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Organized Crime Imposes Fraud Tax on NY Drivers

NEW YORK, March 14 -- Two million dollars a day is stolen from honest New York drivers, according to the Insurance Information Institute (I.I.I.). This not only adds $124 to the cost of a typical auto insurance policy, it increases the likelihood that drivers will be the target of a staged ``accident.''

``Driving safely is tough enough without criminals creating additional crashes on our streets,'' says Jeanne M. Salvatore, I.I.I.'s Vice President for Consumer Affairs. ``Staged accidents are not simply an economic crime, they result in painful injuries, unnecessary property damage and even the identity theft of unsuspecting motorists.

Fraud rings, employing dishonest attorneys, doctors and alternative medical professionals, continue to use the state's auto insurance system as a way to make money. In existence since 1974, New York's no-fault system is designed to speed up the payment of medical bills for those injured in auto accidents. By eliminating the need to sue and ``find fault'' before medical bills will be paid, the system was supposed to reduce insurance costs. Unfortunately, criminals are using the compassionate intent of this law as a money making scheme.

``The best way to combat auto insurance fraud is to take the economic incentive out of this crime,'' says Salvatore. The insurance industry supports no-fault reforms that would close loopholes that make it easier to steal from the system, while guaranteeing benefits to those who are injured and quickly paying honest policyholders, medical providers and attorneys.

Under the current no-fault medical system, (sometimes called personal injury protection or PIP) medical providers have 180 days to submit bills after an accident, while insurers have only 30 days to pay or deny a claim -- even if there is a strong suspicion of fraud. This allows ``medical mills'' to conceal fraud and abuse in piles and piles of paperwork.

Reforms needed to close loopholes in New York must include:

Requiring medical providers to submit no-fault bills to insurance companies within 45 days -- down from 180 days. Claims should also be reported to insurers within 30 days -- down from 90 days. Establishing flexible medical treatment guidelines to reduce inflated billing of injuries and eliminating phony or dubious medical treatments. Injured claimants would retain the right to be treated by any medical provider who handles no-fault auto accidents. Giving insurers more time to investigative claims where there is a strong suspicion of fraud. Currently, they have only 30 days to determine if an auto claim is fraudulent. Increasing penalties for those convicted of no-fault fraud. This would include making it a felony to be found guilty of being a ``runner'' or the facilitator in a no-fault scheme. In addition, medical professionals found guilty of claim fraud would be ``decertified'' and no longer able to bill no-fault when treating patients injured in auto accidents. Making arbitration mandatory in disputed no-fault claims. While New York City has the lion's share of the fraud mills, this crime affects drivers throughout the state.

More information on no-fault fraud can be found in the I.I.I.'s report, No-fault Medical Fraud in New York State: Problems and Solutions at http://www.iii.org. A recent study by the IRC, Claiming Behavior in New York's No-Fault Auto Insurance System is available at http://www.ircweb.org