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Thursday, 24 May 2012 17:13

New York No Fault Insurance v. Medical Mills

New York’s Cuomo administration is opening another front in its battle against no-fault insurance scams.

State Financial Services Superintendent Ben Lawsky has announced a new regulations that give insurance companies more leeway to decline claims if they suspect fraud.

“These reforms will ensure that New Yorkers get the proper and timely treatment for legitimate injuries that they deserve, while closing loopholes that allow criminal medical mills to scam the system and drive up insurance premiums,” Lawsky said.

“The new regulations will give insurers more time to prove fraud and prevent payment, unlike the current system that requires insurers to pay no-fault claims within 30 days even when they suspect that health care services have not actually been provided.”

Under the new regulations, insurers can delay and ultimately deny claims if they suspect fraud and can demonstrate that the medical services were never provided—even if it takes longer than 30 days to investigate the claim and prove fraud.

If the insurer cannot prove fraud, however, the company must pay the claim plus an interest payment of 2% a month for every month the payment was delayed.

Insurers welcomed the change.

“If implemented, these regulatory changes will help close the glaring loopholes that allow criminals to rip off the system and control the ensuing costs which are passed on to drivers by way of higher premiums,” said Kristina Baldwin, co-spokesperson for Fraud Costs-NY and assistant vice president for Property Casualty Insurers Association of America.

The crackdown on insurance fraud was launched after federal prosecutors in February busted up a major no-fault car insurance scam that had been operating medical mills across the city for years.

Lawsky has also vowed to crack down on doctors involved in the scams. In March, he sent letters to more than 100 doctors suspected of fraud, asking for information on their billing practices.

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