Judge Upholds New York Anti-Fraud Rule

His ruling was immediately hailed by insurers who had submitted a friend of the court brief defending the regulations.

In their papers the insurers had argued that in 180 days dishonest medical mills are able to generate "piles of medical bills" on behalf of conspirators in phony accidents who claim to be "cured" after 180 days. Insurers face a deluge of bills at that point, with only 30 days to pay a bill or deny a claim, they contended.

Carriers that deny claims, but lose the case in arbitration, face paying plaintiffs' legal fees and interest penalties under New York law. The brief quoted a comment from Insurance Superintendent Gregory Serio–"How do you review and track hundreds of tests and treatments six months after the fact?"

Judge Wetzel found that Mr. Serio acted within his authority in putting through the new regulation. It was stayed while the judge reviewed its legality.

He noted Mr. Serio's assertion that the change was necessitated by a dramatic increase in fraudulent claims which have "skyrocketed from 489 reported cases in 1992 to 12,372 cases in the year 2000.

The judge said he was unpersuaded by arguments that "asking a supplier to bill within 45 days rises to the level of ?irrational or unreasonable'" especially in view of a prior court opinion calling for deference to Mr. Serio's expertise.