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Mar 03

Seward’s bill aims to reduce fraud, costs in N.Y. no-fault system

A New York senator introduced a bill to “enact comprehensive reforms to reduce fraud, abuse and the associated costs in the New York no-fault system.”
James Seward, New York senator

James Seward

Sen. James Seward of the 51st District and chairman of the New York State Senate Insurance Committee proposed in S2186 changing the 30-day threshold for insurers to pay out on claims and reducing over-billing on no-fault insurance claims, among other things.

Coverage providers now pay accumulated interest on claims if they remain unpaid for 30 days, and any claim that goes past the time limit unpaid cannot be denied by the insurer. S2816 suggests keeping the interest detail, but would allow insurers more options for recourse in the event that they do not pay out within 30 days of the filing.

No-fault fraud costs New Yorkers more than $241 million in auto insurance premiums, according to Seward.

The bill also calls for treatment guidelines for the workers compensation system, which are a “valuable tool” in preventing overuse of “unnecessary” medical treatments. The bill also would prohibit insurers from paying any charge which exceeds or is not provided for under the applicable fee schedule.

“New York’s no fault system is plagued by fraud and abuse which is adding significant costs to auto premiums in New York and a major contributing factor making New Yorkers pay among the highest auto insurance premiums in the nation,” according to the bill.

About 20% of no-fault auto insurance claims closed in 2010 appear to have elements of fraud in the New York City area, according to a recent Insurance Research Council study.

The average PIP claim cost rose 60.4% in New York from 2004 through the second quarter 2010, nearly 42 points faster than the 18.6% growth rate in the Consumer Price Index cost of medical goods and services found in the region, the bill indicated.

“In order to address this rampant fraud and abuse problem and reduce no-fault costs, comprehensive reform is necessary,” the bill stated. “This bill includes a number of important reforms that will give insurers the tools that they need to fight fraud and abuse and reduce no-fault costs.”

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