Attorney and Consultant

In Fair Price Med. Supply Corp. a/a/o Cesar Nivelo v. Travelers Indem. Co. 2008 NY Slip Op 04946, Decided on June 5, 2008,the court concluded that if a no-fault insurer does not detect fraud within 30 days it must pay. "While preclusion requires Travelers to pay a no-fault claim it might not have been obligated to honor if timely disclaimed, the same can be said of any policy defense subject to preclusion. Moreover, although there may be some merit to Travelers'' protest that a 30-day (plus potential tolling) window is generally too short a time frame in which to detect billing fraud, any change is up to the Legislature." The dissenters unsuccessfully argued: "The impact of fraud on this State''s no-fault system is notorious, as the Appellate Term majority and the Appellate Division acknowledged, even while rejecting Travelers'' defense. The Appellate Term referred to ''the steep increase in fraudulent no-fault benefits claims arising . . . from provider claims where the services or supplies were . . . never rendered''; the Appellate Division said that ''the fraud and abuse that plagues the no-fault insurance system is a serious problem with widespread consequences''. Today''s decision, I believe, unjustifiably hinders insurers'' efforts to keep that problem within bounds." It appears that it means nothing to the top court of New York State that they are allowing unquestionably fraudulent claims to be paid. The Court does not find it even slightly disturbing that they are, in effect,legalizing insurance fraud if an insurer does not catch it within 30 days. The court believes allowing fraud to succeed is part of the "trade-off" of the no-fault scheme. The fact that the Court notes the "trade-off" to be a "reduction in litigation" (i.e., fewer liability lawsuits for medical expenses), appears to ignore the fact that tens of thousands of no-fault suits filed each year. Litigation has not been reduced and fraud, apparently is, in New York, a cost of doing business and a business that cannot lose. The New York Legislature should take the advice of its high court and modify its statutes or risk every insurer leaving the state.