Giving auto insurers tools to better battle fraudsters [NJBIZ (NJ)]
|By Fitzgerald, Beth|
Bill encourages sharing amid companies to thwart padded claims
IT COULD GET easier for auto insurance companies to share information when they suspect fraud, and harder for fraud rings to prey on accident victims, under legislation being considered in
A bill making its way through the Assembly seeks to grant limited immunity from lawsuits when insurers seek to shortcircuit fraud by sharing information with other insurers or law enforcement. The bill imposes a 30-day waiting period before police accident reports become available to the general public, making it harder for fraud rings to find accident victims and pressure them to get unneeded medical care that pads insurance claims. And it makes it a disorderly person offense for New Jerseyans to obtain auto insurance in another state to evade the higher insurance rates here.
The bill has passed the
Bill sponsor Assemblywoman
"It gives the accident victim a little bit of time and protection, and that is one of my main concerns," Riley said.
"We are trying to detect a pattern of fraud, and the best way to do that is to see what other (investigators) have found out," Breslin said. To break up sophistical fraud rings, "it is important to be able to connect the dots by having companies share information," he said. The bill provides limited lawsuit immunity, but it also provides that "if the investigators share information with willful malice - in other words, trying to harm someone's reputation - then they can be sued."
Right now, fraud investigators at New Jersey Manufacturers and other insurance companies complete their investigations and refer cases to insurance regulators and law enforcement; the bill seeks to remedy that by encouraging information sharing earlier in the investigation.
"For example, suppose the perpetrator is a doctor, and five insurance companies get multiple bills showing all the work done on one day, and it's physically impossible to do all that work," Breslin said. 'That would be an indication of fraud, while the information from one company alone would not be enough." With shared information, the insurers can build a case, recover money that was paid out and prevent future losses, Breslin said.
Fraud investigations can lead to big criminal cases. In July 201 1,
According to a statement from the office of the attorney general, the scheme involved chiropractors recruiting runners, and runners recruiting patients; such conduct "corrupts the insurance system because it gives powerful financial incentives that can influence a doctor's treatment decisions to maximize insurance billings."
Riley said her bill "gives fraud investigator more tools. Every time insurance companies lose money to fraud, it raises rates and makes insurance less affordable for the rest of us." She said advances in technology are making fraud easier to commit and harder to combat. 'The tools have to be updated, because fraud is lucrative, and people who commit fraud keep thinking of new ways to do it."
Riley said that when the bill comes before the Judiciary Committee, she expects to amend a provision dealing with kickbacks to health care providers who refer patients to their colleagues in order "to protect doctors who make legitimate referrals." Health care attorney
"There is a lot of good stuff in the bill," he said. "There are fraud rings out there, and we support legislation to break up these rings." But Manigan said
The bill is supported by insurers but opposed by the consumer advocacy group New Jersey Citizen Action, which is concerned the civil immunity provision could prevent consumers from suing insurers who erroneously reject legitimate claims on fraud grounds.
"Combating fraud is important, but we want to make sure the consumer can go after the insurance company if a claim is unfairly denied," said
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