The TRUTH about No-Fault Insurance Collections

by Attorney Thomas Tona:

Recently, I was out to dinner with two chiropractors.  Twenty minutes into the dinner, the discussion turned to the business of Chiropractic, where two issues dominated the balance of the night.

Issue one arose when I asked the question, “What is your number?”

Silence and blank stares followed.  

I then elaborated, “What are your current receivables and more specifically, what are your current no-fault receivables?”  More blank stares.  I followed up with the inevitable question, “How long have these been outstanding?”  More silence.

As a Chiropractic Business owner, you must be able to quantify the current amount of your receivables and their aging at any given moment. This directly relates to the financial health of your business.

I always emphasize the subcategory of no-fault collection receivables for two reasons.  First, as a healthcare provider, you have the most control over your no-fault collection receivables and how fast you can realize the cash due on these receivables, because of the legal remedies available to you.  Second, in most instances, you can predict with a reasonable degree of accuracy the amount you will be paid on those receivables, assuming your documentation is thorough and well prepared.

Sitting on any amount of wrongly denied no-fault receivables for any length of time is a lost opportunity cost to a practice; one that is easily remedied with the right law firm representing you.

Issue two arose with the question, “When is a legal fee not a legal fee?”

I asked one of the chiropractors where he had his $100,000.00 in uncollected no fault receivables, and for how long they had been uncollected.  His startling response was that it has been with his current collections attorney for two years and he had not recovered any money from them.  He added, “I have no idea what is going on.”

Immediately I knew that the entire balance had to be in litigation, which begged the next question of what the legal fee arrangement was that he had agreed to with his attorney.  The confused answer of “two percent” was offered.

What this chiropractor was really paying was 100% of the interest ($24,000/yr.) and 5% ($5,000) of the claim amount as the legal fee.  This was in addition to the statutory legal fee of 20% paid by the carrier ($20,000).  So the true fee was approximately $73,000!

The inherent problems in agreeing to this type of arrangement without full disclosure or understanding became readily apparent.  You must understand what you are agreeing to when signing a contract with your attorney.

I relate this story to you as a cautionary tale. MIND YOUR BUSINESS.

What can you do to learn more?


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