Is there a connection between no-fault insurance regulations and fraud? Experience from several no-fault states, including New York and Florida have seen high levels of auto insurance medical claims fraud. A new article from the Wall Street Journal examined a new study from the Insurance Research Council that found increased rates of claimants utilizing expensive treatments from chiropractors and acupuncturists.
“Four out of every 10 people who submit medical claims to auto insurers after car crashes in the New York City area visit an acupuncturist for treatment, according to a new study. Upstate, only three out of 50 such claimants submit bills for acupuncture.
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.”
Many experts within the insurance industry attribute the increased incidence of fraud in the state to the states no-fault system. Opponents of the no-fault system argue that when insurance companies assume the cost of paying for accidents and medical claims, claimants overcharge insurers for medical and repair services. OOTS News recently discussed this issue in regard to auto glass claims.
“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.”
