S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2964

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 22, 2009
                               ___________

Introduced  by  M.  of  A.  BARCLAY,  CALHOUN, KOLB, GIGLIO, McKEVITT --
  Multi-Sponsored by -- M.   of  A.  BACALLES,  BARRA,  CROUCH,  ERRIGO,
  FINCH,  McDONOUGH,  MILLER, RABBITT, SAYWARD, THIELE, TOWNSEND -- 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:

  Section  1.  This act shall be known and may be cited as the "New York
automobile insurance fraud and premium reduction act".
  S 2. The insurance law is amended by adding a new section 5110 to read
as follows:
  S 5110. CERTIFICATION OF MANAGED CARE ORGANIZATIONS. (A)(1) ANY  INDI-
VIDUAL  OR  GROUP  AUTHORIZED  TO  PROVIDE  MEDICAL OR OTHER HEALTH CARE
SERVICES IN THIS STATE MAY, DIRECTLY OR THROUGH AN  AUTHORIZED  INSURER,
MAKE  WRITTEN  APPLICATION  TO THE SUPERINTENDENT TO BECOME CERTIFIED TO
PROVIDE MANAGED CARE TO INJURED COVERED PERSONS UNDER THIS ARTICLE.
  (2) CERTIFICATION SHALL BE VALID FOR SUCH PERIOD AND FOR SUCH  SERVICE
AREAS  AS  THE  SUPERINTENDENT  MAY  PRESCRIBE,  UNLESS  SOONER REVOKED,
SUSPENDED OR AMENDED.
  (3) EACH APPLICATION FOR  CERTIFICATION  SHALL  BE  ACCOMPANIED  BY  A
REASONABLE  FEE  PRESCRIBED BY THE SUPERINTENDENT AND A PROPOSED MANAGED
CARE PROGRAM DETAILING ITS SIGNIFICANT FEATURES, METHODS AND PROCEDURES.
  (B) APPLICATION FOR CERTIFICATION SHALL  BE  MADE  IN  SUCH  FORM  AND
MANNER, AND SHALL SET FORTH SUCH INFORMATION REGARDING THE PROPOSED PLAN
OF MANAGED CARE FOR PROVIDING MEDICAL AND OTHER HEALTH CARE SERVICES, AS
THE SUPERINTENDENT MAY PRESCRIBE, INCLUDING:
  (1) THE NAMES AND CREDENTIALS OF ALL INDIVIDUALS OR ORGANIZATIONS THAT
WILL  PROVIDE  SERVICES  UNDER  THE  MANAGED CARE PROGRAM, TOGETHER WITH
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.
                                                           LBD03006-01-9
              

A. 2964                             2

REQUIREMENTS  FOR  SUCH INDIVIDUALS OR ORGANIZATIONS TO PRACTICE IN THIS
STATE;
  (2)  A  DESCRIPTION  OF  THE  TIMES,  PLACES  AND  MANNER OF PROVIDING
SERVICES UNDER THE MANAGED CARE PROGRAM;
  (3) A DESCRIPTION OF THE TIMES, PLACES AND MANNER OF  PROVIDING  OTHER
RELATED OPTIONAL SERVICES THE APPLICANT MAY WISH TO PROVIDE; AND
  (4)  A  DESCRIPTION  AND REPRESENTATIVE COPIES OF ALL REMUNERATION AND
RELATED ARRANGEMENTS BETWEEN THE MANAGED CARE ORGANIZATION AND  INDIVID-
UAL PROVIDERS OF SERVICES UNDER THE MANAGED CARE PROGRAM.
  (C)  THE SUPERINTENDENT SHALL CERTIFY AN APPLICANT, IF THE SUPERINTEN-
DENT FINDS THAT THE MANAGED CARE PROGRAM:
  (1) PROVIDES MEDICAL AND OTHER HEALTH CARE SERVICES THAT MEET QUALITY,
CONTINUITY AND OTHER TREATMENT STANDARDS PRESCRIBED BY  THE  SUPERINTEN-
DENT  OR  THE COMMISSIONER OF HEALTH, IN A MANNER THAT IS TIMELY, EFFEC-
TIVE AND CONVENIENT FOR INJURED PERSONS;
  (2) INCLUDES A SUFFICIENT NUMBER OF EACH CATEGORY OF PROVIDER THROUGH-
OUT THE PROPOSED SERVICE AREAS TO GIVE INJURED PERSONS  ADEQUATE  FLEXI-
BILITY  TO  CHOOSE  AN  AUTHORIZED PROVIDER FROM AMONG THOSE HEALTH CARE
PROVIDERS WHO PARTICIPATE IN THE MANAGED CARE PROGRAM;
  (3) PROVIDES APPROPRIATE FINANCIAL INCENTIVES OR OTHER  APPROACHES  TO
REDUCE COSTS AND MINIMIZE IMPROPER UTILIZATION WITHOUT SACRIFICING QUAL-
ITY OF SERVICE;
  (4)  PROVIDES ADEQUATE METHODS OF PEER REVIEW, UTILIZATION REVIEW, AND
DISPUTE RESOLUTION, INCLUDING WHERE APPLICABLE, ACCESS TO  THE  EXTERNAL
APPEAL  PROCESS  AS  PROVIDED  IN ARTICLE FORTY-NINE OF THIS CHAPTER, IN
ORDER TO: (A) PREVENT INAPPROPRIATE OR EXCESSIVE  TREATMENT;  (B)  AVOID
CONFLICTS    OF  INTEREST; (C) EXCLUDE FROM PARTICIPATION IN THE PROGRAM
THOSE PROVIDERS WHO VIOLATE  REASONABLE  TREATMENT  STANDARDS;  AND  (D)
PROVIDE FOR THE RESOLUTION OF MEDICAL DISPUTES;
  (5)  PROVIDES  A TIMELY AND ACCURATE METHOD OF REPORTING TO THE SUPER-
INTENDENT OR THE COMMISSIONER OF HEALTH AS APPROPRIATE, NECESSARY INFOR-
MATION REGARDING MEDICAL AND HEALTH CARE SERVICE COST AND UTILIZATION TO
MONITOR THE EFFECTIVENESS OF THE MANAGED CARE PROGRAM;
  (6) PROVIDES A MECHANISM FOR AN INJURED  PERSON  TO  OBTAIN  TREATMENT
OUTSIDE OF THE MANAGED CARE PROGRAM IF THE SERVICES ARE NOT AVAILABLE OR
ACCESSIBLE WITHIN THE PROGRAM;
  (7) PROVIDES FOR A REASONABLE AND APPROPRIATE COORDINATION WITH ANOTH-
ER  HEALTH  CARE  PROVIDER  WHERE  THE INJURED PERSON HAS BEEN RECEIVING
TREATMENT FROM ANOTHER HEALTH CARE PROVIDER FOR  A  PREVIOUSLY  EXISTING
CONDITION OR INJURY WHICH HAS BEEN AGGRAVATED BY THE MOTOR VEHICLE ACCI-
DENT;
  (8)  PROVIDES  FOR  A  MECHANISM FOR NOTIFICATION ABOUT AND TRANSITION
FROM EMERGENCY CARE; AND
  (9) COMPLIES WITH ANY OTHER REQUIREMENT THE SUPERINTENDENT  DETERMINES
IS  NECESSARY  TO PROVIDE QUALITY MEDICAL AND OTHER HEALTH CARE SERVICES
TO INJURED PERSONS.
  (D) THE SUPERINTENDENT MAY CERTIFY A HEALTH  MAINTENANCE  ORGANIZATION
ISSUED A CERTIFICATE OF AUTHORITY UNDER ARTICLE FORTY-FOUR OF THE PUBLIC
HEALTH  LAW OR LICENSED UNDER ARTICLE FORTY-THREE OF THIS CHAPTER, IF IT
MEETS THE REQUIREMENTS OF THIS  SECTION.  THE  SUPERINTENDENT  MAY  ALSO
CERTIFY  AN  ACCIDENT AND HEALTH INSURER, INCLUDING A CORPORATION ORGAN-
IZED UNDER ARTICLE FORTY-THREE OF THIS CHAPTER, WHICH HAS A  PARTICIPAT-
ING OR PREFERRED NETWORK OF PROVIDERS IF SUCH INSURER MEETS THE REQUIRE-
MENTS  OF  THIS  SECTION.  TO THE EXTENT A MANAGED CARE ORGANIZATION HAS
BEEN REVIEWED, APPROVED OR CERTIFIED  BY  ANOTHER  STATE  AGENCY  AS  TO
ACCESSIBILITY,  QUALITY  OR  CONTINUITY  OF CARE OR FOR ANY OF THE OTHER

A. 2964                             3

MATTERS WITHIN THE SUPERINTENDENT'S  REVIEW,  THE  SUPERINTENDENT  SHALL
CONSIDER  THE  REVIEW, APPROVAL OR CERTIFICATION OF ANOTHER STATE AGENCY
SO AS NOT TO  DUPLICATE  THOSE  REVIEWS,  APPROVALS  OR  CERTIFICATIONS.
HOWEVER,  NOTHING IN THIS SUBSECTION SHALL BE DEEMED TO LIMIT THE SUPER-
INTENDENT'S AUTHORITY TO IMPOSE AND REVIEW  ADDITIONAL  REQUIREMENTS  OR
STANDARDS  ABOVE AND BEYOND THOSE IMPOSED BY ANOTHER STATE AGENCY TO THE
EXTENT THOSE REQUIREMENTS OR STANDARDS ARE NECESSARY OR APPROPRIATE  FOR
IMPLEMENTATION OF THIS SECTION.
  (E)  THE  SUPERINTENDENT  SHALL  REFUSE  TO CERTIFY, OR MAY REVOKE, OR
SUSPEND OR AMEND THE CERTIFICATION OF, ANY MANAGED CARE ORGANIZATION, IF
THE SUPERINTENDENT FINDS THAT:
  (1) THE MANAGED CARE PROGRAM FOR PROVIDING SERVICES FAILS TO MEET  THE
REQUIREMENTS OF THIS SECTION; OR
  (2)  SERVICE  UNDER  THE MANAGED CARE PROGRAM IS NOT BEING PROVIDED IN
ACCORDANCE WITH ITS TERMS AS DESCRIBED IN THE  APPLICATION  FOR  CERTIF-
ICATION.
  (F)  FOR  PURPOSES  OF  THIS  SECTION, THE SUPERINTENDENT MAY CONSIDER
WHETHER PROVIDERS UTILIZED BY A MANAGED CARE ORGANIZATION  OR  OTHERWISE
AUTHORIZED  TO  PROVIDE  SERVICES  UNDER  THE CONTRACT ARE AUTHORIZED TO
RENDER MEDICAL CARE IN ACCORDANCE WITH SECTION THIRTEEN-B OF  THE  WORK-
ERS' COMPENSATION LAW.
  (G)  UTILIZATION  REVIEW, QUALITY ASSURANCE AND PEER REVIEW ACTIVITIES
PURSUANT TO THIS SECTION SHALL BE SUBJECT TO REVIEW BY  THE  SUPERINTEN-
DENT  AND  THE  COMMISSIONER  OF HEALTH. FINDINGS BY THE COMMISSIONER OF
HEALTH OF PROFESSIONAL MISCONDUCT, OR DISCIPLINARY ACTIONS  IN  RELATION
THERETO,  SHALL  BE REPORTED TO THE APPROPRIATE LICENSING BOARDS AND THE
SUPERINTENDENT.
  (H) DATA GENERATED BY OR RECEIVED IN CONNECTION WITH THESE ACTIVITIES,
INCLUDING WRITTEN REPORTS, NOTES OR RECORDS OF ANY SUCH ACTIVITIES OR OF
THE REVIEW THEREOF, SHALL BE CONFIDENTIAL AND SHALL  NOT  BE  DISCLOSED,
EXCEPT TO THE EXTENT DETERMINED TO BE NECESSARY BY THE SUPERINTENDENT OR
THE  COMMISSIONER  OF  HEALTH.  NO DATA GENERATED BY UTILIZATION REVIEW,
QUALITY ASSURANCE OR PEER REVIEW ACTIVITIES PURSUANT TO THIS SECTION, OR
THE REVIEW THEREOF, SHALL BE USED IN ANY  ACTION,  SUIT  OR  PROCEEDING,
EXCEPT TO THE EXTENT DETERMINED TO BE NECESSARY BY THE SUPERINTENDENT OR
THE COMMISSIONER.
  (I)  A  PERSON PARTICIPATING IN UTILIZATION REVIEW, QUALITY ASSURANCE,
OR PEER REVIEW ACTIVITIES PURSUANT TO THIS SECTION SHALL NOT BE EXAMINED
AS TO ANY COMMUNICATION MADE IN THE COURSE OF  SUCH  ACTIVITIES  OR  THE
FINDINGS THEREOF, NOR SHALL ANY SUCH PERSON BE SUBJECT TO A CIVIL ACTION
FOR ACTIONS TAKEN OR STATEMENTS MADE IN GOOD FAITH.
  (J) PROVIDED THAT THERE IS COMPLIANCE WITH STANDARDS GOVERNING MANAGED
CARE  ESTABLISHED  BY  THE SUPERINTENDENT, NO PERSON WHO PARTICIPATES IN
FORMING ANY NETWORK, COLLECTIVELY NEGOTIATING FEES, OR OTHERWISE  SOLIC-
ITS  OR ENTERS INTO CONTRACTS IN A GOOD FAITH EFFORT, TO PROVIDE MEDICAL
OR OTHER HEALTH CARE SERVICES ON A MANAGED CARE BASIS IN ACCORDANCE WITH
THE PROVISIONS OF THIS SECTION, SHALL BE SUBJECT TO ANTITRUST  LIABILITY
REGARDING SUCH PARTICIPATION.
  (K) THE PROVISIONS OF THIS SECTION SHALL NOT AFFECT THE CONFIDENTIALI-
TY OR ADMISSION IN EVIDENCE OF A CLAIMANT'S MEDICAL TREATMENT RECORDS.
  (L)  THE  SUPERINTENDENT,  IN  CONSULTATION  WITH  THE COMMISSIONER OF
HEALTH, SHALL ADOPT SUCH RULES AS MAY BE  NECESSARY  TO  CARRY  OUT  THE
PROVISIONS OF THIS SECTION.
  S  3.  Paragraph  1 of subsection (a) of section 5102 of the insurance
law, as amended by chapter 298 of the laws of 2006, is amended  to  read
as follows:

A. 2964                             4

  (1)  All  necessary  expenses  incurred  for:  (i)  medical,  hospital
(including services rendered in compliance with article forty-one of the
public health law, whether or not such services are rendered directly by
a hospital), surgical, nursing, dental, ambulance,  x-ray,  prescription
drug   and  prosthetic  services;  (ii)  psychiatric,  physical  therapy
(provided that treatment is rendered pursuant to a referral) and occupa-
tional therapy and rehabilitation; (iii) any non-medical  remedial  care
and  treatment rendered in accordance with a religious method of healing
recognized by the laws of this state; and (iv)  any  other  professional
health services; all without limitation as to time, provided that within
one  year after the date of the accident causing the injury it is ascer-
tainable that further expenses may be incurred as a result of the  inju-
ry.  For  the  purpose  of determining basic economic loss, the expenses
incurred under this paragraph shall be in accordance  with  the  limita-
tions  of  section  five  thousand  one  hundred  eight of this article.
MEDICAL TREATMENTS, DIAGNOSTIC TESTS AND SERVICES PROVIDED BY THE POLICY
SHALL BE RENDERED IN ACCORDANCE WITH  COMMONLY  ACCEPTED  PROTOCOLS  AND
PROFESSIONAL  STANDARDS  AND  PRACTICES  WHICH  ARE COMMONLY ACCEPTED AS
BEING BENEFICIAL FOR THE TREATMENT OF THE COVERED INJURY.  PROTOCOLS AND
PROFESSIONAL STANDARDS AND PRACTICES WHICH ARE  DEEMED  TO  BE  COMMONLY
ACCEPTED  PURSUANT TO THIS SECTION SHALL BE THOSE RECOGNIZED BY NATIONAL
STANDARD SETTING ORGANIZATIONS, NATIONAL OR STATE PROFESSIONAL ORGANIZA-
TIONS OF THE SAME DISCIPLINE AS THE TREATING PROVIDER  OR  THOSE  DESIG-
NATED  OR  APPROVED  BY  THE SUPERINTENDENT IN CONSULTATION WITH PROFES-
SIONAL LICENSING BOARDS IN THE DEPARTMENT OF HEALTH AND  THE  DEPARTMENT
OF EDUCATION. THE SUPERINTENDENT, IN CONSULTATION WITH THE COMMISSIONERS
OF  HEALTH AND EDUCATION, MAY REJECT THE USE OF PROTOCOLS, STANDARDS AND
PRACTICES OR LISTS OF DIAGNOSTIC TESTS SET BY  ANY  ORGANIZATION  DEEMED
NOT TO HAVE STANDING OR GENERAL RECOGNITION BY THE PROVIDER COMMUNITY OR
APPLICABLE  LICENSING  BOARDS.    PROTOCOLS SHALL BE DEEMED TO ESTABLISH
GUIDELINES AS TO STANDARD APPROPRIATE TREATMENT AND DIAGNOSTIC TESTS FOR
INJURIES SUSTAINED IN AUTOMOBILE ACCIDENTS,  BUT  THE  ESTABLISHMENT  OF
STANDARD  TREATMENT  PROTOCOLS  OR  PROTOCOLS  FOR THE ADMINISTRATION OF
DIAGNOSTIC TESTS SHALL NOT  BE  INTERPRETED  IN  SUCH  A  MANNER  AS  TO
PRECLUDE  VARIANCE  WHEN  WARRANTED  BY REASON OF MEDICAL NECESSITY. THE
POLICY FORM MAY PROVIDE FOR  PRE-CERTIFICATION  OF  CERTAIN  PROCEDURES,
TREATMENTS,  DIAGNOSTIC  TESTS  OR OTHER SERVICES OR FOR THE PURCHASE OF
DURABLE MEDICAL GOODS OR EQUIPMENT,  EXCEPT  THAT  NO  PRE-CERTIFICATION
REQUIREMENT  SHALL  APPLY WITHIN TEN DAYS OF THE ACCIDENT GIVING RISE TO
THE INJURY.
  S 4. Subsection (d) of section 5103 of the insurance law is amended to
read as follows:
  (d) Insurance policy forms for insurance to satisfy  the  requirements
of  subsection (a) [hereof] OF THIS SECTION shall be subject to approval
pursuant to article twenty-three of this chapter. Minimum benefit stand-
ards for such policies and for self-insurers, and rights of subrogation,
examination and other such matters, shall be established  by  regulation
pursuant  to section three hundred one of this chapter, PROVIDED, HOWEV-
ER, THAT EFFECTIVE  IMMEDIATELY  SUCH  REGULATION  SHALL  BE  DEEMED  TO
INCLUDE  NEW  PROVISIONS  APPLICABLE TO INJURIES WHICH OCCUR ON OR AFTER
THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND NINE  THAT
AMENDED  THIS  SUBSECTION AND ESTABLISHED THE NEW YORK AUTOMOBILE INSUR-
ANCE FRAUD AND PREMIUM REDUCTION ACT.   SUCH  REGULATION  SHALL  PROVIDE
THAT  THE  INITIAL  FILING  OF  A  NOTICE OF THE EXISTENCE OF A CLAIM OR
CLAIMS FOR FIRST PARTY BENEFITS BY A COVERED PERSON SHALL BE MADE WITHIN
THIRTY DAYS OF SUSTAINING AN INJURY FOR WHICH SUCH CLAIM OR  CLAIMS  MAY

A. 2964                             5

BE  MADE,  BUT  WHICH  PERMIT  THE  FILING OF SUCH INITIAL NOTICE OF THE
EXISTENCE OF A CLAIM OR CLAIMS AS SOON AS REASONABLY  PRACTICABLE  AFTER
THE  EXPIRATION OF SUCH THIRTY DAY PERIOD WHERE THE NATURE OF THE INJURY
RESULTS  IN  A REASONABLY JUSTIFIABLE DELAY IN FILING THE INITIAL NOTICE
DURING SUCH THIRTY DAY PERIOD.
  S 5. Section 5108 of the insurance law is  amended  by  adding  a  new
subsection (d) to read as follows:
  (D)  PROOF  OF  THE  FACT  AND  COST OF A MEDICAL OR HEALTH SERVICE OR
TREATMENT WHICH IS NEEDED FOR A COVERED PERSON  TO  RECEIVE  PAYMENT  OR
REIMBURSEMENT FOR THAT PORTION OF A CLAIM OR CLAIMS ATTRIBUTABLE TO SUCH
SERVICE  OR  TREATMENT, WHETHER SUCH PROOF IS SUBMITTED TO A FIRST PARTY
OR ADDITIONAL FIRST PARTY BENEFITS INSURER  BY  THE  COVERED  PERSON  OR
DIRECTLY BY A MEDICAL PROFESSIONAL OR HEALTH SERVICES PROVIDER ON BEHALF
OF  SUCH COVERED PERSON, FOR A SERVICE RENDERED BY THE MEDICAL OR HEALTH
SERVICES PROVIDER TO  THE  COVERED  PERSON  SHALL  BE  SUBMITTED  WITHIN
FORTY-FIVE  DAYS  FROM  THE DATE THE SERVICE WAS RENDERED TO THE COVERED
PERSON. AT THE OPTION OF THE INSURER, IN  ANY  CASE  WHERE  MULTIPLE  OR
CONTINUING  MEDICAL  OR HEALTH TREATMENTS OR SERVICES ARE REQUIRED, SUCH
TIME LIMIT MAY BE WAIVED AND THE CLAIMS OF ONE OR MORE SUCH  MEDICAL  OR
HEALTH SERVICE PROVIDERS MAY BE BUNDLED.
  S  6. Section 5106 of the insurance law, subsection (b) as amended and
subsection (d) as added by chapter 452 of the laws of 2005,  is  amended
to read as follows:
  S  5106.  Fair claims settlement. (a) Payments of first party benefits
and additional first party  benefits  shall  be  made  as  the  loss  is
incurred.  Such  benefits  are  overdue  if  not  paid  within  [thirty]
FORTY-FIVE days after the claimant supplies proof of the fact and amount
of loss sustained. If proof is not supplied as to the entire claim,  the
amount  which is supported by proof is overdue if not paid within [thir-
ty] FORTY-FIVE days after such proof is supplied. All  overdue  payments
shall  bear  interest  at  the rate of two percent per month. If a valid
claim or portion was overdue, the claimant shall  also  be  entitled  to
recover   his   attorney's  reasonable  fee,  for  services  necessarily
performed in connection with securing  payment  of  the  overdue  claim,
subject to limitations promulgated by the superintendent in regulations.
THE FAILURE TO ISSUE A DENIAL OF A CLAIM WITHIN THE FORTY-FIVE DAY PERI-
OD  PROVIDED  FOR IN THIS SUBSECTION SHALL NOT PRECLUDE THE INSURER FROM
RAISING A DEFENSE TO THE CLAIM WHERE THE INSURER HAS MADE  A  REPORT  TO
THE  INSURANCE  FRAUDS  BUREAU  PURSUANT TO SECTION FOUR HUNDRED FIVE OF
THIS CHAPTER. AN INSURER WILL ALSO NOT BE  PRECLUDED  FROM  ESTABLISHING
THAT THE CLAIMANT HAS FAILED TO MEET ITS PRIMA FACIE BURDEN OF PROOF.
  (b)  Every  insurer shall [provide] NOTIFY a claimant [with the option
of submitting] THAT any dispute involving the insurer's liability to pay
first party benefits, or additional first  party  benefits,  the  amount
thereof  or  any other matter which may arise pursuant to subsection (a)
of this section [to] MUST BE SETTLED BY arbitration pursuant to  simpli-
fied  procedures  to  be  promulgated or approved by the superintendent.
Such simplified procedures shall include an expedited eligibility  hear-
ing  option,  when  required,  to  designate the insurer for first party
benefits pursuant to subsection  (d)  of  this  section.  The  expedited
eligibility  hearing  option  shall  be a forum for eligibility disputes
only, and shall not include  the  submission  of  any  particular  bill,
payment or claim for any specific benefit for adjudication, nor shall it
consider any other defense to payment.
  (c) An award by an arbitrator shall be binding except where vacated or
modified by a master arbitrator in accordance with simplified procedures

A. 2964                             6

to  be  promulgated  or  approved by the superintendent. The grounds for
vacating or modifying an arbitrator's award by a master arbitrator shall
not be limited to those grounds for review set forth in  article  seven-
ty-five of the civil practice law and rules. The award of a master arbi-
trator  shall  be binding except for the grounds for review set forth in
article seventy-five of the civil practice law and rules[, and  provided
further  that where the amount of such master arbitrator's award is five
thousand dollars or greater, exclusive of interest and attorney's  fees,
the  insurer  or the claimant may institute a court action to adjudicate
the dispute de novo].
  (d) Where there is reasonable belief more than one  insurer  would  be
the  source  of first party benefits, the insurers may agree among them-
selves, if there is a valid basis therefor, that one of them will accept
and pay the claim initially. If there is no  such  agreement,  then  the
first  insurer to whom notice of claim is given shall be responsible for
payment. Any such dispute shall be resolved in accordance with the arbi-
tration procedures established pursuant to  section  five  thousand  one
hundred five of this article and regulation as promulgated by the super-
intendent,  and  any  insurer paying first-party benefits shall be reim-
bursed by other insurers for their proportionate share of the  costs  of
the claim and the allocated expenses of processing the claim, in accord-
ance  with  the  provisions entitled "other coverage" contained in regu-
lation and the provisions entitled "other sources of  first-party  bene-
fits" contained in regulation. If there is no such insurer and the motor
vehicle accident occurs in this state, then an applicant who is a quali-
fied person as defined in article fifty-two of this chapter shall insti-
tute  the  claim  against  motor vehicle accident indemnification corpo-
ration.
  S 7.  Subsection (c) of section 5303 of the insurance law  is  amended
to read as follows:
  (c)  Such  plan  shall  provide  for  the method of classifying risks,
establishing territories  and  making  rates  applicable  thereto.  Such
rates[, except with respect to rates for the minimum limits of insurance
required  by article six or seven of the vehicle and traffic law,] shall
be based upon loss and expense experience of the risks insured  pursuant
to the plan.
  S  8.  Paragraph  11 of subsection (d) of section 405 of the insurance
law, as added by chapter 678 of the laws of 1997, is amended to read  as
follows:
  (11) an assessment of law enforcement and insurance company activities
to detect and curtail the incidence of operating a motor vehicle without
proper insurance coverage as required by this chapter  AND THE INCIDENCE
OF  MISREPRESENTATION  BY  INSUREDS  OF  THE PRINCIPAL PLACE WHERE MOTOR
VEHICLES ARE GARAGED AND DRIVEN.
  S 9. The insurance law is amended by adding a  new  section  405-a  to
read as follows:
  S  405-A.   COMPENSATION FOR REPORT OF INSURANCE FRAUD TO LAW ENFORCE-
MENT AUTHORITIES. (A)  ANY  PERSON,  OTHER  THAN  PERSONS  DESCRIBED  IN
SUBSECTION  (A)  OF  SECTION  FOUR HUNDRED FIVE OF THIS ARTICLE, WHO HAS
REASON TO BELIEVE THAT A FRAUDULENT INSURANCE ACT PROHIBITED PURSUANT TO
ARTICLE ONE HUNDRED SEVENTY-SIX OF THE PENAL LAW HAS BEEN  COMMITTED  OR
THAT AN INSURANCE TRANSACTION MAY BE FRAUDULENT, OR HAS KNOWLEDGE THAT A
FRAUDULENT  INSURANCE  TRANSACTION  IS ABOUT TO TAKE PLACE, OR HAS TAKEN
PLACE MAY REPORT SUCH ACT OR TRANSACTION AND ANY ADDITIONAL  INFORMATION
RELATIVE TO THE FACTUAL CIRCUMSTANCES OF THE TRANSACTION AND THE PARTIES

A. 2964                             7

INVOLVED  TO THE ATTORNEY GENERAL, DISTRICT ATTORNEY OR INSURANCE FRAUDS
BUREAU.
  (B)  IF THE INSURANCE FRAUDS BUREAU RECOMMENDS TO THE ATTORNEY GENERAL
OR DISTRICT ATTORNEY TO COMMENCE AN ACTION OR IF THE ATTORNEY GENERAL OR
DISTRICT ATTORNEY COMMENCES AN ACTION BASED ON INFORMATION PROVIDED BY A
PERSON PURSUANT TO SUBSECTION (A) OF  THIS  SECTION,  THEN  SUCH  PERSON
SHALL  BE  ENTITLED TO RECEIVE AN AWARD OF AT LEAST FIFTEEN PERCENT, BUT
NOT MORE THAN TWENTY-FIVE PERCENT OF  THE  PROCEEDS  OF  THE  ACTION  OR
SETTLEMENT OF THE CLAIM UP TO A MAXIMUM OF TWENTY-FIVE THOUSAND DOLLARS.
THE  ATTORNEY  GENERAL OR DISTRICT ATTORNEY SHALL RECOMMEND TO THE COURT
WHEN A SETTLEMENT IS ENTERED THE AMOUNT OF SUCH AWARD. THE  COURT  SHALL
BASE SUCH AWARD DECISION ON THE EXTENT TO WHICH THE PERSON SUBSTANTIALLY
CONTRIBUTED TO THE PROSECUTION OF THE ACTION.
  S  10.  Section 176.00 of the penal law is amended by adding three new
subdivisions 6, 7 and 8 to read as follows:
  6. "PROVIDER" MEANS AN ATTORNEY, A HEALTH CARE PROFESSIONAL, AN  OWNER
OR  OPERATOR  OF  A  HEALTH  CARE  PRACTICE  OR FACILITY, ANY PERSON WHO
CREATES THE IMPRESSION THAT HE OR  SHE,  OR  HIS  OR  HER  PRACTICE  CAN
PROVIDE  LEGAL OR HEALTH CARE SERVICES, OR ANY PERSON EMPLOYED OR ACTING
ON BEHALF OF ANY SUCH PERSON.
  7. "PUBLIC MEDIA" MEANS TELEPHONE DIRECTORIES,  PROFESSIONAL  DIRECTO-
RIES,  NEWSPAPERS  AND  OTHER  PERIODICALS,  RADIO AND TELEVISION, BILL-
BOARDS, AND MAILED OR ELECTRONICALLY TRANSMITTED WRITTEN  COMMUNICATIONS
THAT  DO  NOT  INVOLVE  IN-PERSON  CONTACT  WITH  A SPECIFIC PROSPECTIVE
CLIENT, PATIENT, OR CUSTOMER.
  8. "RUNNER" MEANS A PERSON WHO, FOR A PECUNIARY BENEFIT,  PROCURES  OR
ATTEMPTS  TO  PROCURE A CLIENT, PATIENT OR CUSTOMER AT THE DIRECTION OF,
REQUEST OF OR IN COOPERATION WITH A PROVIDER WHEN SUCH PERSON  KNOWS  OR
HAS  REASON  TO  KNOW  THAT  THE  PURPOSE OF SUCH PROVIDER IS TO SEEK TO
FALSELY OR FRAUDULENTLY: OBTAIN BENEFITS UNDER A CONTRACT OF  INSURANCE;
OR ASSERT A CLAIM AGAINST AN INSURED OR AN INSURANCE CARRIER FOR PROVID-
ING  SERVICES  TO  THE  CLIENT, PATIENT OR CUSTOMER. SUCH TERM SHALL NOT
INCLUDE A PERSON WHO PROCURES OR ATTEMPTS TO PROCURE  CLIENTS,  PATIENTS
OR  CUSTOMERS FOR A PROVIDER THROUGH PUBLIC MEDIA OR A PERSON WHO REFERS
CLIENTS, PATIENTS OR CUSTOMERS AS AUTHORIZED BY LAW.   NOTHING  IN  THIS
ARTICLE  SHALL  BE  DEEMED TO PROHIBIT AN AGENT, BROKER OR EMPLOYEE OF A
HEALTH MAINTENANCE ORGANIZATION FROM SEEKING TO SELL HEALTH  MAINTENANCE
ORGANIZATION  COVERAGE  OR HEALTH INSURANCE COVERAGE TO AN INDIVIDUAL OR
GROUP.
  S 11. Subdivision 1 of section 176.05 of the penal law, as amended  by
chapter  635  of  the laws of 1996 and as designated by chapter 2 of the
laws of 1998, is amended to read as follows:
  1. A fraudulent insurance act is committed by any person who, knowing-
ly and with intent to defraud  presents,  causes  to  be  presented,  or
prepares with knowledge  or belief that it will be presented to or by an
insurer,  self insurer, or purported insurer, or purported self insurer,
or any agent thereof, any written statement as part of,  or  in  support
of, an application for the issuance of, or the rating of a POLICY INSUR-
ING  AGAINST  LOSSES OR LIABILITIES ARISING OUT OF THE OWNERSHIP, OPERA-
TION, OR USE OF A MOTOR  VEHICLE,  A  commercial  insurance  policy,  or
certificate  or  evidence  of self insurance for commercial insurance or
commercial self insurance, or a  claim  for  payment  or  other  benefit
pursuant to an insurance policy or self insurance program for commercial
or  personal  insurance which he OR SHE knows to: (i) contain materially
false information concerning any fact material thereto; or (ii) conceal,

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for the purpose of misleading, information concerning any fact  material
thereto.
  S  12. The penal law is amended by adding a new section 176.50 to read
as follows:
S 176.50 UNLAWFUL PROCUREMENT OF CLIENTS, PATIENTS OR CUSTOMERS.
  A PERSON IS GUILTY OF UNLAWFUL PROCUREMENT  OF  CLIENTS,  PATIENTS  OR
CUSTOMERS WHEN, HE OR SHE KNOWINGLY:
  1. ACTS AS A RUNNER; OR
  2.  USES, SOLICITS, DIRECTS, HIRES OR EMPLOYS ANOTHER PERSON TO ACT AS
A RUNNER.
  UNLAWFUL PROCUREMENT OF CLIENTS, PATIENTS OR CUSTOMERS IS  A  CLASS  E
FELONY.
  S  13.  Section  176.15 of the penal law, as amended by chapter 515 of
the laws of 1986, is amended to read as follows:
S 176.15 Insurance fraud in the fourth degree.
  A person is guilty of insurance fraud in the  fourth  degree  when  he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold proper-
ty with a value in excess of [one thousand] FIVE HUNDRED dollars.
  Insurance fraud in the fourth degree is a class E felony.
  S  14.  Section  176.20 of the penal law, as amended by chapter 515 of
the laws of 1986, is amended to read as follows:
S 176.20 Insurance fraud in the third degree.
  A person is guilty of insurance fraud in  the  third  degree  when  he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold proper-
ty with a value in excess of [three] ONE thousand FIVE HUNDRED dollars.
  Insurance fraud in the third degree is a class D felony.
  S  15. Section 176.25 of the penal law, as added by chapter 515 of the
laws of 1986, is amended to read as follows:
S 176.25 Insurance fraud in the second degree.
  A person is guilty of insurance fraud in the  second  degree  when  he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold proper-
ty with a value in excess of [fifty] TWENTY-FIVE thousand dollars.
  Insurance fraud in the second degree is a class C felony.
  S  16. Section 176.30 of the penal law, as added by chapter 515 of the
laws of 1986, is amended to read as follows:
S 176.30 Insurance fraud in the first degree.
  A person is guilty of insurance fraud in  the  first  degree  when  he
commits a fraudulent insurance act and thereby wrongfully takes, obtains
or withholds, or attempts to wrongfully take, obtain or withhold proper-
ty  with  a  value  in  excess  of  [one  million] FIVE HUNDRED THOUSAND
dollars.
  Insurance fraud in the first degree is a class B felony.
  S 17. Section 176.35 of the penal law, as added by chapter 635 of  the
laws of 1996, is amended to read as follows:
S 176.35 Aggravated insurance fraud IN THE THIRD DEGREE.
  A person is guilty of aggravated insurance fraud in the [fourth] THIRD
degree  when  he OR SHE commits [a fraudulent insurance act] THE OFFENSE
OF INSURANCE  FRAUD  IN  THE  FIFTH  DEGREE,  and  has  been  previously
convicted  within  the preceding five years of any offense, an essential
element of which is the commission of a fraudulent insurance act.
  Aggravated insurance fraud in the [fourth] THIRD degree is a  class  D
felony.

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  S  18.  The penal law is amended by adding two new sections 176.40 and
176.45 to read as follows:
S 176.40 AGGRAVATED INSURANCE FRAUD IN THE SECOND DEGREE.
  A  PERSON IS GUILTY OF AGGRAVATED INSURANCE FRAUD IN THE SECOND DEGREE
WHEN HE OR SHE COMMITS THE OFFENSE OF  INSURANCE  FRAUD  IN  THE  FOURTH
DEGREE,  AND  HAS  BEEN  PREVIOUSLY  CONVICTED WITHIN THE PRECEDING FIVE
YEARS OF ANY OFFENSE, AN ESSENTIAL ELEMENT OF WHICH IS THE COMMISSION OF
A FRAUDULENT INSURANCE ACT.
  AGGRAVATED INSURANCE FRAUD IN THE SECOND DEGREE IS A CLASS C FELONY.
S 176.45 AGGRAVATED INSURANCE FRAUD IN THE FIRST DEGREE.
  A PERSON IS GUILTY OF AGGRAVATED INSURANCE FRAUD IN THE  FIRST  DEGREE
WHEN  HE  OR  SHE  COMMITS  THE  OFFENSE OF INSURANCE FRAUD IN THE THIRD
DEGREE, AND HAS BEEN PREVIOUSLY  CONVICTED  WITHIN  THE  PRECEDING  FIVE
YEARS OF ANY OFFENSE, AN ESSENTIAL ELEMENT OF WHICH IS THE COMMISSION OF
A FRAUDULENT INSURANCE ACT.
  AGGRAVATED INSURANCE FRAUD IN THE FIRST DEGREE IS A CLASS B FELONY.
  S 19. Paragraph (a) of subdivision 2 of section 846-m of the executive
law,  as  amended  by  section  6 of part T of chapter 57 of the laws of
2000, is amended to read as follows:
  (a) The moneys received by the fund shall be expended in a manner that
is consistent with the plan of  operation,  pursuant  to  appropriation,
only  to reimburse costs incurred by provider agencies for pilot program
activities relating to the detection, prevention or reduction  of  motor
vehicle theft and motor vehicle insurance fraud, PROVIDED, HOWEVER, THAT
BEGINNING JANUARY FIRST, TWO THOUSAND TEN, ADDITIONAL MONIES RECEIVED BY
THE  FUND  PURSUANT TO AN APPROPRIATION MADE BY A CHAPTER OF THE LAWS OF
TWO THOUSAND NINE ESTABLISHING THE NEW YORK AUTOMOBILE  INSURANCE  FRAUD
AND  PREMIUM  REDUCTION ACT SHALL BE USED EXCLUSIVELY TO SUPPORT EFFORTS
UNDERTAKEN BY DISTRICT ATTORNEYS TO DETECT, IDENTIFY AND PROSECUTE FRAUD
PERTAINING TO ARTICLE FIFTY-ONE OF THE INSURANCE LAW.
  S 20. No later than eighteen months after the effective date  of  this
act, the superintendent of insurance shall study, evaluate and report to
the  governor  and  legislature  on the impact and effect of this act on
private passenger automobile insurance costs, by  rating  territory,  in
New York state. The superintendent of insurance shall recommend for each
insurer,  by  rating  territory,  a  one-time  premium reduction for the
insurance required pursuant to article 51  of  the  insurance  law  that
reflects  the  reduced  cost of this type of coverage as a result of the
provisions enacted pursuant to this act. Notwithstanding the  provisions
of article 23 of the insurance law, any such recommended reduction shall
be  binding unless demonstrated by an insurer, based on sound underwrit-
ing and actuarial principles reasonably related to actual or anticipated
loss experience, that such reduction would result in underwriting losses
for policies issued in such rating territory.
  S 21.    The  sum  of  three  million  one  hundred  thousand  dollars
($3,100,000),  or  so much thereof as may be necessary, is hereby appro-
priated to the department of transportation out of  any  moneys  in  the
state  treasury  in  the general fund to the credit of the motor vehicle
theft and insurance fraud prevention fund, not  otherwise  appropriated,
and  made  immediately  available,  for  the purpose of carrying out the
provisions of paragraph (a) of subdivision 2 of  section  846-m  of  the
executive  law,  as  amended  pursuant  to section nineteen of this act.
Such moneys shall be payable on the audit and warrant of the comptroller
on vouchers certified or approved by the commissioner of  transportation
in the manner prescribed by law.

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  S 22.  Severability clause. If any clause, sentence, paragraph, subdi-
vision,  section  or  part  contained  in  any part of this act shall be
adjudged by any court of competent  jurisdiction  to  be  invalid,  such
judgment  shall not affect, impair, or invalidate the remainder thereof,
but  shall  be  confined in its operation to the clause, sentence, para-
graph, subdivision, section or part of this act contained  in  any  part
thereof  directly  involved  in  the  controversy in which such judgment
shall have been rendered. It is hereby declared to be the intent of  the
legislature  that  this act would have been enacted even if such invalid
provisions had not been included herein.
  S 23. 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.