For the last several months I have read articles in the papers concerning the allegedly “countless” number of people who are defrauding insurance companies. As a consequence of this alleged “massive fraud”, the insurance industry has succeeded in pressuring the New York State Insurance Department to change the regulations relating to “no-fault” automobile insurance. As you know, no-fault automobile insurance covers your medical bills and lost income in the event you are involved in a motor vehicle accident. As a result of the changes, it will be much more difficult to file a no- fault claim. This is so because the time period for filing your papers is greatly accelerated. Additionally, medical providers have less time in which to bill the carrier. On top of that, insurance carriers will become much more aggressive in conducting examinations under oath (EUOs) of their insureds. The purported purpose of an EUO is to determine if there is insurance coverage in effect. The carrier’s real purpose in conducting an EUO is to discredit the insured, to discourage the claim and to conduct unnecessary and often unfair discovery. Why has this happened? The alleged justification is “massive insurance fraud” on the part of claimants. No numbers are given by the insurance industry, no figures are given, only anecdotes of alleged fraud.

I have practiced personal injury law for a long time now and I am familiar with trends in the insurance industry. I can say without equivocation that I have noticed no “massive insurance fraud” on the part of the Hudson River Valley residents. While there may be isolated incidents of fraud elsewhere, it is clear that the insurance industry’s claim of “massive insurance fraud” is nothing but propaganda used to extract favors from the State Legislature and the Insurance Department. I ask, “Who is defrauding whom?” An examination of the record reveals that it is the insurance industry which has defrauded us. For example, in Florida, the State Farm Mutual Automobile Insurance Company is fighting a claim for punitive damages for allegedly forging a policyholder’s documents and engaging in a cover-up to reduce its liability in the policyholder’s case. There is a hearing scheduled in Broward County, Florida to determine whether various State Farm agents should face trial for punitive damages. This is not an isolated example. During litigation, insurance companies often fail to disclose the existence of excess insurance which may require them to pay additional money to an injured party. Insurance company investigators obtain statements from injured people when they are in the hospital on pain medication. Worst of all, insurance companies, acting through members of the medical profession, routinely have their insureds subjected to a so called “independent medical examination” to determine the nature and extent of their insured’s injuries. In a vast majority of the cases, (over 90% to the best of my estimation), the insurance doctor finds little or no injury, thereby giving the carrier a basis to disclaim responsibility for further medical bills. These “independent” physicians are anything but independent. Matters are routinely sent to them by the various insurance companies because it is a forgone conclusion that these physicians will deliver the goods and deny injury on the part of the insurance policyholder. There is little incentive for an insurance company to behave in an open and honest fashion since its liability is limited to normal breach of contract damages. Generally, New York does not recognize the right of the policyholder to sue the carrier for punitive damages for bad faith or unfair claims practices.

Recently, another interesting trend has emerged in automobile accident litigation. Insurance companies learned that they can capitalize on the widespread misconception that there must be extensive physical damages to a car in order for an occupant to be injured. Relying on junk science, carriers have pursued this misconception in court claiming that the lack of damages to the car means that the injured occupant is lying about his injuries. In doing so, the insurance industry ignores literally volumes of studies which demonstrate that modern cars protect themselves from damage, not the occupants.

The next time you hear an insurance company complaining about insurance fraud, ask yourself who is defrauding whom. I think the answer is clear. Write to your New York State Senator and Assemblyman and insist upon reform.