Health care costs related to car accidents increased three times faster than the overall medical costs in New York for the last five years, largely due to rampant fraud by medical providers, according to an analysis of car insurance claim costs by the Fraud Costs New York Coalition and the Property Casualty Insurers Association of America (PCIAA).
The average payout for medical claims related to car accidents in New York increased 60.4 percent, almost 42 points faster than the 18.6 percent growth rate in the Consumer Price Index cost of medical goods and services in the region since the end of 2004.
"Unscrupulous medical providers are taking advantage of New York's automobile insurance system by inflating charges, submitting bills for procedures that were never performed, or billing for excessive or unnecessary treatments," said Kristina Baldwin, PCIAA's assistant vice president, in a press statement. "Unless the state legislature overhauls the system to curb the fraud, costs will continue to escalate."
Allstate and GEICO recently announced that they had filed lawsuits alleging fraudulent activity in New York totaling almost $12 million. In September, New York Attorney General Andrew Cuomo announced criminal charges against seven medical professionals and a clinic receptionist for their roles in a scheme to submit phony claims for tens of thousands of dollars to car insurance companies.
Fraud increases insurers' costs, which translate into higher car insurance rates for consumers.