State insurance regulators plan to start kicking crooked doctors out of New York's no-fault program next month, calling them linchpins in fake-accident scams that cost insurers and policyholders hundreds of millions of dollars.
Regulations are set to take effect June 12.
No-fault insurance lets drivers and passengers claim up to $50,000 for accident injuries regardless of who caused the accident.
The Department of Financial Services sent certified letters in March to 135 doctors, chiropractors, acupuncturists and physical therapists, demanding they explain suspect billing patterns and threatening to remove them from the program if they don't respond.
That's "just the tip of the iceberg," Superintendent Benjamin Lawsky said.
"For every fraudulent medical mill, there's got to be a doctor attached to it, or they couldn't do the billing," he said. "The doctor is sort of at the top of this medical mill pyramid. So we have to go after these dirty doctors."
Providers can challenge expulsion at hearings, but they can be suspended for up to 90 days while cases are pending.
The Automobile Insurance Fraud Unit in the state Attorney General's Office has charged 407 people, including clinic owners and doctors, since it was established in 2001, spokeswoman Jennifer Givner said. The office, funded by the Department of Financial Services, has multiple pending investigations of staged-accident rings and corrupt clinics, she said.
An Insurance Research Council study indicates that fraud added $385 million to $512 million to New York no-fault claims in 2010, or about roughly one-third the total no-fault payments, according to the New York Insurance Association.
Ellen Melchionni, association president, said the organization believes the system in New York is "severely broken," and that the inflated cost translates to higher premiums. There are many fraud rings, and they keep evolving, she said, adding that the new regulation to decertify deceitful doctors is a good step.
Lawsky's letters demanded a raft of information from doctors, including all professional addresses from which their no-fault claims are submitted, the people or legal entities who have an economic interest in their practices and any agreements with medical management companies and billing contractors.
Department spokesman David Neustadt said they received "many" responses, though he declined to say how many or identify them.