Relates to providing for the use of treatment guidelines in the no-fault system

BILL NUMBER:S6706

Title of bill

An act to amend the insurance law, in relation to providing for the use of treatment guidelines under the comprehensive motor vehicle reparations act

Purpose

To eliminate fraudulent and unnecessary medical treatment in the no-fault system.

Summary of provisions

Section 1 of this bill would require the establishment of treatment guidelines for medical treatment provided under the no-fault system.

Section 2 of this bill would provide an expedited process for the resolution of disputes regarding deviations from the treatment guidelines.

Section 3 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 involving fraudulent medical clinics (medical mills). One of the reasons why medical mills proliferate in New York is because New York's no-fault system makes it very easy to bill insurance companies for fraudulent and unnecessary treatment. This bill would remedy this situation by establishing guidelines for the treatment of various injuries commonly sustained in automobile accidents.

Treatment guidelines have been adopted in New Jersey for its no-fault system and in New York for the workers compensation system. Treatment guidelines are a valuable tool in preventing the fraudulent over utilization of unnecessary medical treatments. Treatment guidelines are evidence based standards of care and best practices for the medical treatment of injuries which ensure that claimants receive the highest quality medical treatment. In the workers compensation context, the guidelines were initially developed by the Governor's Workers' Compensation Reform Task Force and its advisory committee comprised of well credentialed medical professionals and other interested parties. This bill would require similar scientifically based guidelines to be developed for the treatment of injuries commonly resulting from auto accidents. These guidelines would ensure that auto accident victims would receive the best care for their injuries and, because the guidelines set forth clear standards for treatment, they would significantly reduce fraud and

abuse in the no-fault system. Establishing treatment guidelines would go a long way toward putting an end to medical mills in New York State.

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 quarter 2010 Establishing treatment guidelines for the no-fault system would assist in reducing fraud in the no-fault system and the costs associated with fraud.

Legislative history

New bill.

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.