FRAUDTUITOUS: Gov. Kathy Hochul has spent the last four months beating the auto-insurance affordability drum and fighting the trial lawyers and unconvinced lawmakers who stand in her way.
She’s proposing limiting the ways car crash victims — especially those deemed at fault for the collision — can sue for damages, a move she says will cut the cost of auto insurance. She also wants to target insurance fraud and staged crashes.
It’s been a massive sticking point in negotiations to finish her now-late budget.
“If, God forbid, you are the majority reason that there’s an accident, you will no longer be entitled to pain and suffering,” Assembly Speaker Carl Heastie told reporters Wednesday. “That’s a pretty serious thing for people to accept. I mean, accidents do happen.”
But as Hochul hopes to draw the Assembly and Senate to her side, it just so happens that federal prosecutors in the Southern District of New York dropped indictments this week targeting a close personal friend of former Mayor Eric Adams and alleging a massive car-crash-victim-fraud scheme.
Perfect! Timing!
“This alleged scheme is exactly the type of fraud Governor Hochul’s auto insurance reforms are designed to curb in New York State,” Hochul spokesperson Kristin Devoe told Playbook in a statement.
Her office is arguing that the scheme might never have happened had Hochul’s proposed changes been in place.
“The Governor’s proposals would strengthen enforcement, allow more time to investigate suspected fraudulent claims and crack down on the networks and providers that make this type of fraud possible in the first place,” Devoe said.
Our colleague Chris Sommerfeldt reported this morning that federal prosecutors dropped a superseding indictment Thursday in their fraud case against Zhan “Johnny” Petrosyants, the man who hobnobbed, dined and clubbed with Adams during his tenure, as Hizzoner tested New York City’s nightlife “product.” The superseder alleged businessmen Vladislav Stoyanovsky and Dmitriy Khavko participated in the scheme as well. All three men pleaded not guilty.
Prosecutors claim the men had car crash victims in medical clinics undergo dubious procedures conducted by clinicians who were part of the scheme. The indictment also alleges the men behind the operation billed insurers for procedures that never happened.
Petrosyants, Stoyanovsky and Khavko then allegedly filed no-fault claims to the insurance companies, who, under state law, are required to pay out the claims in just 30 days. The scheme brought in tens of millions of dollars, prosecutors said.
Hochul’s office wants to change that. The governor says she’d give insurers more time to investigate whether a no-fault claim is fraudulent. Right now, if an insurer delays a payout, it can’t defend itself in court by saying it was busy investigating the claim. Insurers would still have to pay interest on delayed payouts. And if someone sues to force a reluctant insurer to pay up, the insurer would have to cover attorneys fees.
The cost of paying out bogus insurance claims is a main factor in the high cost of auto insurance in New York, contends Team Hochul. Last year, insurance carriers reported 43,811 incidents of suspected auto insurance fraud to regulators, an 80 percent jump compared to 2020.
The Trial Lawyers Association says Hochul’s proposals would give insurance companies more time to delay and deny claims.
“Stripping away consumer rights while insurers rake in record profit is a giveaway to the industry that leaves New Yorkers to pick up the tab,” association spokesperson Sabrina Rezzy said in a statement. — Jason Beeferman
From the Capitol
TIGHTENING ALBANY’S BELTWAY: The much-derided I-787 — an asphalt apron familiar to Capital Region drivers who commute downtown to the statehouse — is one step closer to a makeover.
Hochul announced Thursday the state is opening a community outreach center amid an environmental review focused on how to improve waterfront access. I-787 runs parallel to the Hudson River.
“Reimagining the I-787 corridor is a once-in-a-generation opportunity to shape the future of downtown Albany, so it is imperative that the people who live and work in the area have a major voice in how this project progresses,” Hochul said. — Nick Reisman
FROM THE CAMPAIGN TRAIL
BLACKBURN’S BONDI PAST: In 2016, years before she became one of the Trump administration’s most prominent and polarizing officials, then-Florida Attorney General Pam Bondi had a young intern in her office named Conrad Blackburn.
That fact is now being seized on by Blackburn’s critics as he runs for a Harlem-based Assembly seat as a democratic socialist and unabashed enemy of Trump.
“It is unconscionable that Conrad Blackburn chose to work for Pam Bondi at the very moment she was leading the charge to keep more than a million Floridians, including one in five Black adults, permanently locked out of the voting booth,” Uptown Democratic Club President Donna-Marie Gibbons told Playbook, referencing Bondi’s effort to preserve a Florida law that made it difficult for felons to regain voting rights after serving time. “Anyone who signed up to work in that office while she was fighting to preserve this racist, Jim Crow-era machinery has questions to answer about their commitment to our community.”
Trump fired Bondi as his U.S. attorney general Thursday.
Blackburn, who grew up in Florida, said criticism of his stint with the attorney general there says more about his haters than it does about him.
He told Playbook he took the unpaid, two-month internship in Bondi’s criminal appeals bureau while in law school — and the experience drove him to become a public defender, a role he continues to serve in to this day.
“I did not need very long to say that the system was broken and I needed to spend my time working to protect Black folks from it, with actions, not just words,” Blackburn said.
“I am happy to debate my record on its merits,” he continued. “But harkening back to my days as a 1L, as a poor kid trying to work in the criminal appeals bureau of the Florida AG’s office as some kinda gotcha? That is everything wrong with politics now. If the powers that be in this district focused on the issues, they would have to explain the lack of meaningful change in the community…Heck, if the powers that be did their jobs, I may not be running in this race at all.”
Blackburn is facing off in June’s Democratic primary against Assemblymember Jordan Wright, the son of Manhattan Democratic Party head Keith Wright.
New York Focus reported today that Charlie King, a longtime aide to former Gov. Andrew Cuomo, is launching a super PAC to boost Wright, whose district Mayor Zohran Mamdani comfortably won in last year’s election. — Chris Sommerfeldt
IN OTHER NEWS
— ARRESTS SURGE: ICE arrested more New Yorkers between November and January than in any comparable period since 2022, according to federal data. (Times Union)
— ONE MAN’S TRASH: Reports show that progress in New York’s composting push slowed after officials halted fines and enforcement efforts. (Gothamist)
— BLESS THIS MESS: Competing lobbying groups in Hochul’s car insurance reform fight are clashing over dueling clergy letters and even disputing who actually signed which. (City and State)
Missed this morning’s New York Playbook? We forgive you. Read it here.
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