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 has warned an appeals court panel that that millions of dollars will be lost to fraud if a new New York State regulation aimed at halting phony auto injury claims is blocked.

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

On Feb. 21, Appellate Division First Department Judge David Sachs issued a stay of Regulation 68 at the request of the New York State Trial Lawyers Association, 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 trade group's brief was filed with the Appellate Division on Monday by their attorney John M. Aerni.

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

According to insurers, under current regulations, fraudulent medical facilities will, at the end of 180 days, 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 within 30 days.

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

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

The brief cited Insurance Research Council findings that Personal Injury Protection claims have seen a 79 percent increase per insured car since 1995 in New York.

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

An actuarial study, the brief said, has found that if the new regulation were in effect, PIP premiums would be reduced by 12 to 13 percent.

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

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Insurers Urge Court: Don't Halt Fraud Rule

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