Gov. Kathy Hochul is using federal indictments against a close associate of former Mayor Eric Adams to bolster her push for auto insurance reforms, arguing the alleged fraud scheme demonstrates why her proposals are needed.

The Southern District of New York dropped a superseding indictment this week targeting Zhan "Johnny" Petrosyants, who hobnobbed and dined with the former mayor during his tenure. The indictment also alleged businessmen Vladislav Stoyanovsky and Dmitriy Khavko participated in the scheme. All three men pleaded not guilty.

Prosecutors claim the men directed car crash victims to undergo dubious medical procedures at clinics, billed insurers for treatments that never occurred, and filed no-fault claims required by state law to be paid within 30 days. The scheme brought in tens of millions of dollars, prosecutors said.

Hochul's office says the alleged scheme is exactly the type of fraud her auto insurance reforms are designed to curb. Her proposals would give insurers more time to investigate suspected fraudulent claims and strengthen enforcement against fraud networks.

What the Right Is Saying

Assembly Speaker Carl Heastie has expressed reservations about Hochul's proposal to limit pain-and-suffering damages for crash victims deemed at fault for collisions. "If, God forbid, you are the majority reason that there's an accident, you will no longer be entitled to pain and suffering," Heastie told reporters. "That's a pretty serious thing for people to accept. I mean, accidents do happen."

Republicans and business groups have generally supported Hochul's efforts to address insurance costs, arguing that fraud drives up premiums for all drivers. The governor's office contends that cracking down on fraudulent claims is essential to making auto insurance affordable in New York.

What the Left Is Saying

Progressives and consumer advocates have raised concerns about Hochul's approach to auto insurance reform. The Trial Lawyers Association has been a vocal opponent, arguing that the governor's proposals would give insurance companies excessive power to delay and deny legitimate 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.

Some progressive lawmakers have also been skeptical of tying the fraud indictments to broader policy changes, noting that the alleged scheme involves criminal activity that existing laws already prohibit.

What the Numbers Show

The alleged fraud scheme comes amid rising concerns about auto insurance costs in New York. Last year, insurance carriers reported 43,811 incidents of suspected auto insurance fraud to regulators, an 80 percent jump compared to 2020.

New York has among the highest auto insurance premiums in the nation. Under current state law, insurers must pay no-fault claims within 30 days or face penalties, a requirement that critics say limits their ability to investigate suspicious claims.

Hochul's budget proposal includes giving insurers more time to investigate claims before payment is due, while requiring them to pay interest on delayed payouts. Her office estimates the changes could reduce premiums if fraud is curtailed.

The Bottom Line

Hochul's timing in connecting her auto insurance reforms to the Adams associate indictment is strategic, as she seeks to break a deadlock in budget negotiations with the Assembly and Senate. The governor's office argues her proposals would have made the alleged fraud more difficult to execute, though critics note that criminal activity already violates existing law.

The challenge for Hochul will be convincing skeptical lawmakers — particularly Assembly Democrats led by Heastie — that her reforms balance consumer protections with addressing fraud. The Trial Lawyers Association and progressive Democrats oppose what they see as giving insurers too much power to deny claims.

What's next: Budget negotiations continue with auto insurance reform remaining a key sticking point. The Assembly and Senate must decide whether Hochul's fraud-fighting arguments outweigh concerns about limiting damages for accident victims.