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Dynamic Chiropractic – September 23, 1994, Vol. 12, Issue 20

The New, New York No-Fault Insurance Law

How a $25 Discount Can Cost You up to $2,500

By James Hogan, Esq.
Effective March 27, 1994, the insurance law in New York state was amended. The new sections permit insurance carriers to offer their insureds the opportunity to get a discount on their personal injury protection (no fault) coverage. To be eligible for the discount the insured promises, if injured in an auto accident, to go to a health care provider associated with a managed care organization (MCO) designated by the insurance carrier.

Generally, individuals injured in auto accidents may go to the doctor of their own choice, provided that the doctor agrees to bill according to the no-fault fee schedule. The injured party and doctor will determine the type of care and any testing necessary to diagnose and treat the injury. This is still the case, unless the insured has selected the managed care option.

Under the new law, an insurance carrier has the option of offering a discount to its insureds injured in auto accidents, if they agree to go to a designated MCO. The carrier is supposed to provide the insured, or potential insured, with a list of doctors who participate in the MCO prior to that person signing up for the option. Whether or not the person agrees to go to the MCO cannot be a reason to deny coverage to that person.

If an insured takes the discount (applicable to the personal injury protection coverage only and estimated at $15-25), the MCO is supposed to provide any and all of the health care services which would otherwise be available to the injured party if he had not selected the managed care option.

If the injured party goes to a doctor who is not a participant in the MCO, the patient is deemed to be "opting out" of the MCO, and would be subject to penalties. Under the insurance regulations, which are being finalized, the participating carriers may charge a deductible of up to $2,500 and/or a co-payment of up to 25 percent to a person who opts out. So, if you are hurt and have taken the MCO option, and want to see a doctor who does not participate, you will have to pay his bills until the deductible has been paid, and then the carrier may pay only a percentage of the bill.

There are some other problems which might arise, such as a conflict of interest. If your insurance carrier owns the MCO, which is permissible under this law, your treating doctor will be an employee of your insurance company. There may very well be cases where an insured will be making a claim for money damages against his own company, and he will have to rely on the testimony of the treating doctor. The doctor may then be in a position of having to testify against his employer.

Another problem has to do with "guidelines" which may be established by the MCO. Under regular no fault, the carrier can monitor the progress of the patient either by assigning a rehabilitation nurse to work with the patient, or by using outside consultants to examine the patient on a periodic basis. Other than these, the doctors may treat as they deem fit. With the MCO option, the MCO will establish "guidelines" and the care given to the patient will be determined by his progress when compared to the guidelines.

Under the MCO option, diagnostic testing may not be as available to the doctor and patient. Under regular no fault insurance, the treating doctor may perform diagnostic tests in the office or refer the patient out as he feels is necessary. Under the MCO, the ability to do the tests will be different, and the availability of the desired test may be impacted.

This last point is quite significant since diagnostic testing is important when the injured party is trying to demonstrate that he has suffered a "permanent" or "serious" injury. As per the insurance law, if you are going to make a claim for money damages in New York state, you have to demonstrate that you have a "permanent" or "serious" injury. This is usually not a problem when you have a fracture, or a severe laceration, but when you are dealing with a back injury, diagnostic testing is crucial.

In sum, the new law presents the public with a choice when it comes to obtaining or renewing their automobile insurance (personal injury protection coverage). They can do nothing and their no fault coverage will remain unchanged. Or, they can opt for the managed care program, and receive a discount on this coverage, but they should be aware of what they are giving up in return for the discount.

James K. Hogan, Esq.
Patchogue, New York

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