Massachusetts Gov. Signs Bill Cracking Down on Auto Insurance Fraud

November 8, 2004

Massachusetts Gov. Mitt Romney has taken another step forward in the effort to reform the state’s auto insurance market by signing into law a measure that stiffens penalties for those who engage in injury claims fraud and puts in place stronger licensing and enforcement protections.

“Residents of Massachusetts currently pay some of the highest insurance costs in the nation,” Romney said. “We are saddled with a system that discourages competition, forces safe drivers to subsidize reckless behavior, encourages fraud and threatens lives. With this new law, we are taking a critical step forward in reviving our ailing auto insurance market.”

Romney said that system-wide fraud is a major reason for the high cost of auto insurance in the Commonwealth. The new law cracks down on fraud by making it a felony to act as or hire a “runner,” individuals who are paid to stage accidents and to direct clients to health care providers. Under the new law, runners will be punished by a maximum five-year prison sentence and up to $4,000 in fines.

The new law also strengthens the ability of the state’s medical licensing boards to oversee chiropractic and physical therapy facilities and offices, annually review insurer data for indications of over-treatment or claim fraud by providers and initiate enhanced levels of enforcement.

These stricter enforcement provisions will cause chiropractors and physical therapists suspended more than once for insurance claim misconduct to permanently lose their license to practice. In addition, medical professionals suspended for more than a year will be barred from participating in any manner in their professional discipline until their license is restored.

“The vast majority of our health care providers are honest and law-abiding,” Romney continued. “But from now on, for those few who try to cheat the system by participating in auto insurance fraud, they won’t just find themselves out of luck. They’ll find themselves looking for a new line of work.”

Romney praised the Legislature for passing the legislation. Combined with recent regulatory changes that make bad drivers pay more, Romney said the effort to reform the auto insurance market is making headway. Soon, the auto insurance task force appointed last year by Romney is due to make its recommendations for legislative changes.

Representative Ronald Mariano (D-Quincy), House chairman of the Insurance Committee and a member of the Governor’s task force, called the law signed by Romney the state’s strongest response yet to insurance fraud.

“Together, we have taken the first step in reigning in the staggering fraud statistics that plague our Commonwealth. Our continued efforts statewide will ensure a fair and equitable system for all Massachusetts’ drivers,” Mariano said.

Added Sen. Susan Tucker (D-Andover): “False insurance claims drive up the cost of auto insurance for every driver in the state. This bill outlaws the practice of ‘running,’ striking right at the heart of many of these fraudulent schemes.”

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