NY Legislature Considering No Fault Anti-Fraud Measures

On January 22, 2013, representatives from the Brooklyn and Manhattan District Attorney’s Offices, as well as a representative from AAA, testified before the New York State Legislature regarding the rampant motor vehicle insurance fraud currently happening in New York State. According to the testimony, in 2010, 36% percent of ALL No Fault insurance claims contained some element of fraud, resulting in an estimated $241 million in additional insurance premiums passed along to drivers that year. The testimony comes on the heels of several related bills that were passed before the New York State Senate last March (Why it took ten months between hearings was not discussed in local news.)

Among the bills up for consideration are 1) making it felony to “stage” a crash, 2) making it a felony for medical facilities to use “runners,”, who are paid to steer potential accident victims toward unnecessary medical treatment, and 3) allowing insurers to cancel polices ab initio (“from the beginning,” for you Latin enthusiasts) where fraud has been committed.

One major problem with insurance fraud from an insurer’s perspective is that while fraud is often suspected, it can be very difficult to prove without the testimony of a co-conspirator or evidence of an ongoing scheme. The proof problems with fraud can actually make it more cost effective to settle with suspected fraudsters, rather than go through the time and expense to investigate and litigate fraud, with no guarantee of success. Hopefully, passage of these bills will at least prompt people to think twice before engaging in fraud, which would (hopefully) bring the 36% number down dramatically in the future.

Thanks to Brian Gibbons for his contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.