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

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

The findings of a recent study conducted by the InsuranceResearch Council (IRC) indicate that expenses related to injuriesfrom auto accidents in the New York City area have risen a whopping70 percent over the past decade, surpassing the 49-percent increasein medical care inflation over the same period.

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

Uptown, Downtown Fraud

Analysts believe that this discrepancy can be attributed todifferences in behavior between upstate and downstate residents.For instance, claimants from the New York City metro area werereportedly “much more likely” to consult chiropractors, physicaltherapists, and acupuncturists. They also seemed more eager to seekexpensive diagnostic procedures and treatment in pain clinics, aswell as report durable medical equipment expenses. Moreover, thoseresiding in or around the Big Apple were more inclined to hireattorneys to help them seek compensation for supposed injuries.

“This report further details the problem of claims abuse in NewYork, especially unscrupulous medical providers who overtreat andovercharge claimants and their insurers,” said Elizabeth Sprinkel,senior vice president of the IRC. “Even when the excessive chargescan be mitigated, the costs of combating these fraudulentactivities are further driving up the price of insurance for allconsumers 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 forthis type of abuse. More than half (52 percent) of apparent abuseclaims stemmed from accidents occurring in either Brooklyn orQueens; these two boroughs accounted for only 28 percent of allclaims in the study. Consequently, in Queens drivers pay 167percent more than the statewide average, whereas Brooklyn residentspay 185 percent more.

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

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

“These findings highlight the urgent need for reforms [to]increase penalties for those criminals and unscrupulous medicalproviders who rip off honest, hardworking New Yorkers time andagain,” concluded Kristina Baldwin, chair of the Fraud Costs NewYork 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 CharteredProperty Casualty (The Institutes). For more detailed informationon the study's methodology and findings, visit www.ircweb.org.