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

                                  5200

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            February 14, 2011
                               ___________

Introduced  by  M.  of  A.  BARCLAY,  CALHOUN, KOLB, GIGLIO, McKEVITT --
  Multi-Sponsored by -- M.  of A. CROUCH, FINCH,  McDONOUGH,  J. MILLER,
  RABBITT, SAYWARD, THIELE -- 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
REQUIREMENTS FOR SUCH INDIVIDUALS OR ORGANIZATIONS TO PRACTICE  IN  THIS
STATE;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                      [ ] is old law to be omitted.
                                                           LBD08666-01-1

A. 5200                             2

  (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
MATTERS  WITHIN  THE  SUPERINTENDENT'S  REVIEW, THE SUPERINTENDENT SHALL
CONSIDER THE REVIEW, APPROVAL OR CERTIFICATION OF ANOTHER  STATE  AGENCY

A. 5200                             3

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:
  (1)  All  necessary  expenses  incurred  for:  (i)  medical,  hospital
(including services rendered in compliance with article forty-one of the

A. 5200                             4

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 ELEVEN
THAT AMENDED THIS SUBSECTION AND ESTABLISHED  THE  NEW  YORK  AUTOMOBILE
INSURANCE  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  BE MADE, BUT WHICH PERMIT THE FILING OF SUCH INITIAL NOTICE
OF THE EXISTENCE OF A CLAIM OR CLAIMS AS SOON AS REASONABLY  PRACTICABLE

A. 5200                             5

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
to be promulgated or approved by the  superintendent.  The  grounds  for
vacating or modifying an arbitrator's award by a master arbitrator shall

A. 5200                             6

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. 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
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

A. 5200                             7

BASE SUCH AWARD DECISION ON THE EXTENT TO WHICH THE PERSON SUBSTANTIALLY
CONTRIBUTED TO THE PROSECUTION OF THE ACTION.
  S  9.  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 10. 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,
for the purpose of misleading, information concerning any fact  material
thereto.
  S  11. The penal law is amended by adding a new section 176.66 to read
as follows:
S 176.66 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.

A. 5200                             8

  S  12.  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 13. 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 14. 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 15. 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  16. 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.
  S 17. The penal law is amended by adding two new sections  176.36  and
176.37 to read as follows:
S 176.36 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 176.37 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

A. 5200                             9

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 18. 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 TWELVE, ADDITIONAL MONIES RECEIVED
BY  THE  FUND PURSUANT TO AN APPROPRIATION MADE BY A CHAPTER OF THE LAWS
OF TWO THOUSAND ELEVEN 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  PROSE-
CUTE FRAUD PERTAINING TO ARTICLE FIFTY-ONE OF THE INSURANCE LAW.
  S  19.  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  20.    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  eighteen  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.
  S 21.  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 22. This act shall take effect on the ninetieth day after  it  shall
have become a law.