BILL NUMBER: S5353
SPONSOR: COMRIE
 
TITLE OF BILL:
An act to amend the insurance law, in relation to enacting the "automo-
bile insurance fraud prevention act of 2025"
 
PURPOSE OR GENERAL IDEA OF BILL:
To reform the automobile no-fault insurance system.
 
SUMMARY OF PROVISIONS:
Section 1. This act shall be known and may be cited as the "Automobile
Insurance Fraud prevention Act of 2021."
Section 2. Fair claims settlement. (2) The failure of an insurer to
issue a denial within 30 days of it becoming overdue shall not preclude
the insurer or self-insurer from presenting evidence to establish that
(A) the services or items billed for in a claim were not provided; (B)
certain portions of the charges for the charges for. services in a claim
exceed, by more than ten percent, the charges permissible under the fee
schedules prepared and established pursuant to subsections (a) and (b)
of section five thousand one hundred eight of this article, or (c) the
event from which the claim arose was based upon an intent to defraud an
insurer or self-insurer Nothing contained in this paragraph shall
preclude an insurer from contesting the existence of applicable insur-
ance coverage for the loss claimed.
(3) An insurer may deny a claim on the basis of lack of medical necessi-
ty not later than sixty days after the date upon which the claim became
overdue. However any denial of a claim which is based on lack of medical
necessity -shall be based upon review by a licensed provider who typi-
cally provides the health care service or treatment under review. Copies
of all reports prepared by a health care provider who examines a claim-
ant must provide the claimant with copies of those reports within thirty
days
(c) (2) The commencement of a court proceeding or the submission of a
dispute to arbitration shall not preclude a claimant from electing to
submit other disputes arising from the same instance of use of operation
of a motor vehicle to the alternate forum.
(3) Requires arbitrators to follow and apply substantive law. A master
arbitrator, after having modified or vacated an award by an arbitrator,
shall offer the parties to opportunity to submit written briefs. The
grounds for vacating or modifying an arbitrator's award by a master
arbitrator shall also include factual, legal and procedural errors.
(c) with respect to an action for serious personal injury, the award of
an arbitrator or master arbitrator, other than an award pertaining to
the existence of insurance coverage, shall not constitute collateral
estoppels of the issues arbitrated
(d) With respect to an arbitration or an action commenced in court
initiated to obtain payment for an overdue claim for medical benefits
prima facie entitlement to benefits shall be established by a verifica-
tion by the claimant setting forth that: (1) the claimant was licensed
to render the services or that the items were provided.; (2) the
services were rendered or items supplied by the claimant. (3) the
services were medically necessary or for services or supplies provided
pursuant to a prescription, were properly supported by a prescription:
(4) the claim- ant received an assignment of benefits from the injured
party or the guardian or parent of the injured party; (5) the claimant
authorized the particular attorney or law firm to commence the suit.
(e) With respect to an action commenced in court to obtain benefits
pursuant to this article: (1) a rebuttable presumption of admissibility
attaches to claims forms, denial of claim forms, verification requests
and responses, when such are accompanied by an affidavit when such forms
are business records according to rule forty-five hundred eighteen of
the CPLR.
(2) A rebuttable evidentiary presumption shall attach to the documents
referenced in paragraph one that such are valid.
(3) A rebuttable evidentiary presumption shall attach to the documents
referenced in paragraph one that were mailed to the address contained
thereon, on the date contained thereon.
(4) A rebuttable evidentiary presumption shall attach to proofs of
payment that such payments were made by the insurer and received by the
plaintiff.
(5) In matters where the insurer's denial is based upon an alleged lack
of medical necessity, a rebuttable presumption of admissibility attaches
to medical reports of the claimant's treating providers"
(6) Nothing in this section shall preclude a party from offering
evidence at trial to rebut any of the aforementioned prescriptions nor
will an insurer be precluded from offering evidence at trial on any
meritorious, non-precluded defense to payment of the benefits,
(7) The deposition of any person may be used by any party without the
necessity of showing unavailability or special circumstances, subject to
the right of any party pursuant to section 3103 of the CPLR to prevent
abuse, provided that the party against whom the evidence is offered had
been afforded the opportunity to participate and questions the witness
at the deposition.
3. section 5109 of the insurance law, as added by chapter 423 of the
laws of 2005 is amended.
§ 5109. Unauthorized providers of health services The superintendent of
insurance shall be regulation, promulgate standards and procedures for
investigating and suspending or removing the authorization for providers
of health services to demand or request payment as specified in para-
graph one of subsection (a) of section 5102 of this article. As used in
this section "health services" means services, supplies, therapies or
other treatment specified in subparagraph (1),
(ii) or (iv) of paragraph one of subsection (a) of section 5102 of this
article.
(b) Following a hearing conducted pursuant to the procedure and regu-
lation promulgated pursuant to this section, the superintendent may
prohibit a provider of health services from demanding or requesting
payment for health services under this article for a period not exceed-
ing three years if the superintendent determines, after notice and hear-
ing that the provider of health services: (1) has admitted to or been
found guilty of professional misconduct in connection with health
services rendered under Article 51; (2) has exceeded the limits of his
or her professional competence in rendering medical care under this
article or has knowingly made a false statement or representation as to
the material fact in any medical report, (3) solicited or employed
another person to solicit for the provider or another person or entity,
professional treatment, examination or care of a person in connection
with any claim under Article 51, (4) refused to appear before, or answer
any question upon request of the superintendent, or refused to produce
any relevant information. concerning the provider's conduct in
connection with health services rendered under Article 51, (5) engaged
in a pattern of billing for, health services alleged to have been
rendered under Article 51 when the health services were not rendered,
provided that this shall not be construed to apply to good faith
disputes regarding the appropriateness of a particular coding to
describe a health care service, (6) utilized unlicensed person to render
health services under Article 51, (7) utilized licensed persons to
render health services, when rendering the health services is beyond the
authorized scope of a person's license,unlawfully ceded ownership, oper-
ation or control of a business entity that provides health services to a
person not licensed to render the health services for which the entity
is legally authorized to provide, unless otherwise permitted by law, (9)
committed a fraudulent insurance act as defined in penal Law § 176.05,
(10) has been convicted of a crime involving fraudulent or dishonest
practices,
(11) has, after warning by the superintendent, engaged in a pattern of
unlawfully attempting to collect. payment directly from the patient or
eligible person for services rendered under this article when such
attempts violate the terms of an enforceable assignment of benefits.
(c) The superintendent shall by regulation develop due process proce-
dures to assure a health provider accused under this section has appro-
priate notice, an opportunity for a fair hearing and appeal prior to a
determination that the health provider may not bill for services under
this section. A provider of health services shall not demand. or request
payment for any health service under this article that are rendered
during the term of the prohibition ordered by the superintendent pursu-
ant to subsection (b) of this section The prohibition ordered by the
superintendent may be a defense in any action by the provider of health.
services for payment for health services rendered pursuant to this arti-
cle at any time after such provider has been prohibited from demanding
or requesting payment for such health services in connection with any
claim under this article.
(d) Requires the Superintendent to maintain a database containing a list
of providers of health services that the Superintendent has prohibited
from demanding. or requesting payment for health services rendered under
Article 51, and to make this information available to the public.
(e) The Superintendent may levy a civil penalty not exceeding $50,000 on
any provider of health services that the Superintendent prohibits from
demanding or requesting payment. for health services pursuant to Insur-
ance Law § 5(b) However, any civil penalty imposed for a fraudulent
insurance act must be levied pursuant to Article 4 of the Insurance law"
A determination of the Superintendent pursuant to subsection (b) of this
section shall not be binding upon the commissioner of health or the
commission of education in a professional discipline proceeding relating
to the same conduct.
§ 4. Subsection (d) of section 5102 of the insurance law, as amended by
chapter 955 of the laws of 1984 is amended to add to the definition of
"serious injury" a complete tear or rupture of a nerve, tendon, liga-
ment, cartilage or muscle; a tear, rupture or impingement of a nerve,
tendon, ligament, cartilage or muscle which results in a significant
impairment of a body organ, member, function. or system"
§ 5. Subsection (j) of section 3420 of the insurance law is amended by
adding a new paragraph 4.
(4) The term "covered person" as used in this article shall mean a
pedestrian injured through the use or operation of, or any owner, opera-
tor or occupant of, a motor vehicle which has in effect the financial
security required by article six or eight of the vehicle and traffic law
or which is referred to in subdivision two of section three hundred
twenty-one of such law; or any other person entitled to first party
benefits, For the purpose of this article, "covered person" shall also
include any person injured as the result of a staged, planned or inten-
tional accident, provided that such person is not a perpetrator of or a
knowing participant in the staging or planning of the accident.
§ 6. Section 5202 of the insurance law is amended by adding a new
subsection (m)
(m) The term "covered person" as used in this article shall mean a
pedestrian injured through the use or operation of, or any owner, opera-
tor or' occupant of, a motor vehicle which has in effect the financial
security required by article six or eight of the vehicle and traffic law
or which is referred to in subdivision two of section three hundred
twenty-one of such law; or any other person entitled to first party
benefits For the purpose of this article, "covered person" shall also
include any person injured as the result of a staged, planned or inten-
tional accident, provided that such person is not a perpetrator of or a
knowing participant in the staging or planning of the accident.
§ 7. Effective Date.
 
JUSTIFICATION:
In the 1970's, it appeared as though 'no-fault automobile insurance was
a genuinely superior policy innovation that would displace convention
tort-based automobile insurance regimes. The central idea of a no-fault
system is that, rather than seek recovery against another driver under
conventional principles of tort law, an insured automobile-accident
victim could simply recover the costs of the accident from his or her
our insurance company. More than 40 years later, no fault had lost much
of its popularity among insurers and consumer groups.
There is absolute correlation between instances of fraud and increased
automobile insurance premiums and healthcare .costs forced on consumers.
These abuses cost insurers tens to hundreds of millions of dollars,
which ultimately result in substantially increased premiums for New
York's consumers. This piece of legislation will combat fraud with two
significant changes to current law; First, it will amend the insurance
Law with respect to preclusion of insurance company defenses. Currently,
an insurer that does not deny a claim. within 30-days is precluded from
asserting a defense to payment based on lack of medical necessity or
other grounds, including fraud, and must pay that claim. This encourages
unscrupulous individuals and providers to flood the system with multiple
claims, knowing claims not denied within 30-days will have to be paid
Investigations into fraud cases take much longer than 30-days and often
require additional time to determine the appropriate course of action.
Therefore, this legislation permits the insurer to issue a denial and
assert a defense after the 30-day period
Secondly, this bill would provide the Superintendent of Insurance with
the authority to terminate no-fault payments to deceitful providers of
medical care." For years, some professional service corporations have
abused the no-fault system by intentionally-staging accidents and bill-
ing insurers for health services that were unnecessary or never
rendered. In some instances, individuals have been known to actually
purchase the names, signatures and licenses of currently-licensed physi-
cians in order to fraudulently bill the insurers. Current law attempts
to curb such abuses by requiring the Department of Health and the State
Education Department to investigate providers who engage in misconduct.
However, implementation of this specific section is deemed to be too
diffuse to be effective, thus, in an effort to rein in this form of
fraud, this legislation would authorize the Superintendent of Insurance
to prohibit a provider from demanding or requesting payment for services
rendered under Article 51 for a period not exceeding 3-years if a hear-
ing determines that provider participated in illicit behavior. This
bill would not preclude the Commissioners of Health or Education from
taking appropriate action under any other provision of law. Moreover,
the Superintendent will maintain a database of these individuals which.
will be publicly available.
Additionally, the process by which no-fault claims are tried civilly
results in exorbitant costs to taxpayers in the State of New York and is
cumbersome to claimants. This legislation would promote the use of arbi-
tration. in no-fault cases and require arbitrators to apply substantive
law, and would offer parties to arbitration the opportunity to submit
written briefs. In personal injury cases other than an award pertaining
to the issue of the existence of insurance coverage, the arbitrator's
award shall not constitute collateral estoppel of the issue.
 
PRIOR LEGISLATIVE HISTORY:
2023-2024- S3590
2021-2022- S4714
2018-2017- S2802
2016/2015- S791
2014/2013- S.1151
2011/2012- A.3787/S.3444
2009/2010- A.11596/S.8414
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately; provided that: (a) section two
of this act shall apply to benefits initiated on or after the one
hundred eightieth day after this act shall have become a law and (b)
sections three, five, and six of this act shall take effect on the one
hundred eightieth day after it shall become a law provided that the
superintendent of financial services shall immediately promulgate rules
and regulations pursuant to section 5109 of the insurance law as amended
by section three of this act and sections five and six of this act shall
apply to all new policies and policies that are renewed or modified
after such one hundred eightieth day.

Statutes affected:
S5353: 5109 insurance law, 5102 insurance law, 5102(d) insurance law, 3420 insurance law, 3420(j) insurance law, 5202 insurance law