New Regulation Could Tackle Bogus Medical Clinics in New York

Consumers Can Help Lower Auto Insurance Rates Through Anti-Fraud Reform

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Jack Houston, NYAAIF Chairman

ALBANY, NY (05/03/2012)(readMedia)--

Medical fraud mills bilking New Yorkers will have a tougher time under new regulatory reforms proposed in the state, says the New York Alliance Against Insurance Fraud (NYAAIF).

"These bogus medical clinics have been taking millions of dollars from consumers' pockets by exploiting loopholes in the law," said Jack Houston, chairman of the NYAAIF. "They raise everyone's insurance premiums when we are most crunched by a downturned economy."

The latest reforms are an effort to stop the flow of cash to medical fraud mills, which often submit endless claims for nonexistent or unneeded procedures.

First, the reforms will stop a requirement forcing insurers to pay suspicious claims within 30 days. If a claim contains red flags, insurers will now be able to delay payment while investigating it. If fraud is proven, the claim can be denied... Otherwise, the insurer must pay the claim as well as 2% interest for every month the payment was delayed.

Another loophole feeding medical fraud mills was the ability to ignore requests for evidence that a procedure was medically necessary. Fraudsters could disregard requests for more information, knowing that they would still get paid. Under the new reforms, healthcare providers would have a 120-day deadline to respond.

"These reforms are part of a whole host of efforts to keep New Yorkers' premiums in check, encouraging insurers to ensure claims are legitimate," says Houston. "They pose no threat to honest consumers, while lowering the 'fraud tax' for everyone."

The NYAAIF applauds Financial Services Superintendent Benjamin Lawsky, and encourages consumers to urge approval of the new regulations. Beginning May 16, the public will have 45 days to comment on the new rules. Comments can emailed to

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The New York Alliance Against Insurance Fraud is a non-profit organization that seeks to increase public awareness about insurance fraud and its consequences. Membership includes more than 100 insurance companies writing policies in New York State.


Jennifer Tchinnosian