Rice-Consumer Protection Agenda

8/8/2019 Rice-Consumer Protection Agenda

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The Rice Consumer Protection Agenda

These are tough times. The last thing New Yorkers need is for a bad situation to be made worseby deceitful businesses and fraudsters. Yet the working families, individuals, and elderlycitizens of our state are encountering more scams than ever as they struggle to make ends meet.

Crimes against consumers are also not limited to the kind that endanger bank accountsthey canalso threaten the health and safety of individuals and families. Internet predators, toxic toypeddlers, and insurers who delay or block treatment for profit all endanger New Yorkers through

consumer products.

It is a fundamental responsibility of the attorney general to protect New Yorkers safety, as wellas their pocketbooks. The AG is granted broad investigative and prosecutorial powers to combatillegal and unsafe business practices throughout the state. There is tremendous potential for thenext AG to isolate and end emerging threats, and eliminate the persistent consumer crimes thatplague our state.

The following is Kathleen Rices agenda to protect consumers in New York:

Protecting Our Health and Safety

When we set up a new computer for our daughter or buy a baby bottle for our son or pay aninsurance premium for our family, we should not be concerned that these products can causeharm to the ones we love. But the reality is that the safety of consumers is at serious risk withoutsmart, tireless law enforcement to protect themand it is the ultimate responsibility of theattorney general to provide that protection.

Here are solutions for the top consumer safety issues affecting New Yorkers:

1) Keep Internet predators at bay. About 20 years after email, web surfing, and chat roombecame part of the American vocabulary, the Internet is as dangerous a place as ever.Pedophiles stalk social media and instant messaging services, prowling for unsuspectingchildren, and far too many are successful in finding them. No matter how many securitymeasures a parent takes at home, kids these days have access to the Interneteverywhereand so it must be the mission of the next attorney general to proactivelyfind predators before they can strike, and ensure we jail them if they try.


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To stop them, a permanent, joint task force within the Economic Justice Division combining the resources of the Investigations Division, Internet and Consumer FraudsBureaus must be permanently deployed to scour the Internet for predators, bullies andfraudsters. This virtual field unit will tie together efforts to track deceitful use of theInternet and work with other law enforcement agencies and the companies that are

responsible for helping protect the consumers they serve.

The law must also be strengthened so that pedophiles who lure minors for sex through theInternet can be stopped and prosecuted before they commit a crime. Right now, the lawmakes it difficult to protect children from predators before its too lateeven if theperpetrator uses the Internet to coerce a child and then actually meets them inperson.

2) Stop the use of toxic chemicals and compounds in consumer products. Believe it ornot, consumers are subjected to poisonous levels of toxins in products they buy everyday, right off the shelf. Most troublingly, the products that most consistently show up inconsumer alerts are geared toward children and babiessuch as bottles, toys, and even

clothing. Most of the time these products are foreign-made in places where there arevirtually no safety standards. Though there are U.S. government agencies responsible formonitoring the sale of consumer products and the content of their materials, itsimpossible for every single thing sold to be tested.

Thats where the AG comes in. Only severe penalties and jail time can deter theproliferation of dangerous consumer products, and it is up to the AG to make sure thatthese unscrupulous manufacturers and retailers are regularly and strictly brought tojustice. The next AG should take a two-pronged approach: force retailers to becomedirectly responsible for their wares; and sue to stop any use of known potentially harmfultoxins in consumer products.

Through the Economic Justice Division, the OAG could create and publicly pushretailers to sign a code of conduct requiring content and safety information frommanufacturers. If manufacturers dont report the necessary information, retailers wouldnot carry their products. Any retailer who refuses to sign would be subjected to theharshest scrutiny imaginable under the powerful Consumer Protection ActandExecutiveLaw 63(12), which allow the AG to subpoena corporate officers and employees, and digdeep into the practices of any company in New York until wrongdoing is found.

The AG can also go after toxic consumer products at the source by suing to stop their useby manufacturers. Incredibly, some uses of hazardous chemicals like lead, phthalates,PBDEs, cadmium, and bisphenol A are still approved, or not well-controlled. In somecases, it will take legal action to force them off of store shelves.

3) Prevent insurance companies from risking lives for profit. Weve all been through itbefore: endless phone menus and insurance company flunkies forcing us to jump throughevery bureaucratic hoop in order to get a mundane test or treatment approved. But,unbelievably, the same time-intensive processes are used for much more pressing andeven life-threatening circumstances. Every day, New Yorkers in need of emergency


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care are put at risk by the red tape and stalling tactics of big insurance providers whowould rather save a dollar than a life.

Lets take a lung cancer patient, for instance. This patient unusually but not totallyuncommonly develops a node during radiation therapy. The doctor prescribes a more

sophisticated procedure, targeted radiation, to address the danger. But the insurer ignoresthe special circumstance and rejects the treatment in favor of traditional radiotherapybecause it is less expensive, and more broadly used. Now begins a weeks-long process togain authorization for the needed treatmentone that can only be initiated and followedthrough by the dying cancer patient. And thats time and energy the patient doesnt have.

When such critical decisions have to be made, it is too often not a doctor who isultimately determining the course of treatment; it is an accountant, or worse, an operatorwith an instruction manual. Such an irresponsible and callously greedy system isunacceptable. The next AG must require insurers who operate in New York to developan expedited adjudication process for cases where a medical provider deems delay in

treatment a serious risk to the health or life of a patient. If the insurers dont comply, theOAG should go after them for endangering the health of New Yorkers. A unit combiningthe resources of the Health Care and Consumer Frauds Bureaus and a new SpecialDeputy Attorney General for Public Intelligence would also help advocate for consumerswho need immediate help to get urgent treatment.

Protecting Our Pocketbooks

It seems the worse the economy and the more vulnerable our citizens to financial peril, thegreater the incidence of fleecing and fraud. And so it is today. It has been a generation since

such a downturn has left so many so vulnerable. They must be protected from those who usetheir desperate position to coax them into schemes to steal their hard-earned money. In thiseconomy, predatory lenders, insurance and Medicaid scammers, and major corporations withdishonest agendas are the worst kinds of criminals.

Here are Kathleen Rices solutions to protect New Yorkers pocketbooks:

1) Expand the OAGs mediation practice and access to whistleblowers. Most NewYorkers dont know that they can avoid Small Claims Court by requesting mediationthrough the OAG, or that the OAG has dozens of attorneys waiting to act on their tipsabout bad business practices. The OAG should have the resources it needs to educate the

public about these services, and the infrastructure to deal with the increase in tips andcomplaints it would create.

More mediation cases will likely lead to more, larger actions on behalf of entire classes oftaxpayers when common complaints show trends of illegal activity. Cash recoveries andpenalties from these cases would pay for the expense of expanding the mediation unit.


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Designating a Special Deputy Attorney General for Public Intelligence would give theOAG a whistleblower czar to reach out to New Yorkers about existing and emergingthreats to consumers, oversee a new integrated system for receiving tips (including animproved, 311-linked hotline for whistleblowers), and help coordinate and vet the tipsreceived by the various units and bureaus of the OAG.

2) Halt mortgage fraud and predatory lending. Every year, thousands of unsuspectingNew Yorkers are taken for a ride by unscrupulous merchants in the mortgage lending andconsumer finance industries. These scammers frequently target low-income, minorityand elderly consumers, who they believe have few options for securing a safe loan. Butthe AG has powerful investigative and prosecutorial tools to stop them, including thestates consumer laws and theReal Property Actions and Proceedings Law.

They key to making these laws work is enforcement. The OAG already has a task forcefor taking on such crimes, combining staff from the Criminal Prosecutions, Civil Rights,and Investor Protection Bureaus. Its work should continue. But its team needs tips and

additional resources to get the job done. In particular, an initiative must be undertaken tocodify rules for coordination and reporting between the Banking Department and the taskforce so that the two can join resources to jump on emerging threats, specifically, whenunregistered brokers and dicey loan outfits set up shop to steal from New Yorkers.

An expanded mediation unit and whistleblower czar will also help funnel tips andevidence of wrongdoing directly to the task force for quick action against bad actors, andimmediate results.

3) Ramp up the fight against Medicaid fraud. New Yorks Medicaid system is rife withabuse. The federal government has estimated that between 1.5 and 10 percent of ourMedicaid spending goes toward fraudulent claims, which is between $750 million and $5billion annuallyall of which comes directly out of taxpayers pockets. Twenty-fivepercent of most Medicaid costs are also passed down by the State to local governments,which are then forced to increase property and local taxes to pay the tab. In many NewYork counties, Medicaid costs exceed property taxes. In other words, reducing Medicaidfraud equals lower property taxes.

Reducing Medicaid fraud is the direct responsibility of the OAG, and so its MedicaidFraud Control Unit (MFCU) must be fully funded to ensure New Yorkers are protected.Because of a 3-to-1 federal match, and the direct correlation between funds spent andfunds recovered, it makes the most sense to fully fund the unit to the federal cap. Doingso would triple the total budget of the officeand triple the money saved for NewYorkers by catching more Medicaid cheats.

In addition to a fully funded MFCU, the next AG should undertake the followinginitiatives to fight Medicaid fraud:

New, more severe penalties for Medicaid fraud. Create a Martin Act forHealthcare, as suggested by Attorneys General Spitzer and Cuomo.


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The MFCU can request, at any time, that providers produce records to supporttheir billings. If they dont produce records in a timely fashion, the state shouldautomatically withhold its portion of their Medicaid payments to the provider.

Make illegal kickbacks from Medicaid providers to patients who come into theiroffice or clinic, and their agents (so-called flyer boys) a felony.

Set strict guidelines for interaction between the MFCU and the Office of theMedicaid Inspector General (OMIG) so that there is maximum inter-agencyefficiency.

Expand the use of sting operations to proactively investigate fraud by creating afield team unit within the MFCU to crack down on providers breaking the law.

Audit major providers frequently. Individual providers make up a much smallerpercentage of fraudulent acts than hospitals and managed care providers, and theyshould be evaluated regularly.

4) Put the brakes on auto insurance fraud. Fraud in New Yorks no-fault auto insurancesystem is a pervasive and expensive problem. The staggering cost of false medical and

accident claims are passed on to consumers, essentially adding a 50 perent surcharge tothe average New Yorkers policy over the U.S. average. In New York City, thepremiums are nearly four times the national rate.

Normally, county DAs work with the Insurance Frauds Bureau of the state InsuranceDepartment on prosecution of auto insurance fraudhowever, the OAG can also getinvolved if the fraud is pervasive, or across multiple jurisdictions. Dedicated personnelfrom the OAGs Consumer Frauds Bureau should initiate a Compstat-like approach totracking insurance fraud statewide in an attempt to reconstruct the many players involvedin the fraud rings. The new unit could also act as a liaison with the various federal, state,and local agencies that are involved in anti-fraud efforts, such as the FBI, local DAs, andthe Insurance Department.

As further deterrent, this OAG Auto Unit could also coordinate with state medicalboards to publicize the penalties for certified medical practitioners who engage in fraud.While many involved in the crime rings are likely to be career criminals, the medicalprofessionals essential to filing the false claims are already engaged in a potentiallyprofitable, and legal, profession and could therefore be more susceptible to scrutiny.

Finally, the next AG must also push strongly to make runners the scam artists whosolicit accident victims in order to defraud insurance companies Class E felons, and topass Alices Law, which would also make staging an accident a felony. The legislaturehas had both bills on their dockets for some time, yet have failed to make them law.

5) Block cell phone bill shock. Its called bill shock when wireless companiescharge huge penalties to customers that unknowingly go over their monthly data, voice,or texting limits and, if you have a cell phone, youve probably been a victim. At atime when most New Yorkers are scraping together the cash to pay for just the basics, itis unconscionable that utilities would so blatantly gouge their customers.


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Providers of wireless coverage in New York should end this practice of over-billingimmediately or set up instant warning systems when consumers are approaching theirlimits, similar to the alerts issued to credit card users at the point-of-sale. If the telecomgiants dont do whats right, the OAG can go after them for possible fraud andmisleading contracts.

Documents

Rice-Consumer Protection Agenda