Trial Lawyers Again Halt N.Y. Anti-Fraud Reg.

By Daniel Hays

NU Online News Service, Feb. 22, 10:36 a.m. EST?Court action by trial lawyers has again blocked the New York State Insurance Department's use of a claim reporting regulation that was developed to help curb auto injury fraud in New York, which totals $1 billion-a-year.

Appellate Division First Department Judge David Sachs yesterday issued a stay of Regulation 68 pending a hearing by the full Appellate Division to decide if a permanent stay of the regulation should be issued while the case is on appeal.

The regulation at issue would reduce the time to give notice of a claim from 90 to 30 days and cut the time limit for submitting medical bills from 180 days to 45 days.

According to insurers, medical mills at the end of 180 days will submit a stack of phony bills for thousands of dollars on behalf of conspirators whose injuries are "cured." Insurers are then required to pay the bills or deny the claims in 30 days.

Insurers complain that in addition to having only a short time for investigation, if a claim denial is not upheld in arbitration they face sanctions, including having to pay attorneys fees and interest penalties in addition to the claim.

The stay from Judge Sachs was obtained the day after a challenge to the regulation by the New York State Trial Lawyers and doctors' groups was rejected by a lower court judge.

A decision on whether to continue the stay is expected by mid-to-late March, according to the American Insurance Association, which originally filed a friend-of-the-court brief in support of the regulation.

Michael Moran, a spokesman for the Washington-based AIA, called the latest court action "an unfortunate delay in the implementation of this important regulation." He said the group believes that given the strong language in the decision by the lower court judge, "we believe it will be a temporary delay."

The decision by Supreme Court Justice William Wetzel, a county level judge, on Tuesday found that it was not irrational or unreasonable to ask a supplier to bill within 45 days.

He noted a prior decision by the Court of Appeals, New York's highest court, which found that deference should be given to the insurance superintendent's expertise concerning the insurance industry, "unless it runs counter to the clear wording" of the law.

Trial lawyers in a previous court tilt were able to topple the regulation on procedural grounds. Judge Wetzel in his decision found that Superintendent Gregory Serio this time had responded to "each and every one of the" Administrative Procedure Act issues involving hearings and comment periods.

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Trial Lawyers Again Halt N.Y. Anti-Fraud Reg.

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