No-Fault Insurance Medical Providers Take Notice: Emergency Rule for No-Fault Insurance Hearings Takes Effect
Providers who care for patients utilizing no-fault insurance should familiarize themselves with an emergency rule promulgated by the Department of Financial Services (“DFS”) that took effect on June 12, 2012. Authorized by Insurance Law § 5109(a) and issued in response to a growing number of law enforcement actions and private lawsuits targeting alleged abuses of the no-fault insurance system, the purpose of the emergency rule is to provide the Commissioners of the Department of Health (“DOH”) and the Department of Education (“DOE”), and the Superintendent of the DFS, with the ability “as soon as possible, to prohibit health service providers who engage in such activities from demanding or requesting payment from no-fault insurers.” The state’s no-fault insurance system was instituted to remove the majority of motor vehicle accident claims from New York courts and to establish an efficient system for obtaining compensation for losses suffered from those accidents. The DFS Superintendent’s Statement of Reasons for the emergency rule and the rule’s preamble cite growing abuse of these laws, including staged accidents, billing for unnecessary medical services, billing for medical services that were not rendered, and ownership of professional corporations by individuals that are not licensed to practice medicine.
The rule, which is now located at 11 NYCRR §§ 65-5.0 et seq., sets forth the procedures for administrative hearings to investigate reports of fraudulent activity in connection with no-fault insurance claim. These hearings could result in a final determination from any of these three agencies prohibiting a medical provider from “demanding or requesting any payment for medical services” in connection with any no-fault claim “and requiring the provider to refrain from subsequently treating, for remuneration, as a private patient, any person seeking medical treatment” for conditions covered by the no-fault law. Insurance Law § 5109(e) and the emergency rule also authorize these agencies, after the hearing, to temporarily prohibit the provider from demanding or requesting any payment for medical services under this article for up to ninety days, regardless of the initial determination by the hearing officer.
The administrative hearing regulations in the emergency rule, authorized by section 5109(a) of the Insurance Law, provide that DOH, DOE, or DFS may commence these hearings based on any information within the agency’s possession, and not just formal reports of fraud made pursuant to the Insurance Law. The provisions covering a notice of hearing, located at 11 NYCRR § 65-5.3, are worth particular attention as they do not require the noticing agency to give great detail and may require swift action by a provider. First, although the rules require that the notice to the provider lists “the applicable provisions of the law under which action is proposed to be taken and the grounds therefor,” the same section then notes that an agency’s “failure to make such reference shall not render the notice ineffective if the provider to whom it is addressed is thereby or otherwise reasonably apprised of such grounds.” 11 NYCRR § 65-5.3(a)(2) (emphasis supplied). Second, a provider may have to respond quickly after receiving a notice, in order to guarantee a hearing. The emergency rule provides that if “the noticed provider seeks a hearing, then the provider shall notify the superintendent or noticing commissioner in writing, within ten days of receipt of the notice, that a hearing is demanded.” 11 NYCRR § 65-5.3(b) (emphasis supplied).
Providers who receive these notices for hearings under Insurance Law § 5109 or 11 NYCRR §§ 65-5.0 et seq. should immediately contact an attorney.