NY Gov. Announces Crackdown on No-Fault Car Insurance Fraud

New York’s insurance regulator would be allowed to randomly audit and inspect medical practices suspected of fraudulently billing the state’s no-fault car insurance system under a new budget proposal from Gov. Andrew Cuomo.

Gov. Cuomo said expanding investigatory and enforcement powers for the Department of Financial Services (DFS) would lower rates for car insurance in New York and strengthen consumer protections. Proposals for that expansion were contained in Gov. Cuomo’s 2014-15 executive budget, released on Tuesday, that would allow the DFS to:

  • Prohibit payments to health providers engaged in fraudulent activity
  • Levy civil fines for violations
  • Perform unannounced facility audits and inspections

Trade groups applauded Gov. Cuomo’s proposals. According to the American Insurance Association, “enhancing DFS’ powers will further curtail fraudulent practices” and target the “unscrupulous actors” and medical mills that weigh the state’s no-fault system with bogus costs.

Ellen Melchionni, president of the New York Insurance Association, said that New York’s “crackdown on auto fraud appears to have great promise,” though she also said that the NYIA wants lawmakers to pass legislation this year that would:

  • Make staging an auto accident a felony
  • End fraudulent billing from fly-by-night durable medical equipment providers
  • Require providers to show that a treatment is medically necessary

Other regulations announced in March 2012 by Gov. Cuomo gave the DFS the power to ban doctors and health care providers from participating in the no-fault system. The DFS said at that time that it was investigating 135 medical service providers that the agency had flagged for suspicious billing practices.

Last October, 18 medical service providers were barred from further billing of the no-fault system in what Gov. Cuomo called the “first round” of bans in the “extensive and ongoing DFS investigation.”

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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