DFS Commissioner Announces No-Fault Reform Initiative

By: Donald Partyka

Yesterday Benjamin Lawsky, Superintendent of the New York Department of Financial Services, announced the launch of a campaign to combat abuse in the no-fault auto-insurance system.

New York is the home of the fourth highest auto-insurance rates in the nation , the second highest level of fraud in the country, and its no-fault system is “plagued by fraud” according to Lawsky.

Because they have to sign off on all claims, corrupt medical practitioners will be the focus of the campaign, as they are the crucial component to the continuing abuses of the system.  “The key thing here is you need a doctor to perpetuate this scheme,” said Lawsky, adding that the physicians either bill for unneeded procedures or procedures not performed, or rent out their licenses to medical “mills.”

Suspicious no-fault automobile insurance claims are the most common type of health care-related fraud in New York state, according to a report released by the New York State Insurance Department.   In fact, some estimates for New York state are as high as quarter of a billion dollars in no-fault fraud.  These costs are passed down to the insured resulting in every policy holder paying what can be seen as a “fraud tax.”

Commissioner Lawsky has taken a major step in the right direction. No-fault reform has been long overdue in New York.  But corrupt physicians are only part of the problem – the next step should be banning claims by corrupt attorneys.