Senate Bill S3511

                                
 
BILL NUMBER: S3511

SPONSOR: BRESLIN
 
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 equita-
ble.

 
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 indict-
ment 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 shift-
ed 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 require-
ments 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 jurisdic-
tion. 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 require-
ments 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 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.

 
LEGISLATIVE HISTORY:

S.770 of 2017-18;
S.2368 of 2015-16;
S.3545 of 2013-14;
S.6707 of 2011-12.

 
FISCAL IMPLICATIONS:

None.