It is believed that auto insurance fraud schemes cost New Yorkers more than $1 billion each year. As we've written about in the past few weeks, investigators and law enforcement authorities have uncovered a number of fraud rings involving doctors, lawyers and others abusing New York's no-fault insurance laws.
The New York legislature has decided to put the brakes on these fraud schemes. Last week, the state Senate passed three bills that aim at cracking down on auto insurance fraud.
Under the current law in New York, auto insurance companies cannot cancel auto insurance policies even if fraud occurs. Under one of the proposed bills, this would change. Insurance companies would be able to retroactively cancel an auto policy within 60 days if the initial premium payment was rejected (because it was a bad check, unauthorized account or stolen credit card). The majority of other no-fault states already allow for retroactive cancellation.
The second bill would make staging a motor vehicle accident a felony. Conviction under this law could result in up to seven years in prison.
The third and final bill would make "runners" illegal in New York. Runners are commonly used in New York to find "clients" or "patients" to receive unnecessary medical care. Under the bill, hiring a runner would be a felony that could result in up to four years in prison.
The bills are currently sitting with the New York State Assembly.
Source: The Insurance Journal, "N.Y. State Senate Passes Auto Insurance Fraud Measures," 3/23/12.