New York Launches Initiative to Combat Insurance Abuses

The New York Department of Financial Services (DFS) is now able to ban doctors from getting compensation through the state’s no-fault system if they’re found to have cheated insurers out of unwarranted compensation through that system, according to an announcement from Gov. Andrew M. Cumo on Thursday.

DFS is already planning on looking into banning 135 medical providers whose billing practices have raised red flags.

The Department will be sending letters to those facilities “demanding information regarding their corporate structure, payment requests and the doctor’s direct participation in the practice,” according to a release from the regulatory offices.

New York has been lumped into a notorious handful of states where insurers say they are hemorrhaging money because of residents who inflate claims or fake them altogether in order to get undeserved benefits provided through car insurance policies. Many insurers say this is hurting the availability of low cost auto insurance coverage in the state.

Drivers in New York are all required to carry personal injury protection (PIP), a type of no-fault insurance that pays for the policyholder’s and any other insured individual’s medical treatments that are the result of a crash, regardless of who is at fault.

Policies issued in the Empire State much included at least $50,000 worth of PIP, and the general consensus is that some policyholders and medical care providers are milking that $50,000 of protection for all its worth, especially in the major metropolitan areas of the state.

Numerous studies have shown that claims filed in Manhattan and other metropolitan areas are consistently larger than those filed in other parts of the state, and the medical necessity of many of those treatments has been called into question.

“Rather than caring for victims of auto accidents, these doctors and other health care providers engage in scams, bilking millions of dollars from insurance companies each year,” said DFS Superintendent Benjamin M. Lawsky, in the release. “Their unlawful schemes are also directly responsible for driving up insurance premiums for everyone. We are going to call them to account and put them out of the no-fault business.”

Just last week, Manhattan U.S. attorney Preet Bharara announced charges filed against 36 defendants for an alleged scheme that defrauded New York insurers of an an estimated $279 million.

About Matthew Morisset
Matthew Morisset is a proud alumnus of the University of Redlands, where he obtained a degree in English Literature. Utilizing his passion for analysis and writing, Matthew looks for important trends in the auto insurance industry and their implications for consumers and the market as a whole.

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