Doctors conspiring to cheat New York's no-fault personal injury protection (PIP) system are writing a prescription for trouble—and perhaps professional suicide.
A rigorous, statewide initiative is under way to close medical offices billing for services that are either wholly unnecessary or never rendered to auto accident victims. Under the new regulation, physicians engaging in unscrupulous billing practices to siphon funds from New York's PIP system will ostensibly turn themselves into pariahs, at least in the professional sense.
The new regulation, which the Department of Financial Services (DFS) is issuing under the direction of Governor Andrew M. Cuomo, implements a 2005 law that affords DFS the power to regulate doctor participation in the no-fault system. Doctors found to be in violation would be banned from the PIP system altogether and possibly stripped of certification.
If the penalty seems harsh, then that is because this particular type of fraud bilks insurers out of millions of dollars each year and drives up auto insurance rates for New Yorkers. In fact, the state reports the fourth highest auto insurance premiums in the U.S., said to be attributed in large part to PIP abuse.
“The state has no tolerance for medical providers or doctors ripping off the system,” said Gov. Cuomo.
Early Diagnosis
DFS already has identified 135 medical providers whose billing practices have raised concerns regarding possible no-fault fraud through audits and information obtained from law enforcement and insurers. As part of an ongoing investigation, letters are being sent to all 135 medical providers demanding a response and information. According to the department, failure to answer the letters may automatically lead to the medical provider being banned from the no-fault system.
Investigators also cite anecdotal evidence of doctors “renting” their tax ID numbers to fraudulent medical practices that submit bogus bills to insurers.
The regulation mandates that DFS will have to send a list of any medical providers suspected of no-fault fraud to the Department of Health (DOH) and the State Education Department (SED) for their review. DFS will then conduct hearings. Providers found to have violated the law will be banned from participating in the no-fault payment system. In appropriate cases, DOH and SED may rescind any medical licenses and law enforcement will decide whether criminal charges should be filed.
Resounding Support
So far, the regulation has shored up a long list of advocates. In a statement released this week, National Association of Mutual Insurance Companies (NAMIC) lauded the efforts by the Cuomo administration specifically: “The initiative to target medical providers engaged in fraudulent activities is an encouraging sign that the Cuomo administration is highly engaged in the important fight to curb fraud and abuse in New York's no-fault system,” NAMIC stated. “The decertification of medical providers is one of several important measures that have been identified as necessary to address systemic issues. While legislative reforms are still necessary, Department of Financial Services Superintendent Ben Lawsky is to be commended for utilizing the tools available to him to take a meaningful step forward in the fight against no-fault fraud.”
“I applaud Superintendent Lawsky and stand ready to support him in his fight to crack down on no-fault fraud and the criminals who profit from this illegal enterprise,” added Senator James L. Seward, chair of the Senate Insurance Committee, in a separate statement. “Activating this powerful tool to decertify doctors who cheat the system is long overdue. I sponsored this reform in 2005 and am pleased the superintendent is taking steps to implement it—helping fight fraud and get insurance rates under control.” 
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