Vowing vigilance “in protecting the pocketbooks of consumers,” New York insurance regulators are proposing revised rules to govern no-fault automobile insurance in the state.

James J. Wrynn

New York Insurance Superintendent James J. Wrynn announced Nov. 24 that following “extensive consultation with all stakeholders,” the state will make reforms to help reduce fraud and abuse and help make the no-fault system “more user friendly.”

The revised regulation would modify prescribed forms to require additional information, helping to ensure claims paid are medically necessary, Wrynn’s office said. This would also reduce the need for additional verification by an insurer, thereby speeding up claims processing and legitimate payments to consumers.

Insurers would have greater latitude to deny health services that are not provided or are not billed in compliance with the applicable fee schedule, reducing payment of fraudulent claims and instances of overbilling.

Another change to the regulation would address fraud by simplifying procedures required for insurers to suspend all payments for claims, submitted either by the owner or owners of medical clinics, if fraud is suspected while an investigation of the clinics’ licensing status is conducted.

Wrynn said that there has been an “explosion” of filings in the courts of disputed no-fault claims by health service providers, overwhelming courtrooms and resulting in long delays in the payment of claims.

Updating a 1974 law

“Especially in these difficult economic times, we have to be vigilant in protecting the pocketbooks of consumers,” Wrynn said in a statement. “New Yorkers should not have to pay a fraud and abuse tax in their auto insurance premiums. The cost of each no-fault claim has gone up by more than half in the past five years, and all New Yorkers with auto insurance are paying that tab.”

No-fault insurance allows victims of an automobile accident to collect directly from their insurance company for medical and hospital expenses and lost wages, regardless of who was at fault. The law implementing New York’s no-fault law, Regulation 68, was created in 1974.

Wrynn said the proposed changes would be the first significant revision to that law since 2002.

“Protecting consumers means stopping those who would exploit the system for personal gain and unnecessarily drive up costs for all New Yorkers,” he said. “No-fault reform is desperately needed, and this proposed regulatory reform is a step toward that goal.”

Help for the consumer

The New York State Insurance Department said that other provisions in the revised regulation would aid policyholders in that insurers would have to schedule requested medical exams to not overly burden the consumer. For example, multiple exams may not be scheduled on the same day and they may not be scheduled in “geographically inconvenient locations,” the department said.

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.

Wrynn added that there is also action by New York legislators required under the proposed changes. These actions include providing tools to better police improper activities by health providers and claimants and a mechanism to prevent unscrupulous individuals and providers from flooding the system with multiple claims, taking advantage of a stipulation that claims not denied within 30 days must be paid.

New York regulators are seeking additional feedback on the proposed changes before the formal regulatory approval process begins, which includes a set public comment period.

Any comments on the draft must be sent to the New York State Insurance Department by mail or e-mail by Jan. 8, 2010.