N.Y. Proposes Rule Changes To Combat Auto Injury Fraud

It has also led to payment of unnecessary claims, "undermining the very purpose of the no-fault system," the department noted.

One proposed revision to Regulation 68 would "simplify procedures required for insurers to suspend all payments for claims submitted by the owner or owners of medical clinics suspected of fraud while an investigation of the clinics' licensing status is underway," the department said.

Paul Magaril, regional manager for the Property Casualty Insurers Association of America (PCI) said PCI research indicates fraud is costing New York's insured drivers an estimated $1.2 million per day with problems most acute in New York City driven by health services over-utilization. The organization looks forward to reviewing and commenting on the proposed regulatory change.

Howard Goldblatt, director of government relations for the Coalition Against Insurance Fraud said that "the ability to stop paying a clinic that is being investigated will clearly save everyone from claims being paid while an investigation is going on."

Another proposed revision would modify prescribed forms to require more information, helping to ensure that claims paid are medically necessary, according to the department.

It added that more information on the forms would reduce the need for additional verification by the insurer, "thus hastening insurer claims processing and legitimate payments to consumers,"

Further, the department said insurers would have greater latitude to deny health services that are not provided or are not billed in compliance with the applicable fee schedule, and thus the payment of fraudulent claims and instances of overbilling would be reduced.

Ellen Melchionni, president of the New York Insurance Association (NYIA) said the state has had a growing problem with unscrupulous medical providers. Making providers show treatment is medically necessary, rather than just proving that there was a bill, will help curb fraudulent activity she said.

Protections for insureds would be included in the regulation as well, with one proposed revision requiring insurers to schedule medical examinations they request in a way that would not overly burden the insured, the department explained.

The proposed regulation would also raise the maximum attorney fee to reflect inflation and to help ensure adequate representation for applicants and assignees, and eliminate the minimum attorney fee to encourage the consolidation of claims in arbitration and litigation, according to the department.

Superintendent Wrynn also called for legislative action on top of the regulatory changes. He said he would like to see better tools to police improper activities by health providers and claimants.

He also cited a current provision that mandates if a claim is not denied in 30 days, it must be paid even if it is found to be fraudulent.

"That encourages unscrupulous individuals and providers to flood the system with multiple claims, knowing any claims not denied within 30 days will have to be paid," Superintendent Wrynn said. "Legislation to curtail such abuses would go a long way to keeping no-fault costs down," he suggested.

Mr. Goldblatt also said the department's effort "doesn't diminish the need for the legislature to tighten its auto insurance fraud efforts in ways we've been talking about for the last number of years."

He cited the need for an anti-runner law, and targeting of fraud as a specific crime as examples.