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NY District Attorneys On No-Fault Reform

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					For Immediate Release                                                     Contact: Austin Finan
                                                                                  (917) 828-3494

     DISTRICT ATTORNEYS TAKE UP FIGHT TO REFORM NO-FAULT LAWS

   City Council, Chambers Call on Albany to Give Prosecutors More Tools to Crackdown on Criminals



NEW YORK, New York June 1, 2011 – Queens County District Attorney Richard A. Brown,
Richmond County District Attorney Daniel M. Donovan, Kings County District Attorney
Charles J. Hynes, Nassau County District Attorney Kathleen M. Rice and New York County
District Attorney Cyrus R. Vance, Jr. today joined the Fraud Costs New York coalition – a
broad-based group of elected officials, chambers of commerce, civic associations, law
enforcement and insurance trade associations committed to reforming New York’s no-fault auto
insurance system and stopping insurance fraud and the lawsuit abuses that drive up costs for
consumers and cost New Yorkers hundreds of millions of dollars annually.

New Yorkers now pay the fourth highest premiums in the nation for auto insurance, due in large
part to no-fault auto insurance fraud. In 2010, the State’s outdated and broken insurance system
cost New Yorkers more than $200 million – an outrageous sum that amounts to a ‘Fraud Tax’
which is absorbed by all drivers in the form of higher insurance premiums. These soaring costs
are most pronounced downstate, where drivers in New York City pay as much as 272% more
than the State-wide average.

“No fault insurance fraud has grown by leaps and bounds in recent years,” said District Attorney
Brown. “Indeed, it is estimated at over $23 billion nationwide each year – and that cost is
ultimately passed on to the consumer by ever increasing insurance premiums. While we have had
some success in recent years in prosecuting those who engaged in insurance fraud, more needs to
be done. The enactment of the legislative proposals recommended today will significantly
enhance the ability of local prosecutors like myself to do long-term investigations and give us the
tools necessary to continue to address the problem. Those who engage in insurance fraud
cost working-class families hundreds of dollars each year, amounting to a ‘Fraud Tax’ that every
one of us must pay in the form of higher insurance premiums. This is one tax that we can all
agree must be eliminated.”

“No-fault fraud has reached crisis level in New York. Auto accident fraud not only costs New
York’s working families millions of dollars annually by way of a “Fraud Tax,” but it also poses a
considerable threat to public safety,” said District Attorney Donovan. “Time and again, innocent
people are seriously injured or killed as a result of ‘runners’ who stage phony auto accidents. It’s
time Albany implements real reforms that finally allow law enforcement to prosecute these
criminals to the fullest extent of the law and keep our streets safe.”

Currently, there are no criminal statutes that deal specifically with “runners” who stage
accidents, requiring prosecutors to use other criminal laws to crack down on this type of fraud.
Although the State Legislature passed a law several years ago to stop fraudulent medical
providers from receiving payment under the no-fault system, the regulations were never
promulgated to implement the law.
According to the New York State Insurance Department’s 2010 Annual Report on Health
Insurance Fraud, there were 12,807 reports of suspected fraud involving no-fault insurance, or 88
percent of the total number of health care-related reports received. The report says that common
types of health care fraud include billing for services not rendered, performing medically
unnecessary treatments, filing claims for non-existent injuries and staging auto accidents. In
addition, a recent Insurance Research Council study found that in the New York City area, about
one in every five no-fault auto insurance claims closed in 2010 appear to have elements of fraud.

“There is nothing more frustrating than closing down a criminal ‘medical mill’ only to see the
same players open one with a new name a few weeks later,” said District Attorney Hynes. “The
Legislature must ensure the Health Department moves to crackdown on criminal doctors, and
give prosecutors effective new tools to go after ‘runners’ and those who stage accidents. It is
time to shut down these criminal enterprises that make criminals rich and leave New York’s
working families in the red.”

District Attorney Rice said, “New York’s no-fault criminal penalties are failing to deter crime.
By allowing the courts to prosecute “runners” and other accomplices with felony charges, we can
begin to stop the spread of no-fault fraud, keep our streets safe and save New Yorkers millions of
dollars each year at a time when every cent counts.”

“No-fault fraud has reached crisis level in New York, and we need to find new and creative ways
to prevent it,” said District Attorney Vance. “Our state is long overdue to outlaw the ‘runners’
who steer patients to no-fault clinics for which treating patients is beside the point; they are in
business to bill maximum amounts to insurance companies without regard to injuries caused by
car accidents. Our car owners deserve better.”

Several members of the New York City Council have also united around the need for reforms to
the State’s broken no-fault insurance system, urging their partners in Albany to take up the fight
for reforms to the broken no-fault system while still ensuring that victims receive the are
protected and compensated in a swift and fair manner.

New York City Councilmember Peter F. Vallone, Jr. said, “Without real reform in Albany,
criminals will continue to milk the system to their advantage and gouge the people of New York.
We need sensible reforms that continue real protections for New Yorkers who are hurt in
accidents, but undercut the criminals who feed on the current system. I urge Albany to take up
the fight for no fault reforms now.”

The District Attorneys and their partners in the City Council called for reforms that would:



                  Make it a Class D and E Felony to act as a ‘Runner’ and steer people to no-
                   fault medical clinics or lawyers in exchange for monetary payments;
                  Make it a Class C felony to stage an accident;
                  Ensure that medical providers convicted on No-Fault fraud are prohibited
                   from receiving future payments under the no-fault system and are subject to
                   civil penalties;
Many in New York’s business community have also joined the fight to reform New York’s no-
fault system. Rampant fraud has driven the cost of premiums beyond the reach of many
businesses owners, therefore forcing them to pass the risings costs onto their customers by way
of price increases for goods and services. Even businesses that do not utilize a company vehicle
are forced to pay for the fraudulent activity of these criminals. For example, when a local
restaurant receives their daily delivery of produce, a portion of the price they pay is used to cover
the outrageous insurance premiums that the delivery drivers are forced to pay.

“Outrageous insurance premiums are a significant part of what makes doing business in New
York difficult. If our state is going to work its way out of one of the most challenging fiscal
times in recent memory, then loopholes in insurance laws like those in our no-fault system have
to be closed,” said Brooklyn Chamber of Commerce President & CEO Carl Hum. “Last year, the
no-fault system was defrauded by some $200 million, which is more than New York has in its
Rainy Day reserve fund. If we are serious about advancing the economy and making New York a
more business friendly state, then tackling this type of fraud is a step in the right direction.”

Manhattan Chamber of Commerce President Nancy Ploeger said, “Small businesses face enough
pressure in today’s economy without having to pay a ‘Fraud Tax’ to criminals. The State
Legislature can demonstrate its commitment to helping small businesses, and the thousands of
jobs they provide, by enacting common sense reforms and easing this unnecessary financial
burden.”

“I applaud District Attorneys Brown, Donovan, Hynes and Rice as well as the entire Fraud Costs
New York coalition for taking initiative and calling for reforms which will increase penalties for
those criminals and crooked doctors who are bent on defrauding honest, hard working New
Yorkers,” said Kristina Baldwin, assistant vice president for Property Casualty Insurers
Association of America. “New York’s law enforcement officials must be given the ability to
issue stiffer penalties for no-fault fraud criminals so that we can more effectively deter crime,
keep our streets safe and put money back in the wallets of New York’s working families.”

Fraud Costs New York is a broad-based group of elected officials, chambers of commerce, civic
associations, law enforcement and insurance trade associations committed to reforming New
York’s no-fault auto insurance system and stopping insurance fraud and the lawsuit abuses that
drive up costs for consumers and cost New Yorkers hundreds of millions of dollars annually.

Fraud Costs New York coalition members include:

               •   Queens County District Attorney Richard A. Brown
               •   Richmond County District Attorney Daniel M. Donovan
               •   Kings County District Attorney Charles J. Hynes
               •   Nassau County District Attorney Kathleen M. Rice
               •   New York County District Attorney Cyrus R. Vance, Jr.
               •   New York City Councilmember Daniel J. Halloran
               •   New York City Councilmember Peter Koo
               •   New York City Councilmember Peter F. Vallone, Jr.
               •   New York City Councilmember Albert Vann
               •   New York City Councilmember Ruben Wills
•   Town of North Hempstead Supervisor Jon Kaiman
•   Nassau County Legislator David Denenberg
•   Nassau County Legislator Rich Nicolello
•   Nassau County Legislator Joe Scannell
•   New York State Business Council
•   Brooklyn Chamber of Commerce
•   Great Neck Chamber of Commerce
•   Long Island Hispanic Chamber of Commerce
•   Manhattan Chamber of Commerce
•   Queens Chamber of Commerce
•   Staten Island Chamber of Commerce
•   Queens Civic Congress.




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