N.Y. Proposes New Rule to Fight No-Fault Fraud

New York State regulators are expanding their effort to stop no-fault auto insurance fraud. The New York Department of Financial Services announced a draft regulation, Regulation 68, that would make it easier for insurers to detect fraudulent activities.

Regulation 68 would put an end to requirements that mandate insurers pay for treatments that were never actually provided, or pay more than the established fee schedule for a given service.

The department noted that the current law provides no remedy to insurers when doctors and other healthcare providers bill in excess of the mandated workers’ comp fee schedule or for services not actually rendered-two major issues plaguing the no-fault system.

The new regulation also prevents healthcare providers from ignoring requests for evidence that the treatments they are providing are medically necessary, by setting a 120-day deadline to provide requested information. Under the current system, there is no specific deadline for healthcare providers for responding to a verification request from insurers.

Currently, no-fault law requires insurers to pay claims in 30 days or pay a very high interest rate on delayed payments. But oftentimes, it takes longer to discover that the health care was not actually provided.

Under current law, courts do not allow insurers to deny claims after the deadline even if the provider has over-billed or billed for phantom services.

If the new rule is adopted, insurers must either 1) pay or deny the claim within 30 days of receiving a no-fault claim from a healthcare provider, or 2) send a request to healthcare providers within 15 days for additional data to verify the claim. (And the healthcare providers, in turn, would now have 120 days to provide requested information.) Once the insurer receives the verification, it would have 30 more days to pay or deny the claim.