NU Online News Service, Feb. 8, 12:22 p.m. EST

Insurance industry representatives were optimistic that some type of action will be taken this year to remedy flaws in New York's no-fault auto insurance system after a State Senate Insurance Committee hearing.

The hearing was held Thursday, days after Assemblyman Joseph Morelle, D- Irondequoit, chairman of the Assembly Insurance Committee, held a roundtable discussion on the no-fault system.

"There seems to be general consensus that there needs to be reform," Howard Goldblatt, director of government relations for the Coalition Against Insurance Fraud, said about the Senate hearing. "Even the trial lawyers spoke somewhat favorably about, for instance, an anti-runner law. Whether that means anything, we shall see."

Runners are individuals who solicit persons to take part in phony auto accident claims' schemes.

Outlining the problem in the state, the Property Casualty Insurers Association of America (PCI) said in its testimony that no-fault auto insurance fraud is estimated to have added almost $229 million in costs to the insurance system.

"We are urging the Legislature to put responsible citizens first and take action this year to curtail the actions of unethical medical providers and collections attorneys who are abusing the system," Paul Blume, senior vice president, state government affairs for PCI, testified.

"As a result of overutilization of medical services and a growing number of provider-initiated lawsuits in New York City, some drivers are paying nearly four times more than the state average and almost five times more than drivers in Albany for no-fault coverage," said Mr. Blume.

Gary Henning, Northeast Region assistant vice president for the American Insurance Association (AIA), said in testimony that plaintiffs' lawyers, particularly in New York City, are clogging the courts with no-fault cases.

Citing Insurance Information Institute figures, he said approximately one-third of cases in New York City courts are no-fault cases, and cases brought in 2009 received 2011 court dates.

The Senate Insurance Committee consists of 18 senators; however, only three members–Senator Neil Breslin, D-Bethlehem, chairman of the committee; Senator Jim Seward, R-Oneonta, the ranking minority member; and Senator Craig Johnson, D-Nassau–attended the Thursday hearing.

Ellen Melchionni, president of the New York Insurance Association (NYIA), noted that the Senate was not in session when the hearing took place.

She agreed with Mr. Goldblatt that there is consensus around some areas of reform. She said there is a chance for passing reforms such as tighter decertification laws for medical providers convicted of fraud and an anti-runner law.

But she noted the industry has been told it has to give a bit as well. Trial lawyers, for example, are pushing to loosen the verbal threshold for a claim to go out of the no-fault system and qualify as a serious injury, Ms. Melchionni said.

Asked whether the Senate committee seemed receptive to the industry's message, Ms. Melchionni said the senators were not necessarily receptive to the message, but they "recognized the numbers."

Any action, she said, will likely come in the form of a balanced approach.

Ms. Melchionni said she would like to see some form of preauthorization for expensive tests for non-emergency diagnostic treatments, similar to what is done in workers' compensation.

As for the next steps in New York, Ms. Melchionni said she believes there has been talk internally about the Senate, Assembly, Insurance Department and Governor's Office putting together a group to discuss ways to amend and improve the no-fault system.

Sen. Breslin did not return a call for comment on the hearing.

Special Reports /

Insurers See Hope For N.Y. No-Fault Changes After Hearing

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