Crooked medical providers and dishonest drivers continue to bilk New Yorkers and their insurers, exposing numerous dents in the state's no-fault-based system.

Riddled with fraud, “creative” medical billing for procedures and services, and needless lawsuits, the system has been under fire for years. A recent analysis of thousands of PIP claims logged last year may boost the efforts of those lobbying for state-wide personal injury protection (PIP) reform.

The findings of a recent study conducted by the Insurance Research Council (IRC) indicate that expenses related to injuries from auto accidents in the New York City area have risen a whopping 70 percent over the past decade, surpassing the 49-percent increase in medical care inflation over the same period.

The IRC reached this conclusion after examining in-depth claims data provided by ten insurers. When sifting through more than 4,500 PIP claims closed in 2010, the IRC calculated medical costs, lost wages, and other expenses related to injuries stemming from auto accidents. It fond that the average reported loss per PIP claimant in the New York City metro area was more than double the average loss amongst claimants from the rest of the state—or roughly $15,086 compared with $6,870.

Uptown, Downtown Fraud

Analysts believe that this discrepancy can be attributed to differences in behavior between upstate and downstate residents. For instance, claimants from the New York City metro area were reportedly “much more likely” to consult chiropractors, physical therapists, and acupuncturists. They also seemed more eager to seek expensive diagnostic procedures and treatment in pain clinics, as well as report durable medical equipment expenses. Moreover, those residing in or around the Big Apple were more inclined to hire attorneys to help them seek compensation for supposed injuries.

“This report further details the problem of claims abuse in New York, especially unscrupulous medical providers who overtreat and overcharge claimants and their insurers,” said Elizabeth Sprinkel, senior vice president of the IRC. “Even when the excessive charges can be mitigated, the costs of combating these fraudulent activities are further driving up the price of insurance for all consumers in the state.”

Although soaring costs are most pronounced in New York City, where drivers pay as much as 272 percent above the state average, the IRC was quick to identify Brooklyn and Queens as hotspots for this type of abuse. More than half (52 percent) of apparent abuse claims stemmed from accidents occurring in either Brooklyn or Queens; these two boroughs accounted for only 28 percent of all claims in the study. Consequently, in Queens drivers pay 167 percent more than the statewide average, whereas Brooklyn residents pay 185 percent more.

In terms of claims on an overall statewide basis, 23 percent—or nearly one in four—claims involved the appearance of claims abuse. For the purposes of the study, the IRC defined “abuse” as either fraud, material misrepresentation of the facts of the claim; or buildup, inflated medical or other expenses in an otherwise legitimate claim. Claims from the New York City metro area were more than four times as likely to involve apparent abuse—or 35 percent compared with just 8 percent in the rest of the state.

Among other findings, the study illuminated the role of medical providers in the abundance of no-fault fraud in the state, highlighting treatment patterns for claimants, the percentage of medical providers producing bills with charges in excess of the state's fee schedule, and so on.

“These findings highlight the urgent need for reforms [to] increase penalties for those criminals and unscrupulous medical providers who rip off honest, hardworking New Yorkers time and again,” concluded Kristina Baldwin, chair of the Fraud Costs New York Coalition. “Auto insurance fraud is a crime, and it is costing [state residents] millions of dollars every year.”

The IRC is a division of the American Institute For Chartered Property Casualty (The Institutes). For more detailed information on the study's methodology and findings, visit www.ircweb.org.

Special Reports /

NYC PIP Claims Costs Outpace Inflation

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