senate Bill S3544

2013-2014 Legislative Session

Relates arbitration of claims under the comprehensive motor vehicle insurance reparations act

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to insurance
Feb 05, 2013 referred to insurance

S3544 - Bill Details

Current Committee:
Law Section:
Insurance Law
Laws Affected:
Amd ยง5106, Ins L
Versions Introduced in 2011-2012 Legislative Session:
S6708

S3544 - Bill Texts

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Relates to fair settlement practices under the comprehensive motor vehicle insurance reparations act; requires mandatory arbitration of no-fault disputes.

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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by the legislature when they originally enacted the no-fault system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.

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

                                  3544

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            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

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