The Reason For The Rise In Florida Auto Accident Insurance Fraud
Ed NormandJanuary 27, 2012 11:36 AM
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Fraud related to Florida auto accidents is a huge problem. The cause of the problem is well known: Florida's Personal Injury Protection Insurance (PIP) laws give an automatic $10,000.00 in medical care to each and every person involved in an auto accident in Florida, even if they are at fault. The idea behind PIP was well intended: if initial medical bills were covered without having to prove fault (No Fault) then litigation would decrease and the overall cost of auto claims to society would decrease. Like the best laid plans of mice and men this "No Fault" system too has gone awry. The reason: shady health care providers get an automatic check for $10,000.00 of auto accident related medical care whether it is needed or not. So medical providers can profit from all car accidents, even ones where the patient (or a car load full of them) are themselves at fault. They can then provide them with medical "treatment" and cash in at a tune of $10,000 per person. So there is a temptation to stage accidents or to give unneeded or excessive care for patients in real accidents until all the insurance is used up. They bill for $10,000 of treatment, whether the care is needed or not.
Here is how it works: lets say there is a collision with 6 people in the car. Even a minor impact collision. All 6 get $10,000.00 in PIP coverage. So if they all go to the same clinic and get the same treatment, pain medications, massages etc... the clinic can bill and collect for $60,000.00 worth of care. The clinics are also tied in with medical testing facilities like MRI centers and other peripheral medical providers. They do the treatment and testing so fast that before the insurance company can even figure out the problem, the testing and care is already at or close to the $10,000.00 insurance limits. Even the most minor accident or accidents where the patient is at fault can result in huge pay days to medical providers.
Believe it or not, personal injury lawyers and claimants are generally not the driving force behind the fraud. The same no fault law that gives $10,000.00 in medical care no matter how minor the accident also limits the claimant's rights and prevents the claimant from recovering unless there is a permanent injury. Of course, in a minor accident with shady care like numerous massages, it is hard to prove a permanent injury to a jury and there is never a recovery in a case where the claimant is at fault. The lawyer is paid on the settlement, the $10,000 in medical care billed under the PIP is excluded from the settlement, so these claims with no real injury are worth little to scrupulous and even unscrupulous lawyers and claimants. An examination of Florida Jury Verdict reports shows that insurers win most of these minor soft tissue cases with little or no proof of real injury. While there are some lawyers that make money on the PIP system from litigation of PIP claims and from working with clinics, the big winners are the clinics and medical testing companies that cash in on the $10,000.00 and the fraudulent patients who are paid to get the medical treatment.
Is it a coincidence that we now see many more ads for medical providers seeking auto accident cases? Not all the advertisers are frauds, many or most provide good care. But the law is such a temptation and it has attracted so many schemers that good health care providers get lumped in with the bad. Further, even honest doctors may tend to over treat because the insurance is there for the taking. If the money is there it will get used, that is just human nature. To make it worse for consumers and honest lawyers (insert lawyer joke here), many good doctors shy away from treating the injured auto accident patients because they are treated like frauds by the insurance industry. Even good doctors get subpoenas and challenges to bills and valid medical care because the fraudsters have tainted the whole pool. In addition, the PIP insurance laws have so many complicated piecemeal "fixes" to battle the fraud that regular physicians cannot deal with the huge paperwork and compliance regulations. Fraudsters can play the game, honest docs get stuck in the middle, and many just refuse auto cases even for good valid existing patients.
The fix is quite simple, follow what most States do: get rid of PIP and the no fault threshold and make Bodily Injury Liability coverage mandatory. In this way at fault drivers are held responsible for the injuries they cause. Medical care is provided under standard health insurance or is charged to the at fault party that caused the accident. The $10,000 automatic windfall is gone. Treatment that is needed is provided without the artificial pool of money attracting unnecessary care. None gets money when they are at fault, the at fault parties pay for what they cause including reimbursement to health insurers or Medicare/Medicaid from the payment by the at fault party. Consumers would also benefit because they would no longer be forced to pay for PIP insurance. That, I am afraid, is why the fix will not work. Insurers want to be able to charge for mandatory PIP premiums, they just do not want to pay the cost of the associated claims. For example, a young male driver may owe thousands in annual premiums for the mandatory PIP that pays only $10,000 in benefits, even if he already has health insurance and does not need the PIP coverage. Consumers pay way too much for PIP and insurers and medical providers do not want to lose that revenue. In the end it will be up to legislators to go above the special interests in the medical industry and insurance industry and do what is right for consumer-dump mandatory PIP insurance!