NU Online News Service, Nov. 8, 3:43 p.m. EST

Proposed increases of 30 percent or more for certain fees by the New York State Workers' Compensation Board (WCB) could have "unintended negative consequences for the state's no-fault automobile system," the Property Casualty Insurers Association of America (PCI) said.

The fee hikes could also lead to more fraud and abuse, a problem already plaguing the no-fault system, PCI said in a letter to the WCB.

The WCB has proposed a 30 percent increase in evaluation and management fees and changes to the way chiropractic services are billed which will result in increases of between 30-42 percent, PCI said.

PCI state officials said that such increases would impact auto insurance rates.

"Although some updating of the workers' compensation fee schedule may be warranted, the proposed changes could lead to significant cost increases for motorists," said Kristina Baldwin, assistant vice president for PCI.

Moreover, she said, in addition to potentially increasing auto insurance costs, increasing fees required to be paid to medical care providers may make New York's no-fault system even more attractive as a target for fraud, "thereby exacerbating the problems plaguing the system," she said.

The letter points out that medical claim costs have skyrocketed for auto insurance.

It notes that since the end of 2004, the average amount paid for medical claims related to auto accidents in New York rose by 60.4 percent, 31.2 points faster that the 29.2 growth rate of all other no-fault states and nearly 42 points faster than the 18.6 percent growth rate in the consumer price index cost of medical goods and services found in the region.

"We attribute much of the disparity in no-fault medical costs to fraud," Ms. Baldwin said.

"Related to the fraud problem is our concern that the no-fault system does not have the variety of cost containment tools found in the workers' compensation system to guard against overutilization, which is a highly prevalent problem in the no-fault system," she said.

"We are urging the board to take into consideration that the dramatic increases in the workers' compensation fee schedule may have a real impact on no-fault costs," she added.

Special Reports /

N.Y. WCB Fee Hike Proposal Could Impact No-Fault System

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