Relates to fair claims settlement practices under the comprehensive motor vehicle insurance reparations act

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 indictment 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 shifted 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 requirements 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 jurisdiction, 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 requirements 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 20 10, 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.

Legislative history

New bill.

Fiscal implications

None

Effective date

Immediately and shall apply to all actions and proceedings commenced on or after such date where, as of such date a trial of the issues has not yet commenced.