New York is in an Auto Accident Fraud Crisis, Broken Laws Need to be Fixed Now, NYIA to Testify at Senate Hearing

ALBANY, N.Y.--April 26, 2011: Immediate reform of New York's fraud-riddled no-fault automobile insurance system is needed to stop criminals from cheating the state's citizens out of hundreds of millions of dollars a year, says the New York Insurance Association, Inc. (NYIA).

In testimony prepared for delivery today at the New York State Senate Insurance Committee regarding no-fault auto insurance fraud, Ellen Melchionni, president of NYIA, identifies how the broken no-fault auto laws are forcing New Yorkers to paying for the fraudulent activities of criminals. Costs are spiraling out of control because bogus medical mills and unscrupulous medical providers, predominantly in the New York City area, are billing for treatments that were never performed, unnecessary or excessive.

"Criminals are committing rampant fraud, imposing a 'fraud tax' on honest, hardworking New Yorkers," Melchionni said. "Meaningful, comprehensive reform of the laws is necessary to fix the broken system that criminals are blatantly exploiting for their personal gain. There is not a silver bullet to solve this problem. Auto accident fraud is a moving target. The state needs to be vigilant in fighting this vast problem and cracking down on criminals who have created a 'big business' of fraud to cash in at the expense of New York residents."

"NYIA supports the substantive reform introduced by Sen. James Seward and Assemblyman Joseph Morelle, S2816A/A6286," Melchionni said. "This bill contains numerous remedies including giving insurance carriers adequate time to investigate fraud, encouraging efficient and fair settlement of disputes and creating tougher penalties for fraud."

"NYIA also supports two bills that would help stop staged auto accidents," Melchionni said. "We believe the majority of staged accidents occur during the first 60 days of a newly issued policy. Sen. Martin Golden and Assemblyman Carl Heastie have introduced S4507/A6346A, which would allow insurers to cancel new policies purchased with phony checks or credit cards--minimizing the opportunity for fraud. Another piece of legislation, S1685 sponsored by Sen. Seward, was passed in the Senate and now needs to be taken up in the Assembly by passage of A6177 sponsored by Assemblyman David Weprin, to create a necessary deterrent for criminals who prey on innocent motorists by staging car crashes."

"If there is not comprehensive reform, we are concerned that the present crisis will become progressively worse, leading to a system that is not only broken, but beyond repair," Melchionni said.

The New York Insurance Association (NYIA) is a state trade association that has represented the property and casualty insurance industry for more than 125 years. For more information visit NYIA.