Florida Tries to Fix PIP Insurance

Perhaps it is about time.  Numerous state officials, including Governor Rick Scott, have jumped on the “let’s reform personal-injury-protection (PIP) insurance” bandwagon for 2012.

According to Tampa Bay Online, insurance industry officials and investigators and those lawmakers want to try and fix the system by enacting measures to stop the fraud, which includes hiring more prosecutors and closing loopholes in licensing. Scott has also said that he would like to make the coverage optional.

After being hurt in a motor-vehicle accident, or from walking or bicycling, PIP provides insurance coverage for injuries, lost income and other benefits, with the limit in Florida being $10,000.

While the laws were put into place for good reason – to ensure that medical bills are taken care of in a timely manner and without litigation –the system has spawned a widespread fraud outbreak.

One investigator acknowledged to us recently that it has become a gigantic racketeering operation that costs hundreds of millions of dollars a year — fraught with staged accidents and willing participants, including passengers, clinic operators and others. It has gotten so bad that, often, the first duty of law enforcement officers responding to reported crashes is to determine whether they were set up.

With the epicenter of all this organized crime being Tampa, the Hillsborough County Commission has adopted an ordinance that includes licensing and other requirements in their attempt to combat this threat.

The motorists are the ones paying for all this. Insurance industry officials say the average “fraud tax,” as it’s called, on Florida drivers was $48.62 per vehicle last year. That means a family with two cars paid nearly $100.

If the Legislature doesn’t address the widespread fraud, the industry says, the cost could soon increase to nearly $84 per vehicle a year.

Florida drivers are paying $549 million for PIP fraud every year. If no changes are made, the fraud tax is expected to rise to $946 million statewide.

The general picture of PIP fraud is this: Even though the numbers of Florida drivers in crashes has stayed relatively the same, PIP payments and lawsuits have increased by 70% in the last three years.

In the last legislative session, PIP reform was on the agenda, but it fell to the wayside due to pressure from trial lawyers and medical providers. But already this year, key officials are planning to have another go at the issue.

And of course, fraud has to be forced out first before other reforms can be enacted.

Among other things, it is mandated that clinics have a physician on the premises and permit county inspections. Investigators state that it’s not unusual for some clinic employees to never see the doctor in charge. It is also listed that any PIP medical provider must obtain a county license. And the county can deny that license application or revoke a license on several grounds, such as false statements in applications or the arrest of any staff member on fraud charges “related to the operation of the clinic.”

These measures should help prevent scam artists from setting up bogus storefronts or P.O. boxes to continue the fraud, and also take care of those that are already in violation.