N.Y. Dem Raps Alliance Anti-Fraud Idea

But Assemblyman Pete Grannis, D-Manhattan, chairman of the Assembly Insurance Committee, said he could not accept the proposal because of what the measure left out.

The concept developed by the Alliance contains facets of various bills already introduced to fight fraud, but reworked to eliminate language that one side or another sees as "poison pills," explained John Cucci, vice president and Northeast regional manager for the Downers Grove, Ill.-based Alliance.

Auto insurance fraud by some estimates is a $1 billion-a-year problem for the state's no-fault system.

Besides eliminating elements in existing proposals that are opposed by parties such as collision repair shop operators and physicians, Mr. Cucci said the Alliance offering trims out points of dispute between the Democrat-controlled Assembly, the Republican-controlled Senate and the administration of Republican Gov. George Pataki.

Mr. Cucci said, after attending a recent all-industry meeting, he was hopeful that all insurers would agree to support what the Alliance is proposing. According to the Alliance, its members write over 10 percent of the New York auto market.

But Assemblyman Grannis, while he agrees with most of what the Alliance proposes, said he could not go along with an anti-fraud package that omits the creation of a consumer advocate and other protections he wants.

"You don't get what you want and blow off the rest," he said. If the Assembly were to go along with the Alliance package, "We'll never get them [insurers] back to the table," he maintained.

The Alliance envisions legislation that would include:

? Making it a criminal offense to act as a "runner," steering participants in staged auto accidents to unscrupulous attorneys and medical mills that bill for exaggerated or non-existent treatment.

? Changing the present system that allows insurers only 30 days to withhold payment of suspected fraudulent claims and to prove the claim is fraudulent. Under the current system, the Alliance said, fraud perpetrators are free from any prosecution after the 30 days have elapsed.

? Establishing a system of certified and approved protocols for auto no-fault medical treatment to eliminate phony tests, treatments and procedures that are currently allowed.

? Establishing a decertification process to bar fraudulent medical mills and healthcare providers that abuse the system from treating no-fault accident cases. Current procedures to revoke licenses of fraudulent medical practitioners, the Alliance said, rarely result in license suspension even after long procedural delays.

? Providing for mandatory arbitration of disputed no-fault medical claims.

The Alliance said that arbitration decisions are currently not binding, and cases end up in costly court actions, hopelessly clogging the arbitration system and contributing to unnecessary insurance costs for consumers.

Mr. Grannis said he agreed with four of the points, but could not go along with medical protocols, which are also an issue in workers' compensation insurance.

He said a revised package that he will put forward shortly will require insurers to refile for rate approvals to reflect any savings from the anti-fraud component.

His bill, he said, has balance because it includes mandatory arbitration, which consumer groups object to, as well as creating a consumer advocate post that insurers don't like.

Mr. Grannis said the governor's office had not done enough to bring the parties together, while Mr. Cucci praised Mr. Pataki for trying to move up deadlines for reporting accidents and submitting medical bills.

Discussing efforts to pass an anti-fraud package, Mr. Grannis reflected: "This is an election year. There are a lot of battling constituencies."

Mr. Cucci noted that a legal challenge from trial lawyers has blocked a State Insurance Department rule that would shorten the time frame for submission of no-fault medical bills to an insurance company from 180 days to 45 days. It would also reduce the time limit for reporting an accident to an insurer from 90 days to 30 days.

He said as a result the Alliance will seek to have the rule provisions drafted into a bill that they will lobby for. He noted that an analysis of New York no-fault claims by the Insurance Research Institute in Malvern, Pa., found that 65 percent of all claims with a high suspicion of fraud arrived at the insurance company more that 45 days after their first treatment.

The Alliance estimates fraud in New York creates $2 million per day in unnecessary auto insurance costs.