Doctors conspiring to cheat New York's no-fault personal injury protection (PIP) system are writing aprescription for trouble, and perhaps professional suicide.

A rigorous statewide initiative is underway to close medicaloffices billing for services that are either wholly unnecessary ornever rendered to auto accident victims. Under the newregulation, physicians engaging in unscrupulous billing practicesto siphon funds from New York's PIP system will ostensibly turnthemselves into pariahs, at least in the professional sense.

The new regulation, which the Department of Financial Services(DFS) is issuing under the direction of Gov. Andrew M. Cuomo,implements a 2005 law that affords DFS the power to regulate doctorparticipation in the no-fault system. Doctors found to be inviolation would be banned from the PIP system altogether andpossibly stripped of certification.

If the penalty seems harsh, then that is because this particulartype of fraud bilks insurers out of millions each year and drives up autoinsurance rates for New Yorkers. In fact, the state reports thefourth highest auto insurance premiums in the U.S., saidto be attributed in large part to PIP abuse.

"The state has no tolerance for medical providers or doctorsripping off the system," said Governor Cuomo.

Early Diagnosis

DFS has already identified 135 medical providers whose billingpractices have raised concerns regarding possible no-fault fraudthrough audits and information obtained from law enforcement andinsurers. As part of an ongoing investigation, letters are beingsent to all 135 medical providers demanding a response andinformation. According to the department, failure to answer theletters may automatically lead to the medical provider being bannedfrom the no-fault system.

Investigators also cite anecdotal evidence ofdoctors "renting" their tax ID number to fraudulent medicalpractices that submit bogus bills toinsurers.  

The regulation mandates that DFS will have to send a list of anymedical providers suspected of no-fault fraud to the Departments ofHealth (DOH) and the State Education Department (SED) for theirreview. DFS will then conduct hearings. Providers found to haveviolated the law will be banned from participating in the no-faultpayment system. In appropriate cases, DOH and SED may rescind anymedical licenses and law enforcement will decide whether criminalcharges should be filed.

Resounding Support

So far the regulation has shored up a long list of advocates. Ina statement released this week, National Association of MutualInsurance Companies (NAMIC) lauded the efforts by the Cuomoadministration specifically: "The initiative to target medicalproviders engaged in fraudulent activities is an encouraging signthat the Cuomo administration is highly engaged in the importantfight to curb fraud and abuse in New York's no-fault system," NAMICstated. "The decertification of medical providers is one of severalimportant measures that have been identified as necessary toaddress systemic issues. While legislative reforms are stillnecessary, Department of Financial Services Superintendent BenLawsky is to be commended for utilizing the tools available to himto take a meaningful step forward in the fight against no-faultfraud."

"I applaud Superintendent Lawsky and stand ready to support himin his fight to crack down on no-fault fraud and the criminals whoprofit from this illegal enterprise," added Senator James L.Seward, Chair of the Senate Insurance Committee, in a separatestatement. "Activating this powerful tool to decertify doctors whocheat the system is long overdue. I sponsored this reform in 2005and am pleased the Superintendent is taking steps to implementit—helping fight fraud and get insurance rates under control."