New York's insurance regs struck down by court.

A New York court has struck down state insurance regulations that drastically curtailed claims-filing deadlines for consumers injured in auto crashes, finding that insurance regulators "deliberately overlooked" their duties in response to industry interests.

In a stinging opinion by New York Supreme Court Justice Phyllis Gangel-Jacob, the court granted a request from trial lawyers, doctors, and other plaintiffs to halt enforcement of the regulations, which took effect on February 2. Gangel-Jacob invalidated the rules, holding that they were promulgated in violation of the State Administrative Procedure Act (SAPA) and that the state insurance department abused its discretion. (Medical Society of the State of New York v. Levin, No. 102167/00 (N.Y., N.Y. County Sup. Ct. June 9, 2000).)

"It does not take a leap of faith to recognize the destructive impact the new regulations will have on ... ordinary people ... who have suffered injury and who, at that most vulnerable and confusing time, must navigate the waters of bureaucracy as the only way to cover their costs or risk losing their entitlements," Gangel-Jacob wrote. "Despite this knowledge, respondents have taken an astoundingly narrow view of their obligations under SAPA."

The regulation required injured people to submit written notice of their crash to the responsible insurance carrier within 30 days instead of 90 and to submit proof of medical claims within 45 days instead of 180. Plaintiffs opposed to the requirements argued that with the shortened filing windows, claimants may not have enough time to identify the insurer, let alone file an accident notice. (New York Doctors, Lawyers File Joint Suit to Stop Limit on Insurance Claim Deadlines, TRIAL, June 2000, at 108.)

The state insurance department argued that the new regulations were designed to curb fraud by "unscrupulous doctors and lawyers" and would, in turn, contain insurance premium costs. Moving the filing deadlines closer to the date of a crash, the department argued, would give insurers the chance to weed out fraudulent practices and abuse early, while ensuring prompt payment of uncontested first-party insurance claims. The department contended that the insurance regulations were rationally related to and consistent with the legislative purpose of New York's no-fault auto insurance law, which was enacted in 1973.

Gangel-Jacob dismissed the department's arguments and found it failed to address significant requirements of the SAPA. These include an assessment of the projected costs to claimants and their providers of complying with the new regulations, a statement showing that alternative regulation proposals were considered, and a showing that the department addressed the direct effects the regulations would have on the public.

David Golomb, president of the New York State Trial Lawyers Association, characterized the decision as a "resounding and overwhelming victory" for consumers.

"The court articulated that the legislature's intent in enacting [the] no-fault [law] ... was not to grant unneeded favors to the insurance industry at the expense of crash victims," Golomb said.