June 3, 2011 -- County Executive Robert P. Astorino, New York Sen. Greg Ball and members of New Yorkers Stand Against Insurance Fraud (NYSAIF) have called for passage of the "Fraud Tax Bill" to increase penalties for organized criminals driving up automobile insurance costs by taking advantage of New York's no fault laws.
New Yorkers pay 53 percent more for auto insurance on average than drivers across the country largely due to the "no fault insurance" fraud crisis.
At a news conference at the Department of Motor Vehicle's Peekskill office, they endorsed legislation, (S-2816/A-6286) sponsored by Ball, along with Sens. James Seward and Marty Golden and Assemblyman Joseph Morelle. The bill increases penalties on criminals who cheat the no-fault system and decertifies medical providers who commit insurance fraud.
No-fault fraud cost New Yorkers more than $200 million in 2010 alone and nearly $1 billion over the last five years.
The crime is being perpetrated by organized criminals who stage automobile accidents and orchestrate tens of thousands of dollars in fraudulent medical bills. Under New York's current no-fault laws, insurance companies are required to automatically pay personal injury claims up to $50,000 within 30 days, leaving insufficient time for investigation of potential fraud.
"As people go to the gas pumps for Memorial Day weekend trips, we are painfully reminded of the exorbitant cost of driving in New York," said Astorino. "Cracking down on auto insurance fraud will lead to direct savings for policyholders. We cannot continue to allow criminals to make an easy buck off the backs of honest citizens. I join the members of NYSAIF along with Senator Ball in urging the legislature to pass this important bill before the close of session."
Said Ball: "The 'Fraud Tax Bill' is a critical step toward dissolving the criminal rings that take advantage of New York's no-fault insurance laws. This legislation gives law enforcement and insurers the tools they need to fight fraud and abuse. I urge the Governor and my colleagues in the Senate and Assembly to pass and sign this bill to protect honest, hardworking New Yorkers."
"Consumers want this reform because it will ensure that law enforcement and insurers can adequately fight and find fraud," said NYSAIF Executive Director Rafe Lieber. "This will not affect timing on claims. It only allows for insurers to have legal defenses if fraud is found after the claims are paid and ultimately consumers benefit when they are not subsidizing fraud in their insurance premiums."
He added, "If Albany is serious about helping New York become more affordable, then we urge the legislature to pass this legislation immediately."