Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
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 Trenton.
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 Assembly Financial Institutions and Insurance Committee and been referred to the Assembly Judiciary Committee, which plans to schedule a hearing by January, according to an aide to Assemblyman Peter J. Barnes III (D-Edison), judiciary committee chair.
Bill sponsor Assemblywoman Celeste M. Riley (D-Salem) said restricting access to police accident reports is an important step in fighting fraud. Accident reports would remain readily available immediately to the parties involved in the accident; to attorneys who can prove they were hired by a party to the accident, and to law enforcement and fraud investigators. All others would have to wait 30 days.
"It gives the accident victim a little bit of time and protection, and that is one of my main concerns," Riley said.
Patrick Breslin, director of legislative affairs for New Jersey Manufacturers Insurance Co., said civil immunity will help fraud investigators do their jobs, but won't shield them from lawsuits if they act with malice.
"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, Ronald Chillemi, acting insurance fraud prosecutor, charged 11 people - including three chiropractors - with a scheme involving the illegal use of "runners" to recruit auto accident victims as patients. In this case, the state charged six runners were paid more than $130,000 over two years to recruit patients for chiropractic treatment.
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 Mark Manigan, of Brach Eichler, said he would likely support the bill if the kickback section is amended.
"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 New Jersey law already outlaws kickbacks, and he would oppose broadening the law in ways that could criminalize legitimate business relationships among health care providers.
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 Jeff Brown, coordinator of policy advocacy for Citizen Action. The New Jersey Association for Justice, the trial lawyers' group, also wants the bill amended "to give consumers and policyholders the right to file a claim against an insurance company that commits insurance fraud by unreasonably delaying or denying treatment," said Scott Leonard, its president.
State Sen. Joseph F. Vitale (D- Woodbridge), co-sponsor of the bill, said the consumer lawsuit issue "is a question I will address. We certainly don't want consumers to have any legitimate claims denied."
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