February 24, 2012: 2012, Issue 7
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Bronxites socked by 335% higher no-fault premiums

Bronx Times

A coalition of insurers, elected officials, and community leaders are coming together to stop what some see as a “fraud tax” on Bronx drivers.

Fraud Costs NY is seeking to have laws re-written and others enacted that will stop fraud and lawsuit abuse when it comes to excessive or fraudulent medical claims on no-fault auto insurance policies that are being filed by clients of “medical mills” throughout the borough and the city, said Fraud Costs NY spokeswoman Kristina Baldwin, who is also assistant vice president for the Property Casualty Insurers Association of America.

The high prevalence of medical mills downstate are costing Bronx drivers when they pay their premiums, which are 335% of the New York State average, and the highest of any borough in New York City, Baldwin said, citing statistics that were calculated by the PCIAA.

“By and large, most medical providers are honest people who want to help injured auto accident victims, and certainly we will want policy holders to get the medical treatment that they need,” Baldwin said. “But we do have a major problem with these organized crime entities that have set up medical mills that sometimes don’t even have doctors in their facilities and are solely there to fill out paperwork and file no fault insurance benefits.”

One of the most common schemes used by these medical mills is to have a “runner” wait near or in a hospital where auto accident victims are brought, steering unsuspecting victims to the mills, which then bill for extra or nonexistent treatments, Baldwin stated. In the New York City metro area, 44% of claimants used four or more medical providers, as opposed to 14% upstate, Baldwin said. She also said that this could not be attributed to a higher concentration of medical providers in the metro area as opposed to upstate.

“In the area of durable medical equipment, like canes or walkers, we see that the use of durable medical equipment is four times more likely in the New York City metro area,” Baldwin said. “We are seeing a tremendous amount of fraud in billing for medical equipment that the injured party doesn’t need or in some cases were never given.”

Among the changes the Fraud Costs NY is pushing for are fast and fair dispute settlement that would require medical providers to submit disputed no-fault claims to arbitration, adequate time for fraud investigations by modifying an existing rule, tougher penalties for insurance fraud already in place to decertify health care providers who commit no-fault insurance fraud and outlawing “runners,” and tools to combat excessive medical charges by requiring health care providers to submit evidence that the services billed were medically necessary.

Assemblyman Peter Rivera has signed onto the Fraud Costs NY coalition, and is the sponsor of legislation called the NY Automobile Insurance Fraud and Premium Reduction Act, which would make it a crime to stage an automobile accident and then bill the insurance company for medical and other costs, said Rivera’s chief of staff Danny Figueroa. It is one of about 25 bills dealing with auto insurance fraud currently on record at the New York State Assembly.

“There is a fraud tax for living in the Bronx and wanting to own a car,” Figueroa said. “It is not right for drivers and it is not right for the residents of New York City.”

Some of the costs of no fault auto insurance premiums for Bronx drivers, like those related to fraud, can be controlled with legislation as a useful tool, Figueroa stated. Other factors, like reducing higher incidence of auto theft, could prove more elusive, Figueroa stated.

Senator Jeff Klein is also the sponsor of several bills related to auto insurance fraud in the New York State Senate.

“Automobile insurance fraud is a serious problem plaguing our state, and Bronx County in particular,” Klein stated. “We need to send a clear message that this behavior will not be tolerated, as it raises the rates law-abiding citizens pay for phony claims.

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