AIA Backs New York City Proposal to Fight No-Fault Fraud

November 2, 2005

The American Insurance Association (AIA) this week testified in favor of New York City Council legislation (Introduction 708) to fight no-fault auto insurance fraud.

“While much has been done to combat no-fault fraud in New York, Introduction 708 would provide insurers and law enforcement new tools to fight fraud and take costs out of the system,” explained Gary Henning, AIA assistant vice president, Northeast Region, in testimony before the New York City Council Committees on Health and Consumer Affairs.

The proposal would require clinics where 50 percent or more of their claims are no-fault auto insurance medical claims to be licensed by the New York City Department of Consumer Affairs.

“Licensing clinics that provide a high volume of no-fault medical services will allow for better monitoring of these clinics where fraud is likely to be the most prevalent,” said Henning. “A licensure requirement can provide law enforcement with another legal avenue to shut down clinics that commit no-fault fraud. Rather than having to prove fraudulent claims activity, law enforcement officials would only need to prove that the clinics were violating the licensure requirements.”

The proposal would also require medical providers to submit reports on no-fault claims to the New York City Department of Health and Mental Hygiene. And it would increase criminal and civil penalties for committing fraud.

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