Doctors conspiring to cheat New York's no-fault personal injuryprotection (PIP) system are writing a prescription for trouble—andperhaps professional suicide. 

A rigorous, statewide initiative is under way 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 Governor 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 of dollars each year and drivesup auto insurance rates for New Yorkers. In fact, the state reportsthe fourth highest auto insurance premiums in the U.S.,said to be attributed in large part to PIP abuse.

“The state has no tolerance for medical providers or doctorsripping off the system,” said Gov. Cuomo.

EarlyDiagnosis 
DFS already has identified 135medical providers whose billing practices have raised concernsregarding possible no-fault fraud through audits and informationobtained from law enforcement and insurers. As part of an ongoinginvestigation, letters are being sent to all 135 medical providersdemanding a response and information. According to the department,failure to answer the letters may automatically lead to the medicalprovider being banned from the no-fault system.

Investigators also cite anecdotal evidence of doctors “renting”their tax ID numbers to fraudulent medical practices that submitbogus bills to insurers. 

The regulation mandates that DFS will have to send a list of anymedical providers suspected of no-fault fraud to the Department 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 regulationhas shored up a long list of advocates. In a statement releasedthis week, National Association of Mutual Insurance Companies(NAMIC) lauded the efforts by the Cuomo administrationspecifically: “The initiative to target medical providers engagedin fraudulent activities is an encouraging sign that the Cuomoadministration is highly engaged in the important fight to curbfraud and abuse in New York's no-fault system,” NAMIC stated. “Thedecertification of medical providers is one of several importantmeasures that have been identified as necessary to address systemicissues. While legislative reforms are still necessary, Departmentof Financial Services Superintendent Ben Lawsky is to be commendedfor utilizing the tools available to him to take a meaningful stepforward in the fight against no-fault fraud.”

“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 decertifydoctors who cheat the system is long overdue. I sponsored thisreform in 2005 and am pleased the superintendent is taking steps toimplement it—helping fight fraud and get insurance rates undercontrol.”