New York Senate passes three bills aimed to stamp out auto fraud

The New York Senate has passed three bills intended to help combat auto fraud.

One bill creates the crimes of staging a motor vehicle accident in the first, second and third degrees.

Specifically it prohibits acting as a passenger or an operator of a motor vehicle with intent to defraud by means of planning and execution of an accident. It further provides that the crime is a Class B felony if an uninvolved party is injured.

A Class B felony can carry a sentence of up to 25 years in prison. (A Class A felony can carry up to a life sentence.)

This bill was in response to the 2003 death of Alice Ross, a 71-year-old grandmother who was killed during a staged auto collision.

A second bill permits an insurer to cancel an auto insurance policy retroactively within the first 60 days of inception due to non-sufficient funds, non-existence of a bank account or the unauthorized use of the account.

The bill is responding to a typical fraud scenario in which a fraudster purchases auto insurance, fails to complete payment for the transaction, but makes a claim on the policy while the payment is not yet complete and during which time the policy is in effect.

“This bill allows for retroactive cancellation in New York of newly issued automobile insurance policies to prevent this type of fraud,” the bill states. “This would bring New York in line with the other large no-fault states…”

In Ontario, in cases of auto insurance fraud, insurers can cancel a policy retroactively for non-payment of premiums, misrepresentation on the application or material risk change.

The New York Senate’s third bill establishes the crime of unlawful procurement of clients, patients or customers for knowingly acting as a “runner,” or for using, soliciting, directing, hiring or employing another person to act as a runner.

A “runner” is defined as a person who knowingly and for profit seeks to procure clients, patients or customers on behalf of an attorney or health care provider for the purpose of falsely or fraudulently obtaining benefits under a contract of insurance.