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Lawmakers to tackle PIP fraud in upcoming session

By Tom Flanigan


Tallahassee, FL – Every Floridian who drives a car could be affected by the actions of the Florida Legislature during the 2012 session that begins in January. Tom Flanigan reports lawmakers have already begun struggling with the unintended consequences of an auto insurance law that's marking its fortieth anniversary

Robin Westcott in the office of Florida Chief Financial Officer Jeff Atwater, says the state's "no-fault" auto insurance law was passed in 1971 with the best of intentions.

"That law was enacted primarily to provide immediate relief and payment for injuries sustained in an automobile accident for economic loss. It was meant to also avoid litigation."

Before that law took effect, traffic crashes resulting in personal injury often descended into a legal tar pit. First, the party most at fault had to be determined. It was then up to that party's insurance to pay the medical bills of the other party. But lawsuits and counter-suits sometimes ensued. Badly injured victims could die while awaiting settlement. Westcott says the law has had undeniable benefits.

"It was meant to have this situation where there is this access to the money that can be immediately paid, people do not have to assign fault and do not have to go through our tort system to establish fault to be entitled to payment for the benefit."

That immediately accessible benefit was raised to ten-thousand dollars in 1979. Ten-thousand dollars may not seem like a lot of money today, but it's been tempting enough to attract fraudsters over the last forty years. In response, lawmakers have tightened up the basic law over time. The most recent change coming in 2007. But there's still a problem, Westcott told members of the House Insurance and Banking Subcommittee.

"The industry is reporting that they have many more additional claims coming in the last year or so, but that's unexplained by the fact that we have no more drivers than we always had and actually fewer crashes."

How many suspicious claims? The insurance industry says Florida now leads the nation in staged traffic crashes and questionable claims. Four of the top U-S hotspots for such claims - Tampa, Miami, Orlando and Hialeah - are in Florida. The explosion in fraud is having a real impact on the average driver. Florida car insurance customers now pay more than fifty percent more than the national average. And, in an effort to protect themselves, insurance companies are denying more claims than ever. Robin Westcott says that can include legitimate claims and that's when the lawsuits start flying.

"It doesn't matter whether it was the insurance company that denied the legitimate or it was the provider who submitted the inflated claim, we're gonna fight about it and we're gonna go to court. And that is exactly why the PIP system was created was to avoid just this situation."

Governor Scott and the Cabinet got an update during their November first meeting. About a week later, the governor was in Tampa, a major hotbed of auto insurance fraud. There he heard from consumers, investigators and insurance regulators. He viewed a surveillance camera video that showed an actual staged accident taking place. And the drumbeat to do something is getting louder on other fronts as well. There's a new coalition called "Gear Up Florida". In includes groups representing business, law enforcement, insurance companies and the medical community. It wants to see new legislation that would do four major things:

Allow a reasonable amount of time for investigators to probe suspicious claims. They want what they call "reasonable limits" on lawyers' fees. They'd like more oversight of clinics frequented by PIP claimants. There would also be some treatment restrictions for accident victims to prevent what the group calls "excessive and unnecessary" medical care.

The coalition's Steve Casey, who heads the Florida Sheriff's Association, says all this is needed because a staged crash is just the beginning of a trail of fraud that benefits several entities. Similar changes in the law are expected to be urged by the Florida Chamber of Commerce, which holds it annual insurance summit in Orlando the seventeenth and eighteenth of this month. Given the growing pressure from so many directions, it seems there are some changes on the way for the insurance carried by Florida's drivers.