City Blamed For Soaring N.Y. Auto Claims

By Daniel Hays

NU Online News Service, Jan. 29, 10:43 a.m.EST?New York City is the driver behind New York State's $1billion a year auto insurance fraud problem, with one out of everyfour claims from the metropolitan area appearing suspect, anon-profit industry group has found.

The study of personal injury protection claims by the InsuranceResearch Council in Malvern, Pa. found that the cost for a claimjumped 20 percent in New York State in 2000.

High usage of providers and expensive treatments in the state,especially in New York City, "is creating a crisis in the New Yorkno-fault system," said Elizabeth A. Sprinkel, senior vice presidentof the IRC.

That increase in claim cost in New York, the study found, wasfive times the medical care inflation rate for non-PIP care inmetropolitan New York. It found also that claim frequency rose 7percent in New York while declining 2 percent in other no-faultstates.

According to the IRC research, the one-in-four rate offraudulent claims was caused by exaggeration of medical expenses,along with unnecessary treatments or padding claim-relatedcosts.

The findings were contained in a study titled Claiming Behaviorin New York's No-Fault Auto Insurance System: An Analysis of ClosePIP Claims, based on examination of 2,800 paid claims. Twelveinsurers took part in the study.

Brooklyn, the researchers said, had particularly high claims andabuse fraud, and to a lesser extent, Queens and the Bronx.

The study found that New York City claimants, when compared withupstate residents:

? Hired attorneys at nearly four times the rate of the rest ofthe state.

? Reported more neck and back sprains, and 47 percent reportedthree or more injuries from an accident?twice the statewideaverage.

? Were more likely to seek treatment from a larger number ofmedical professionals, including chiropractors, neurologists,physical therapists, psychotherapists and alternative treatmentproviders, and were less likely to be treated in hospitals.

? Received diagnostic procedures more often that involvedmagnetic resonance imaging (MRI) and electromyography (EMGs).

? Were two to three times more likely to wait more than 30 daysbefore reporting injuries to insurance companies and were two timesmore likely to have waited more than 45 days before submittingmedical bills.

IRC said delayed reporting and bill submission "are potentiallyimportant contributors to no-fault auto fraud, since current ruleswithin New York allow 90 days for claimants to report injuries and180 days to submit medical bills."

Insurance companies, IRC noted, have only 30 days to pay claims,even if fraud is suspected. If they don't pay, they face legalaction for bad-faith claims practices.

The state insurance department has ordered quicker reporting,but the change in reporting dates has been halted by a courtchallenge from trial lawyers.

A large administration package of reform legislation to dealwith fraud and abuse has been introduced in the legislature, butindustry political analysts suggest it may become a victim ofpolitical battling between Republican Gov. George Pataki, who isseeking reelection, and the Democrat-controlled assembly.

According to the IRC, in 2000 the average New York City metroarea PIP claim payment was $6,898, compared with $3,295 in the restof the state.