Insurance Fraud in New York: How Medical Providers and Lawyers Scheme to Defraud

Insurance fraud is a serious issue in New York, costing consumers millions of dollars annually in increased premiums and higher prices for goods and services. New York’s no-fault system accounts for up to 93% of all healthcare fraud reported to the state’s insurance regulator, driving premiums ever higher. While it’s difficult to estimate the exact cost of insurance fraud because much of it goes unreported, it’s clear that it victimizes every resident of New York State. This blog post will delve into how certain medical providers and lawyers scheme to defraud insurance companies, the types of fraud they commit, and the penalties they face if caught.

The High Cost of Insurance Fraud in New York

New Yorkers pay nearly double the national average for car insurance – $4,031 a year compared to $2,400 nationwide. This staggering figure highlights the excessive litigation and insurance fraud plaguing the state. A Citizens for Affordable Rates (CAR) report revealed that outdated laws and systemic fraud, ranging from staged accidents to medically unnecessary procedures, are driving up insurance rates for everyone.

Common Insurance Fraud Schemes

Insurance fraud takes many forms, but some common schemes involve medical providers and lawyers working together to exploit the system for financial gain. These schemes often include:

Staged Accidents: Dishonest individuals intentionally cause car accidents to file fraudulent claims. In January 2025, the New York DMV reported that insurance scams increased by 34 percent between 2021 and 2023. New York had the second-highest number of staged crashes in the country in 2023, with over 1,700 reported deliberate crashes.
Exaggerated Injuries: Individuals involved in accidents may exaggerate their injuries to receive larger insurance payouts. Faked or exaggerated injury reports were mentioned in 26 percent of questionable no-fault claims in 2009.
Unnecessary Medical Treatments: Some medical providers bill for services that patients don’t need, driving up costs for insurance companies. A racketeering suit in June 2025 alleged a scheme involving a New York City personal injury law firm and dozens of medical providers who conspired to recruit construction workers to stage or exaggerate workplace injuries and undergo unnecessary medical procedures.
Inflated Billing: Medical providers may overcharge for services or bill for services never rendered.
Kickbacks and Illegal Referrals: Clinic owners may pay kickbacks for patient referrals, leading to excessive and unnecessary medical treatments. In an average no-fault setting, the individual who operates the clinic refers patients to other providers to receive excessive and unnecessary medical treatments.
False Claims: Filing claims with false information or for incidents that never occurred is a common form of insurance fraud.

The Role of Medical Providers

Unethical medical providers play a significant role in insurance fraud schemes. They may:

Provide unnecessary treatments: They administer excessive or unwarranted medical procedures to inflate insurance claims.
Overbill for services: They inflate their charges or bill for services that were never provided.
Participate in kickback schemes: They receive payments for referring patients for unnecessary treatments.

The Role of Lawyers

Some lawyers also contribute to insurance fraud by:

Recruiting clients for staged accidents: They seek out individuals willing to participate in fraudulent schemes.
Referring clients to complicit medical providers: They direct clients to doctors and clinics that will provide unnecessary treatments and inflate bills.
Filing fraudulent claims: They submit claims with false or exaggerated information.

Penalties for Insurance Fraud in New York

New York law imposes harsh penalties for insurance fraud, with the severity depending on the amount of money involved. Insurance fraud is classified by degrees, ranging from a Class A misdemeanor to a Class B felony.

Insurance fraud in the fifth degree: A Class A misdemeanor involving less than $1,000, punishable by up to one year in jail.
Insurance fraud in the fourth degree: A Class E felony involving more than $1,000 but less than $3,000, punishable by up to four years in prison.
Insurance fraud in the third degree: A Class D felony involving more than $3,000 but not more than $50,000, punishable by up to seven years in prison.
Insurance fraud in the second degree: A Class C felony involving more than $50,000, punishable by up to 15 years in prison.
Insurance fraud in the first degree: A Class B felony involving more than $1 million, punishable by up to 25 years in prison.

In addition to imprisonment, those convicted of insurance fraud may also face fines, restitution, and a permanent criminal record.

Recent Cases and Enforcement Trends

New York authorities are actively cracking down on insurance fraud. Recent cases include:

In June 2024, the leaders of one of the largest no-fault insurance frauds in New York history were sentenced to prison for orchestrating a $40 million scheme involving sham medical clinics and pharmacies.
In October 2024, four defendants were charged in a multi-million dollar no-fault insurance fraud scheme and money laundering conspiracy.
In January 2025, Uber filed a racketeering lawsuit against a group of law firms, doctors, and pain-management clinics it claims staged fake car accidents and performed unnecessary surgeries to exploit New York’s no-fault insurance policies.

These cases demonstrate the state’s commitment to prosecuting insurance fraud and holding perpetrators accountable.

How to Report Insurance Fraud

If you suspect insurance fraud has been committed, you should report it to the New York State Department of Financial Services (DFS). You can report fraud by:

Phone: Call the Insurance Fraud Hotline at (888) FRAUDNY | (888) 372-8369.
Online: Use the Report Insurance Fraud submission form on the DFS website.
Mail: Print, complete, and mail the Report Fraud Form (PDF) to: New York State Department of Financial Services, Insurance Frauds Bureau, One State Street, New York, NY 10004.
Fax: Print, complete, and fax the Report Fraud Form (PDF) to: (212) 709-3555.

Your report will be kept confidential.

Protecting Yourself from Insurance Fraud

While authorities are working to combat insurance fraud, there are steps you can take to protect yourself:

Be wary of unsolicited offers for medical treatment or legal services after an accident.
Carefully review all medical bills and insurance claims for accuracy.
Report any suspicious activity to the DFS.
Consider installing a dash cam in your vehicle to help document accidents.

Conclusion

Insurance fraud in New York is a pervasive problem that drives up costs for everyone. By understanding how these schemes work, the roles of medical providers and lawyers, and the penalties for committing fraud, we can all work together to combat this crime and protect ourselves from becoming victims. If you have been accused of insurance fraud, it is important to seek the advice of an experienced attorney who can help you navigate the legal system and protect your rights.