February 17, 2012 – 12:01am
As part of the no-fault law enacted in the early 1970s, the PIP requirement was designed to pay up to $10,000 for timely emergency treatment for injured motorists.
But what has evolved includes staged accidents organized by fraudsters who conspire with cooperating clinics, physicians, chiropractors, massage therapists and unscrupulous lawyers to bleed the system with needless treatments and spurious lawsuits.
The fraud-related costs totaled $1.3 billion between 2009 and 2011, according to estimates by the Insurance Information Institute.
The numbers are startling:
– Lawsuits have increased from 9 per 100 crashes in 2008 to 39 per 100 crashes in 2011.
– Since 2007, the average paid PIP loss per car has increased by 44 percent.
– Staged accidents increased from 1,268 in 2008 to 2,779 in 2010, an increase of 119 percent.
Florida leads the nation in the number of questionable PIP claims, twice as many as the next highest state.
With an average premium of $1,055 for auto insurance, Florida is now the third-most expensive state, having recently surpassed New York, according to industry reports. It could easily become the most expensive in the country unless something is done to address PIP fraud.
Both the number and the severity of PIP claims continue to increase. The average cost per claim is now $8,600, which is 48 percent higher than just three years ago.
The results are predictable: While the number of auto accidents has declined in the last three years, total insurance payouts for PIP benefits are up 69 percent, increasing from $1.45 billion in 2008 to $2.45 billion in 2010.
Insurance rates are skyrocketing, becoming unaffordable for many and leaving more and more uninsured motorists on state highways.
Hillsborough shows the way
It is shameful that the Legislature has not dealt with this problem, but one county has demonstrated how effective reform can be.
After the Legislature failed to address PIP fraud last year, officials in Hillsborough County passed an ordinance requiring so-called PIP clinics to register and be monitored, and set up a local law enforcement task force to address fraud.
The result was a 62 percent drop in staged accidents from 2010 to 2011. Within a month of the ordinance’s passage, 79 clinics closed.
The number of questionable insurance claims in the county dropped to nearly zero.
Coming this way
Auto insurance fraud is most dominant in South and Central Florida, but PIP fraud activity, including staged accidents, has picked up substantially in Northeast Florida, according to state insurance officials.
The Jacksonville Field Office of the state Division of Insurance Fraud, which has five detectives, is now investigating several area PIP clinics as well as handling fraud case referrals, which increased by more than 40 percent in the last year.
In the Legislature, compromise seems likely for Senate and House bills to address the fraud.
The Senate bill, proposed by Sen. Joe Negron, R-Stuart, would close loopholes that allow unlicensed clinics to operate, improve accident reporting, exclude massage and acupuncture treatments from PIP reimbursement, create a strike force to support investigation and prevention of fraud, and impose harsher penalties on those convicted of PIP fraud.
A House bill would cap attorney fees, in an attempt to counter the ubiquitous lawyer referral services, and require that accident victims relying on PIP coverage be treated only in hospital emergency rooms.
Until the Legislature acts, be careful out there on the highways. On top of the usual perils in traffic, Florida motorists must be concerned with scam artists who deliberately cause crashes and injure other drivers in order to make big bucks.
The Legislature can curtail this fraud — and must.