Casualty

Key Points:

• A recently introduced bill in the New York State Assembly will hold accident scene runners as criminal defendants for unlawful procurement of clients, patients, and customers. 
• Runners are most common in staged and intentional accidents. 
• According to the Department of Financial Services, no-fault fraud reports accounted for 93% of all fraud reports received in 2022 and 90% of all health care fraud reports received since 2018.

---

New York Insurance Law § 5102 and the corresponding no-fault regulations require automobile insurance carriers to provide a statutory mandatory minimum coverage of $50,000 for “first party benefits” for “basic economic loss” due to personal injury arising out of the use or operation of a motor vehicle. No-fault law provides for prompt payment for medical treatment, so claimants do not need to file personal injury lawsuits to be reimbursed. Under no-fault law, patients may assign their right to reimbursement from an insurance carrier to other parties, including health care providers.

Due to the extremely high volume of claims that must be processed within strict timeframes, the no-fault industry is primed for health care provider fraud. Often, health care providers are assisted by “runners,” who procure patients. 

Significantly, a recently introduced Bill in the New York State Assembly will hold accident scene runners as criminal defendants for unlawful procurement of clients, patients, and customers. The proposed Bill includes the addition of three new sections: (1) N.Y. Penal Law §§ 176.85, 176.90, and 176.95, and (2) an amendment of §176.00 to include new subdivisions which define “runner” and “provider.” 

Under the proposed Bill, a “runner” is defined as “a person, not a provider, who with the intent to obtain a material pecuniary benefit, procures or attempts to procure a client, patient or customer at the direction of, request of, in cooperation with, while employed by, or with intent to solicit a fee from, a provider or from any person who creates the impression that he or she or his or her practice can provide legal or health care services.” See N.Y. Assembly Bill 855, 205th N.Y.S. Legislature (2023). The proposed Bill defines “provider” as a “health care professional, an owner, or operator of a health care practice or facility or an attorney.” See N.Y. Assembly Bill 855. This means an individual charged as a runner or provider could face up to a first degree class D felony, as further defined below.

According to the New York State Department of Financial Services (DFS), no-fault fraud reports accounted for 93% of all fraud reports received in 2022 and 90% of all health care fraud reports received since 2018. See DFS, “Investigating and Combating Health Insurance Fraud,” dated 03/15/2023. In 2019, the DFS implemented investigations to uncover information regarding runners’ involvement in staged accidents and doctors engaging in no-fault fraud for rendering unnecessary medical treatment.

The two most common staged accident scenarios are drivers who intentionally hit their automobiles together or the driver of one automobile causes an accident with an unsuspecting driver of another automobile. See DFS, “Investigating and Combating Health Insurance Fraud,” dated 03/15/2020. An additional scenario involves “jump-ins,” which occur when individuals are not involved in the accident but are added to the accident report.
 
Runners are most common in staged and intentional accidents. After an accident occurs, a runners appear in order to tip-off individuals to medical clinics and law firms for a kickback, and they coach accident victims to exacerbate injuries. Runners receive a pecuniary kickback from clinic controllers and doctors when solicited patients undergo medically unnecessary treatments at no-fault clinics. Subsequently, personal injury lawyers file lawsuits. As a result, insurance carriers shell out millions on unnecessary medical expenses, lost wages, and litigation defense costs—all set in motion by runners, whose sole intent is to defraud insurance carriers.

Should this Bill be passed and enacted, a runner or provider could be charged for the unlawful procurement of clients, patients, or customers in the third, second, or first degree. It would depend on the frequency of occurrences and pecuniary benefit received in exchange.

A runner will be charged in the third degree under N.Y. Penal Law § 176.85, a Class A misdemeanor, if he or she knowingly acts as a runner more than once during a year. A provider would be charged under this section if the provider “uses, solicits, directs, hires or employs another” as a runner more than once during a year and offers a material pecuniary benefit. See N.Y. Assembly Bill 855.

A runner will be charged in the second degree under N.Y. Penal Law § 176.90, a Class E felony, if he or she knowingly acted as a runner on five or more occasions within a 12-month period or received a pecuniary benefit in aggregate of $5,000. The same penalty is applicable to the provider who employs the runner.

A runner will be charged in the first degree under N.Y. Penal Law § 176.95, a Class D felony, if he or she knowingly acted as a runner on more than ten occasions in a 12-month period or received an aggregate of $20,000. Similarly, a provider knowingly employs a runner for ten or more occasions over a 12-month period or offers pecuniary benefit of over $20,000, he or she would face a Class D felony. See N.Y. Assembly Bill 855.

It is hoped that the enactment of Assembly Bill 855 will act as a deterrent to stop runners and providers from engaging in insurance fraud schemes. It may also incentivize insurance carriers to conduct and participate in investigations, which resulted in $518 million in savings and $48 million in recovered funds in 2021. See “Investigating and Combating Health Insurance Fraud,” dated 03/15/2023.

by Danielle Corbisiero, Esq.

_{Defense Digest, Vol. 29, No. 2, June 2023, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2023 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}