2007 | 2008 | 2009 | |
Reports | 11,549 | 11,260 | 12,961 |
Arrests | 388 | 344 | 323 |
Convictions | 245 | 160 | 281 |
2007 | 2008 | 2009 | |
Arrests/Reports | 3.36% | 3.05% | 2.49% |
Convictions/Reports | 2.12% | 1.42% | 2.17% |
Convictions/Arrests | 63.14% | 46.51% | 87% |
Coming in again at 248 total pages replete with 68 tables and 10 color charts, the 2008 Annual Report of the Superintendent of Insurance to the New York State Legislature was released on May 15, 2009.i. Impact of recent case law on the Automobile No-Fault systemTwo 1997 Court of Appeals decisions, Central General Hospital v. Chubb, and Presbyterian Hospital v. Maryland Casualty, had an enormous impact on No-Fault adjudication and the number of disputes generated by the No-Fault system. These cases generally established that a No-Fault insurer may not assert a defense when it does not timely deny a claim within 30 days of receipt. In a 2008 decision, Fair Price Medical Supply v. Travelers, the Court of Appeals upheld the application of a preclusion sanction for a late denial where durable medical equipment supplies were billed for and never provided, so that any amount billed by a health provider for non-existent services must be paid by the insurer when there is a late denial. Essentially, the fundamental requirements established by the Legislature in 1973 that all reimbursable No-Fault health care expenses must be necessary and billed in accordance in the fee schedule limits have been frustrated by the decisions mentioned above. Therefore, the Legislature should enact legislation similar to the bill proposed by the Senate two years ago in S2638 that would restore the fundamental requirements for No-Fault health care expenses to be reimbursable by permitting an insurer to assert a defense when it does not deny a claim within 30 days of receipt.
ii. Mandatory arbitration for all No-fault insurance disputesThe Civil Court of the City of New York and District Courts in Nassau and Suffolk Counties have been inundated with lawsuits filed by medical providers seeking reimbursement of No-Fault benefits for services rendered to injured claimants. This strain on the judiciary’s resources led the Chief Administrative Judge's Local Courts Advisory Committee (Unified Court System) to propose a bill in 2006 that would amend NYIL §5102 to require mandatory arbitration for all No-Fault insurance disputes. Since the improvements in the administration of the No-Fault Arbitration System in the past few years permit it to process substantially more requests for arbitration without compromising the goal of a speedy dispute resolution system, the Legislature should consider legislation that would reduce the strain on the judiciary’s resources by revising NYIL §5102 to require mandatory arbitration for all No-Fault insurance disputes.
The Department has received numerous complaints from consumers whose homeowners’ policies were cancelled after insurers claimed that their residences had become unoccupied. The Department investigated these complaints and determined that a number of insurers had improperly cancelled homeowners’ policies on the ground that an apparently unoccupied residence constituted a “physical change” in the premises. The purpose of this Circular Letter is to review the relevant sections of the Insurance Law governing mid-term cancellations of homeowners’ policies, and to advise insurers of the Insurance Department’s interpretation of the law, so as to ensure that homeowners are protected from improper cancellations.
Homeowners’ policies are “personal lines insurance” under Insurance Law § 3425. That statute governs cancellation and renewal of most non-commercial property/casualty insurance policies. Such policies may not be cancelled in the middle of the policy term, except for certain reasons specified in § 3425, which must be set forth in the notice of cancellation. In particular, Insurance Law § 3425(c)(2)(E) permits a mid-term cancellation of a personal lines insurance policy due to:
physical changes in the property insured occurring after issuance or last annual anniversary date of the policy which result in the property becoming uninsurable in accordance with the insurer’s objective, uniformly applied underwriting standards in effect at the time the policy was issued or last voluntarily renewed...
The Department’s investigation determined that a number of insurers, after apparently determining that residences had become unoccupied, improperly cancelled the owners’ policies on grounds that the lack of occupancy constituted “physical changes” within the meaning of § 3425(c)(2)(E). One investigation revealed that an insurer had improperly cancelled the policy of a husband and wife while they were residing in a nursing home.
Insurance Law § 3425(c)(2)(E) applies only when there has been an actual physical change to the property that renders the property uninsurable in accordance with the insurer’s underwriting guidelines. Physical change occurs only when the dwelling or property has been altered or changed in some manner. (See Opinion of Office of General Counsel No. 04-11-20, November 29, 2004). The fact that an insured is not occupying a residence does not constitute a physical change to the premises within the meaning of § 3425(c)(2)(E).
Similarly, the fact that an insured is not occupying a residence does not, standing alone, constitute grounds for cancellation of a homeowners’ policy under Insurance Law § 3425(c)(2)(D). That provision permits an insurer to cancel coverage upon “discovery of willful or reckless acts or omissions increasing the hazard insured against.” Whether an insured would be justified in cancelling a homeowners’ policy pursuant to § 3425(c)(2)(D) depends on the totality of the circumstances. While lack of occupancy of the premises might be a relevant factor to consider, it is not necessarily a willful or reckless act or omission, which also must be demonstrated.
Nor may insurers use the existence of a foreclosure action as a basis to cancel a homeowners’ insurance policy under Insurance Law § 3425(c)(2)(D) or (E). The filing of a foreclosure action does not constitute a willful or reckless act or omission or increase the hazard insured against, nor does it constitute a physical change in the property.
Questions regarding this Circular Letter should be addressed to Deborah Jewell, Senior Examiner, New York State Insurance Department, 1 Commerce Plaza, Albany, New York, 12257, 518-402-2312, djewell@ins.state.ny.us.
Very Truly Yours,
Steven Nachman
Deputy Superintendent for Frauds and Consumer Services
i. Impact of recent case law on the Automobile No-Fault systemTwo 1997 Court of Appeals decisions, Central General Hospital v. Chubb, 90 N.Y.2d 195 (1997), and Presbyterian Hospital v. Maryland Casualty, 90 N.Y.2d 274 (1997), had an enormous impact on No-Fault adjudication and the number of disputes generated by the No-Fault system. These cases generally established that a No-Fault insurer may not assert a defense when it does not timely deny a claim within 30 days of receipt. In Fair Price Medical Supply v. Travelers, 42 A.D. 3rd 277 (2nd Dept.) (2007), the Appellate Division, Second Department upheld the application of a preclusion sanction for a late denial where durable medical equipment supplies were billed for and never provided, so that any amount billed by a health provider for non-existent services must be paid by the insurer when there is a late denial. Essentially, the fundamental requirements established by the Legislature in 1973 that all reimbursable No-Fault health care expenses must be necessary and billed in accordance in the fee schedule limits have been frustrated by the Judiciary’s application of the Court of Appeals decisions mentioned above. Therefore, the Legislature should enact legislation similar to the bill proposed by the Senate last year in S2638 that would restore the fundamental requirements for No-Fault health care expenses to be reimbursable by permitting an insurer to assert a defense when it does not deny a claim within 30 days of receipt.
ii. Mandatory arbitration for all No-fault insurance disputesAccording to the authors of an article that appeared in the June 21, 2007 edition of the New York Law Journal, the Civil Court of the City of New York and District Courts in Nassau and Suffolk Counties have been inundated with lawsuits filed by medical providers seeking reimbursement of No-Fault benefits for services rendered to injured claimants. This strain on the judiciary’s resources led the Chief Administrative Judge's Local Courts Advisory Committee (Unified Court System) to propose a bill in 2006 that would amend NYIL §5102 to require mandatory arbitration for all No-fault insurance disputes. Since the improvements in the administration of the No-Fault Arbitration System in the past few years permit it to process substantially more requests for arbitration without compromising the goal of a speedy dispute resolution system, the Legislature should consider legislation that would reduce the strain on the judiciary’s resources by revising NYIL §5102 to require mandatory arbitration for all No-fault insurance disputes.
iii. Decertification of Health Care ProvidersChapter 424 of the Laws of 2005 added a new Section 5109 to the Insurance Law to require the Superintendent, in consultation with the Commissioners of Health and Education, to promulgate standards and procedures for investigating and suspending or removing a health care provider’s ability to be reimbursed under the No-Fault system. The Commissioners of Health and Education are required to maintain a list of providers who they deem, after a reasonable investigation, not authorized to submit claims for reimbursement under No-Fault. This list, which must be updated regularly, must be posted on each agency’s website and provide a toll free telephone number for the public to access the information. Under the law, health care providers can be decertified if the provider:
The Insurance, Health and Education Departments have had discussions concerning the standards and procedures that should be implemented.
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Private passenger automobile rate filings reviewed and approved in 2007 can be found in Table 41 beginning on page 85 of the report.
A legislative and regulatory recap runs from pages 179 to 191.
Passing percentages for licensing examinations administered in 2007 (Table 62, page 221): public adjusters - 39%; independent adjusters (overall) - 51%; agents & brokers (overall) - 44%.
