MED. SOCY. v. Levin

• Decision Date: 09 June 2000
• Citation: MED. SOCY. v. Levin, 185 Misc.2d 536, 712 N.Y.S.2d 745 (N.Y. Sup. Ct. 2000)
• Court: New York Supreme Court
• Parties: In the Matter of MEDICAL SOCIETY OF THE STATE OF NEW YORK, INC., et al., Petitioners,<BR>v.<BR>NEIL D. LEVIN, as Superintendent of Insurance for the State of New York, et al., Respondents.

185 Misc.2d 536

712 N.Y.S.2d 745

In the Matter of MEDICAL SOCIETY OF THE STATE OF NEW YORK, INC., et al., Petitioners,

v.NEIL D. LEVIN, as Superintendent of Insurance for the State of New York, et al., Respondents.

June 9, 2000.

Gleason, Dunn, Walsh & O'Shea, P. C., Albany (Thomas F. Gleason and Michael P. Ravalli of counsel), for petitioners.

Suzanne Y. Mattei, New York City, for New York State Trial Lawyers Association, Inc., petitioner.

Eliot Spitzer, Attorney General, New York City (August Fietkau of counsel), for respondents.

Harter, Secrest & Emery, L. L. P., Rochester (Matthew D. Brown of counsel), for New York State Chiropractors Association, amicus curiae.

OPINION OF THE COURT

PHYLLIS GANGEL-JACOB, J.

By this combined proceeding petitioners seek (1) judgment pursuant to CPLR 3001, declaring null and void as contrary to law and lawful procedure the recent amendments to the regulations contained in 11 NYCRR part 65 which implement article 51 of the Insurance Law (No-Fault Automobile Insurance Law)^[1] adopted and approved by respondents Neil D. Levin, as Superintendent of Insurance, and the State of New York Insurance Department (respondents), with an effective date of February 1, 2000, also known as Regulation 68, set forth in respondents' notice of adoption dated November 3, 1999 (the New Regulations),^[2] and (2) judgment pursuant to CPLR article 78 annulling the New Regulations on the grounds that respondents have failed to perform a duty enjoined upon them by law, have acted in excess of their jurisdiction, and the adoption and approval of the New Regulations was affected by errors of law and was arbitrary and capricious.

By legislative enactment in 1973, as amended, the system for compensating automobile accident victims was completely changed. No-fault reform virtually extinguished the common-law rights of ordinary citizens who are automobile accident victims to sue for damages in tort (unless there is "serious injury" or economic loss in excess of "basic economic loss," as defined in the statute) in exchange for prompt uncontested statutorily assured payment of "first-party benefits" (as defined in the statute) for basic economic loss, without the necessity of recourse to the courts (see, Montgomery v Daniels, 38 NY2d 41 [1975]; Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211 [1996]; see also, Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997]; Insurance Law §§ 5102, 5104). The law applies generally to all automobile accidents that occur throughout New York State and in some instances those that occur outside the State that involve New York citizens, and evinces the Legislature's intention that first-party benefits under no-fault reform be made widely and promptly available to all injured persons within New York's legislative jurisdiction (Insurance Law §§ 5103, 5107). The law refers to persons entitled to no-fault benefits as "covered persons" (see, Insurance Law § 5102 [j]). First-party benefits provide reimbursement to covered persons of up to $50,000 per person for medical expenses and loss of income due to automobile accident injuries (see, Insurance Law §§ 5102, 5104).

Under Insurance Law § 301 respondent Superintendent of Insurance is vested with the power to prescribe regulations interpreting the provisions of the Insurance Law provided that such regulations are not inconsistent with specific provisions of the law (see, Matter of New York Pub. Interest Research Group v New York State Dept. of Ins., 66 NY2d 444, 448 [1985]; Insurance Law § 301; see also, Insurance Law § 5103 [d]). The New Regulations are intended to repeal and replace the pre-existing No-Fault Automobile Insurance Law regulations promulgated at 11 NYCRR part 65 (the Current Regulations),^[3] and include the following changes to the Current Regulations which are complained of by petitioners herein:

1. The maximum time within which eligible injured persons shall notify no-fault insurers of an accident has been reduced from 90 to 30 days, with the requirement of "written proof providing clear and reasonable justification for the failure to comply with such time limitation" (compare, Current Regulations [11 NYCRR] § 65.11 [m] [2], with New Regulations [11 NYCRR] § 65-1.1 [d] [Mandatory Personal Injury Protection Endorsement § I, Conditions, Notice]; § 65-2.4 [b]).

2. The maximum time within which eligible injured persons or their assignees shall submit written proofs of claim to insurers for medical treatment has been reduced from 180 to 45 days after the date services are rendered, with the requirement of "written proof providing clear and reasonable justification for the failure to comply with such time limitation" (compare, Current Regulations § 65.11 [m] [3], with New Regulations § 65-1.1 [d] [Mandatory Personal Injury Protection Endorsement § I, Conditions, Proof of Claim]; § 65-2.4 [c]); in addition a maximum time limit of 90 days for submission of written proofs of claim for work/earnings loss has been substituted for within a reasonable time as provided for in the Current Regulations (id.).

3. The method of payment of interest on overdue mandatory no-fault benefits to an applicant or an assignee is changed from a compound rate of 2% per month on all overdue payments to a simple interest rate of 2% per month (compare, Current Regulations § 65.15 [h] [1], with New Regulations § 65-3.9 [a]; see, Insurance Law § 5106 [a]).

4. A new provision is added that no attorney's fees are to be paid by insurers if the charges by a health care provider who is an applicant for benefits exceed statutory limits (New Regulations § 65-4.7 [i]; cf., Current Regulations § 65.15 [i]; see, Insurance Law § 5106 [a]).

5. A new provision has been added to the arbitration forum procedures that "[t]he arbitrator may raise any issue that the arbitrator deems relevant to making an award that is consistent with the Insurance Law and department regulations" (compare, New Regulations § 65-4.5 [e]; § 65-4.6 [n], with Current Regulations § 65.17 [b] [4] [v]).

6. Under the direct payment provisions of the New Regulations the ability of nonlicensed providers of medical equipment to become assignees of covered persons/applicants is eliminated (compare, New Regulations § 65-3.11 [a], with Current Regulations § 65.15 [j] [1]).

Petitioners claim that the challenged regulations have a profound, impermissibly destructive impact on the careful balance crafted by the Legislature in enacting the No-Fault Law concerning the rights and interests of injured claimants and their providers on the one hand and those of insurance companies on the other, that they reduce the rights and increase the burdens on covered persons contrary to the intent of no-fault reform, and that the impacts of the proposed changes on small businesses and other members of the public were not properly or adequately identified, discussed or evaluated in respondents' public notices as required by the provisions of the State Administrative Procedure Act. Petitioners assert the invalidity of the New Regulations for respondents' failure to substantially comply with the requirements of the State Administrative Procedure Act and in their failure to consider viable alternatives to the perceived problems of abuse, such as targeted enforcement. Petitioners assert that the New Regulations are not consistent with the provisions of Insurance Law article 51, contrary to respondents' grant of authority under section 301 to prescribe regulations "not inconsistent" therewith.

Section 202 of the State Administrative Procedure Act establishes certain minimum procedures that an agency must follow when promulgating regulations, including the requirements that an agency publish in the New York State Register a notice of proposed rule making which affords the public an opportunity to submit comments on the proposed rule and, subsequently, a notice of adoption which includes an assessment of the public comment submitted on the proposed rule, to include "(i) a summary and an analysis of the issues raised and significant alternatives suggested by any such comments, (ii) a statement of the reasons why any significant alternatives were not incorporated into the rule and (iii) a description of any changes made in the rule as a result of such comments" (State Administrative Procedure Act § 202 [5] [b]). The standard to be met in determining the validity of an agency's rule making under the statute is "substantial compliance" (State Administrative Procedure Act § 202 [8]). State Administrative Procedure Act § 202 (1) (f) requires the agency's notice of proposed rule making, among other things, to include a regulatory impact statement (RIS) prepared pursuant to section 202-a, and a regulatory flexibility analysis (RFA) prepared pursuant to section 202-b. State Administrative Procedure Act § 202-a, entitled "Regulatory impact," provides, in part:

"1. In developing a rule, an agency shall, to the extent consistent with the objectives of applicable statutes, consider utilizing approaches which are designed to avoid undue deleterious economic effects or overly burdensome impacts of the rule upon persons^[4] * * * directly or indirectly affected by it or upon the economy or administration of state or local governmental agencies * * *

"2. Each [RIS] shall contain [see also, State Administrative Procedure Act § 202-a (3)] * * * "(c) * * * A statement indicating the projected costs (i) for the implementation of, and continuing compliance with, the rule to the state, its local governments and regulated persons and (ii) to the agency for the implementation and continued administration of the rule * * *

"(d) * * * A statement describing the need for any reporting requirements, forms and other paperwork, which would be required as a result of the rule [and] * * *

"(f) * * * A statement indicating whether any significant alternatives to the rule were considered by the agency, including a...