N.Y. state must stand against no-fault car insurance fraud

In these uncertain economic times, the Queens small business community faces immense challenges. It becomes even more difficult for Queens business owners to make ends meet when they are forced to foot an outrageous “fraud tax” bill in the form of auto insurance premiums 167 percent higher than the national average.

This results when criminals and unscrupulous medical providers defraud the state’s no-fault auto insurance system. The Queens Chamber of Commerce, which represents 1,200 members collectively employing 500,000 Queens residents, urges the state Legislature to act to cut the fraud and ease the unnecessary financial burden on the thousands of businesses and firms of all sizes that do business from or in our borough. The chamber, through its programs and advocacy, works to promote the general welfare of Queens and foster its commerce.

In 2010, no-fault auto insurance cost New Yorkers $241 million — a $12 million increase from the previous year. “Runners,” who stage fraudulent accidents, and “jumpers,” who claim phony injuries in accidents they were never involved in, or crooked doctors who bill insurance companies for procedures never performed or not medically necessary contribute to a growing criminal racket that gouges the Queens business community of its hard-earned dollars.

No-fault auto insurance fraud, a bread-and-butter issue, affects all members of the Queens business community one way or another. Whether it is a fleet of vehicles for a construction trades company or a restaurant that relies on a company car for deliveries, many businesses find themselves shouldering the financial burden of no-fault auto insurance fraud that increases the costs of auto insurance premiums.

Even businesses that use no company vehicles pay for this fraudulent activity. The outrageous insurance premiums that delivery drivers must pay as a result of this criminal activity increases the price businesses must pay to deliver or receive their goods and products.

The ramifications of no-fault auto insurance fraud are cyclical and undeniable. The high costs of increased auto insurance premiums force businesses to pass them along to their customers in increased prices for goods and services at a time when everything, from bread and milk to gas and heating oil, are at an all-time high.

No-fault auto insurance — a good idea — has not worked in practice as cost-effectively and efficiently as its originators intended. We must preserve what works while adopting meaningful reforms that reduce fraud and maintain protections for individuals injured in car accidents.

The state Insurance Department continues to aggressively pursue regulatory changes to combat no-fault auto insurance fraud. In 2010, investigations by the department’s Frauds Bureau led to 159 arrests, but we need more than these mitigating efforts to combat a problem that infiltrates the budgets of business owners and consumers throughout New York. Albany must act to implement fundamental reforms that combat fraud before it starts.

The Queens business community and small business owners throughout New York will benefit from common-sense reforms. These include:

• making it a felony to be runners, who stage accidents to enable fraudulent medical claims or steer accident victims toward unnecessary medical treatments;

• making it easier to decertify health-care providers who commit no-fault insurance fraud;

• providing insurers with adequate time to conduct fraud investigations; and

• requiring that certain disputed claims be settled through arbitration.

The state Legislature owes it to New York business owners and consumers to cut the fraud tax and ease the unnecessary financial burden it placed on them as a result of unchecked fraud and abuse in a system that is clearly broken.

Jack Friedman

Executive Director

Queens Chamber of Commerce

Jackson Heights

More from Around New York