Hugh T. Farley

May 09, 2013

State Senator Hugh T. Farley (R – Schenectady) reported the New York State Senate ecently passed legislation to crack down on auto insurance fraud which has led to injuries - even death - for innocent victims and costs hundreds of millions of dollars a year in higher premiums when New Yorkers already pay some of the highest auto insurance rates in the country.

The three bills approved would significantly cut down on auto insurance scams by increasing penalties for those who commit or assist in the fraud and by giving more flexibility to insurance companies to prevent criminals from getting policies and continuing to commit auto fraud.

According to the National Insurance Crime Bureau (NICB), New York ranks among the top five states for fraudulent auto insurance claims.

Senate action on the bills this year came shortly after the 10th anniversary of the tragic death of Alice Ross, a 71-year-old wife and grandmother who was killed as the result of a fraud-related, staged auto accident in Queens. One of the criminals drove into her car, causing her to lose control of her vehicle, strike a tree and die.

The Senate’s Anti-Auto Fraud Legislative Package includes the following:

* Bill S3547 makes it a crime to stage a motor vehicle accident with intent to commit insurance fraud. If a staged motor vehicle accident results in serious injury or death, the person who staged the accident could face a maximum sentence of up to 25 years.

According to the NICB, insurers across the country reported a 102-percent increase in suspected cases of staged auto accidents between 2008 and 2011.

* Bill S3033 makes it illegal to act as a “runner” who steers accident victims towards crooked doctors who bill Medicaid for unnecessary medical treatments. Runners are key members of auto fraud rings. Under this bill, runners and their associates could face up to seven years in prison.

* Bill S1959A allows insurance companies to retroactively cancel policies taken out by people who commit auto fraud. These criminals often take out policies and pay for them with bad checks or stolen credit cards just before they stage accidents. Under current law, insurance companies cannot cancel the policy and policyholders wind up paying for it through higher premiums. This bill would take that burden off honest consumers.

This measure would bring New York in line with the other large no-fault states and remove any incentives for staged accidents. In fact, only seven other states (AZ, CO, KS, ME, MD, NC and SD) do not allow for retroactive cancellation. Innocent victims of uninsured drivers would be covered under their own policy or the Motor Vehicle Accident Indemnification Corporation.

Last year, the longest-running auto insurance rip-off scam in history was busted by federal and New York City authorities. Three dozen people, including doctors, lawyers and patients coached to fake injuries, are accused of stealing more than $279 million in accident benefits over five years. The ring allegedly exploited the state’s "no-fault" auto insurance law as their own giant state-sponsored ATM machine. In New York, vehicles registered in the state are required to carry insurance that lets drivers and passengers obtain up to $50,000 for accident injuries, regardless of fault.

The bills have been sent to the Assembly.