NU Online News Service, March 26, 1:37 p.m.EDT

March 22, 2012 marked nine years to the day when Alice Ross, a71-year-old grandmother, was killed in a no-fault auto insurance fraud scheme, and the daywhen the New York State Senate passed three bills aimed at stemmingthe multimillion-dollar stage-and-fraud crime trend. 

The first of the individual laws allows for retroactivecancellation of a new auto policy if payment was later found to befraudulent, preventing criminal rings from illegally financing thepolicies that allow them to enact a scheme.

It also allows victims of a no-fault accident to receivebenefits from their own insurer. New York law did not previouslyprovide benefits to victims and their families even if the accidentwas ruled to have been intentional.

The second piece of legislation makes faking an automobileaccident, participating in a staged accident or submitting falseclaims to collect benefits a felony offense. The third makes theact of hiring another person to commit no-fault fraud, submittingor collecting its benefits a felony.

The laws also give law enforcement officials tools toinvestigate no-fault fraud schemes and prosecute those who plannedand carried them out. 

The reforms have received bipartisan support from DemocraticGovernor Andrew Cuomo, Republican Senate Majority Leader Dean G.Skelos, Republican Senators James L. Seward and Martin J. Golden,and Financial Services Superintendent Benjamin M. Lawsky.

The bills must now pass through the Assembly. An article in theNew York Daily News quoted a spokesman for AssemblySpeaker Sheldon Silver calling auto insurance fraud "extremelydisturbing" and promising that "we'll be reviewing this package ofbills with a goal of protecting consumers."

New York Insurance Association, Inc. President Ellen Melchionnisays she is "extremely encouraged by what's happened in theSenate", mentioning that the trial bar supports the bills.Melchionni believes that the legislation should be passed shortlyafter the Assembly agrees on the state budget.

"In our opinion, these 3 bills really go after the individualsthat are really, truly intending to commit fraud. It's low-hangingfruit if they are intending to fight [this]," she says, citing arecent insurance-fraud bust which implicated 36 people and robbed the state's no-fault system ofmore than $279 million.

"When they close one office, it pops up 3 blocks away with adifferent doctor and billing name," says Melchionni of the"pervasive" nature of insurance fraud. Melchionni adds that aregulation adopted by Lawsky "requiring providers to signa form to attest to the fact that their license is not used forfraud might go a long way in closing down medicalmills." 

"Not to mention that the costs of these crimes are passed on toconsumers, and we all end up paying," she emphasizes.

Future reforms will incrementally give law-enforcement andinsurance companies time to investigate such crimes, requiremedical providers to confirm that prescribed treatments werenecessary to the victim's health, enforce treatment procedures, andensure a legal limit on medical service fees.

Florida, another no-fault state, has also recently pursuedlegislative reforms.

Corrected to show that a measure requiringproviders to sign a form attesting their license is not used forfraud is a regulation, not legislation.