A Compromise On N.Y. Auto Insurance Fraud?

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By Michael Ha

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NU Online News Service, March 18, 11:41 a.m.EST?The chairman of the insurance committee in New York'sDemocrat-dominated Assembly said he is willing to work with theRepublican- controlled Senate on a compromise bill addressing thestate's crippling auto insurance fraud problem

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The comments by Assemblyman Pete Grannis, D-Manhattan, followedaction earlier this month when both the Assembly and the StateSenate introduced and passed their own measures to tackle autoinsurance fraud and help curb soaring auto insurance premiums.

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"We are focused on the outcome. In the Assembly, this bill hasbeen passed three years in a row. The bill has to be effective, butit doesn't have to be our way or the highway," said Mr. Grannis,who is the chief sponsor of the Assembly's bill.

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The Assembly bill 4807, Mr. Grannis explained, increasespenalties for rip-off artists who stage accidents and providers whoput in phony medical bills, and authorizes the use of wiretaps ininvestigating these crimes.

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He also explained the bill closes loopholes and bansunscrupulous medical providers from billing under the state'sno-fault law. The bill also requires medical providers to discloseties to so-called "medical mills," provides more timely access toaccident reports, and allows whistleblowers to be rewarded for tipsresulting in successful prosecutions.

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On the Senate side, two bills dealing with insurance fraud werepassed this month: S.B. 683, which deals with no-fault insurancefraud; and S.B. 555, which would make it a felony to act as a"runner"--acting to procure clients for attorneys or healthcareproviders with the intent of defrauding an insurer.

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The bills introduced by the two sides have a number ofprovisions in common, but the biggest difference is the proposal bythe Assembly to create a Special Office of Insurance ConsumerAdvocate, which would be independent of the state's insurancedepartment.

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The budget for the Consumer Advocate office would be aroundhalf-a-million dollars per year, which would be "a drop in thebucket," Mr. Grannis said.

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Mr. Grannis had argued earlier that while the Senate billsprimarily focus on the insurance industry's agenda, the Assembly'sbill also boosts the oversight of the industry to addresscomplaints about insurers' abusive claims settlement practices.

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"This new office would focus solely on consumer protection. Thereason the insurance companies are opposing this is because theydon't want to rock the boat. Things are going fine for them withjust the insurance department," he argued.

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But Mr. Grannis also told National Underwriter that heis willing to work with the Senate on this issue as well to reach acompromise bill.

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The American Insurance Association in Washington, D.C. has beenparticularly critical of the Assembly's proposal for the specialoffice, calling it "a new bureaucracy" that would not work.

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The Office of Public Insurance Consumer Advocate, AIA argued,would create an expensive, duplicative and unnecessary newbureaucracy. Gary Henning, AIA assistant vice president for thenortheast region, said the way to reduce the cost of auto insurancein New York is to eliminate fraud, abuse and over-utilization inthe no-fault system. "Creating a new bureaucracy would costinsurers, motorists and taxpayers money," Mr. Henning argued.

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"We would very much hope that the New York State Senate and theAssembly will pass a meaningful reform," added Michael Moran,spokesperson for the AIA, who declined to speculate further on thelikelihood of a compromise bill.

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"I don't know what kind of compromise they could have, though. Ican tell you that the New York insurance department alreadyprovides some of the strongest oversight in the country," Mr. Moransaid.

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