N.Y. Fraud Crackdown Cuts Accident Claim Cost

During the past year, more than 1,000 people in the state have been indicted, arrested or convicted in connection with auto injury fraud.

The New York Alliance said the crackdown had spearheaded by New York's insurance companies, law enforcement agencies and prosecutors, and supported by tough insurance department regulations and a statewide public information program "is beginning to put a small dent in the costs of New York State's no-fault insurance system."

But, the group noted, despite the recent decrease, personal injury protection costs for the state's no-fault insurance system are still 12 percent above the national average this year–and were 34 percent above the countrywide average in 2002.

Bernard Bourdeau speaking for the anti-fraud alliance said, "In spite of this progress, the criminal activities of sham medical clinics, corrupt medical professionals, attorneys and others who loot the no-fault insurance system still levy a ?fraud tax' on auto premiums of $1 million per day."

Mr. Bourdeau cited several reasons for the positive trends, including greater recognition on the part of law enforcement and prosecutors of the costs of fraud.

He mentioned creation of a special fraud-fighting unit in the New York City Police Department, a fraud prosecutor's office by the state Attorney General, a medical fraud task force by the National Insurance Crime Bureau, the filing of civil suits under the Racketeer Influenced and Corrupt Organizations (RICO) act and the indictments by the Suffolk County, Long Island district attorney of more than 500 people associated with a massive fraud ring.

Mr. Bourdeau also noted a New York appeals court decision upholding the insurance department's Regulation 68 requiring people injured in auto accidents to notify their insurance company within 30 days of an accident, rather than 90 days, and submit proof of medical, wage loss and other expenses within 45 days, rather than 180 days as was previously permitted.

"The prolonged notification periods allowed corrupt medical professionals to generate masses of bogus treatment bills before the insurance company had a chance to thoroughly investigate them," said Mr. Bourdeau.

As he has in the past, Mr. Bourdeau urged passage of additional anti-fraud measures proposed by Republican Gov. George Pataki and the insurance department including criminal penalties for "runners" who solicit participants in fraud scams, medical protocols, and decertification of corrupt medical providers.

He said the public now has a greater awareness of costs of fraud both through higher insurance premiums and as potential victims of staged accidents.

Mr. Bourdeau said millions of New Yorkers had seen television commercials or heard radio ads produced by NYAAIF which demonstrate the impact of insurance fraud on New Yorkers.

He also noted news accounts of police officers and hospital workers involved in providing fraud rings and bogus medical clinics with phony accident reports and victims.

"The more people are aware of the costs and consequences of insurance fraud, the greater the likelihood they will not commit this crime or report it to law enforcement when they suspect it," Mr. Bourdeau said.

The Albany, N.Y.-based New York Alliance Against Insurance Fraud is a cooperative effort by insurance companies in New York to educate the state's insurance consumers about insurance fraud.