On Thursday, May 11, Brooklyn Borough President Marty Markowitz joined Mayor Michael Bloomberg, Department of Consumer Affairs Commissioner Jonathan Mintz, and Council Members David Yassky, Kendall Stewart, and David Weprin for the bill-signing ceremony of the Motor Vehicle Insurance Fraud Reduction Act, which will help identify and shut down fraudulent “medical mills” that have driven up auto-insurance rates for Brooklyn and New York City drivers to among the highest in the nation. Council Member Yassky introduced the bill at Borough President Markowitz’s request, and it passed unanimously on April 26.

“This law represents a crucial first step toward ending the scams that have been car-jacking insurance rates for safe, law-abiding drivers for too long,” said Borough President Markowitz. “I’m confident that by continuing to work together to defend our drivers, we will put the days of Brooklyn and New York City’s sky high car insurance rates where they belong: in the rearview mirror.”

The legislation requires “medical mills”—clinics that process high volumes of no-fault insurance claims that are primarily responsible for the fraud that increases auto-insurance rates for law-abiding New Yorkers—that bill 50% or more in no-fault claims to report to the city’s Department of Consumer Affairs. Rather than addressing the genuine medical needs of injured accident victims, “medical mill” clinics order needless tests and unnecessary treatments for both real and fake victims in order to pilfer money from the no-fault insurance system. The cost of fraudulent no-fault personal injury claims in Brooklyn alone is estimated at nearly $500 million annually.

These same facilities will also be required by the City to document that a) they do not employ “runners,” who solicit accident victims with the express intent of defrauding insurance companies; and b) that their business does not engage in fraudulent activity. Employing a runner or failing to report will result in fines or jail time. The reporting process will also make it easier to identify fraudulent clinics, which will create savings that can be passed on to the consumer, while also ensuring that accident victims receive quality medical treatment.

The initial impetus for the bill was an October 2004 report titled “Putting the Brakes on Out of Control Rates,” which was issued by the Borough President’s Task Force on Equity in State and Local Policy, with cooperation from Assembly Member Jim Brennan.