White Plains, NY - The Democratic majority of the Westchester County Board of Legislators (BOL) joined the Fraud Costs New York coalition in calling for reforms of New York’s no-fault auto insurance system and stopping insurance fraud and the lawsuit abuses that drive up costs for consumers and cost New Yorkers hundreds of millions of dollars annually.

The Fraud Costs New York coalition is a broad-based group of elected officials, chambers of commerce, civic associations, law enforcement and insurance trade associations from around the state fighting against insurance fraud.

And rightly so. In 2010, the state’s outdated and broken insurance system cost New Yorkers more than $385 million. Auto insurance costs are most pronounced downstate, where drivers in the New York City area pay as much as 272% more than the state-wide average. In Westchester, no-fault auto insurance fraud costs drivers nearly $36 million a year—a cost that amounts to a "Fraud Tax" which affects every driver in the county. At the individual level, it means each driver in the county is paying roughly $60 more a year for insurance due to no-fault fraud and abuse.

“It is time to bring fundamental change by cracking down on the criminals who impose a fraud tax on the honest, hardworking people in this county and the state,” said BOL Chairman Ken Jenkins (D-Yonkers). “We’re here to tell Albany that we need reform and we need it now.”

The effort to reform New York’s no-fault auto insurance system took an important step forward last month when New York State’s Superintendent of Financial Services Benjamin M. Lawksy and Governor Andrew M. Cuomo joined forces to call for a crackdown on medical mills and crooked doctors who perpetuate fraud by billing insurance companies for procedures that are either not medically necessary or are never even performed in the first place.

“Albany must follow the lead of Governor Cuomo and Superintendent Lawsky and take the fight to reform New York’s no-fault laws to the next level,” said Legislator and BOL Vice Chair Lyndon Williams (D-Mount Vernon). “The Legislature owes it to ratepayers to pass meaningful legislation that will allow law enforcement and insurance companies sufficient time to investigate suspicious claims and require medical providers to submit disputed no-fault claims to arbitration in order to ensure fast and fair settlement.”

New Yorkers now pay the fourth highest premiums in the nation for auto insurance, due in large part to no-fault auto insurance fraud.

“As gas prices continue to soar, owning and operating an automobile in New York is becoming less and less affordable.” said Legislator and BOL Majority Leader Peter Harckham (D-Katonah). “Ratepayers and small business owners in Westchester County and throughout New York stand to benefit from commonsense reforms which will close the loopholes in our state’s insurance system and cut the ‘Fraud Tax’ for honest drivers at a time when every penny counts. This is one tax that all lawmakers can agree must be eliminated.”

Currently, there are no criminal statutes that deal specifically with “runners” who stage accidents, requiring prosecutors to use other criminal laws to crack down on this type of fraud.

Legislator and BOL Majority Whip MaryJane Shimsky (D-Hastings-on-Hudson) said, “No-fault auto insurance fraud in New York State is simply out of control. This type of fraud not only steals hard-earned dollars from New York’s working families, but it also poses a real threat to public safety. All too often, innocent drivers and bystanders are seriously injured or killed as a result of ‘runners’ who stage phony auto accidents and steer unsuspecting victims to medical mills where the goal is to turn an illegal profit, not to provide patient care. The State Legislature must act now to give law enforcement the power to stiffen felony charges for criminals who stage accidents and the necessary tools to investigate and prosecute suspicious claims.”

According to the New York State Insurance Department’s 2010 Annual Report on Health Insurance Fraud, there were 12,807 reports of suspected fraud involving no-fault insurance, or 88 percent of the total number of health care-related reports received. The report says that common types of health care fraud include billing for services not rendered, performing medically unnecessary treatments, filing claims for non-existent injuries and staging auto accidents. In addition, a recent Insurance Research Council study found that in the New York City area, about one in every five no-fault auto insurance claims closed in 2010 appear to have elements of fraud.

“Reforming New York’s no-fault auto insurance system is long overdue,” said Jenkins.  “We need sensible reforms that maintain protections for individuals who are seriously hurt in accidents, but severely penalize criminals who feed on the current system. I urge Albany to act now on behalf of all New Yorkers.”

The Democrats on the Westchester County Board of Legislators called for reforms that would:

- Make it a Class D and E Felony to act as a ‘Runner’ and steer people to no-fault medical clinics or lawyers in exchange for monetary payments;

- Make it a Class C felony to stage an accident;

- Require medical providers to submit disputed no-fault claims to arbitration;

- Combat excessive medical charges by establishing treatment guidelines and requiring health care providers to submit evidence that all services billed were medically necessary;

- Modify the “30-day rule” to allow more time for investigation into suspicious claims.

“I applaud the Westchester County Board of Legislators as well as the entire Fraud Costs New York coalition for taking initiative and calling for reforms which will increase penalties for those criminals and crooked doctors who are bent on defrauding honest, hardworking New Yorkers,” said Kristina Baldwin, assistant vice president for Property Casualty Insurers Association of America and co-chair of Fraud Costs New York. “New York’s law enforcement officials must be given the ability to issue stiffer penalties for no-fault fraud criminals so that we can more effectively deter crime, keep our streets safe and put money back in the wallets of New York’s working families.”

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