Insurers Snub N.Y. Assembly Auto Fraud Bill

By Daniel Hays

NU Online News Service, April 9, 3:04 p.m. EST?The New York Assembly approved a comprehensive auto insurance measure yesterday that the sponsor said should satisfy insurer concerns while it halts "soaring" premiums and reduces fraud. However, industry reaction was negative.

A representative for the Alliance of American Insurers said today that the bill's language sounded much like a measure passed by the Assembly last year "that we could not support and we criticized."

Assemblyman Pete Grannis, D-Manhattan, chairman of the Assembly Insurance Committee, announced after passage of the bill--A.8654-E--that it "strikes a balance between insurer concerns and the legitimate needs of consumers. The Assembly proposal cracks down on criminals who stage accidents and file pumped-up or phony medical bills, and it also seeks to ensure that the $1 billion insurance companies say could be wiped out by fraud-fighting reform finds its way quickly into consumers' pockets."

He said the legislation is supported by Consumers Union, the New York State branch of the Automobile Association of America, and the New York Public Interest Research Group.

Among the bill's provisions that Assemblyman Grannis called key aspects are:

? Felony penalties for "runners and rip-off artists who participate in fraud schemes."

? A hard focus on medical claims abuse.

? Creation of an independent consumer advocate to represent the public in rate and rule matters before the state insurance department.

Besides objecting to the bill as a repeat of earlier legislation, John Cucci, Northeast region vice president for the Downers Grove, Ill.-based Alliance, said a consumer advocate was unneeded and would create "another level of bureaucracy," while adding expense to the system.

A provision in the bill to freeze rates for 18 months, he said, would stifle competition. Another section, which would shorten the deadline for filing medical provider bills from 180 to 60 days, has been implemented through an insurance department regulation, making the measure "a day late and a dollar short," he added.

"Overall, while the bill has some modest reform, it does not address in enough depth the fraud situation out there in the urban areas," Mr. Cucci said.

The measure that passed the Democrat-controlled Assembly differs from an auto insurance bill pending in the Republican-controlled Senate, which has industry support.

Assemblyman Grannis is urging the Senate to act swiftly on the Assembly package. "With drivers in the assigned risk plan being hit with a 19.5 percent rate hike, and insurance companies in the voluntary market seeking double digit rate increases, policyholders need relief," he said.

The Assembly's Omnibus Motor Vehicle No-Fault Insurance Fraud Prevention Act creates Class D and E felony-level penalties for people running accident scams, and authorizes the use of wiretapping to investigate them.

Among other points mentioned by Assemblyman Grannis:

? It modifies the law to permit insurers to challenge fraudulent claims after the 30-day deadline for payment of claims.

? It requires disclosure of information to help insurers and regulators track down "medical mill" scams, and allows fraud whistleblowers to receive a limited monetary reward.

? It creates a process for removing the ability of unscrupulous healthcare providers to bill under no-fault.

? It requires that arbitration be the first forum for resolution of no-fault disputes if and when the state insurance department cleans up its arbitration backlog and improves processing times.

? Requires any insurers that do not show a 17 percent reduction in no-fault insurance personal injury protection premiums after 18 months to provide a detailed explanation to the insurance department

? Requires the insurance department to provide personalized premium quotes on its Web site and a toll-free number.

? Requires an independent audit of the insurance department's enforcement of the state's law limiting excess profits.

? Changes the requirement that the department cannot act on an unfair claims settlement practice complaint unless it finds the insurer has engaged in the practice with such frequency as to indicate a "general business practice."

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Insurers Snub N.Y. Assembly Auto Fraud Bill

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