Almost nine in 10 suspected health care fraud cases in New York last year came from no-fault auto injury claims, a cottage industry so rife with abuse that the state Insurance Department wants to tighten regulations.
Related Fraud Bureau investigations led to 159 arrests in 2010, including a Schenectady man who filed a no-fault claim, collected $5,300 for lost wages and was charged with insurance fraud and falsifying business records, the department said.
The 12,807 no-fault claims reported as suspicious in 2010 by insurers and others were down slightly from 13,433 the previous year, according to department reports.
Under New York’s 1974 law, accident victims can collect directly from their insurance companies for medical and hospital expenses and lost wages, regardless of who was at fault. The department has proposed the first major changes in almost a decade in related regulations, meant to streamline the claims process and give insurers more tools against fraud such as requiring more medical information on prescribed forms.
“We want to make sure that the new rules that are put in place effectively address the no-fault issues that need to be corrected,” Insurance Superintendent James Wrynn said recently. First proposed in 2009, the proposed changes have been revised in talks with insurers, lawyers, hospitals and doctors. The agency is taking additional public comments for the next several weeks.
Department spokesman Ron Klug said Friday that while some suspected fraud cases lead to arrests, others are later deemed unfounded, addressed by other agencies, may not be worth prosecuting or may result from multiple referrals about a single situation.
An investigation last June by the Frauds Bureau and federal authorities led to the arrests of 17 people in Brooklyn and another in Florida, accused of using medical equipment retail companies to submit fraudulent invoices to no-fault insurers for inflated expenses.
When the department proposed the revisions in 2009, officials said legislation would be needed for other changes, like ending a requirement that insurers who don’t deny a claim within 30 days must pay it, even if it turns out later to be fraudulent.
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