Insurance Advocate January 14, 2019 by C Acunto

Vol. 130 No. 1 | January 14, 2019

PIA On Main St.:

‘WORK WITH AN AGENT’

Lacewell Nominated to Head NYDFS

Your New York DBL/PFL Partner

Learn more, please visit:

www.shelterpoint.com/AboutUs

Sheltering You.

16 ‘Work with an Agent’

Contents

4 Foreword: Straight Laced Steve Acunto, Publisher 6 HR Update: Not to be Ignored: The New I-9 “Smart” Form Alfred T. DeMaria 8 On the Level: How I See It - 2019 & Forward Jamie Deapo 10 Guest Article: So What if ACA is Unconstitutional? Jane M. Orient, M.D. 12 Legal Update: DFS’ Cybersecurity Regulation and

the Compliance Deadline Sari Gabay

14 On My Radar: Contra Proferentem Does Not Apply to a

Clear and Unambiguous Policy

Barry Zalma

18 Feature: ISO Emerging Issues Report 25

In the News: MSO Elects Futon, Makes Staff Changes

Looking Back: December 4, 1993

Insurance Fraud Legion of Shame

28 Courtside: When Provider Bills Under a “By Report” Code,

Insurer Must Demand Supporting Documents if it Wants Them

Lawrence N. Rogak

29 Guest Opinion: The Healthcare Revolution: More Choices,

Not More Taxes

Marilyn M. Singleton, M.D.

30 Courtside: PIP Inurers Must Pay More Than Policy Limit When info@insurance-advocate.com www.insurance-advocate.com

Denied Claims are Lost After Policy Exhaustion

Lawrence N. Rogak INSURANCE ADVOCATE / January 14, 2019 3

[ FOREWORD ]

STEVE ACUNTO, EDITOR & PUBLISHER

Straight Laced

4 January 14, 2019 / INSURANCE ADVOCATE

inda Lacewell has been nominated Superintendent of the New York State Department of Financial Services. She would succeed Maria Vullo in the role. Ms. Lacewell most recently served as Chief of Staff and Counselor to the Governor. In that role, she oversaw Executive Chamber operations, as well as ethics and law enforcement matters. Ms. Lacewell previously served as executive director of a cancer foundation initiative in Culver City, California. Prior to that, Ms. Lacewell served as Chief Risk Officer and Counselor to Governor Cuomo where she built and implemented the first statewide system for ethics, risk and compliance in agencies and authorities. Ms. Lacewell was formerly special counsel to the Governor, as well as the architect of OpenNY, a state-of-the-art open data initiative. She also served as special counsel to Attorney General Cuomo, where she oversaw the public pension fund pay-to-play investigation and the out-of-network health insurance investigation, both of which led to nationwide systemic reform. Prior to that, Ms. Lacewell spent nine years as an assistant U.S. attorney for the Eastern District of New York, including two years on the Enron Task Force, and received the Henry L. Stimson Medal and the Attorney General’s Award for Exceptional Service. Ms. Lacewell earned her B.A. from New College of the University of South Florida and her J.D. with honors from the University of Miami School of Law. She clerked for a United States District Judge for the Southern District of Florida. She serves as an adjunct professor at New York University School of Law, teaching ethics in government, and previously served as an adjunct professor of law at Fordham University School of Law, teaching international criminal law.… Amazing Pamela Newman (pictured above) just received the Woman of Inspiration Award from Business Insurance. Pamela was our inspiring Insurance Person of the Year in 2016 and continues to lead the field of accomplished women across the country.… The Hill, a leading political newspaper, has named Bob Rusbuldt, Big “I” president & CEO (pictured right), and

Charles Symington, Big “I” senior vice president of external, industry, and government affairs (pictured left), among the top trade association lobbyists in Washington, D.C. The Hill piece noted that “ when the stakes are at their highest, these are the players at the top of their game, known for their ability to successfully navigate the byzantine and competitive world of federal policymaking.” The Big “I” had notable legislative wins in the past year, including favorable treatment for C Corporations and pass-through entities in the new tax law, multiple extensions of the National Flood Insurance Program, and protection of the Federal Crop Insurance Program as part of Congressional action on the Farm Bill. “Recognition from a leading publication on Capitol Hill points to the strength of our association in the government affairs arena,” says Joe Leahy, Big “I” chairman and president of Leahy & Brown Insurance + Realty, Inc. in Springfield, Massachusetts. “Thanks to the hard work of president & CEO Bob Rusbuldt, Charles Symington and the entire government affairs staff, the Big ‘I’ is consistently named one of the most influential associations in the country.” Congressional leaders regularly tap the Big “I” federal government affairs team for its policy and political acumen including advising on insurance, financial services and economic issues, along with sitting on congressional steering committees, hosting political events, and strategizing to help members of Congress better serve their constituents and advance top issues. A vital component of the association advocacy efforts is InsurPac, the Big “I” political action committee. “The Big ‘I’ stood out as the only group listed that represents insurance agents and brokers,” says Angela Ripley, Big “I” government affairs committee chairman and president of VW Brown Insurance Service in Columbia, Maryland. “We know the interests of independent insurance agents and brokers are well represented on Capitol Hill with the Big “I” leading the charge. Looks like it.

S I N C E

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VOLUME 130 NUMBER 1 JANUARY 14, 2019

www.insurance-advocate.com EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Jamie Deapo Alfred T. DeMaria Sari Gabay Lawrence N. Rogak Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Gina Marie Balog 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x113 circulation@cinn.com PUBLISHED BY CINN Global Initiatives P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | info@cinn.com www.cinn.com President and CEO Steve Acunto

CINN GROUP

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in January, July, August, and December by CINN ESR, Inc., P.O. Box 9001, Mt. Vernon, NY 10552. Periodical postage pending at Greenwich, CT and additional mailing offices. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $135.00. TO ORDER Call 914-966-3180, email: circulation@cinn.com or write: Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2018. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.

[ HR UPDATE ]

ALFRED T. DEMARIA

Not to be Ignored: The New I-9 “Smart” Form u Just as employers and HR professionals were beginning to get comfortable with the parameters of the old Form I-9, U.S. Citizenship and Immigration Services (USCIS) rolled out a new I-9, which must now be used. The new Form I-9 Employment Eligibility Verification is in two versions a “smart” PDF version (which is called “Form I-9”) and a Form I-9 “paper” version which can be printed and filled out manually. The PDF I-9 has not become solely electronic or mandatory, so once the form is completed on the computer, it still must be printed out and manually signed and dated. Both the smart I-9 PDF and the regular paper version I-9 PDF can be found on USCIS’ website: https://www.uscis.gov/i-9. In addition to rolling out a smart I-9, USCIS made some content-based changes to the form. Three notable changes were made to Section 1 (Employee Information and Attestation):

The PDF I-9 has not become solely electronic or mandatory, so once the form is completed on the computer, it still must be printed out and manually signed and dated.

1. “Other Names Used” was replaced with “Other Last Names Used”; 2. A liens authorized to work may now present an Alien Registration Number or USCIS Number (specifying which number), a Form I-94 Admission Number, or a Foreign Passport Number; and, 3. E mployees must now indicate whether or not they used a preparer or translator to complete the form. Two notable changes were made to Section 2 (Employer or Authorized Representative Review and Verification):

BARRY ZALMA, INC. 4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 | http://zalma.com/blog

Mr. Zalma recently published on Amazon.com with links at the Zalma Books site, with the following: Non Fiction books: • “Random Thoughts on Insurance • “Insurance Fraud & Weapons to Defeat Volumes IV and V: Digests from Barry Insurance Fraud” In Two Volumes Zalma’s Blog: ‘Zalma on Insurance’” • “The Compact Book on Adjusting Fiction: Liability Claims: A Handbook for the • “HEADS I WIN, TAILS YOU LOSE” Liability Claims Adjuster” • “Candy and Abel: Murder for • “The Compact Book on Adjusting Insurance Money” Property Claims” • “Ethics for the Insurance Professional” • “Murder And Insurance Fraud Don’t Mix” • “Rescission of Insurance” • “Murder & Old Lace” • “The Insurance Examination Under Oath” 6 January 14, 2019 / INSURANCE ADVOCATE

Alfred T. DeMaria is a Senior Partner at Clifton Budd & DeMaria, LLP and is recognized as one of the preeminent management labor attorneys in the field. He has extensive experience in all areas of employment law, including advice on avoiding liability under disability, race, gender, age and related anti bias laws. Mr. DeMaria advises on compliance with all federal, state and local laws governing the employment relationship, including the defense of lawsuits brought by employees against the companies that employ them. Prior to his work at Clifton Budd & DeMaria, LLP, he served as a trial attorney with the National Labor Relations Board.

1. The employee’s citizenship/immigration status must be input at the top of the Section; and, 2. A box with blank space has been added for “Additional Information,” which may include employment authorization extension notations or notations concerning employee termination. What has not changed is that new employees must still complete Section 1 no later than their first day of work for pay, and that an employer must complete Section 2 of the form no later than the third business day that the employee is working for pay. This is a strict timeline, and an employer’s failure to ensure timely completion of Form I-9 will open it up to civil liability. NEW CIVIL PENALTY RATE INCREASES ARE IN EFFECT. Employer liability for I-9 errors or omissions can range from $216 – $2,156 per I-9, with the exact penalty amount dependent upon the number and severity of errors and omissions. With the penalty rate increase, it has become even more important for employers to ensure I-9 compliance.[IA]

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[ ON THE LEVEL ]

JAMIE DEAPO

How I See It–2019 & Forward uOur business is changing. Unless you have been living under a rock you know that already. Change in and of itself is not good or bad. Instead, good or bad is determined by the results of that change. Insurance consumers want speed and simplicity in purchasing and handling their insurance needs. They also want to do business when it is convenient for them, using whatever method of communication they choose. They search for information to better understand insurance protection, to be informed and, to be smart consumers of the product. The new tech-based competitors are meeting these consumer’s demands. These new competitors are gaining traction because they have been able to offer consumers the speed and convenience they want. They use technology to eliminate human staff, replacing them with tutorials and artificial intelligence applications. Those changes mean cost savings from quoting and selecting coverage to the paying of claims. The savings developed from these changes have allowed them to reduce the cost of coverage. It would appear these new competitors have revolutionized the industry and are the companies of the future. If we were selling a simple product without serious financial implications, that might be true, however, insurance protection doesn’t meet that definition. Insurance is a complicated purchase based on legal contracts where minor changes in wording can impact whether coverage applies or not. The average consumer doesn’t have the knowledge or experience necessary to fully understand insurance coverage and how it works. Understanding and selecting insurance protection is a very personal and HUMAN process best handled between the consumer and a trusted, 8 January 14, 2019 / INSURANCE ADVOCATE

Understanding and selecting insurance protection is a very personal and HUMAN process best handled between the consumer and a trusted, experienced and knowledgeable licensed agent. experienced and knowledgeable licensed agent. There’s a reason states require agents to have a certain level of training, test and pass to get a license and meet future continuing education requirements. So far independent agent companies have not moved to use available technology and streamline the process between the agent and company. Nothing agents do will fix the problem unless carriers immediately move to improve the process for placing client’s coverage. To be competitive, the process needs to take seconds not minutes or hours. It needs to provide agents with a seamless, integrated platform between the agency and the carriers they represent. That platform should prefill public information and provide for instantaneous pricing for all contracted carriers. Customer information should only be entered once and flow between agent and company. Why the resistance? I can’t be sure, but my best guess is cost. The financial impact would be significant and the folks in charge of the decision are afraid to make it. Their investors are not going to be happy with the impact to the bottom line and share prices. Questions may arise about why management waited so long to update and change their legacy systems. They’re also not thrilled with the idea of a streamlined process that makes the process of carrier selection fast and efficient. But that’s what the marketplace demands.

Jamie Deapo is AVP of Membership & Member Programs for Big I and is an approved CE instructor in New York. Prior to being with Big I, he was an independent agent in the Syracuse area for 15 years. Jamie started his career in 1972 working for insurance carriers, and he has held various underwriting and marketing positions with several national as well as regional companies. He is a past president of the Independent Insurance Agents of Central New York and served on the board of directors of Big I.

Would it make more sense for some of them to work on developing a better system for providing their product direct, eliminating the agent? I’m sure having more control of marketing their products is attractive and has crossed the minds of some carriers. A major change like that would raise some serious questions. What would be the overall cost and impact of such a decision? How would they deal with the business they currently write that is owned by agents? Is the better solution to update the technology and aggressively market through independent agents? It’s clear that the system between agents and carriers needs to be modernized to provide fast, efficient placement of coverage. Carriers cannot keep looking to agents for solutions. Agents have had to, and will continue to have to, invest in technology to meet the competition and stay competitive in the marketplace. However, no matter how much the agents do, the system will not be able to effectively compete until the agentto-carrier piece is updated and fixed. This is not a new discussion as it’s been going on for years. Unfortunately, the time for talk is over and carriers need to make the changes necessary for our system to effectively compete in today’s marketplace.[IA]

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[ GUEST OPINION ]

JANE M. ORIENT, M.D.

So What if ACA is Unconstitutional? uStocks of hospital and Medicaidcontracted managed-care companies plunged on the announcement of Judge Reed O’Connor’s ruling that the Affordable Care Act (ACA) is unconstitutional. Some advisors consider this a “buying opportunity,” expecting that the ruling will be reversed on appeal. This shows who the important stakeholders are. Medicaid managed-care contractors get a monthly payment for each enrollee, whether any care is provided or not. The majority of newly insured people are in expanded Medicaid. And the vast majority of Medicaid recipients are in managed care. The quality of coverage may be very poor. In fact, all ACA coverage is likely to be worse than the plans many had before ACA. Forced to take added risk by the “pre-existings protections,” insurers cut quality, through narrow networks, limited drug formularies, and various ploys to make themselves unattractive to people with expensive problems. Insurers who can’t turn a profit—or have a loss rather than an excess if they are “nonprofit”—leave the market. Then there’s less competition for the big players skilled in systems gaming. Where in the Constitution does Congress get the authority to outlaw

the plans that millions have chosen to purchase to help pay medical bills, and force them to buy a product they can’t afford and don’t want? It is nowhere to be found. This is why the Association of American Physicians and Surgeons (AAPS) challenged its constitutionality as soon as ACA passed. Since the New Deal, however, the Constitution has been taken to mean whatever a judge says it does. Various judges have handed down differing rulings on ACA. In 2012, a 5:4 U.S. Supreme Court majority held that the Commerce Clause, which allows Congress to “regulate interstate commerce,” does not extend so far as to allow Congress to make people buy something. ACA would have been declared unconstitutional except that Chief Justice Roberts found a way to save it. He declared the “shared responsibility” payment or individual mandate—the penalty for not purchasing an acceptable plan—to be a tax. Before that, proponents argued that it was not a tax. The government’s taxing power is virtually unlimited. So, the mandate to purchase insurance isn’t really forcing you to buy a product, which would be unconstitutional. You have the choice of paying a tax instead. Along came the Tax Cuts and Jobs Act (TCJA) and zeroed out the individual

Jane M. Orient, M.D. obtained her undergraduate degrees in chemistry and mathematics from the University of Arizona in Tucson, and her M.D. from Columbia University College of Physicians and Surgeons in 1974. She completed an internal medicine residency at Parkland Memorial Hospital and University of Arizona Affiliated Hospitals and then became an Instructor at the University of Arizona College of Medicine and a staff physician at the Tucson Veterans Administration Hospital. She has been in solo private practice since 1981 and has served as Executive Director of the Association of American Physicians and Surgeons (AAPS) since 1989. She is currently president of Doctors for Disaster Preparedness. Since 1988, she has been chairman of the Public Health Committee of the Pima County (Arizona) Medical Society. She is the author of YOUR Doctor Is Not In: Healthy Skepticism about National Healthcare, and the second through fourth editions of Sapira’s Art and Science of Bedside Diagnosis, published by Lippincott, Williams & Wilkins. She is the editor of AAPS News, the Doctors for Disaster Preparedness Newsletter, and Civil Defense Perspectives, and is the managing editor of the Journal of American Physicians and Surgeons.

mandate. TCJA couldn’t repeal it because this was budget reconciliation, so the act had to be restricted to financing. Texas and other states argued that the rationale for constitutionality had been removed, so ACA is unconstitutional. The Judge also ruled that the whole of ACA is unconstitutional because the individual mandate is not severable. It’s the linchpin of ACA, as everybody agreed before the law was passed. Its architects knew perfectly well that premiums would soar, and low-risk people would choose not to pay them, so they would go even higher (the insurance “death spiral”)—unCONTINUED ON PAGE 30 10 January 14, 2019 / INSURANCE ADVOCATE

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[ LEGAL UPDATE ]

SARI GABAY, ESQ.

DFS’ Cybersecurity Regulation and the Compliance Deadline u The Department of Financial Services’ (“DFS”) cybersecurity regulation, 23 NYCRR 500 (referred to in this article as the “Cyber Regulation”), became effective on March 1, 2017 with a two-year implementation deadline approaching on March 1, 2019. In a nutshell, the Cyber Regulation is designed to protect consumer data and to defend against security attacks. To that end, all DFS regulated entities (unless a limited exemption applies), are required to adopt and implement a cybersecurity program. In broad strokes, the program must include a cybersecurity policy, effective access privileges, cybersecurity risk assessments and training and monitoring for all authorized users. This is particularly relevant now as the second annual certification of compliance is due February 15, 2019, by which time all regulated entities and licensed persons must file a Certificate of Compliance, confirming compliance with DFS’ Cyber Regulation for 2018. Do Not “Do Nothing” and Rely on a Previous Exemption Filing Even in the case of an exemption for employees, agents, or representative of a regulated entity (500.19(b)), the individual must still file a Notice of Exemption and identify the regulated entity’s program that is being followed, the name and address of the entity that supports the cybersecurity program, and the name of the representative who can confirm the program. A regulated entity or person that was previously exempt, should make sure it still falls under one of the applicable limited exemptions (500.19(a)). Is the regulated entity one with (1) less than 10 employees (including independent contractors), or (2) less than $5,000,000 in gross annual revenue in each of the last three fiscal years from New York business, or (3) less than $10,000,000 12 January 14, 2019 / INSURANCE ADVOCATE

...“a significant number of events reported to DFS involved breaches that stemmed from employees providing credentials in response to attractive emails that trick a user to provide confidential information” and other access issues involve “credentials churning” and phishing scams.

in year-end total assets? Even if one of these limited exemptions applies, the regulated entity must still maintain a cybersecurity program that meets some but not all the regulatory requirements, including filing an annual Certification of Compliance. Also, licensees who may not be actively using their licenses may be partially exempt provided they are not maintaining nonpublic information concerning former or potential consumers or otherwise maintaining information or systems covered by the Cyber Regulation. Such licensees must comply with certain provisions such as conducting a Risk Assessment in accordance with the Cyber Regulation and submit an annual Certification of Compliance. Thus, while one may have filed a Notice of Exemption initially, it may be necessary to amend or terminate such exemption if the exempt status has changed. The assessment of exemption status is an annual requirement so do not simply rely on a prior calendar year’s filing and if exempt, a Notice of Exemption must be filed each calendar year. All filings required by the Cyber Regulation must be done electroni-

Sari Gabay is a go-to insurance regulatory lawyer representing insurance agents, brokers and public adjusters in Department of Financial Services’ investigations, complaints, and hearings and in relicensing applications. She represents sellers and purchasers of insurance agencies and other businesses. Sari also reviews and interprets insurance policies and advises homeowners, venues, and other policyholders in insurance coverage disputes, in addition to her general law practice. Sari is a frequent speaker and author on issues in the insurance industry, and most recently spoke on October 3, 2018 on DFS’ Regulation 208 and the ensuing Article 78 proceeding. Sari is also among PIA’s Circle of Consultants.

cally on the DFS’ cybersecurity portal. It is recommended that once completed, check for an email that includes a receipt number and maintain this record as proof of filing. Importantly, regulated persons and entities should be sure to not only have a policy in place, but to actually adhere to it and report cybersecurity events to DFS. DFS issued a December 21, 2018 Memo regarding the Cyber Regulation’s first two years and next steps, wherein it indicates that “the Department has received approximately 1,000 notices of cybersecurity events from regulated institutions.” In fact, according to DFS, “a significant number of events reported to DFS involved breaches that stemmed from employees providing credentials in response to attractive emails that trick a user to provide confidential information” and other access issues involve “credentials churning” and phishing scams. DFS’ Memo stresses the important of “multi-factor authentication (500.12), encryption (500.15) and training (500.14). [IA]

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[ ON MY RADAR ]

BARRY Z ALMA

Contra Proferentum Does Not Apply to a Clear and Unambiguous Policy No Coverage Before Policy In Effect People who sue insurance companies seem to forget that an insurance policy is a contract – not an entitlement provided by a government. Insurance contracts must be read as a whole document and all clear and unambiguous terms must be applied as written. In Atlantic Specialty Insurance Company v. Sergey Pastukov, No. 1811129, United States Court Of Appeals For The Eleventh Circuit, (October 10, 2018) the Eleventh Circuit was asked to provide insurance coverage for Sergey Pastukov who was involved in a truck accident on May 14, 2015 before a policy with Atlantic Specialty Insurance Company was in effect. Atlantic Specialty denied his claim and later sought a declaratory judgment to establish that it was not obligated to cover his accident. The district court agreed and granted judgment in Atlantic Specialty’s favor. Before the district court, Atlantic Specialty provided three reasons for which it was not obligated to provide coverage for Mr. Pastukov’s accident. First, it argued that his claim was not covered because his loss occurred before coverage began. Second, it argued that he was not eligible for coverage under the policy because he did not meet the requirements of a “Contract Driver” or an “Owner-Operator.” Finally, it asserted that his claim was barred by the known loss doctrine. The district court adopted the second basis, finding that Mr. Pastukov was never eligible for coverage. It rejected Mr. Pastukov’s contention that the contract’s terms were ambiguous and held that there is “no interpretation of the language of the [Certificate of 14 January 14, 2019 / INSURANCE ADVOCATE

Insurance] under which [he] qualifies for coverage, either as a Contract Driver or an Owner-Operator.”

THE POLICY

According to the insurance contract, under the provision entitled “Your Coverage Effective Date,” Mr. Pastukov’s “coverage under the Policy beg[an] on the latest of:” (1) the policy effective date (2) the date you become a member of an eligible class as described above; or (3) the date upon which the program administrator or its designee approves your fully completed and signed enrollment form. Mr. Pastukov’s Policy stated an effective date of May 14, 2015. His coverage began, however, when the Program Administrator approved his application on May 29, 2015.

ANALYSIS

Under Florida law, insurance contracts are construed according to their plain meaning. The policy terms should be given their plain and unambiguous meaning as understood by the manon-the-street. If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and another limiting coverage, the insurance policy is considered ambiguous. If, however, the policy provision is clear and unambiguous, it should be enforced according to its terms whether it is a basic policy provision or an exclusionary provision. This provision is consistent with Florida law. Florida recognizes that generally, the parties to a contract are competent to fix the effective date. The ability of the parties to agree upon which date, or event, coverage begins is also recognized by the leading trea-

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 51 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Mr. Zalma’s books are available as Kindle books or paperbacks at Amazon. com and can be reached at http:// zalma.com/zalma-books/ Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/ bzalma on Facebook at https://www. facebook.com/barry.zalma and you can follow him on Twitter at https:// twitter.com/bzalma. His blog, Zalma on Insurance is available at http://zalma.com/blog and his videoblog, Zalma’s Insurance 101 is available at http://www.zalma.com/ videoblog/

If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and another limiting coverage, the insurance policy is considered ambiguous.

[ ON MY RADAR ] tises. The effective date is a key concept because it defines when the insured has contractual rights that can be enforced. As a general rule, the risk attaches as of the time actually agreed upon or understood by the parties. A court may not, as Pastukov argued, focus on portions of the contract in isolation. Rather, the court must read the policy as a whole, endeavoring to give every provision its full meaning and operative effect. The clear terms of the insurance policy contemplate that “coverage under the Policy beg[an] on the latest of ” three events. The latest event was the approval of his application on May 29. Mr. Pastukov argued that the maxim that the court should construe insurance policy language in favor of the insured. The Eleventh Circuit concluded that this principle (sometimes called Contra Proferentum) does not apply because the contract language is clear. Only if a provision is ambiguous after considering the policy as a whole will a court construe the ambiguous provision against the insurer in favor of coverage.

ZALMA OPINION

The Eleventh Circuit read the contract as a whole. It did not use the same reason as did the District Court since it found there was no policy in effect at the time of the loss and had no need to look to the other two grounds on which Atlantic based its conclusion there was no coverage. There can never be coverage under a policy before it comes into effect.[IA]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com

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Northeast PIA Launches

â&#x20AC;&#x2DC;Work with a 16 January 14, 2019 / INSURANCE ADVOCATE

he Professional Insurance Agents of Connecticut, New Hampshire, New Jersey, New York and Vermont launched “Work with a Professional Insurance Agent/Local is Better” local marketing campaign. This resource offers PIA members in the five states access to informative pieces to promoting their agencies, capitalizing on their local community-centered strengths, with consumer focused materials and consumer content for use in a variety of media. It also illustrates to the insurance-buying public the benefits of an independent agent (i.e., working with someone who can offer insurance choices; who has a unique understanding of his or her clients’ and communities’ needs; and who often can offer the most affordable rate). “Independent agents know they can offer customers a choice of insurance products from a variety of carriers; they can shop for the best insurance coverage for their clients; they can give knowledgeable and objective advice on complex insurance decisions; and they live in the communities they serve and support local efforts,” said Kelly K. Norris, CAE, executive director of PIACT, PIANH, PIANJ, PIANY and PIAVT. “This marketing campaign helps agents remind consumers to work with an independent agent when they are considering their insurance-buying options.” Through the campaign, PIA members can learn how to launch and maintain a successful marketing campaign; ramp up their social-media presence; build relationships with their local media; and more. It also offers ready-made press releases (with an accompanying calendar); tweets and more, which can be personalized with the agency’s contact information. It also offers professional independent agents the chance to take their marketing campaign to the next level, through PIA Creative Services, PIA’s in-house advertising agency. “The point of this campaign is to help agents maintain market share by helping them highlight their own, exceptional understanding and concern for the communities and clients they serve,” said Norris. “It is also a go-to resource for the insurance-buying community that is looking for information on how working with an independent agent can benefit them.” The Work with a Professional Insurance Agent/Local is Better website found at pia. org/COMM/workwithanagent includes consumer information about managing risk, smart insurance choices and how the independent agency system benefits them with their insurance-buying needs. The Work with a Professional Insurance Agent/Local is Better local marketing campaign also is accessible to PIA members via the PIA website. PIA also reminds the insurance-buying public to look for the “Work with a Professional Insurance Agent/ Local is Better” logo when they want information about their insurance options.

an Agent’

INSURANCE ADVOCATE / January 14, 2019 17

2019 [ FEATURE ]

ISO Looks at New Risks Posed by Societal Trends • Nanotech • Cannabis • Opiods Excerpts from a Searching ISO Report.

18 January 14, 2019 / INSURANCE ADVOCATE

Small Things Considered: What Dangers Does Nanotech Pose? Nanotechnology refers to scientists studying, manipulating, designing, manufacturing, and using materials on a scale between 1 and 100 nanometers.1 To put that into perspective, a nanometer is one-billionth of a meter. A human hair is about 75,000 nanometers thick; a sheet of newspaper is 100,000 nanometers thick. The small size of engineered nanoparticles means they often have different properties than the same material on a larger scale. It’s these differences that allow scientists and researchers to create innovative products, from medical drugs to everyday consumer goods. Similarly, material toxicity may change on the nanoscale. Take zinc oxide, a chemical often used in sunscreen lotion and other products. On the macroscale, it’s relatively inert and generally considered to be of low toxicity. But on the nanoscale, zinc oxide exhibits different properties, which may increase its toxicity. Furthermore, nanoparticles may be small enough to move throughout the human body, crossing the blood-brain barrier, accumulating in certain organs, entering human cells, and causing reactive oxygen damage. Other nanoparticles, such as carbon nanotubes and carbon nanofibers (engineered nanoparticles often used to strengthen other materials), might lead to health complications when inhaled, like those caused by asbestos.2 In the workplace, such toxicity is of particular concern for “upstream” workers manufacturing nanoparticles in their “pure” form, often as powders or slurries (to prevent the nanoparticles from becoming airborne and subsequently inhaled). However, when combined with other materials, such nanoparticles may be less toxic. But quantifying nanoparticle toxicity, exposure, and risk is complicated. The health effects of nanoparticles depend on various characteristics, including, in part, their size, structure, composition, and ability to clump together (or agglomerate) to form larger particles. In addition, past studies generally have provided results from laboratory studies using ideal or simplified exposure scenarios, while current research is more focused on studies representative of exposures in real-world settings. To complicate matters further, health effects from nanoparticle exposures could have long latency periods. For example, if carbon nanotubes do cause asbestos-like health effects, those effects might take decades to manifest.3 Despite such difficulties, governments and private entities have begun taking action to mitigate nanoparticle health risks in occupational settings. For one, risk management techniques have been introduced in manufacturing operations to reduce exposures. The U.S. National Institute of Occupational Safety and

ISO Emerging Issues

INSURANCE ADVOCATE / January 14, 2019 19

Health (NIOSH) has been conducting occupational exposure studies and publishing guidance related to nanotechnology risk management, including suggested occupational exposure limits for some nanoparticles and recommended control methods to reduce worker exposures. For another, the large data sets generated by nanoparticle research have led to the development of “nanoinformatics” to collect, categorize, share, and mine research data on chemical and physical properties and health effects of nanoparticles, which should prove useful for risk management purposes. Epidemiological studies are being conducted based on preclinical biological markers to determine the potential for the development of a nanoparticle-caused disease, instead of waiting for it to manifest years later. ISO’s Engineering and Safety Service (E&STM ) is an active member of the ASTM International Subcommittee E56.06 on Nano-Enabled Consumer Products and the American Industrial Hygiene Association’s Nanotechnology Working Group. E&S interfaces with NIOSH on various aspects of nanotechnology. The unit monitors developments and publishes reports related to nanotechnology exposures and risks; it also conducts consultations related to the sampling of nanomaterials and other aspects of nanotechnology. Verisk 3E offers compliance solutions for environmental health and safety (EH&S) requirements relating to workplace safety and product stewardship. In that capacity, Verisk 3E monitors possible effects from nanoparticle exposure (nanotoxicology) and works to characterize health effects from manufacturers’ nanoparticles through testing. Verisk 3E also reviews exposure evidence and evaluates possible health outcomes related to nanotechnology. AIR Worldwide’s Arium platform maps interrelationships between liability policies across industries, a so-called “event footprint.” Arium has begun quantifying potential liability losses from carbon nanotube/nanofiber risks for insurer portfolios. Based on the footprint, the total loss amount, and the loss distribution across industries and lines of business, Arium can then run thousands of simulations to determine how carbon nanotube/nanofiber losses may affect a specific portfolio. Contributors Hans Plugge, Verisk 3E, Senior Toxicologist and Manager, Safer Chemical Analytics Mark Grossman, ISO, Manager, Occupational Safety and Health, Engineering and Safety Service

1. National Nanotechnology Initiative, “What is Nanotechnology?” https://www.nano.gov/ nanotech-101/what/definition. 2. CDC Current Intelligence Bulletin 65, “Occupational Exposure to Carbon Nanotubes and Nanofibers,” https://www.cdc.gov/niosh/docs/2013-145/pdfs/2013-145.pdf, 2013. 3. Environmental International, “Carbon nanotube and nanofiber exposure and sputum and blood biomarkers of early effect among U.S. workers,” https://www.ncbi.nlm.nih. gov/pubmed/29698898, April 23, 2018.

ISO Emerging Issues

20 January 14, 2019 / INSURANCE ADVOCATE

Exposures Associated with Regulated Marijuana Span the Supply Chain The United States has come a long way in terms of public attitudes toward cannabis. An increasing number of states are passing legislation generally designed to permit commercial markets to serve medical or recreational marijuana users, often with significant variation between jurisdictions. One analysis found that the U.S. cannabis market earned about $9 billion in sales in 2017 and that sales could reach $21 billion by 2021.1 Other countries have also begun passing similar legislation. For example, Uruguay now permits recreational marijuana sales from government stores;2 Canada permits recreational marijuana markets; 3 and Germany recently passed legislation permitting medical marijuana use.4 The effect, or “high,” induced by marijuana comes from the psychoactive chemical tetrahydrocannabinol (THC).5 Marijuana-related products that may not induce a psychoactive response, such as cannabidiol (CBD), also exist.6 Commercial marijuana markets may pose new risks and exposures for insurers and reinsurers across the supply chain, including cultivating, manufacturing, dispensing, and using the drug. And it’s also important to remember that marijuana is currently listed as a Schedule I drug under the federal Controlled Substances Act of 1970 (CSA), which defines Schedule I drugs as those “with no currently accepted medical use and a high potential for abuse” and “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” Indoor crop cultivation: Many marijuana businesses conduct crop cultivation indoors, allowing for a year-round growing season in a tightly controlled environment that can maximize THC content and the quality of the plant. Such operations may be exposed to higher risks from mold, fires, and dangerous gases. Crops could also be contaminated from improper pesticide use.7 Product manufacturing: Some marijuana businesses may take harvested marijuana and process the crop into other THC-based products, including concentrates, oils, and tinctures. Hydrocarbon-based solvent extraction

ISO Emerging Issues

INSURANCE ADVOCATE / January 14, 2019 21

processes may be used to create products high in THC content. Hydrocarbon-based extraction can increase fire and explosion risks in such facilities.8 Dispensary and sale: Marijuana businesses that sell or dispense recreational or medical marijuana are furnishing potentially intoxicating substances to consumers, typically for off-premise consumption, depending on the state in question. Properly classifying such risks may be difficult. Marijuana is a highvalue product, and since many marijuana businesses operate using a cash-only business model, there may be increased exposure to theft risk. Businesses may also be exposed to product liability risks.9 “Stoned” driving: Products containing THC are intoxicants. Some studies—though not all—have found that marijuana use correlates with the rate of automobile accidents. Others have argued that it’s difficult to know when marijuana is to blame for a vehicle crash, and epidemiological research is ongoing. The length of a user’s intoxication from marijuana varies widely by consumption method, the potency of the product, and the user’s physiological characteristics. Identifying actual marijuana intoxication by measuring levels of THC has been a concern because, unlike alcohol, THC persists in a user’s body for long periods after intoxication.10 The ISO Emerging Issues team monitors rapidly shifting marijuana-related developments, including exposure considerations, to help inform ISO customers of potential challenges and certain recent changes. For more information on marijuana supply chain risks, see the ISO Emerging Issues series “From Seed to Smoke.” Contributor William Mauro, ISO, Director, Commercial Casualty Product Development

1. CNN, “The U.S. legal marijuana industry is booming,” https://money.cnn.com/2018/01/31/news/marijuana-state-of-the-union/ index.html, January 31, 2018. 2. BBC, “Uruguay pharmacies start selling recreational marijuana,” https://www.bbc.com/news/world-latin-america-40653912, July 19, 2018. 3. New York Times, “If You’re Going to Canada to Buy Weed, Here’s What You Need to Know,” https://www.nytimes.com/ 2018/10/22/travel/travel-canada-buy-weed-explained.html, October 22, 2018. 4. CNN, “Germany joins the global experiment on marijuana legalization,” https://www.cnn.com/2016/12/29/health/ global-marijuana-cannabis-laws/index.html, March 6, 2017. 5. National Institute on Drug Abuse, “What is marijuana?” https://www.drugabuse.gov/publications/drugfacts/marijuana, June 2018. 6. National Center for Biotechnical Information, “Cannabidiol,” https://pubchem.ncbi.nlm.nih.gov/compound/ cannabidiol#section=Top, July 30, 2018. 7. Verisk, “From seed to smoke: Marijuana cultivation,” https://www.verisk.com/insurance/visualize/from-seed-to-smokemarijuana-cultivation/, June 14, 2017. 8. Verisk, “From seed to smoke: Marijuana concentrates and manufacturing risk,” https://www.verisk.com/insurance/visualize/ from-seed-to-smoke-marijuana-concentrates-and-manufacturing-risk/, July 10, 2017. 9. Verisk, “From seed to smoke: Marijuana retail stores and dispensaries,” https://www.verisk.com/insurance/visualize/ from-seed-to-smoke-marijuana-retail-stores-and-dispensaries/, August 16, 2017. 10. Verisk, “From seed to smoke: Driving under the influence,” https://www.verisk.com/insurance/visualize/from-seed-to-smokedriving-under-the-influence/, October 25, 2017.

ISO Emerging Issues

22 January 14, 2019 / INSURANCE ADVOCATE

Opioid Crisis: A Systemic Liability Event? In October 2017, the White House announced a “nationwide public health emergency” to address the “opioid crisis,” which generally refers to the reported increase in opioid-related deaths and addiction in the United States.1 The National Institute on Drug Abuse (NIDA) states that opioids are a class of pain relievers and other drugs. Prescribed opioid pain relievers are generally safe for short durations but can be misused and abused.2 The U.S. Centers for Disease Control and Prevention (CDC) states that drug overdose deaths and “opioid-involved deaths” continue to increase in the United States. “Most drug overdose deaths (more than six out of ten) involve an opioid,” the CDC says.3

The U.S. Substance Abuse and Mental Health Services Administration (SAMHSA) reports that the National Survey on Drug Use and Health results from 2013 and 2014 indicate that “50.5% of people who misused prescription painkillers got them from a friend or relative for free, and 22.1% got them from a doctor.”4 The opioid crisis could evolve into a systemic liability event because of the high number of opioid manufacturers and distributors, retailers, physicians, and hospitals that may be involved in the marketing and distribution of such drugs. Lawsuits have reportedly been filed against opioid supply chain participants, including manufacturers and distributors of opioids, pharmacies, insurers, and healthcare providers.5 Allegations have included failure to warn, failure to control “suspicious opioid orders,” and deceptive business practices.

ISO Emerging Issues

INSURANCE ADVOCATE / January 14, 2019 23

The primary lines of business likely to be impacted by lawsuits related to the opioid crisis are product liability, general liability, and professional liability, including medical malpractice, and possibly directors and officers liability. AIR Worldwide’s Arium platform maps interrelationships between various liability policies across industries—a so-called “event footprint.” Arium has begun quantifying potential liability losses from the opioid crisis for insurer portfolios. The platform can estimate a spread of losses across industries and insurance lines of business to help gauge the total gross and net (of reinsurance) losses for a specific portfolio. Based on the footprint, the total loss amount, and the loss distribution across industries and lines of business, Arium can then run thousands of simulations to help determine how opioid losses may impact the specific portfolio. The simulations are a way to help develop a reasonable range of estimates for potential insurable loss outcomes on a portfolio from the opioid crisis. The output of this process can help insurers with portfolio/ exposure management, reinsurance buying/pricing, stress testing for capital adequacy, and reserving for potential large liability catastrophes. Contributors Robin Wilkinson, AIR Worldwide, Vice President, Casualty Analytics Paloma Ambros, AIR Worldwide, Data Scientist, Casualty Analytics James Kaufmann, AIR Worldwide, Senior Manager, Casualty Analytics

1. The White House, “President Donald J. Trump is Taking Action on Drug Addiction and Opioid Crisis,” https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-taking-action-drug-addictionopioid-crisis/, October 26, 2017. 2. U.S. National Institute on Drug Abuse, “Opioids,” https://www.drugabuse.gov/drugs-abuse/opioids. 3. U.S. Centers for Disease Control and Prevention, “Understanding the Epidemic,” https://www.cdc.gov/ drugoverdose/epidemic/index.html, August 30, 2017. 4. U.S. Substance Abuse and Mental Health Services Administration, “Opioids,” https://www.samhsa.gov/atod/opioids, February 23, 2016. 5. Columbus Business First, “Cardinal Health now facing more than 350 opioid lawsuits,” https://www.bizjournals.com/columbus/news/2018/02/13/cardinal-health-now-facing-more-than350-opioid.html, February 13, 2018.

ISO Emerging Issues

24 January 14, 2019 / INSURANCE ADVOCATE

[ IN THE NEWS ]

MSO Elects Fulton, Makes Staff Changes uMSO, Inc. (The Mutual Service Office, Inc.) is pleased to announce the addition of Karen S. Fulton (pictured right) to its board. Ms. Fulton is the retired President and CEO of ARI Insurance Company (an Amtrust Company), and its predecessor, ARI Mutual Insurance Company. She previously served as Vice President and Controller of American Reliance Insurance Company. Ms. Fulton was the 2017 recipient of the PCI and Griffith Foundation lifetime achievement award. She is a past member of several insurance industry boards. She is a past president of the New Jersey Association of Mutual Insurance Companies. Ms. Fulton earned her BSBA from Bucknell University, where she majored in Accounting. According to MSO Board Chairman Robert Gage, “We are delighted to have Karen Fulton join the MSO, Inc. Board of Trustees. She brings excellent industry experience and knowledge to the Board as MSO continues its national expansion.” In the Program Division, Jan Kozlowski, MBA has been named Senior Vice President, Programs, Legal, Research, Compliance & Corporate Records. Jan Kozlowski has worked for MSO since 1989. His current duties include identifying and analyzing the needs of MSO’s clients, managing the development, introduction and maintenance of the various personal and commercial insurance products serviced by MSO, and monitoring the effects on the P & C insurance environment from the state and federal regulatory bodies. Melissa “Missy” Smith, CPCU, API was named Assistant Vice President, National Filing Services and Senior Product Development Analyst. Ms. Smith was instrumental in the national rollout of the MSO Commercial

Auto Pro g r am and Businessowners Program. Trish Riggio is now Assistant Vice President, Compliance Services and Senior Product Development Analyst. Ms. Riggio handled the full state licensing for MSO and established and maintains the MSO compliance structure for processing MSO’s licenses in all states, as well as ensuring compliance with the regulations in all jurisdictions. In the Actuarial & Statistical Division, Jane McGraw, MBA, ARM has been promoted to Assistant Vice President, Cyber/ Enterprise Risk and Statistical Services. Ms. McGraw manages statistical reporting and was a key architect of MSO’s Statistical Plan and Enterprise Risk Management model. Leo Black has been named Director and Senior Actuarial Analyst. He is responsible for loss cost development and modeling for MSO’s property and casualty programs on a national basis. According to MSO CEO, Jan Scites, “We are fortunate to have such talented and dedicated employees. They have been instrumental in building MSO’s national presence in the P&C industry. They are very valuable members of the team.” MSO is a national property and casualty rating service bureau, providing product development and rating services to the insurance industry since 1944. MSO has long been an industry leader, offering programs that are comprehensive and easy to use. MSO will work with companies to customize programs to meet a company’s marketing and underwriting requirements. For information on all of the programs and services offered by MSO, call Sue C. Quimby, CPCU at (800) 935-6900 ext. 9128. Email: MSO_Press@msonet. com. Mail to: MSO, Inc. 139 Harristown Road Suite 100 Glen Rock, NJ 07452. Visit us at www.msonet.com and follow us on LinkedIn.[IA]

Insurance Legion of Shame uWelcome to the Insurance Fraud Legion of Shame. The year’s convicted extreme schemers were chosen by the New York Alliance Against Insurance Fraud. D r i v en to d e c ei v e . M i c h a e l Danilovich (NYC) masterminded a massive fraud ring that stole $279 million in false injury claims from bogus and setup car wrecks. It was one of the largest such crimes in U.S. history. Burning desire. Samuel Crawford (Canandaigua) burned down his vacant rental home because he was having problems leasing it due to code violations. Two adjacent homes also were damaged. Fiery fraud. Jesus Cruz (Newburgh) burned down his store after inspectors cut off power due to code violations. Cruz lit up gasoline he spread around the main floor and basement. Medical madness. Dr. Gregory B. Shankman (Utica office) billed for giving workers-compensation exams on fully 150 days he was traveling elsewhere in New York — and even vacationing in Iceland. Wound madness. Dr. Syed Imran Ahmed (Long Island) billed Medicare $85 million for wound treatments he never performed. That included 600 surgeries for one elderly woman. Unsober sober homes. Yury Baumblit ran unsafe flophouses that housed homeless people and addicts in the New York City area. He pushed many residents into unneeded drug rehab, forced some to take drugs, and evicted anyone who didn’t cooperate. Commercial con. Jean Davilmar (Brooklyn) falsely insured more than 100 high-risk commercial vehicles with fake companies. He lied that they did safe work such as delivering packages, and supporting flower businesses and landscapers. Compounding the fraud. Bus driver Enver Kalaba helped fellow employees of the New York City MTA file CONTINUED ON PAGE 30 INSURANCE ADVOCATE / January 14, 2019 25

[ LOOKING BACK ]

INSURANCE ADVO CATE - 26 YEARS AGO

26 January 14, 2019 / INSURANCE ADVOCATE

INSURANCE ADVO CATE - 26 YEARS AGO

[ LOOKING BACK ]

INSURANCE ADVOCATE / January 14, 2019 27

[ COURTSIDE ]

LAWRENCE N. RO GAK

When Provider Bills Under a “By Report” Code, Insurer Must Demand Supporting Documents if it Wants Them Pavlova a/a/o Cosby Reavis v Allstate Ins. Co. Edited by Lawrence N. Rogak In this no-fault suit, plaintiff medical provider billed for services under CPT code 20999, which is a “by report” code. The insurer denied the claim on the grounds that the provider did not supply documentation backing up the need for the services. The Appellate Term held that when a provider bills under a “by report” code, the insurer must use a verification request to demand backup documentation; it cannot simply deny the claim on the ground that the documentation was not submitted with the bill.—LNR uAppeal from an order of the Civil Court of the City of New York, Kings County (Devin P. Cohen, J.). The order denied the plaintiff ’s motion seeking summary judgment on so much of the complaint as sought to recover for services billed under CPT code 20999 and granted the branch of defendant’s cross motion seeking summary judgment dismissing that portion of the complaint. The order is modified by providing that the branch of defendant’s cross motion seeking summary judgment is denied; as so modified, the order is affirmed. In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which denied the plaintiff ’s motion seeking summary judgment to recover for services billed under CPT code 20999 and granted the defendant’s cross motion seeking summary judgment dismissing that portion of the complaint. As plaintiff failed to demonstrate prima facie that its claim for the ser28 January 14, 2019 / INSURANCE ADVOCATE

Lawrence N. (“Larry”) Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best’s Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.

The order denied the plaintiff’s motion seeking summary judgment on so much of the complaint as sought to recover for services billed under CPT code 20999 and granted the branch of defendant’s cross motion seeking summary 65-3.5 (b) requires the insurer to, within judgment dismissing that 15 business days of its receipt of the portion of the complaint. claim form, request “any additional vices at issue had not been timely denied (see Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 [2015]), or that defendant had issued a timely denial of claim that was conclusory, vague or without merit as a matter of law, plaintiff failed to establish its prima facie entitlement to judgment as a matter of law with respect to its claim for these services. Consequently, plaintiff ’s motion for summary judgment on the portion of the complaint that sought to recover for these services was properly denied. It is undisputed that defendant denied plaintiff ’s claim for services billed under CPT code 20999 in its entirety. Because the workers’ compensation fee schedule has assigned a “By Report” designation for that CPT code, a provider billing under that CPT code is required to furnish certain additional documentation to enable the insurer to determine the appropriate amount of reimbursement. Plaintiff properly argues that where, as here, a provider does not provide such documentation with its claim form, and the insurer will not pay the claim as submitted, 11 NYCRR

verification required by the insurer to establish proof of claim” (see Bronx Acupuncture Therapy, P.C. v Hereford Ins. Co., 54 Misc 3d 135[A], 2017 NY Slip Op 50101[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]). Thus, defendant’s denial of payment for the services billed under CPT code 20999 on the ground that plaintiff had failed to provide sufficient documentation, where defendant did not demonstrate that it had requested any such documentation, was not proper and the branch of defendant’s cross motion seeking summary judgment dismissing so much of the complaint as sought to recover for services billed under that CPT code should have been denied. Accordingly, the order, insofar as appealed from, is modified by providing that the branch of defendant’s cross motion seeking summary judgment dismissing so much of the complaint as sought to recover for services billed under CPT code 20999 is denied.[IA] 2018 NY Slip Op 51654(U) Decided on November 16, 2018 Appellate Term, Second Department CONTINUED ON PAGE 30

MARILYN M. SINGLETON, M.D., J.D.

The Healthcare Revolution: More Choices, Not More Taxes uParis is in flames over a fuel tax increase that would pile 30 cents onto the $7.06 per gallon price paid by citizens whose average monthly salary is $2,753. This burdensome “carbon tax” on the middle class is intended to help meet Europe’s commitment to reduce carbon dioxide emissions and thereby halt global warming or climate change. It appears that the 21st century French Revolution has begun. This time, Brussels is sending in tanks to protect the new elite and its agenda. Back in the states, some well-heeled, presumably well-intentioned Medicarefor-All advocates from California, New York, and New Jersey are grousing about how “Trump took away my homeowners tax deduction!” The Tax Cuts and Jobs Act now caps the previously unlimited federal tax itemized deductions for the combined state, local and property taxes at $10,000. The portion of a mortgage on which interest can be deducted is limited to $750,000, down from the current limit of $1 million. Folks with million-dollar homes who continue to vote for legislators who impose high state taxes to finance their pet social programs are less sympathetic than the French Yellow Vests—especially when these same elitists want to take away the “crumbs” from the 80 percent of taxpayers who are receiving some relief from the near doubling of the standard deduction. But everyone will face still more taxes to fund Medicare-for-All. Bernie Sanders’s financing plan would “limit tax deductions for the wealthy,” defined as $250,000 per household. Sanders also proposes eliminating health savings accounts (HSAs), which allow patients to take charge of their own care. And it won’t stop there—or at the equivalent of 30 cents per gallon. It’s not just the taxes: it’s the loss of the freedom to choose. The M4A bills prohibit virtually all private health insurance. M4A promises “free” access to “willing

healthcare providers”—but robs us of choice. Even existing Medicare offers 11 supplemental insurance programs with options for different premium structures. Purchasers can decide to pay a little more now for a stable premium price as they age, or pay quite a bit less and anticipate the age-related increase over the years. But, you say there would be no premiums with M4A. Wrong. The “premiums” are increased taxes. And taxes are not optional. You must obey. We should take a cue from the French (minus the fires and looting). We need a middle-class medical care revolt against the elitists and politicians who think more government through high taxes is The Answer while ignoring community solutions. For example, We Do Better, a humanitarian movement, seeks out solutions to social problems based not on a particular political ideology or lobbyist’s effort, but on what works. In Southern California eight Clinica Mi Pueblo (CMP) clinics accept only cash, have transparent pricing on their website, and their services cost less than half of the price set by third parties. Where the average charge for an X-ray is between $260 and $460, CMP charges only $80. Utah’s Maliheh Free Clinic (MFC) serves low income and uninsured residents who are ineligible for Medicare, Medicaid, or any government subsidized healthcare. The MFC provided free healthcare to more than 15,000 patients in 2016 at an average cost of only $56 per patient, and 95% of donations to MFC go to providing medical services. New Jersey’s Zarephath Health Center is a volunteer-run and funded facility for patients who cannot find care “in the system.” Here it costs $15 to see a patient, versus $160-$280 at the Federally Qualified Health Center down the street. Another increasingly popular model is direct primary care (DPC). Here, patients pay a monthly subscription fee to the practice (between $40 and $100 de-

[ GUEST OPINION ]

Dr. Singleton is a board-certified anesthesiologist. She is also a Boardof-Directors member and Presidentelect of the Association of American Physicians and Surgeons (AAPS). She graduated from Stanford and earned her MD at UCSF Medical School. Dr. Singleton completed 2 years of Surgery residency at UCSF, then her Anesthesia residency at Harvard’s Beth Israel Hospital. While still working in the operating room, she attended UC Berkeley Law School, focusing on constitutional law and administrative law. She interned at the National Health Law Project and practiced insurance and health law. She teaches classes in the recognition of elder abuse and constitutional law for non-lawyers.

pending on age and family size), which covers all primary care services, certain laboratory tests, and at-cost pharmaceuticals at as much as 15 times less than the price at the pharmacy. The personal relationship with a physician enhances the care to patients with chronic conditions, reducing costly hospitalizations. Catastrophic insurance can cover major medical expenses. St. Luke’s Family Practice in Modesto, California is a DPC non-profit organization. Here, “benefactors” pay the fees for the “recipients” – those who cannot afford the fees. Then there are many health care sharing ministries where members engage in voluntary sharing of costs for its members’ health needs. One such model, the Christian Healthcare Ministries (CHM), has plans that cost half as much as ACA Marketplace plans. It has more than 279,000 members, and has covered more than $1 billion in medical bills since 1981. Americans want authority over our own lives. Our innovative spirit and generosity have created and will continue to create ways to deliver medical care to the most people without sacrificing choice— and at a more affordable cost.[IA] INSURANCE ADVOCATE / January 14, 2019 29

[ COURTSIDE ]

GUEST OPINION

PIP Insurers Must Pay More Than Policy Limit When Denied Claims are Lost After Policy Exhaustion First Am. Alliance, Inc. v Ameriprise Ins. Co. Edited by Lawrence N. Rogak A recurring dilemma in New York PIP is the following situation: a claim is properly denied, and later, other claims are paid in the regular course of business which exhaust the policy. Later, the denied claim goes to trial or arbitration and the provider wins. Under the current state of the case law, in this scenario the insurer must pay the provider, even though the policy is exhausted (contrast with the situation where a bill is in delay status when the policy is exhausted by subsequent bills; in that case, the insurer does not have to pay). The post-exhaustion payment rule was set forth in Alleviation Medical v Allstate Ins. Co., 55 Misc 3d 44 (App Term 2d Dept 2017), and is relied upon in the case below. The Alleviation case is currently pending appeal to the Appellate Division (and I personally think it should be reversed, because of the general rule that policy exhaustion ends an insurer’s obligation to pay). But until then, PIP insurers are on the hook for post-exhaustion judgments and awards for bills that were denied.—LNR uAppeal from an order of the Civil Court of the City of New York, Kings County (Reginald A. Boddie, J.), entered September 25, 2015. The order denied defendant’s motion for summary judgment dismissing the complaint. ORDERED that the order is modified by providing that the branch of defendant’s motion seeking summary judgment dismissing so much of the complaint as sought to recover on a bill for $630 is granted; as so modified, the order is affirmed, without costs. In this action by a provider to re30 January 14, 2019 / INSURANCE ADVOCATE

Never mind that ALL Americans are hurt by ACA’s destruction of true insurance, by the $1 trillion increase in spending, by the disruption of their prior care, by the restriction of medical choices, and by the chaos that comes from the loss of consistent, understandable law. cover assigned first-party no-fault benefits, defendant appeals from an order of the Civil Court which denied defendant’s motion for summary judgment dismissing the complaint. In support of its motion, defendant alleged that, after it had denied the claims that are the subject of this action, it paid other claims and that those subsequent payments had exhausted the available coverage. However, even if true, this allegation does not warrant summary judgment dismissing the complaint on the basis of an exhaustion of available coverage defense (see 11 NYCRR 65-3.15; Alleviation Med. Servs., P.C. v Allstate Ins. Co., 55 Misc 3d 44 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]; see also Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 [2007]). Accordingly, the order is modified by providing that the branch of defendant’s motion seeking summary judgment dismissing so much of the complaint as sought to recover on the bill for $630 is granted.[IA] 2018 NY Slip Op 51765(U) Decided on November 30, 2018 Appellate Term, Second Department

CONTINUED FROM PAGE 10

less people were punished for not buying. The penalty was scheduled to reach 2.5% of your income. So, what happens now? The Judge has stayed his ruling pending appeal to avoid disruptions while a new constitutionality rationale is devised. Thus, ACA is still the “law of the land.” (That’s supposed to be the Constitution.) ACA defenders argue that a tax of $0 is still a tax although it raises no revenue, and the law’s unconstitutional requirement to buy ACAcompliant insurance isn’t really a law because the millions of scofflaws who disobey it won’t be punished, at least not until Congress passes a new penalty. The AMA doesn’t want ACA overturned, ostensibly because that might cause 20 million people to lose “healthcare” (i.e. overpriced, generally poor insurance). Never mind that ALL Americans are hurt by ACA’s destruction of true insurance, by the $1 trillion increase in spending, by the disruption of their prior care, by the restriction of medical choices, and by the chaos that comes from the loss of consistent, understandable law. Without the individual mandate, but with ACA’s federal insurance rules still in place, Americans have a tough choice: Buy unaffordable, undesired, even objectionable coverage—or be uninsured. All of ACA, which imposes a straitjacket on a previously diverse, state-regulated industry, needs to be declared unconstitutional—as it surely is, based on any reasonable reading of our founding law.[IA]

IN THE NEWS CONTINUED FROM PAGE 25

millions of dollars in false claims for medically worthless compound scar and pain creams—billed to the MTA’s health program. Murder for life. Jasmine Harlee (Ontario) hired a hitman to smother her mother with a pillow for $30,000 of life insurance money.[IA] The New York Alliance Against Insurance Fraud consists of more than 100 insurance companies that help to educate the public about the severity of fraud in the Empire State. Report fraud by calling tollfree 1-844-FRAUDNY.

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