Insurers Urge Court: Don't Halt Fraud Rule

By Daniel Hays

NU Online News Service, March 8, 11:47 a.m.EST?An attorney for three insurance trade groups haswarned an appeals court panel that that millions of dollars will belost to fraud if a new New York State regulation aimed at haltingphony auto injury claims is blocked.

The arguments were made in a friend of court brief filed by theNational Association of Independent Insurers, American InsuranceAssociation and New York Insurance Association in support of theNew York Insurance Department Regulation 68.

On Feb. 21, Appellate Division First Department Judge DavidSachs issued a stay of Regulation 68 at the request of the New YorkState Trial Lawyers Association, pending a hearing by the fullAppellate Division to decide if a permanent stay of the regulationshould be issued while the case is on appeal.

The trade group's brief was filed with the Appellate Division onMonday by their attorney John M. Aerni.

The regulation at issue would reduce the time to give notice ofan injury claim from 90 to 30 days and cut the time limit forsubmitting medical bills from 180 days to 45 days.

According to insurers, under current regulations, fraudulentmedical facilities will, at the end of 180 days, submit a stack ofphony bills for thousands of dollars on behalf of conspiratorswhose injuries are "cured." Insurers are then required to pay thebills or deny the claims within 30 days.

In arguing against papers submitted by trial lawyers and medicalproviders, Mr. Aerni's brief said that they "appear to contend intheir motion for a stay that no-fault [auto insurance] fraud is avictimless crime.

"They say that ?no harm will ensue' if this court grants astay..But nothing could be further from the truth."

The brief cited Insurance Research Council findings thatPersonal Injury Protection claims have seen a 79 percent increaseper insured car since 1995 in New York.

It cited IRC estimates that PIP claims will cost the average NewYork driver $124 this year, or more than $1 billion for all NewYork drivers.

An actuarial study, the brief said, has found that if the newregulation were in effect, PIP premiums would be reduced by 12 to13 percent.

A ruling in the case is expected by the end of the month.