No fault insurance in New York
Introduction
In an effort to combat rising automobile insurance rates, in 1974 the New York Legislature passed sweeping changes to the Insurance Law designed to provide a basic level of economic coverage for New York drivers hurt in motor vehicle accidents while at the same time significantly curtailing the number of motor vehicle cases litigated in the State courts.
Known as the No-Fault law, the statutes create a dual system for compensating persons involved in motor vehicle accidents. Regardless of fault, every automobile insurance policy in New York provides for the payment of first-party benefits of up to $50,000 for “basic economic loss” for covered persons injured in car accidents, but bars the filing of lawsuits against the at-fault party to recover non-economic loss (i.e. pain and suffering) except for those who have suffered “serious injury” as defined by the statute. This article will provide a basic outline of how the No-Fault system works and will identify some of the pitfalls that can confront New Yorkers injured in motor vehicle accidents.
Who is covered under the No-Fault Law?
The No-Fault statute defines “covered persons” to include any pedestrian injured through the use of operation of a motor vehicle, any owner, occupant or operator of a motor vehicle, or any other person entitled to first party benefits. Generally, for accidents occurring in New York State or for vehicles insured in New York State, this includes the named insured under the insurance policy and members of the named insured’s household. Bicyclists are also covered persons.
The No-Fault law permits insurance companies to exclude coverage for persons who intentionally injure themselves, who are operating under the influence of alcohol or drugs, who are committing a felony, who are knowingly passengers in a stolen car, who are injured while fleeing the police or while racing. Generally, for these to apply, the insurance company must provide an express exclusion in the policy, which carriers do not always do. In the absence of an express exclusion, there may be no-fault coverage even in some of the circumstances listed above.
Motorcyclists and their passengers are excluded from no-fault coverage, as are non-pedestrians injured by motorcycles. Pedestrian victims of motorcycles are covered by no-fault.
Generally, drivers and occupants of uninsured vehicles are excluded from coverage, as are people who are injured repairing, servicing or maintaining motor vehicles in a repair facility, as opposed to on a roadway.
First Party Benefits
This is the core coverage under the New York No-Fault law that provides up to $50,000 for “basic economic loss” to persons injured in or by an insured vehicle. This coverage, which is on the vehicle and is mandated by law, is often called “Personal Injury Protection” or “PIP”. It is available regardless of fault to cover medical expenses, lost wages and certain other expenses caused by a motor vehicle accident.
Although $50,000 is mandatory on all motor vehicle policies in New York, car owners can buy additional protection above the mandatory $50,000. This is often referred to as “Additional Personal Injury Protection” or APIP.
To obtain first party benefits, an injured party must give the carrier notice of the accident. This will require to injured party to submit a written application to the insurance carrier on a standard form that can be obtained by calling the carrier to report the accident. This form must be properly filled out and filed within 30 days of the accident. Failure to timely file this form will permit the insurance carrier to disclaim coverage for first party benefits. Once the application is timely filed, the insurance carrier is responsible for paying medical expenses related to the accident, lost wages caused by the accident, and other “reasonable and necessary expenses.”
A. Medical Bills
For medical bills, the injured party must give his or her health care providers the insurance information for the no-fault carrier, which normally includes the name of the company, the claim number, and the name of the adjuster responsible for the claim. Armed with that information, the medical provider must bill the no-fault carrier within 45 days of the date of service and failure to do so will result in the carrier being allowed to disclaim coverage.
Once the no-fault carrier has been timely billed, the carrier must pay the bill within 30 days or must provide a written disclaimer stating the reasons why the carrier refuses to cover the bill. The automobile insurance carriers pay bills according to an agreed upon fee schedule that pays medical providers substantially less than their normal fee. Frequently, insurance carriers issue partial disclaimers where they are billed in an amount that is different from the fee schedule. The injured party is not responsible for paying the difference between the medical provider’s normal fee and the no-fault fee schedule.
Insurance carriers disclaim medical bills on a number of grounds, the most frequent of which are that the treatment was for a condition unrelated to the accident or that the treatment was unnecessary. As a basis for the disclaimer, insurance companies rely on record-reviews and on Independent Medical Examinations, also known as IMEs. Upon receiving a written denial, the injured party has the right to dispute the decision in a number of different forums that will be discussed later in this article.
There is no time limit for how long the carrier is obligated to pay accident related medical expenses. However, within one year after the accident the need for future accident-related treatment must be ascertainable. If not, such expenses can still be covered but the injured party bears the burden of showing that the expenses were ascertainable and necessitated by the accident.
B. Lost Wages
The no-fault carrier will pay up to $2,000 a month for not more than three years after a motor vehicle accident. The actual amount is calculated as 80% of the injured party’s average weekly wage. If that number is more than $2,000 for one month, the injured party will be paid $2,000.
New York State Disability benefits and Social Security Disability benefits are an offset to what the No-Fault carrier is required to pay for accident-related lost wages. As a condition for continuing to receive wage loss benefits from the no-fault carrier, the carrier will require an injured party to file for both New York State Disability and Social Security disability even where it appears obvious that the injury party will not qualify for the benefit. The failure to apply can delay, reduce or eliminate the no-fault carrier’s obligation to pay lost wages.
For continuing benefits, the no-fault carrier will require periodic updates from the injured party’s medical provider establishing an on-going disability. As with medical expense payments, the carrier has the right to have an injured part examined by an insurance company physician for an IME, or Independent Medical Examination, so the insurance carrier can make its own decision about whether the injured party is disabled from working. These IMEs can and often do result in disputes where the injured party’s treating physicians have opinions that conflict with the IME physician. These will be discussed in more detail later.
C. Other reasonable and necessary expenses
These can include hiring household help, baby-sitting services and the like. They are limited to $25.00 per day and for only one year.
D. Death benefit
In the event of a motor vehicle related death, the no-fault carrier will pay a $2,000 benefit for funeral expenses in addition to the other elements of basic economic loss.
E. Independent Medical Examination or “IME”
The No-Fault statutes and accompanying regulations specifically permit insurance carriers to have injured people receiving no-fault benefits to be examined by a health care provider chosen by the insurance company. These examinations are called Independent Medical examinations or IMEs for short.
Carriers are not limited to one IME and in fact can have an injured party examined by more than one medical specialist. Rather, the carrier can schedule IMEs as are reasonably necessary to determine whether an injured person is entitled to continuing benefits.
The carrier will schedule and IME without consulting the injured party or that party’s attorney, who will instead receive a written notice regarding the time, date anmd place of the examination. If the scheduled date is inconvenient, unacceptable or otherwise unavailable, the IME can be rescheduled to a future date. This must be done quickly upon receiving the notice. Unexcused failure to attend a scheduled IME can result in the suspension of benefits.
Insurance carriers will make decisions about continuing benefits based on the conclusions reached in an IME. Therefore, it is essential that the injured party or their attorney obtain a copy of every IME that the injured party attends. These reports often for the basis for no-fault disputes.
F. Dealing with No-Fault Disputes
While the no-fault system for first party benefits is designed to run seemlessly without the need for lawyers or litigation, disputes do arise. Usually, the dispute begins with the carrier providing a written denial of claim form stating the reasons why the claim is being denied.
Aggrieved parties, who can include the injured person or their medical providers operating under an assignment of rights, have two options to address disputes; binding arbitration or filing a breach of contract suit. Most disputes are solved through arbitration, as that process is quick and cost effective. Once a party elects the arbitration route, it is deemed an election of remedies and that party will be precluded from filing suit.
Arbitrations are initiated by the aggrieved party completing and filing of a no-fault arbitration request form along with a $40.00 filing fee to the American Arbitration Association. There are detailed instructions with appropriate forms appended to the denial of claim form explaining how an aggrieved party can initiate arbitration.
An injured party who prevails in a no-fault arbitration is entitled to the repayment of the $40.00 arbitration filing fee and to a reasonable attorneys’ fee if represented by counsel.
