New York is in a no-fault crisis – a crisis brought on by criminals who are gaming the auto insurance system.
Auto accident fraud is costing New York consumers hundreds of millions of dollars.
According to the Insurance Information Institute, no-fault fraud and abuse cost New Yorkers about a quarter-of-a-billion dollars in 2010.
In addition to costing New Yorkers hundreds of millions of dollars, it put all of us at risk. This is dangerous.
Corrupt medical professionals and attorneys (as well as the street-level criminals who work on their behalf) are exploiting the no-fault auto insurance system because of loopholes in the law.
For example, auto accidents can be caused or staged. Those involved (some not knowingly) are recruited to go to illegal medical facilities—corrupt offices that generate excessive and fraudulent medical bills.
These no-fault medical mills are often illegal corporate structures being run by dishonest people who are in business solely to bill insurance companies—not to provide legitimate medical care.
The criminals taking unfair advantage of New York’s broken no-fault system are organized, calculating, and part of a big business.
In essence, the people behind this crime are imposing a ‘fraud tax’ on honest, hard working New Yorkers by gaming the auto insurance system.
We need to enact comprehensive, meaningful no-fault insurance reform that puts the citizens of New York first.
The reform measures include:
- Implementing tougher penalties on criminals who cheat the no-fault system;
- Modifying “30-day rule” to allow insurers the opportunity for more thorough investigations of suspicious claims;
- Combating excessive and unnecessary medical charges;
- De-certifying medical providers who commit insurance fraud;
- Encouraging fast and fair settlements by requiring medical providers to submit disputed no-fault claims to an arbitrator;
- Providing for the insurance department to promulgate treatment guidelines.
According to the Insurance Information Institute, no-fault fraud and abuse cost NY consumers and insurers about $241 million in 2010 (in the form of higher premiums) and, in addition to costing hundreds of millions of dollars, put all of us at risk.
According to the NYS Insurance Department’s 2010 Annual Report on Health Insurance Fraud, suspicious no-fault automobile insurance claims accounted for most of the 14,625 reports of suspected health care-related fraud sent to the New York State Insurance Department last year. There were 12,807 reports of suspected fraud involving no-fault insurance, or 88 percent of the total number of health care-related reports received.
The NYSID report says that common types of health care fraud include billing for services not rendered, performing medically unnecessary treatments, filing claims for non-existent injuries and staging auto accidents.
Excessive billing by medical mills, fraudulent companies that provide few if any real health care services to the public, is a key factor in driving New York State’s no-fault automobile insurance fraud crisis. The problem with medical mills’ excessive treatment is growing, according to the New York Alliance Against Insurance Fraud.
New York’s no‐fault claim costs have far outpaced that of other no‐fault states and the overall cost of medical care. From 2004 through the 2nd Quarter of 2010, the average personal injury protection (PIP) claim cost rose 60.4 percent in New York, nearly 42 points faster than the 18.6 percent growth rate in the Consumer Price Index cost of medical goods and services found in the region.
For the most part, the perpetrators of this type of fraud are located in the Downstate areas (i.e., New York City and Nassau, Suffolk and Westchester Counties), however, all drivers are penalized by paying higher auto insurance rates due to no‐fault fraud.
Medical provider and attorney-driven fraud contributes to NYC drivers paying about 67% (Staten Island) to 272% (Bronx) more than the statewide average for no-fault coverage.