Last week, Governor Andrew Cuomo announced a state initiative in a stated effort to curb purported no-fault fraud by “getting rid of deceptive doctors” and “shutting down medical mills.” The problem that Gov. Cuomo seeks to address is that some No-Fault doctors engage in fraudulent billing procedures, according to Cuomo, which reportedly results in “hundreds of millions of dollars in insurance costs to New Yorkers.” In order to implement this initiative, Gov. Cuomo has directed the Department of Financial Services (DFS) to issue a new regulation that will permit the Dept. to “ban doctors that engage in fraudulent and deceptive practices.”
Additionally, the initiative involves audits of 135 medical providers whose billing procedures “have raised concerns”, demanding information from these providers as to their corporate structure, payment requests to insurance companies, and the physicians’ participation in the medical practice (as opposed to businessmen). The providers who treat car accident victims will receive a form with fourteen days to respond. The failure to do so may result in the provider being banned from further participation in the no-fault system.
Further, in what would seem to be a lack of due process, prior to a hearing, a list of providers that are “suspected of no-fault fraud” will be sent to the Department of Health (DOH) and the State Education Department (SED) for their review. Then, DFS will conduct hearings. In my opinion, before making allegations and referring cases to these other agencies, DFS should conduct hearings first, but that is not the manner in which the State intends to operate. There is also the implicit threat that in “appropriate cases”, the DOH and SED will revoke medical licenses and decide whether criminal charges should be filed.
One of the primary motivations for the Cuomo initiative is the allegation that New York’s auto insurance rates are the 4th highest in the nation, specifically due to fraud in the No-Fault system. Interestingly, when the New York State Trial Lawyers (NYSTLA) introduced legislation before the New York State Assembly known as the “Sunshine Act”, which would require insurance companies to open their books, show their earnings, and prove whether no-fault fraud was the real reason behind the excessive premiums or just a ruse to raise premiums, their well paid lobbyists bitterly oppose this regulation. This is an issue Governor Cuomo should be exploring as part of his effort to stamp out fraud in the No-Fault insurance industry.
What Governor Cuomo’s initiative also does not address is fraud by the insurance companies in denying medical care to injured victims of car accidents. Let me explain. Back in 1974, when the No-Fault Law was implemented, the purpose of the law was to restrict auto accident claims with the provision that the victim would have to suffer a “serious injury” to have a legal basis to sue for his or her injuries. A “serious injury” under New York’s Insurance Law includes a fracture, disfigurement, dismemberment, loss of use of a body part or system, and non-permanent injuries which lead to a “substantial limitation” of one or more parts of the body. In exchange for the restrictions imposed on auto claims, no-fault insurance was to provide up to a minimum of $50.000.00 in medical and economic (lost wages) benefits to car accident victims.
However, car insurance companies have created a mockery of the original statute. Through their lobbying efforts, and their huge impact on the Court system, hundreds of thousands of car accident victims who have suffered torn tendons, ligaments, and spinal injuries such as herniated discs, routinely have their cases dismissed before they ever get to trial through motions by insurance company defense lawyers claiming that these injuries do not meet the “no-fault threshold.” This includes those who have undergone surgery to treat those injuries!
Further, those injured in car crashes must now submit to no-fault “IME’s” (“Independent” medical examinations), which consist of five to ten minute examinations by doctors hired and paid for by the very insurance companies that “are on your side…that you are in good hands with…”, who make findings as to whether injuries meet the no-fault threshold in these cursory, biased examinations. If the “IME” doctor determines that the person does not have a “threshold injury”, in short order they will receive a letter from the insurance company informing them that all further benefits are denied! To add to the ridiculousness of calling these examinations “independent”, the insurance companies all use the same doctors for these “IME”s, the ones who will reliably find that the victim needs no further treatment, can go back to work and their normal activities, and has no “serious injury.”
In sum, Governor Cuomo, if you want to combat fraud in the insurance industry, and do this in an even handed manner, explore the auto insurance industry’s practices when it comes to “IME’s” and investigate the true reasons behind the excessive auto insurance premiums in New York, in addition to the initiative to root out "medical mills."