Fighting Fraudulent Car Accidents, Part 2: New York
In my previous post, I looked at the situation in Florida, home of three of the top five cities in the nation for auto accident fraud. Today, I’m going to look at another state running close behind — New York.
Practical action against this sort of scam is moving along nicely in New York, as Property Casualty 360 reports:
On March 23, the New York State Senate passed a bill, sponsored by Sen. James Seward, meant to deter criminals who stage auto accidents in order to collect insurance payouts. A felony conviction now awaits those committing insurance fraud in this manner, a change applauded by the New York Insurance Association (NYIA).
With an estimated cost to drivers of $241 million in 2009 (according to The Insurance Information Institute), this is a huge problem. It’s thrown into an even sharper relief when you realize that according to the same numbers, 20% of all no-fault claims in the state are fraudulent. It’s an issue that insurance companies are taking seriously — as they should — since it impacts them directly. More from Property Casualty 360:
According to Ellen Melchionni, president of the New York Insurance Association (NYIA), ‘Something needs to be done as soon as possible to rein in auto accident fraud and stop the illegal billing for medical treatments that were never performed, unnecessary or excessive. If there is not comprehensive reform, we are concerned that the present crisis will progressively become worse, leading to a system that is not only broken, but beyond repair.’
Just a few days ago, arrests were made over an auto accident that occurred last June. Eight people were taken into custody for a triple-vehicle scam that got caught on tape by a nearby security camera. They were trying to collect $39,000 in fraudulent medical bills, according to reports.
Joe Kemp, a writer for the NY Daily News, brings us some details:
Footage from a nearby surveillance camera shows the three vehicles slowly circle the block, allegedly looking for a quiet corner with no witnesses, Boller said.
But the schemers didn’t notice a camera at a nearby business that was recording them the whole time.
Carmine Navarra, 33, backed his 1995 Subaru into the front end of 28-year-old Julio Rivera’s 2000 Ford, then Hector Cruz, 21, backed into Rivera, Boller said.
All three drivers then got out of their vehicles to assess the damage — but hopped back in the cars and smacked into each other again to bang their rides up even more, Boller said.
The three men claimed Cruz stopped short, causing the three-car fender bender, police said.
Investigators rapidly determined that all three were friends prior to the “accident.” Thanks to the surveillance camera footage, they were able to amass enough evidence to not only put the drivers behind bars, but also the passengers — Sor Perez, 30; Dekodar Vacones, 25; Luis Garcia, 31; Venecia Reyes, 23; and Julie Dilondardo, 25. All involved are currently facing charges of grand larceny, falsifying business records, and insurance fraud.
Fight this type of fraud is why Sen. Seward has sponsored the Bill that just passed, as well as another one addressing different aspects of the problem. Here is an excerpt from a recent press release describing the effects of both bills in English rather than legalese (via WiredPRNews.com):
SB 1685, which gained approval from the full senate on Tuesday and now goes to the house for consideration, would discourage would-be fraudsters from staging accidents in order to file for payouts to cover unnecessary expenses. It does this by establishing the staging of an accident as a crime that is considered a felony. For a first offense, a convicted person could get up to seven years’ jail time. If another party is seriously injured in the accident, the penalties escalate.
Amplified fines and penalties are a good start, but far from the only action required. Hence a second bill:
SB 2816, on the other hand, would make broader adjustments to the no-fault insurance system as a whole. It would do so by setting fee schedules for certain types of medical services, requiring health care providers to present documents verifying the necessity of treatments and extending the period that insurers have to investigate claims that appear to be fraudulent. This bill, however, still remains in the insurance committee, which it was referred to last month.
It remains to be seen whether the crackdown will spread to other states, but I would be willing to wager that it might. As efforts in New York and Florida gain more attention, I think there is a good possibility that other states will follow suit, especially with the powerful insurance lobby backing the efforts.
I’ll be back tomorrow with Part 3, in which I’ll take a look at some of the more common scams used in accident fraud and ways to identify them should you become a victim.