Relates to limits on certain supplementary insurance

Summary of provisions

This bill would change the required amount of supplementary uninsured/underinsured motorist (SUM) coverage from a maximum amount that is the same as bodily injury to a minimum amount that is the same as bodily injury. In addition, this bill would automatically require the purchase of SUM coverage but also give the insured the option decline SUM coverage or to purchase lower amounts than the statutory minimum. The insurer or agent would be required to disclose to the insured what SUM coverage is and how much the insured may purchase. If the insured declines to purchase SUM coverage, he or she must acknowledge the declination in writing.

In addition, this bill would allow the Superintendent, after notice and hearing, to prohibit a fraudulent provider of durable medical equipment from demanding or requesting payment under the no-fault law.

Justification

This bill would amend the insurance law in relation to unknowingly waiving supplementary insurance coverage. Supplementary insurance, also known as uninsured or underinsured motorist insurance, protects motorists who suffer severe and devastating injuries in accidents with drivers who carry inadequate or no insurance. Few drivers are aware of the value of supplementary insurance and insurance companies rarely offer supplementary insurance coverage above the statutory minimum This bill will ensure that drivers are fully protected by supplementary insurance, equal to the bodily injury liability insurance coverage they select, unless they affirmatively elect lower coverage.

The bill also allows the superintendent of financial services to establish a mechanism to decertify providers of durable medical equipment from the no-fault system if they have engaged in fraudulent activities or billing practices. This is similar to provisions of the insurance law enacted in 2005 to decertify physicians who engage in no-fault fraud. In recent years an increasing portion of the no-fault fraud has been observed in the area of durable medical equipment (DMF). In many instances the DME wholesaler is involved in the scam and the provider is committing fraud in conjunction with the medical supply companies. Many of these DME frauds occur in the following manner.

Many items are subject to the fee schedule. Items not subject to the fee schedule are billed at a rate of 50% profit. For example, TENS and EMS machines (which emit electrical impulses) perform nearly the same functions. Until last year TENS machines were not subject to the fee schedule, so TENS and EMS billing was relatively equal. However, last year TENS machines were put on the fee schedule. It is no coincidence that no-fault fraudsters are reducing TENS billings and EMS billings have dramatically increased so that those fraudsters can fabricate a price and then add in the 50% profit on top.

As is readily seen by these cases, this area of no-fault fraud is rampant and growing at a tremendous rate producing the fastest and most cash profit of any fraud. Since January 1, 2009, there have been 739 new DME providers registered in NYS, There were 340 new facilities registered in Brooklyn alone but only 10 in Buffalo. In one especially egregious case. one patient's DME billing included 16 different items totaling over $6,000 including a luxury turbo bath spa, an infrared heat wand, a wand massager, two different post-op knee braces. a back support seat, a TENS belt and others. The patient reports that they never used any of the items which were billed for.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act will take effect on the 180th day after it shall have become a law.