A04265 Summary:

BILL NOA04265
 
SAME ASNo same as
 
SPONSORBarclay (MS)
 
COSPNSRKolb, Giglio, McKevitt, Blankenbush, Tenney, Montesano, Walter, Oaks, Corwin
 
MLTSPNSRButler, Crouch, Curran, DiPietro, Finch, McDonough, McLaughlin, Palmesano, Thiele
 
Add SS5110 & 405-a, amd SS5102, 5103, 5108, 5106, 5303, Ins L; amd SS176.00, 176.05, 176.15, 176.20, 176.25, 176.30 & 176.35, add SS176.36, 176.66 & 176.37, Pen L; amd S848-m, Exec L
 
Enacts the New York automobile insurance fraud and premium reduction act; provides that this act is aimed at reducing insurance fraud and thus lowering the cost of insurance premiums; provides a provision for compensation to a person that reports insurance fraud to the authorities; further provides that this act also increases the penalty for insurance fraud; appropriates $3,100,000 therefor.
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A04265 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A4265
 
SPONSOR: Barclay (MS)
  TITLE OF BILL: An act to amend the insurance law, the penal law and the executive law, in relation to establishing the New York automobile insurance fraud and premium reduction act; and making an appropriation therefor   PURPOSE OR GENERAL IDEA OF BILL: To reduce the cost of automobile insurance.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 is the short title. Section 2 adds a new section 5109 to the Insurance Law, reinstating the no-fault managed care option that was allowed to expire in 1998. Section 3 amends Insurance Law section 5102(a) (1) to require the estab- lishment of medical treatment and diagnostic testing protocols to be employed in the evaluation and treatment of injuries sustained in auto- mobile accidents. Pre-certification of treatments, diagnostic tests and the purchase of durable medical equipment may be required, except within 10 days of an accident giving rise to injuries. Section 4 amends Insurance Law section 5103(d) to establish a 30 day window for the initial filing of a notice of a no-fault claim, unless a reasonable justification for delay exists due to the nature of the inju- ry. Section 5 adds Insurance Law subsection 5108(d) to establish a 45 day period from the date that a service was rendered for which medical provider claims must be submitted for payment. Section 6 amends Insurance Law subsections 5106 (a), (b) and (c) to increase, from 30 to 45 days, the time period within which no-fault payments are deemed timely and to provide that the failure to issue a denial of claim within this time period does not preclude the raising of a defense to the claim where fraud is suspected. Further, arbitration (rather than a choice between arbitration or litigation) is established as the exclusive remedy for claim disputes. Section 7 amends Insurance Law section 5303 (c) to remove the exception that presently exists for liability insurance (and as applied, to include no-fault) from the requirement that assigned risk rates must be self supporting, thereby making all assigned risk rates self supporting. Section 8 adds a new section 405-a to the Insurance Law, creating a monetary incentive of between 15 and 25 percent of the amount recovered (up to $25,000) for persons who report suspected insurance fraud to the law enforcement authorities. Sections 9 - 17 amend and add new sections to the Penal Law to define as a criminal act fraudulently procuring persons to commit insurance fraud (runners), re-define the meaning of a fraudulent insurance act, lower the monetary thresholds that define insurance fraud in the first through fourth degrees, increase penalties for insurance fraud violations and establish the crimes of aggravated insurance fraud in the second and first degrees. Section 18 amends Executive Law section 846-m(2) (a) to specify that beginning January 1, 2006, additional monies received by the New York Motor Vehicle Theft and Insurance Fraud Prevention Board shall be used to support the efforts of local district attorneys to detect, identify and prosecute no-fault insurance fraud. Section 19 requires the Superintendent of Insurance to study and evalu- ate the impact and effect of NYAIFPRA on auto insurance costs. Upon conclusion of this evaluation, the Superintendent must recommend appro- priate one-time no-fault premium reductions for every insurer, by rating territory, reflective of the reduced costs as a result of NYAIFPRA's enactment. These recommendations will be binding on insurers unless it can be demonstrated, based on sound underwriting and actuarial princi- ples, that a reduction would result in underwriting losses. Section 20 appropriates $3.1 million to the Motor Vehicle Theft and Insurance Fraud Prevention Fund in furtherance of the efforts of district attorneys to combat no-fault fraud. Section 21 is a severability clause. Section 22 is the effective date.   EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: Numerous sections of existing law are altered by this act, as described in the summary of specific provisions.   JUSTIFICATION: The frequency and cost of no-fault claims is rising in New York at an alarming rate. According to the Insurance Information Institute, the cumulative no-fault fraud burden on New Yorkers exceeded $813 million from 2005-2010. Estimates indicate that the average personal injury protection (PIP) claim in New York is 23% higher than the U.S. average, at $8,276, with fraud accounting for an average of $321 per vehicle (source: Insurance Information Institute, Fast Track Monitoring System). This figure is only an average. Some parts of New York State experience much higher levels. There has been both a greater frequency and a substantial increase in the cost per claim. Police, district attorneys and insurance fraud authorities agree that the two primary causes for this trend are fraud and over-utilization of services. The result is evident in premiums. No-fault fraud takes many forms. Among the most insidious are staged accidents, falsified accident reporting and fictitious or unnecessary medical treatments, some of which are of a highly questionable nature. NYAIFPRA attacks problems with no-fault from several directions simul- taneously. First, it reinstates the no-fault managed care option, which holds the promise of containing out-of-control medical costs and deliv- ering premium savings for those who opt to utilize it. Second, NYAIFPRA directs the establishment of medical treatment and diagnostic testing protocols to be employed in the evaluation and treatment of injuries sustained in automobile accidents. Coupled with pre-certification requirements for certain treatments and equipment, these provisions are intended to curb over-utilization and fraud in medical treatments. Third, the bill incorporates the substance of recent efforts undertaken by the Insurance Department through the adoption of amendments to regu- lation 68 to address fraud and abuse by establishing reasonable time frames for the notification of a claim and the submission of medical bills to insurers. An exception would be made for reasonably justified delays due to the nature of an injury. Fourth, the bill further enables insurers to lower insurance costs and combat suspected fraud by: Over- turning the effect of the   PRESBYTERIAN HOSPITAL V. MARYLAND case. This change will provide that the failure to issue a denial of claim within a 45 day time period does not preclude the raising of a defense to the claim where fraud is suspected; --Requiring arbitration (rather than a choice between arbitration or litigation) as the exclusive remedy for claim disputes; --attacking the problem of underwriting fraud, believed to be prevalent in Sullivan County and the Catskill region, --creating a whistle-blower incentive for persons to report suspected insurance fraud; and --criminalizing "runners" and enhancing existing insurance fraud penalties. Fifth, the bill eliminates the statutory authority for the "Stewart Formula," which requires voluntary market motorists to subsidize the assigned risk plan, a subsidy that can range up to $400 per policy depending on the carrier. The existence of the formula also creates a perverse disincentive for insurers to write new business in the voluntary market, forcing otherwise insurable motorists into the assigned risk plan. Sixth, NYAIFPRA directs resources to district attorneys, the front line of the battle against no-fault fraud, for prosecution of these crimes. Finally, the bill directly benefits those who purchase auto insurance by requiring insurers to pass on the savings realized as a result of NYAIFPRA.   PRIOR LEGISLATIVE HISTORY: 2001: A.7835 Not considered by the Insurance Committee. 2002: A.7835-A Held in the Insurance Committee. 2003: A.3477 Not considered by the Insurance Committee 2004: A.3477 Held in the Insurance Committee. 2005-2006 A.8249 Held for consideration in Insurance 2007-2008 A.3837 Held for consideration in Insurance 2009-2010 A.2964 - Referred to insurance committee 2011-2012 A.5200 - Held for consideration in Insurance Committee   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: $3.1 million to State, all of which will be channeled to local district attorneys to prosecute no-fault fraud.   EFFECTIVE DATE: This act shall take effect on the ninetieth day after it shall have become a law; provided, however, that the amendments to paragraph (a) of subdivision 2 of section 846-m of the executive law made by section nineteen of this act shall not affect the expiration of such section and shall be deemed to expire therewith.
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A04265 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          4265
 
                               2013-2014 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 1, 2013
                                       ___________
 
        Introduced  by  M.  of  A. BARCLAY, KOLB, GIGLIO, McKEVITT, BLANKENBUSH,
          LOSQUADRO, TENNEY -- Multi-Sponsored by -- M. of  A.  CROUCH,  CURRAN,
          FINCH,  McDONOUGH, McLAUGHLIN, PALMESANO, RABBITT, THIELE -- read once
          and referred to the Committee on Insurance
 
        AN ACT to amend the insurance law, the penal law and the executive  law,

          in  relation  to  establishing the New York automobile insurance fraud
          and premium reduction act; and making an appropriation therefor
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  This act shall be known and may be cited as the "New York
     2  automobile insurance fraud and premium reduction act".
     3    § 2. The insurance law is amended by adding a new section 5110 to read
     4  as follows:
     5    § 5110. Certification of managed care organizations. (a)(1) Any  indi-
     6  vidual  or  group  authorized  to  provide  medical or other health care
     7  services in this state may, directly or through an  authorized  insurer,
     8  make  written  application  to the superintendent to become certified to

     9  provide managed care to injured covered persons under this article.
    10    (2) Certification shall be valid for such period and for such  service
    11  areas  as  the  superintendent  may  prescribe,  unless  sooner revoked,
    12  suspended or amended.
    13    (3) Each application for  certification  shall  be  accompanied  by  a
    14  reasonable  fee  prescribed by the superintendent and a proposed managed
    15  care program detailing its significant features, methods and procedures.
    16    (b) Application for certification shall  be  made  in  such  form  and
    17  manner, and shall set forth such information regarding the proposed plan
    18  of managed care for providing medical and other health care services, as
    19  the superintendent may prescribe, including:

    20    (1) the names and credentials of all individuals or organizations that
    21  will  provide  services  under  the  managed care program, together with
    22  appropriate evidence of compliance with any licensing  or  certification
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04861-01-3

        A. 4265                             2
 
     1  requirements  for  such individuals or organizations to practice in this
     2  state;
     3    (2)  a  description  of  the  times,  places  and  manner of providing
     4  services under the managed care program;

     5    (3) a description of the times, places and manner of  providing  other
     6  related optional services the applicant may wish to provide; and
     7    (4)  a  description  and representative copies of all remuneration and
     8  related arrangements between the managed care organization and  individ-
     9  ual providers of services under the managed care program.
    10    (c)  The superintendent shall certify an applicant, if the superinten-
    11  dent finds that the managed care program:
    12    (1) provides medical and other health care services that meet quality,
    13  continuity and other treatment standards prescribed by  the  superinten-
    14  dent  or  the commissioner of health, in a manner that is timely, effec-
    15  tive and convenient for injured persons;

    16    (2) includes a sufficient number of each category of provider through-
    17  out the proposed service areas to give injured persons  adequate  flexi-
    18  bility  to  choose  an  authorized provider from among those health care
    19  providers who participate in the managed care program;
    20    (3) provides appropriate financial incentives or other  approaches  to
    21  reduce costs and minimize improper utilization without sacrificing qual-
    22  ity of service;
    23    (4)  provides adequate methods of peer review, utilization review, and
    24  dispute resolution, including where applicable, access to  the  external
    25  appeal  process  as  provided  in article forty-nine of this chapter, in
    26  order to: (A) prevent inappropriate or excessive  treatment;  (B)  avoid

    27  conflicts    of  interest; (C) exclude from participation in the program
    28  those providers who violate  reasonable  treatment  standards;  and  (D)
    29  provide for the resolution of medical disputes;
    30    (5)  provides  a timely and accurate method of reporting to the super-
    31  intendent or the commissioner of health as appropriate, necessary infor-
    32  mation regarding medical and health care service cost and utilization to
    33  monitor the effectiveness of the managed care program;
    34    (6) provides a mechanism for an injured  person  to  obtain  treatment
    35  outside of the managed care program if the services are not available or
    36  accessible within the program;
    37    (7) provides for a reasonable and appropriate coordination with anoth-

    38  er  health  care  provider  where  the injured person has been receiving
    39  treatment from another health care provider for  a  previously  existing
    40  condition or injury which has been aggravated by the motor vehicle acci-
    41  dent;
    42    (8)  provides  for  a  mechanism for notification about and transition
    43  from emergency care; and
    44    (9) complies with any other requirement the superintendent  determines
    45  is  necessary  to provide quality medical and other health care services
    46  to injured persons.
    47    (d) The superintendent may certify a health  maintenance  organization
    48  issued a certificate of authority under article forty-four of the public
    49  health  law or licensed under article forty-three of this chapter, if it

    50  meets the requirements of this  section.  The  superintendent  may  also
    51  certify  an  accident and health insurer, including a corporation organ-
    52  ized under article forty-three of this chapter, which has a  participat-
    53  ing or preferred network of providers if such insurer meets the require-
    54  ments  of  this  section.  To the extent a managed care organization has
    55  been reviewed, approved or certified  by  another  state  agency  as  to
    56  accessibility,  quality  or  continuity  of care or for any of the other

        A. 4265                             3
 
     1  matters within the superintendent's  review,  the  superintendent  shall
     2  consider  the  review, approval or certification of another state agency

     3  so as not to  duplicate  those  reviews,  approvals  or  certifications.
     4  However,  nothing in this subsection shall be deemed to limit the super-
     5  intendent's authority to impose and review  additional  requirements  or
     6  standards  above and beyond those imposed by another state agency to the
     7  extent those requirements or standards are necessary or appropriate  for
     8  implementation of this section.
     9    (e)  The  superintendent  shall  refuse  to certify, or may revoke, or
    10  suspend or amend the certification of, any managed care organization, if
    11  the superintendent finds that:
    12    (1) the managed care program for providing services fails to meet  the
    13  requirements of this section; or

    14    (2)  service  under  the managed care program is not being provided in
    15  accordance with its terms as described in the  application  for  certif-
    16  ication.
    17    (f)  For  purposes  of  this  section, the superintendent may consider
    18  whether providers utilized by a managed care organization  or  otherwise
    19  authorized  to  provide  services  under  the contract are authorized to
    20  render medical care in accordance with section thirteen-b of  the  work-
    21  ers' compensation law.
    22    (g)  Utilization  review, quality assurance and peer review activities
    23  pursuant to this section shall be subject to review by  the  superinten-
    24  dent  and  the  commissioner  of health. Findings by the commissioner of

    25  health of professional misconduct, or disciplinary actions  in  relation
    26  thereto,  shall  be reported to the appropriate licensing boards and the
    27  superintendent.
    28    (h) Data generated by or received in connection with these activities,
    29  including written reports, notes or records of any such activities or of
    30  the review thereof, shall be confidential and shall  not  be  disclosed,
    31  except to the extent determined to be necessary by the superintendent or
    32  the  commissioner  of  health.  No data generated by utilization review,
    33  quality assurance or peer review activities pursuant to this section, or
    34  the review thereof, shall be used in any  action,  suit  or  proceeding,
    35  except to the extent determined to be necessary by the superintendent or

    36  the commissioner.
    37    (i)  A  person participating in utilization review, quality assurance,
    38  or peer review activities pursuant to this section shall not be examined
    39  as to any communication made in the course of  such  activities  or  the
    40  findings thereof, nor shall any such person be subject to a civil action
    41  for actions taken or statements made in good faith.
    42    (j) Provided that there is compliance with standards governing managed
    43  care  established  by  the superintendent, no person who participates in
    44  forming any network, collectively negotiating fees, or otherwise  solic-
    45  its  or enters into contracts in a good faith effort, to provide medical
    46  or other health care services on a managed care basis in accordance with

    47  the provisions of this section, shall be subject to antitrust  liability
    48  regarding such participation.
    49    (k) The provisions of this section shall not affect the confidentiali-
    50  ty or admission in evidence of a claimant's medical treatment records.
    51    (l)  The  superintendent,  in  consultation  with  the commissioner of
    52  health, shall adopt such rules as may be  necessary  to  carry  out  the
    53  provisions of this section.
    54    §  3.  Paragraph  1 of subsection (a) of section 5102 of the insurance
    55  law, as amended by chapter 298 of the laws of 2006, is amended  to  read
    56  as follows:

        A. 4265                             4
 
     1    (1)  All  necessary  expenses  incurred  for:  (i)  medical,  hospital

     2  (including services rendered in compliance with article forty-one of the
     3  public health law, whether or not such services are rendered directly by
     4  a hospital), surgical, nursing, dental, ambulance,  x-ray,  prescription
     5  drug   and  prosthetic  services;  (ii)  psychiatric,  physical  therapy
     6  (provided that treatment is rendered pursuant to a referral) and occupa-
     7  tional therapy and rehabilitation; (iii) any non-medical  remedial  care
     8  and  treatment rendered in accordance with a religious method of healing
     9  recognized by the laws of this state; and (iv)  any  other  professional
    10  health services; all without limitation as to time, provided that within
    11  one  year after the date of the accident causing the injury it is ascer-
    12  tainable that further expenses may be incurred as a result of the  inju-
    13  ry.  For  the  purpose  of determining basic economic loss, the expenses

    14  incurred under this paragraph shall be in accordance  with  the  limita-
    15  tions  of  section  five  thousand  one  hundred  eight of this article.
    16  Medical treatments, diagnostic tests and services provided by the policy
    17  shall be rendered in accordance with  commonly  accepted  protocols  and
    18  professional  standards  and  practices  which  are commonly accepted as
    19  being beneficial for the treatment of the covered injury.  Protocols and
    20  professional standards and practices which are  deemed  to  be  commonly
    21  accepted  pursuant to this section shall be those recognized by national
    22  standard setting organizations, national or state professional organiza-
    23  tions of the same discipline as the treating provider  or  those  desig-

    24  nated  or  approved  by  the superintendent in consultation with profes-
    25  sional licensing boards in the department of health and  the  department
    26  of education. The superintendent, in consultation with the commissioners
    27  of  health and education, may reject the use of protocols, standards and
    28  practices or lists of diagnostic tests set by  any  organization  deemed
    29  not to have standing or general recognition by the provider community or
    30  applicable  licensing  boards.    Protocols shall be deemed to establish
    31  guidelines as to standard appropriate treatment and diagnostic tests for
    32  injuries sustained in automobile accidents,  but  the  establishment  of
    33  standard  treatment  protocols  or  protocols  for the administration of

    34  diagnostic tests shall not  be  interpreted  in  such  a  manner  as  to
    35  preclude  variance  when  warranted  by reason of medical necessity. The
    36  policy form may provide for  pre-certification  of  certain  procedures,
    37  treatments,  diagnostic  tests  or other services or for the purchase of
    38  durable medical goods or equipment,  except  that  no  pre-certification
    39  requirement  shall  apply within ten days of the accident giving rise to
    40  the injury.
    41    § 4. Subsection (d) of section 5103 of the insurance law is amended to
    42  read as follows:
    43    (d) Insurance policy forms for insurance to satisfy  the  requirements
    44  of  subsection (a) [hereof] of this section shall be subject to approval
    45  pursuant to article twenty-three of this chapter. Minimum benefit stand-

    46  ards for such policies and for self-insurers, and rights of subrogation,
    47  examination and other such matters, shall be established  by  regulation
    48  pursuant  to section three hundred one of this chapter, provided, howev-
    49  er, that effective  immediately  such  regulation  shall  be  deemed  to
    50  include  new  provisions  applicable to injuries which occur on or after
    51  the effective date of the chapter of the laws of two  thousand  thirteen
    52  that  amended  this  subsection  and established the New York automobile
    53  insurance fraud and  premium  reduction  act.    Such  regulation  shall
    54  provide  that the initial filing of a notice of the existence of a claim
    55  or claims for first party benefits by a covered  person  shall  be  made

    56  within  thirty  days  of  sustaining  an  injury for which such claim or

        A. 4265                             5
 
     1  claims may be made, but which permit the filing of such  initial  notice
     2  of  the existence of a claim or claims as soon as reasonably practicable
     3  after the expiration of such thirty day period where the nature  of  the
     4  injury  results  in a reasonably justifiable delay in filing the initial
     5  notice during such thirty day period.
     6    § 5. Section 5108 of the insurance law is  amended  by  adding  a  new
     7  subsection (d) to read as follows:
     8    (d)  Proof  of  the  fact  and  cost of a medical or health service or
     9  treatment which is needed for a covered person  to  receive  payment  or

    10  reimbursement for that portion of a claim or claims attributable to such
    11  service  or  treatment, whether such proof is submitted to a first party
    12  or additional first party benefits insurer  by  the  covered  person  or
    13  directly by a medical professional or health services provider on behalf
    14  of  such covered person, for a service rendered by the medical or health
    15  services provider to  the  covered  person  shall  be  submitted  within
    16  forty-five  days  from  the date the service was rendered to the covered
    17  person. At the option of the insurer, in  any  case  where  multiple  or
    18  continuing  medical  or health treatments or services are required, such
    19  time limit may be waived and the claims of one or more such  medical  or

    20  health service providers may be bundled.
    21    §  6. Section 5106 of the insurance law, subsection (b) as amended and
    22  subsection (d) as added by chapter 452 of the laws of 2005,  is  amended
    23  to read as follows:
    24    §  5106.  Fair claims settlement. (a) Payments of first party benefits
    25  and additional first party  benefits  shall  be  made  as  the  loss  is
    26  incurred.  Such  benefits are overdue if not paid within [thirty] forty-
    27  five days after the claimant supplies proof of the fact  and  amount  of
    28  loss  sustained.  If  proof  is not supplied as to the entire claim, the
    29  amount which is supported by proof is overdue if not paid within  [thir-
    30  ty]  forty-five  days after such proof is supplied. All overdue payments
    31  shall bear interest at the rate of two percent per  month.  If  a  valid

    32  claim  or  portion  was  overdue, the claimant shall also be entitled to
    33  recover  his  attorney's  reasonable  fee,  for   services   necessarily
    34  performed  in  connection  with  securing  payment of the overdue claim,
    35  subject to limitations promulgated by the superintendent in regulations.
    36  The failure to issue a denial of a claim within the forty-five day peri-
    37  od provided for in this subsection shall not preclude the  insurer  from
    38  raising  a  defense  to the claim where the insurer has made a report to
    39  the insurance frauds bureau pursuant to section  four  hundred  five  of
    40  this  chapter.  An  insurer will also not be precluded from establishing
    41  that the claimant has failed to meet its prima facie burden of proof.

    42    (b) Every insurer shall [provide] notify a claimant [with  the  option
    43  of submitting] that any dispute involving the insurer's liability to pay
    44  first  party  benefits,  or  additional first party benefits, the amount
    45  thereof or any other matter which may arise pursuant to  subsection  (a)
    46  of  this section [to] must be settled by arbitration pursuant to simpli-
    47  fied procedures to be promulgated or  approved  by  the  superintendent.
    48  Such  simplified procedures shall include an expedited eligibility hear-
    49  ing option, when required, to designate  the  insurer  for  first  party
    50  benefits  pursuant  to  subsection  (d)  of  this section. The expedited
    51  eligibility hearing option shall be a  forum  for  eligibility  disputes
    52  only,  and  shall  not  include  the  submission of any particular bill,

    53  payment or claim for any specific benefit for adjudication, nor shall it
    54  consider any other defense to payment.
    55    (c) An award by an arbitrator shall be binding except where vacated or
    56  modified by a master arbitrator in accordance with simplified procedures

        A. 4265                             6
 
     1  to be promulgated or approved by the  superintendent.  The  grounds  for
     2  vacating or modifying an arbitrator's award by a master arbitrator shall
     3  not  be  limited to those grounds for review set forth in article seven-
     4  ty-five of the civil practice law and rules. The award of a master arbi-
     5  trator  shall  be binding except for the grounds for review set forth in
     6  article seventy-five of the civil practice law and rules[, and  provided
     7  further  that where the amount of such master arbitrator's award is five

     8  thousand dollars or greater, exclusive of interest and attorney's  fees,
     9  the  insurer  or the claimant may institute a court action to adjudicate
    10  the dispute de novo].
    11    (d) Where there is reasonable belief more than one  insurer  would  be
    12  the  source  of first party benefits, the insurers may agree among them-
    13  selves, if there is a valid basis therefor, that one of them will accept
    14  and pay the claim initially. If there is no  such  agreement,  then  the
    15  first  insurer to whom notice of claim is given shall be responsible for
    16  payment. Any such dispute shall be resolved in accordance with the arbi-
    17  tration procedures established pursuant to  section  five  thousand  one
    18  hundred five of this article and regulation as promulgated by the super-
    19  intendent,  and  any  insurer paying first-party benefits shall be reim-

    20  bursed by other insurers for their proportionate share of the  costs  of
    21  the claim and the allocated expenses of processing the claim, in accord-
    22  ance  with  the  provisions entitled "other coverage" contained in regu-
    23  lation and the provisions entitled "other sources of  first-party  bene-
    24  fits" contained in regulation. If there is no such insurer and the motor
    25  vehicle accident occurs in this state, then an applicant who is a quali-
    26  fied person as defined in article fifty-two of this chapter shall insti-
    27  tute  the  claim  against  motor vehicle accident indemnification corpo-
    28  ration.
    29    § 7.  Subsection (c) of section 5303 of the insurance law  is  amended
    30  to read as follows:
    31    (c)  Such  plan  shall  provide  for  the method of classifying risks,
    32  establishing territories  and  making  rates  applicable  thereto.  Such

    33  rates[, except with respect to rates for the minimum limits of insurance
    34  required  by article six or seven of the vehicle and traffic law,] shall
    35  be based upon loss and expense experience of the risks insured  pursuant
    36  to the plan.
    37    §  8.  The  insurance  law is amended by adding a new section 405-a to
    38  read as follows:
    39    § 405-a.  Compensation for report of insurance fraud to  law  enforce-
    40  ment  authorities.  (a)  Any  person,  other  than  persons described in
    41  subsection (a) of section four hundred five of  this  article,  who  has
    42  reason to believe that a fraudulent insurance act prohibited pursuant to
    43  article  one  hundred seventy-six of the penal law has been committed or
    44  that an insurance transaction may be fraudulent, or has knowledge that a

    45  fraudulent insurance transaction is about to take place,  or  has  taken
    46  place  may report such act or transaction and any additional information
    47  relative to the factual circumstances of the transaction and the parties
    48  involved to the attorney general, district attorney or insurance  frauds
    49  bureau.
    50    (b)  If the insurance frauds bureau recommends to the attorney general
    51  or district attorney to commence an action or if the attorney general or
    52  district attorney commences an action based on information provided by a
    53  person pursuant to subsection (a) of  this  section,  then  such  person
    54  shall  be  entitled to receive an award of at least fifteen percent, but
    55  not more than twenty-five percent of  the  proceeds  of  the  action  or

    56  settlement of the claim up to a maximum of twenty-five thousand dollars.

        A. 4265                             7
 
     1  The  attorney  general or district attorney shall recommend to the court
     2  when a settlement is entered the amount of such award. The  court  shall
     3  base such award decision on the extent to which the person substantially
     4  contributed to the prosecution of the action.
     5    §  9.  Section  176.00 of the penal law is amended by adding three new
     6  subdivisions 6, 7 and 8 to read as follows:
     7    6. "Provider" means an attorney, a health care professional, an  owner
     8  or  operator  of  a  health  care  practice  or facility, any person who
     9  creates the impression that he or  she,  or  his  or  her  practice  can

    10  provide  legal or health care services, or any person employed or acting
    11  on behalf of any such person.
    12    7. "Public media" means telephone directories,  professional  directo-
    13  ries,  newspapers  and  other  periodicals,  radio and television, bill-
    14  boards, and mailed or electronically transmitted written  communications
    15  that  do  not  involve  in-person  contact  with  a specific prospective
    16  client, patient, or customer.
    17    8. "Runner" means a person who, for a pecuniary benefit,  procures  or
    18  attempts  to  procure a client, patient or customer at the direction of,
    19  request of or in cooperation with a provider when such person  knows  or
    20  has  reason  to  know  that  the  purpose of such provider is to seek to

    21  falsely or fraudulently: obtain benefits under a contract of  insurance;
    22  or assert a claim against an insured or an insurance carrier for provid-
    23  ing  services  to  the  client, patient or customer. Such term shall not
    24  include a person who procures or attempts to procure  clients,  patients
    25  or  customers for a provider through public media or a person who refers
    26  clients, patients or customers as authorized by law.   Nothing  in  this
    27  article  shall  be  deemed to prohibit an agent, broker or employee of a
    28  health maintenance organization from seeking to sell health  maintenance
    29  organization  coverage  or health insurance coverage to an individual or
    30  group.
    31    § 10. Subdivision 1 of section 176.05 of the penal law, as amended  by

    32  chapter 211 of the laws of 2011, is amended to read as follows:
    33    1.  any written statement as part of, or in support of, an application
    34  for the issuance of, or the rating of a policy insuring  against  losses
    35  or  liabilities  arising  out  of  the ownership, operation, or use of a
    36  motor vehicle, a commercial insurance policy, or certificate or evidence
    37  of self insurance for commercial insurance or commercial self insurance,
    38  or a claim for payment or other benefit pursuant to an insurance  policy
    39  or  self  insurance program for commercial or personal insurance that he
    40  or she knows to:
    41    (a) contain materially false information concerning any fact  material
    42  thereto; or
    43    (b) conceal, for the purpose of misleading, information concerning any
    44  fact material thereto; or

    45    §  11. The penal law is amended by adding a new section 176.66 to read
    46  as follows:
    47  § 176.66 Unlawful procurement of clients, patients or customers.
    48    A person is guilty of unlawful procurement  of  clients,  patients  or
    49  customers when, he or she knowingly:
    50    1. acts as a runner; or
    51    2.  uses, solicits, directs, hires or employs another person to act as
    52  a runner.
    53    Unlawful procurement of clients, patients or customers is  a  class  E
    54  felony.
    55    §  12.  Section  176.15 of the penal law, as amended by chapter 515 of
    56  the laws of 1986, is amended to read as follows:

        A. 4265                             8
 
     1  § 176.15 Insurance fraud in the fourth degree.

     2    A  person  is  guilty  of insurance fraud in the fourth degree when he
     3  commits a fraudulent insurance act and thereby wrongfully takes, obtains
     4  or withholds, or attempts to wrongfully take, obtain or withhold proper-
     5  ty with a value in excess of [one thousand] five hundred dollars.
     6    Insurance fraud in the fourth degree is a class E felony.
     7    § 13. Section 176.20 of the penal law, as amended by  chapter  515  of
     8  the laws of 1986, is amended to read as follows:
     9  § 176.20 Insurance fraud in the third degree.
    10    A  person  is  guilty  of  insurance fraud in the third degree when he
    11  commits a fraudulent insurance act and thereby wrongfully takes, obtains
    12  or withholds, or attempts to wrongfully take, obtain or withhold proper-
    13  ty with a value in excess of [three] one thousand five hundred dollars.

    14    Insurance fraud in the third degree is a class D felony.
    15    § 14. Section 176.25 of the penal law, as added by chapter 515 of  the
    16  laws of 1986, is amended to read as follows:
    17  § 176.25 Insurance fraud in the second degree.
    18    A  person  is  guilty  of insurance fraud in the second degree when he
    19  commits a fraudulent insurance act and thereby wrongfully takes, obtains
    20  or withholds, or attempts to wrongfully take, obtain or withhold proper-
    21  ty with a value in excess of [fifty] twenty-five thousand dollars.
    22    Insurance fraud in the second degree is a class C felony.
    23    § 15. Section 176.30 of the penal law, as added by chapter 515 of  the
    24  laws of 1986, is amended to read as follows:
    25  § 176.30 Insurance fraud in the first degree.
    26    A  person  is  guilty  of  insurance fraud in the first degree when he

    27  commits a fraudulent insurance act and thereby wrongfully takes, obtains
    28  or withholds, or attempts to wrongfully take, obtain or withhold proper-
    29  ty with a value  in  excess  of  [one  million]  five  hundred  thousand
    30  dollars.
    31    Insurance fraud in the first degree is a class B felony.
    32    §  16. Section 176.35 of the penal law, as added by chapter 635 of the
    33  laws of 1996, is amended to read as follows:
    34  § 176.35 Aggravated insurance fraud in the third degree.
    35    A person is guilty of aggravated insurance fraud in the [fourth] third
    36  degree when he or she commits [a fraudulent insurance act]  the  offense
    37  of  insurance  fraud  in  the  fifth  degree,  and  has  been previously
    38  convicted within the preceding five years of any offense,  an  essential

    39  element of which is the commission of a fraudulent insurance act.
    40    Aggravated  insurance  fraud in the [fourth] third degree is a class D
    41  felony.
    42    § 17. The penal law is amended by adding two new sections  176.36  and
    43  176.37 to read as follows:
    44  § 176.36 Aggravated insurance fraud in the second degree.
    45    A  person is guilty of aggravated insurance fraud in the second degree
    46  when he or she commits the offense of  insurance  fraud  in  the  fourth
    47  degree,  and  has  been  previously  convicted within the preceding five
    48  years of any offense, an essential element of which is the commission of
    49  a fraudulent insurance act.
    50    Aggravated insurance fraud in the second degree is a class C felony.

    51  § 176.37 Aggravated insurance fraud in the first degree.
    52    A person is guilty of aggravated insurance fraud in the  first  degree
    53  when  he  or  she  commits  the  offense of insurance fraud in the third
    54  degree, and has been previously  convicted  within  the  preceding  five
    55  years of any offense, an essential element of which is the commission of
    56  a fraudulent insurance act.

        A. 4265                             9
 
     1    Aggravated insurance fraud in the first degree is a class B felony.
     2    § 18. Paragraph (a) of subdivision 2 of section 846-m of the executive
     3  law,  as  amended  by  section  6 of part T of chapter 57 of the laws of
     4  2000, is amended to read as follows:
     5    (a) The moneys received by the fund shall be expended in a manner that

     6  is consistent with the plan of  operation,  pursuant  to  appropriation,
     7  only  to reimburse costs incurred by provider agencies for pilot program
     8  activities relating to the detection, prevention or reduction  of  motor
     9  vehicle theft and motor vehicle insurance fraud, provided, however, that
    10  beginning  January  first,  two  thousand  fourteen,  additional  monies
    11  received by the fund pursuant to an appropriation made by a  chapter  of
    12  the  laws  of  two  thousand eleven establishing the New York automobile
    13  insurance fraud and premium reduction act shall be used  exclusively  to
    14  support efforts undertaken by district attorneys to detect, identify and
    15  prosecute fraud pertaining to article fifty-one of the insurance law.
    16    §  19.  No later than eighteen months after the effective date of this

    17  act, the superintendent of insurance shall study, evaluate and report to
    18  the governor and legislature on the impact and effect  of  this  act  on
    19  private  passenger  automobile  insurance costs, by rating territory, in
    20  New York state. The superintendent of insurance shall recommend for each
    21  insurer, by rating territory,  a  one-time  premium  reduction  for  the
    22  insurance  required  pursuant  to  article  51 of the insurance law that
    23  reflects the reduced cost of this type of coverage as a  result  of  the
    24  provisions  enacted pursuant to this act. Notwithstanding the provisions
    25  of article 23 of the insurance law, any such recommended reduction shall
    26  be binding unless demonstrated by an insurer, based on sound  underwrit-
    27  ing and actuarial principles reasonably related to actual or anticipated
    28  loss experience, that such reduction would result in underwriting losses

    29  for policies issued in such rating territory.
    30    §  20.    The  sum  of  three  million  one  hundred  thousand dollars
    31  ($3,100,000), or so much thereof as may be necessary, is  hereby  appro-
    32  priated  to  the  department  of transportation out of any moneys in the
    33  state treasury in the general fund to the credit of  the  motor  vehicle
    34  theft  and  insurance fraud prevention fund, not otherwise appropriated,
    35  and made immediately available, for the  purpose  of  carrying  out  the
    36  provisions  of  paragraph  (a)  of subdivision 2 of section 846-m of the
    37  executive law, as amended pursuant to  section  eighteen  of  this  act.
    38  Such moneys shall be payable on the audit and warrant of the comptroller
    39  on  vouchers certified or approved by the commissioner of transportation
    40  in the manner prescribed by law.
    41    § 21.  Severability clause. If any clause, sentence, paragraph, subdi-

    42  vision, section or part contained in any  part  of  this  act  shall  be
    43  adjudged  by  any  court  of  competent jurisdiction to be invalid, such
    44  judgment shall not affect, impair, or invalidate the remainder  thereof,
    45  but  shall  be  confined in its operation to the clause, sentence, para-
    46  graph, subdivision, section or part of this act contained  in  any  part
    47  thereof  directly  involved  in  the  controversy in which such judgment
    48  shall have been rendered. It is hereby declared to be the intent of  the
    49  legislature  that  this act would have been enacted even if such invalid
    50  provisions had not been included herein.
    51    § 22. This act shall take effect on the ninetieth day after  it  shall
    52  have become a law.
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