The New York State Department of Financial Services has proposed several new regulations to the no-fault law including a provision that will, in some circumstances, excuse an insurer’s  technical or immaterial failure to comply with a prescribed time frame. Although on its face these changes may appear benign, regulations such as these threaten to undermine the fundamental goal of the no-fault system: prompt reimbursement of medical expenses for victims injured in a car accident.

For as long as I have been involved in no-fault, I can recall insurers publicizing incidents where they were required to pay an allegedly fraudulent claim on account of a mere technicality or a loophole within the no-fault law. Insurance companies take advantage of such occurrences in furtherance of their agenda to persuade lawmakers to enact even more insurer friendly reforms to the current law.

Of course, the insurance lobby only tells part of the story. First of all, for every example of a fraudulent claim that an insurer was forced to pay due to a mere technicality, I can identify a legitimate claim that an insurer refused to honor because the premium paying policyholder violated a mere technically, such as notifying an insurer 31 days after an accident. However, more important than the fact that the timing regulations apply equally to car accident victims, healthcare providers and insurers alike, is that the timing regulations are the primary means by which the goals underlying the no-fault law are effectuated.

When no-fault was enacted, New York Motorist became severely restricted in their right to recover monetary damages for injuries sustained in a car accident. In exchange for this windfall, insurers were obligated to provide speedy compensation to cover their policyholder’s medical expenses. No longer would a New York Motorist have to await the end of potentially lengthy litigation for payment of their medical bills.

In order to accomplish this goal of prompt payment of medical bills, State lawmakers included in the no-fault law, among other regulations, a rule requiring an insurer to pay or deny a claim within 30 days of receipt. If an insurer neglects to timely act after receiving verification of a claim, it will be precluded from asserting some defenses to payment.

As such, under the current law the following hypothetical could arise:

A Brooklyn motorist insured by Geico injures his neck in a motor vehicle accident. His no-fault policy provides coverage for medical treatment related to the accident. His physician evaluates his injuries and refers the motorist for an MRI. 35 days after Geico receives the bill for the MRI, it determines that the testing was not medically necessary. However, as a result of Geico neglecting to further verify or deny the bill within 30 days after receipt, it is now precluded from contesting the medical necessity of the MRI.

After such an event, Geico will gladly stand up on their soapbox and proclaim what a miscarriage of justice the no-fault law has facilitated. A mere technicality in the no-fault law has prohibited poor Geico from contesting a fraudulent claim; no-fault permits unscrupulous doctors to get away with excessive billing for unnecessary treatments; this fraud tax will get passed on to every New York motorist; insurer friendly reforms are needed in the no-fault scheme, etc, etc.

Recall that the overarching objective of no-fault is to provide prompt payment of medical expenses. Unfortunately, anyone with knowledge of the insurance industry is fully aware that prompt compensation is directly at odds with the insurance industry’s corporate agenda of delay, deny, defend.

Legislators were fully aware when enacting the no-fault law that insurers will use any and all means to delay or deny paying legitimate claims. The strict timing deadlines were implemented in order to prevent insurers from undermining the very foundation of the law with their well documented dilatory tactics. New York’s no-fault insurance industry has already utilized every available avenue to deny paying their policyholder’s claims. Yes, it is possible that a seemingly unjust result can befall an insurance company from time to time when they neglect to abide by the mandated timing regulations. However, only with strict deadlines, can the fallacy of non-adversarial quick reimbursement of medical treatment remain in the no-fault scheme. Any proposed regulation that excuses insurers for failure to abide by a timing regulation is a cause of great concern for victims injured in a car accident.