Senate Passes Tough Auto Insurance Fraud Measures

 

The New York State Senate today passed tough legislation to combat auto insurance fraud, which costs New Yorkers more than one billion dollars a year, as well as legislation that would impose criminal penalties for staging auto accidents.

"Auto insurance fraud is more prevalent in New York State than anywhere in the nation and it’s costing every driver in New York State more money," Senate Majority Leader Joseph L. Bruno said. "It’s estimated that as many as one-third of all auto insurance claims contain some element of fraud, which is a major reason why auto rates in New York are among the highest in the country. This legislation will help to reduce premiums by making it tougher to commit fraud and increasing penalties for people who commit fraud."

SENATE PASSES TOUGH AUTO INSURANCE FRAUD MEASURES
To ease insurance fraud prosecutions and ensure punishment better fits the crimes, the senate passed legislation (S.2390B), sponsored by Senator James Seward (R-C-I, Oneonta), chairman of the Senate Insurance Committee, that would cut in half the value of property obtained through a fraudulent insurance act in order to be convicted of insurance fraud:

> Insurance fraud in the 4th degree, a Class E Felony: Value reduced from $1,000 to $500;
> 3rd degree, a Class D Felony: from $3,000 to $1,500;
> 2nd degree, a Class C Felony: from $50,000 to $25,000; and
> 1st degree, a Class B Felony: from $1 million to $500,000.

In addition, the legislation would:

> Crack down on repeat offenders by establishing three levels of the crime of aggravated insurance fraud for people who commit fraud more than once in a five year period;
> Allow prosecutors to aggregate the value of separate incidents of fraud and base the charge on the total value of the incidents; and
> Allow district attorneys to prosecute organized auto fraud rings under the State Organized Crime Control Act, which carries tough criminal penalties.

"We can help cut auto insurance rates and provide wallet relief for New York’s motorists by cracking down on insurance fraud," said Senator Seward. "In testimony before our committee, people have testified again and again that fraud drives up rates. It has also become increasingly attractive to organized crime because it is lucrative and the risk of violence is low. We must give police and prosecutors the tools they need to help catch and prosecute insurance criminals."

MAKING USE OF INSURANCE FRAUD ‘RUNNERS’ ILLEGAL
The senate also passed legislation (S.487), sponsored by Senator Dean G. Skelos (R, Rockville Centre), that would make the use of "runners" illegal in New York.

A "runner" is a person who receives money for obtaining clients or patients to participate in insurance fraud. Runners are commonly used in the New York City metropolitan area to steer accident victims towards unnecessary medical treatments. Insurance companies have to pay the fraudulent claims and must make up the cost through higher auto insurance premiums.

"Auto insurance fraud is a serious crime that will costs drivers across New York State over a billion dollars in higher premiums each year," said Senator Skelos. "Tough new penalties are needed to prevent 'runners' and other street-level criminals from taking advantage of our no-fault system -- jeopardizing the availability of affordable insurance coverage and denying seriously injured victims the quality care they deserve."

The legislation makes it a class E felony to act as a runner or hire another person to act as a runner.
Medical mills submit fraudulent medical claims for unnecessary tests for phony accident victims. Under the state’s no-fault insurance law, accident victims can build up $50,000 worth of medical bills that must be paid by insurance companies. Sometimes clinics steal identities and policy numbers to commit fraud, even using information of people who are deceased.

The senate also passed a bill today (S.122), sponsored by Senator Seward, that would establish a new felony-level crime of staging a motor vehicle accident. The bill is called "Alice's Law," after Alice Ross, a 71 year old grandmother, who was killed as the result of a staged auto accident in Queens in 2003.

"These 'accidents' are arranged and intentionally committed by criminals who then file fraudulent insurance claims for fake crash injuries and rob insurance companies and their policyholders," Senator Seward said. "While the economic cost of such activity is staggering with no-fault insurance fraud estimated to cost insurance companies and their policyholders $1 billion per year, staged accidents also pose a serious public safety risk, as is demonstrated by the untimely death of Alice Ross."

Senator Seward said that women and elderly drivers are in particular danger because they are often targeted for these accidents because they are less likely to be confrontational after an accident, thereby making it easier for criminals to engage in this activity. This bill would impose tough penalties on those who stage accidents, thus deterring individuals from engaging in this dangerous crime.

The bills were sent to the assembly.