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Should Florida Change its No-fault Auto Insurance Law?
Rich Bard's picture
Rich Bard
Facilitator
There seems to be broad agreement that Florida’s no-fault auto insurance law, called PIP, or personal injury protection, needs to be amended or better enforced to counter fraud. But various interests disagree over specific changes. Our roundtable includes four perspectives – from Florida’s insurance consumer advocate, an attorney representing insurance interests, and spokespersons for the Florida Medical Association and the Florida Justice Association.
Robin S. Westcott
Florida's insurance consumer advocate
The skyrocketing cost of auto insurance and its impact on Floridians already struggling in this down economy prompted me to review and gather data on Florida’s no-fault auto insurance system.
 
Chief Financial Officer Jeff Atwater appointed me to serve as Florida’s insurance consumer advocate in July to be the watchdog for consumers and to ensure Floridians are protected from fraud and abuse. I am doing just that.
 
Based on the data I have gathered, it is impossible to deny that Florida has a continued and escalating problem with Personal Injury Protection (PIP) fraud.  The fact is, over the past five years there have been fewer auto accidents and our population has remained relatively stable, yet the number of PIP claims filed has risen dramatically.  In the past two years, fraud and abuse have infiltrated this coverage so much so that the initial value of such a system is, at best, diluted and now threatens to be unreasonably expensive for Floridians.  We are now at a crossroads as to whether the climbing costs outweigh the benefits to consumers.
 
My report to the Florida Legislature speaks to the fact that Florida’s consumers are required to purchase coverage that they can no longer afford.  PIP was designed to help avoid the court system and promote personal responsibility for those who operate motor vehicles in our state.  It is far off course.  Conservative estimates say that the cost of PIP will double every three years at the current pace, all to pay for coverage under which the most frequent medical procedure is massage therapy.
 
My goal is to provide the most accurate information and data that can be used to shape the policy debate surrounding PIP. During the 2012 legislative session, I urge policymakers to consider the policy reforms in the following areas based on data I have reviewed and compiled:
 
Providers and Venue: The majority of PIP claims originate from a chiropractor, acupuncturist or massage therapist and those services are provided at a clinic rather than a doctor’s office or hospital.
 
Over-Utilization: In the five hardest-hit counties, the average cost per claimant has increased by 91.3 percent over the past five years.
Electronic Claims Filing: A modernized claims filing system would allow law enforcement to identify and track potential fraud.
 
Litigation Costs: Through August 2011, there were 46,842 lawsuits filed. Records indicate a steady increase per month, beginning in 2009, in the number of lawsuits filed -- with almost 9,215 lawsuits filed in August 2011 alone.
On behalf of the consumers of this state, I believe PIP must change and it must change drastically.  It’s time to get consumers back to the intended benefit at a reasonable price.  I am confident that our policymakers will be successful and, when they are, I will be there to make certain that insurance companies respond with lower rates for Florida’s consumers.
 
Robin S. Westcott was appointed by Florida Chief Financial Officer Jeff Atwater as the state’s insurance consumer advocate in July.
Jeffery M. Scott
General Counsel of the Florida Medical Association
Every Florida driver is required to obtain a minimum of $10,000 in Personal Injury Protection (PIP) insurance coverage to ensure that injured motorists receive medical care without waiting for costly and lengthy litigation to determine fault. Unfortunately, opponents of this system, including insurance companies, are using fraud as a pretext to get unfair advantages over patients who need care and the physicians who provide that care. 
 
The Florida Medical Association agrees that fraud is a major problem in the PIP system. A perfect example: Compare the difference between the actual six-month PIP premium quotes for Tallahassee and Hialeah. According to Florida’s Office of Insurance Regulation, the PIP premium per $1,000 in coverage for Tallahassee is $17, while in Hialeah the cost is $85.  Remember, the PIP system is the same in both places: the insurance companies, those insured, attorneys and healthcare providers are all operating under the same rules and regulations.  So why is coverage so much more expensive in Hialeah?  The likely reason is fraud and abuse, from staged accidents to “PIP mills” that exist solely to collect the $10,000 in benefits without providing medically necessary care. 
 
While the PIP system has been subject to fraud and abuse like other government-mandated insurance programs such as Medicare, Medicaid or Worker’s Compensation, that does not mean the system itself is irretrievably broken.  
 
Moreover, the Florida Medical Association (FMA) does not agree with those who would “solve” the fraud problem by imposing burdensome new requirements on the legitimate physicians who treat auto accident patients. We do not agree with efforts to allow the automobile insurance companies to dictate the practice of medicine. Instead, the FMA believes any PIP legislation should focus on giving law enforcement and the Department of Health the resources and tools they need to stop the fraud. Florida should put lawbreakers behind bars and revoke the licenses of the healthcare providers who participate in schemes to defraud the PIP system.  
 
Unfortunately, many of the proposed solutions introduced in the Florida Legislature would do little to stop the fraudulent activity. Instead, they would place additional regulatory burdens on the physicians who treat the injuries and save the lives of auto accident victims.  Onerous new registration requirements, combined with provisions that eliminate the ability to hold insurance companies accountable for wrongfully denying benefits, will serve only to drive legitimate physicians out of the PIP system.  
 
Staged car accidents are illegal.  Failing to properly register as a healthcare clinic is illegal.  Billing insurance companies for care that was not provided or that was not medically necessary is illegal.
 
The solution to stopping PIP fraud is not to make illegal conduct more illegal.  The FMA believes that if we focus on more effectively targeting and punishing those who break the laws, we’ll restore order to the PIP system.  Only then will PIP rates in places like Hialeah start to resemble the rates in Tallahassee.  
 
Jeffrey M. Scott is general counsel of the Florida Medical Association in Tallahassee.
Katherine S. Webb
Partner with the law firm of Colodny, Fass, Talenfeld, Karlinsky & Abate in Tallahassee
It is critical for the Florida Legislature to pass comprehensive and meaningful Personal Injury Protection (PIP) reform during 2012. PIP, in its current state, is rife with fraud and abuse, and Florida drivers are paying the price. 
 
A data call conducted by the Florida Office of Insurance Regulation (OIR) and a subsequent report by the insurance consumer advocate indicate two things: PIP fraud is exploding, and abuse is rampant.  The consumer advocate found that while the number of licensed Florida drivers decreased from January 2008 to January 2011, the number of PIP claims increased by around 50 percent. 
 
Were there that many more accidents? No. Unscrupulous medical providers and attorneys overbilled for treatment or outright faked records.  Some people staged accidents and faked injuries. 
 
Meanwhile, some attorneys used the legal system to pocket six-figure fees while collecting pennies for their clients. Data indicates that PIP-related lawsuits more than doubled between 2008 and 2010. 
 
The explosion in claims and litigation has raised PIP premiums for everyone, including honest consumers.  Because coverage is mandatory, the Legislature has a duty to stymie the rising cost to all drivers. Here’s what lawmakers can do:
 
Limit reimbursable benefits. Because PIP care is not managed like other forms of healthcare insurance, the Legislature should specify that PIP should not be used to pay for luxurious treatments and should limit treatments with limited medical value. 
 
Curb lawsuits. Over the years, a cottage industry of lawyers has found ways to manufacture PIP litigation. Because the insurance code has a one-way provision for PIP attorneys’ fees, lawyers have financial incentives to sue insurers for insignificant sums in order to bill at rates of $300 an hour and more. The Legislature should limit fee awards. 
 
Punish unscrupulous doctors and clinics. The current PIP system rewards healthcare providers for billing the maximum $10,000 benefit, whether or not treatment is needed. The Legislature should establish oversight and enforcement mechanisms that would revoke the licenses of providers that commit fraud and prevent them from reopening under different corporate names. 
 
Reform the claims process. The courts have handicapped fraud investigations by taking away important tools such as examinations under oath (EUOs) and independent medical examinations (IMEs). The Legislature should reinstate them and give insurance companies additional time to investigate suspicious claims.
 
Katherine S. Webb is a partner in the Tallahassee office of the law firm of Colodny, Fass, Talenfeld, Karlinsky & Abate, P.A. Her clients include the Property Casualty Insurers’ Association of America, for which she works for the Florida Gear Up Coalition.
Paul Jess
Deputy Executive Director and General Counsel of the Florida Justice Association

The insurance companies are at it again.  At the same time they are filling the airwaves with promises of cheaper auto insurance, they are trying to sell a “bait and switch” to the public and the Florida Legislature. 

Their latest claim is that fraud in Personal Injury Protection (PIP) auto insurance is driving up your rates.  Their solution:  proposals to allow them to delay and deny legitimate claims by honest injured motorists and their healthcare providers.
 
There is a problem with organized criminals staging accidents and clinics billing for services not rendered – especially in Tampa and South Florida.  In South Florida, the state has provided additional resources for a dedicated fraud prosecutor, which has significantly reduced the problem.  We should take this statewide.  We also must force all PIP clinics to be licensed and subject to inspection.  Many consumer groups and legislators support these reforms – but NOT the insurance companies.
 
Another proposal would get rid of PIP altogether and replace it with a combination of mandatory bodily injury liability insurance (MBI) plus medical payments coverage.  Supporters point out that 48 of the 50 states have MBI, which requires the at-fault driver’s insurance company to pay the medical bills and lost wages of the injured people not at fault.  A fault-based liability system provides a check and balance and can better ferret out fraudulent claims.  Yet the insurance companies don’t support this proposal either.
 
So with the fraud bogeyman as the “bait,” what are the insurance companies proposing?  Their proposals would “switch” from fighting fraud to “lowering costs.”  They want to limit the attorney’s fees for injured people and their doctors who have to sue the insurance company just to get a legitimate claim paid. They want to deny claims unless doctors sit for “examinations under oath.” And they want to force injured people to go to insurance company doctors to get any benefits.
 
If successful in pushing these proposals, the insurance companies will increase their profit potential by knocking the teeth out of consumer protections.  Consumers will be forced to buy coverage they can’t count on, and medical providers will accept fewer auto accident patients.   I say fight PIP fraud or get rid of PIP, but don’t let insurance companies cheat you out of the PIP benefits you pay for.
 
Paul Jess is deputy executive director and general counsel for the Florida Justice Association in Tallahassee.

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FloridaVoices User Comments

beverly - Thu, 2011-12-29 11:19.

This has all been very enlightening. I did not realize the fraud was that bad, especially in comparison with other counties in the State. I think its time the Florida Legislature pass PIP reform ASAP. There are many good options proposed, MBI is an already proven alternative which 48 of 50 states have.

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