BY KENNETH LOVETT
DAILY NEWS ALBANY BUREAU CHIEF
Monday, April 18, 2011
Albany - An increase in auto insurance fraud helped push New York's already sky-high rates up 4% last year, the Daily News has learned.
To keep costs under control, Brooklyn District Attorney Charles Hynes is joining an industry-backed coalition of elected officials, community groups and businesses to fight back.
Hynes and the group, Fraud Costs NY, are pressing lawmakers to make it a felony when fraudsters stage accidents to cash in on the no-fault insurance payouts.
He also wants medical providers convicted of no-fault insurance fraud to be barred from receiving future payments under the system.
"There is nothing more frustrating than closing down a criminal 'medical mill' only to see the same players open one with a new name a few weeks later," Hynes said. "The Legislature must ensure the Health Department moves to crack down on criminal doctors and give prosecutors powerful new tools to go after ...those who stage accidents."
New York drivers face the third-highest car insurance rates in the nation, paying an average of about $1,200 a year for coverage.
In many cases, experts say, accidents are staged and corrupt clinics submit fraudulent claims for treatment that was either not performed - or not needed.
Most of those staged accidents occur in Brooklyn, the Bronx and Queens, according to industry experts and state officials. The industry estimates fraud cost insurers and drivers more than $241 million last year.
Companies inundated the state Insurance Department with 12,807 complaints of suspected no-fault auto insurance fraud last year, up from 10,117 five years ago.
"The situation has gotten progressively worse," state Insurance Superintendent James Wrynn told The News.
As fraud cases have risen, so have the average payouts per auto insurance injury claim.
The average no-fault payout last year was $8,800, up nearly 50% since the end of 2004 and far above the national average, the Insurance Department said.
The state Senate Insurance Committee set a hearing on the no-fault fraud issue for April 26 in the city.
"It's out of control," said committee member Sen. Martin Golden (R-Brooklyn). "It's not working in the city and the state of New York and something has to be done about it."
klovett@nydailynews.com
