NU Online News Service, April 1, 12:12 a.m. EDT
A New York State Senate Insurance Committee staff member said the Senate may consider no-fault fraud legislation this session after the State Insurance Fraud Bureau reported a 9 percent increase in no-fault auto system fraud in 2009.
The Senate committee held a hearing in February that brought various stakeholders together to discuss problems in the no-fault system.
Evan Schneider, Senate Insurance Committee director, said the committee plans to form working groups with the stakeholders next month to "delve into the problems" and hammer out possible solutions.
He said no-fault fraud "appears to be a serious problem" in the state, particularly the downstate regions of Long Island, New York City and Westchester counties.
As the working groups have not met yet, he said he could not say what any no-fault reforms would look like but he is hopeful work will get done this session.
A spokesman for Assembly Insurance Committee Chairman Joseph Morelle, D- Irondequoit, did not return a call, but the Assembly waded into the issue with a roundtable discussion days before the Senate held its hearing in February.
The Fraud Bureau report showed no-fault fraud accounted for 54 percent of all insurance fraud reports received by the bureau in 2009.
In total, the report notes that the bureau received 13,433 suspected fraudulent no-fault claims in 2009, up from 12,339 in 2008.
The bureau received a total of 24,920 suspected fraudulent claims for 2009.
Ellen Melchionni, president of the New York Insurance Association (NYIA), said the state needs to act on no-fault fraud now, before it deteriorates to a point where rates rise considerably and insurers leave the market.
Her fear, she said, is that legislators in Albany will treat no-fault as they have treated medical malpractice. With med mal, legislators waited, she noted, until the situation became a crisis, then responded to rising premiums with rate freezes that did not address the underlying problems.
She said her "big concern is Albany doesn't do anything until it's a crisis."
However, she said she was encouraged by activities in the legislature, such as the Senate hearing and Assembly roundtable.
She said NYIA supports giving carriers the necessary time to determine whether a no-fault claim is fraudulent, bundling and processing individual medical bills as one claim, reforming the dispute resolution system to get the more minor cases out of the overburdened court system, decertifying medical providers who engage in fraudulent activities from receiving no-fault reimbursements, creating guidelines for medical treatments similar to workers compensation claims and making the practice of recruiting claimants to medical mills a felony.
She also suggested oversight of diagnostic treatment and testing.
"Once a specified dollar amount is reached, an individual would need prior approval from their insurance company for further testing," she said in an email. "It is common within the health care system to require prior approval for the most expensive testing–this is certainly not a new idea and should be applied to no-fault claims."
The Insurance Department is working to reform regulations dealing with no-fault as well, and Ms. Melchionni said she was encouraged by the department's work. But she said regulatory changes need to be done in conjunction with legislative fixes.
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