Downstate claimants are also more likely to file claims for chiropractor visits (nearly five out of 10, versus two in 10 upstate). And in the New York City area, 44% eventually visit four or more health-care providers, compared with 14% upstate.
The study by the Insurance Research Council, a nonprofit organization funded by insurance companies, illustrates one of the primary reasons why car insurance is more expensive in New York than in most other states — and why it costs more in the city than it does upstate. The study will be formally released this week.
To the council, the disparity suggests widespread fraud in New York City and its suburbs. Each of the medical claims examined in the study were paid by the insurers, but the authors of the study argue that only part of the difference can be explained by “the availability of different types of treatment downstate compared to the more rural areas of the state.”
That assertion of fraud matches claims from both industry experts and state regulators, who have said organized groups are increasingly using minor crashes or entirely fictional incidents as pretexts to drastically overbill auto insurers for medical costs under the state’s no-fault law.
“While not all of those cases are fraud, the likelihood is that many of them are,” said Kristina Baldwin of the Property Casualty Insurers Association of America, a trade group for insurers.
The study looked at 4,500 instances in which New Yorkers submitted medical claims to their auto insurers over a two-week period last year. Insurance Research Council Vice President David Corum said the study didn’t attempt to quantify how often people who are in accidents are injured, but said a large majority of people in car crashes don’t end up filing medical claims.
New York’s no-fault system, instituted in 1974, allows someone injured in a crash to file up to $50,000 worth of claims for medical costs or lost wages with their own insurer no matter who is to blame for the accident. The system was designed to speed payment for medical treatment by eliminating disputes between insurance companies over who was at fault.
The no-fault portion of a driver’s coverage, called personal injury protection, cost $754 in the Bronx in 2009 on average, compared with a statewide average of $202, according to the Property Casualty Insurers Association of America.
Insurance companies aren’t alone in worrying about fraud: The state insurance department has been working for more than a year on a revision of the state’s no-fault insurance regulation. The state’s Insurance Fraud Bureau reports no-fault fraud increased from 10,117 instances in 2006 to 13,433 in 2009.
“Fraud is pervasive under no-fault, unfortunately,” said Steven Nachman, the New York insurance department’s deputy superintendent for fraud. “The bad guys have figured out how to game the system.”
Insurers hope the insurance department’s changes make it easier for them to deny fraudulent claims, but consumer advocates worry legitimate expenses will be more likely to be turned down as well. J. Robert Hunter, the director of insurance for the Consumer Federation of America, said regulators must remember that insurers have been caught cheating their customers as well.