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Suspicious No-Fault Claims Account for Most Health-Care Fraud in NY

Source: NBC News4

Posted on 03 Mar 2011

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According to a new report released by the New York State Insurance Department, suspicious no-fault automobile insurance claims are the most common type of health care-related fraud in New York state. The caims accounted for most of the 14,625 reports of suspected health care-related fraud sent to the department last year.

This is how the fraud works: The perpetrators are looking to either purposely cause accidents or stage them. Once these fake accidents occur, the individuals will go to medical facilities that are in on the fraud, dubbed "medical mills." The suspects then order up unneeded tests including MRIs, psychological evaluations, acupuncture or chiropractic treatment. Under the state’s no-fault law, individuals involved in car accidents are allowed up to $50,000 in medical treatments. All these treatments and tests amount to tens of thousands of dollars per individual, and ultimately hundreds of thousands and sometimes millions for the medical facilities.

"About one in five no-fault claims in the New York City area shows evidence of fraud,” said Robert Hartwig of the Insurance Information Institute.  “In other words, the claim itself may have been entirely contrived. In New York state alone we are looking at a quarter of a billion dollars in no-fault fraud."

And according to Hartwig, regular law-abiding drivers are paying the price.

"Ultimately, insurers have to pass along these costs despite the fact they remove a significant amount,” Hartwig added.  “It means every single policy holder pays what amounts to be a fraud tax."

The incidence of no-fault fraud has been on the rise since 2007. It has become such a pervasive and expensive problem that insurance companies hire investigators to look into suspected fraudulent claims.

The National Insurance Crime Bureau investigates the larger crime rings that perpetuate most of the false claims.

"It's very profitable and difficult to investigate," said Kevin Gallagher, an investigator with the bureau.  “We're talking millions of dollars here.”

You can search the website for more information about no-fault fraud.