whether the treatment for neck and  back  injuries
covered  under the no-fault system varies in terms of treatment, overall
cost and medical effectiveness when compared  to  such  treatment  under
workers' compensation or other health care delivery plans;
  2. a comparison between the average cost of treatment of neck and back
injuries  under  New  York's no-fault system and the no-fault systems of
other states;
  3. whether the development of no-fault treatment guidelines  for  neck
and back injuries would benefit the consumer;
  4.  an  evaluation  of alternatives with respect to the utilization of
the medical fee schedules established by the chairman  of  the  workers'
compensation  board  for  the  payment  of  benefits  under the no-fault
system; and
  5. any other pertinent issues related to medical  care  and  treatment
under  the no-fault system as determined by the superintendent of insur-
ance or the commissioner of health.
  (b) 1. The temporary panel on medical care  and  treatment  under  the
no-fault  system  shall be composed of 14 members. The superintendent of
insurance and commissioner of health shall be members and shall  act  as
co-chairs  of such panel. The remaining 12 members shall be appointed as
follows:
  a. 8 members shall be appointed by the governor, of which
  (i) 2 shall be representatives of producers placing automobile  insur-
ance,
  (ii)  2  shall be representatives of insurance companies, with experi-
ence in the no-fault system,
  (iii) 2 shall be representatives of the medical profession with  expe-
rience in the no-fault system, and
  (iv)  2  shall be representatives of the legal profession with experi-
ence in the no-fault system;
  b. 2 shall be appointed by the temporary president of the senate, both
of whom shall be members of the public; and
  c. 2 shall be appointed by the speaker of the assembly, both  of  whom
shall be members of the public.
  2. Vacancies in the membership of such panel shall be appointed in the
same  manner  as  original  appointments. All such appointments shall be
made within one month of the effective date of this act  and  the  panel
shall  commence  its  consideration  of  the issues provided for in this
section not later than one month following the effective  date  of  this
act regardless of whether all such appointments have been made.
  (c)  The panel shall make a report to the governor and the legislature
of its findings, conclusions and recommendations within the time  period
provided for in subdivision (a) of this section.

S. 4949                             5

  S 11. The superintendent of insurance shall consider the impact of the
provisions of this act and any changes to regulations promulgated pursu-
ant to article 51 of the insurance law when considering filings for rate
changes  for  noncommercial private passenger automobile insurance poli-
cies  and  shall  require  that  such  filings  reflect any cost savings
resulting from the provisions of this  act  or  changes  to  regulations
promulgated  pursuant  to  article 51 of the insurance law to the extent
quantifiable and actuarially appropriate.
  S 12. This act shall take effect immediately.

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Senate Bill S4949

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Archive: Last Bill Status - In Senate Committee Insurance Committee

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2011-S4949 (ACTIVE) - Details

2011-S4949 (ACTIVE) - Summary

2011-S4949 (ACTIVE) - Sponsor Memo

2011-S4949 (ACTIVE) - Bill Text download pdf

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Sponsored By

James L. Seward

Archive: Last Bill Status - In Senate Committee Insurance Committee

Actions

2011-S4949 (ACTIVE) - Details

2011-S4949 (ACTIVE) - Summary

2011-S4949 (ACTIVE) - Sponsor Memo

2011-S4949 (ACTIVE) - Bill Text download pdf

Comments