Fraudsters quick to find loopholes in new Florida PIP laws

by Matthew Glans on April 17, 2012

Efforts to combat auto insurance fraud in Florida took a positive step forward with the personal injury protection reform bill which recently passed through the state legislature and is now awaiting Gov. Rick Scott’s signature. Auto fraud has been a nagging problem for Florida consumers and insurance companies, as staged accident and unscrupulous doctors and medical clinics have led to skyrocketing claims costs under Florida’s no-fault system. Before the new bill, insurers were required to cover medical damages up to a limit of $10,000. The new reforms attempt to close many of the loopholes currently being exploited by fraudsters, including limiting claims for non-emergency injuries and new tighter requirements designed to rein in medical clinics that facilitate fraudulent claims.

Despite these efforts, and with the ink still dry on the new legislation that has yet to be signed by the governor, some medical providers in the state are already beginning to work on finding loopholes in the law.

In an article published in the Miami Herald, Steve Pociask of the American Consumer Institute discusses efforts by a Tampa medical provider to bypass the new caps on PIP coverage by sending staff to help chiropractic offices declare a patient’s injury as being under emergency conditions. This would allow the patient to claim PIP benefits at the former cap of $10,000 instead of $2,500 for non-emergency conditions.

“This kind of behavior, which appears to be an attempt to game the reform, could blow a gigantic hole into one of the key cost-saving provisions in the new PIP bill,” Pociask wrote.

Fraudulent claims lead to higher costs for insurers and higher premiums for policyholders. It is in the best interest of all parties involved to fight auto insurance fraud. Pociask argues that the new bill does take several positive steps toward achieving reductions in auto insurance fraud.

The bill has several good provisions to rein in bogus medical clinics, eliminate incentives for trial lawyers to sue and provide insurers and law enforcement officials with new fraud-fighting tools.

It actually requires auto insurers to reduce rates 10 percent by Oct. 1 and 25 percent by 2014 or provide a detailed explanation why they can’t. Insurers’ rates are driven by losses they sustain, and at this point, no one really knows yet whether the PIP reform bill will achieve its goal.

Pociask does, however, identify several issues with the legislation that could create problems in the future. The first issue is the loopholes in the law, some of which are already being discovered and exploited. Second, Pociask cautions legislators against expecting immediate rate reductions without giving the anti-fraud measures time to be effective.

As we’ve seen in the case of the Tampa medical staffing firm, the PIP cottage industry will undoubtedly seek loopholes in the reform bill to keep medical billings high.

Trial lawyers may be undeterred by a part of the bill that prevents them from increasing their fees by 250 percent. And many of the bill’s key provisions don’t kick in until 2013 – months after the Legislature’s first deadline for insurers to lower rates.

If PIP reform is a success, medical and litigation costs should come down and consumers should receive the full benefit of lower rates. But elected leaders and regulators must be careful not to expect lower rates without clear evidence that the bill is reducing costs from fraud. In fact, prematurely pressuring rates could destabilize the auto insurance market that policymakers are trying to fix and ultimately harm the consumers they are trying to help.

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  • Richard Parillo

    You guys are wrong.u00a0 A chiro is not qualified to make a determination of an EMC.u00a0 That is the new law.u00a0 They must find MDs or DOs to make this determination. It is NOT fraud for an MD or DO to offer this service.u00a0 Similarly, pip insurers use MD and DOs to cut off care.u00a0 It’s the same thing.u00a0 Thanks to Rick Scott, CFO Atwater, and Boyd for increasing all our pip insurance.u00a0 Rates will never come down.u00a0 For the same premiums we pay now we get $2500 in benefits and not $10,000 and we cannot get some of the therapy.u00a0

  • Pheringart

    why would it be fair for chiroprators who in most instances been considered doctors to be excluded from full pip participation and licensed massage therapists.nnWhat happens next, if the neurologist dont have a lobby do that get excludednnAnd then what comes next.nnThis law is insane and it will not result in lower premiums and I applaud anyone who finds loop holes to help injured people in accidents get care

  • Florida driver

    Since 2006, I have been the victim of two minor crashes where the $10,000 of PIP benefits took care of the treatment by my chiropractor. I did not make a third party claim against the at-fault person. That is the way PIP is supposed to work; you have a threshold of $10,000 before you can file a lawsuit. I was not injured to the extent that I required emergency room treatment. I did not sustain an emergency medical condition. However, my treatment by the licensed massage therapist was essential to my recovery because she found the precise areas of connective tissue that caused the pain. The new law will adversely affect persons suffering the same kind of injuries because without a finding of an emergency medical condition, the maximum my PIP will pay is $2,500. The massage therapist services will no longer be payable. Moreover, the threshold of $10,000 is still in the law. Somehow something is not Constitutional here considering drivers, through the Legislature, gave up the right to file a lawsuit if their pain and suffering did not exceed $10,000. Sen. Negron was horribly misadvised as to the intent of what PIP is supposed to cover.u00a0 He was quoted saying that its original character was emergency treatment to get you back on your feet.u00a0 This gross misunderstanding contradicts that PIP used to pay for spiritual healing before 2008. The issue of rampant fraud has never been proven. The only way to establish such an allegation is if the insurers release the total number of pip claims, the total pip claims of suspected fraud and the total number of claims with real fraud. Until that day comes, the noise coming from the insurers only seeks to limit the amount of treatment so they make larger profits.

  • Florida driver

    Since 2006, I have been the victim of two minor crashes where the $10,000 of PIP benefits took care of the treatment by my chiropractor. I did not make a third party claim against the at-fault person. That is the way PIP is supposed to work; you have a threshold of $10,000 before you can file a lawsuit. I was not injured to the extent that I required emergency room treatment. I did not sustain an emergency medical condition. However, my treatment by the licensed massage therapist was essential to my recovery because she found the precise areas of connective tissue that caused the pain. The new law will adversely affect persons suffering the same kind of injuries because without a finding of an emergency medical condition, the maximum my PIP will pay is $2,500. The massage therapist services will no longer be payable. Moreover, the threshold of $10,000 is still in the law. Somehow something is not Constitutional here considering drivers, through the Legislature, gave up the right to file a lawsuit if their pain and suffering did not exceed $10,000. Sen. Negron was horribly misadvised as to the intent of what PIP is supposed to cover.u00a0 He was quoted saying that its original character was emergency treatment to get you back on your feet.u00a0 This gross misunderstanding contradicts that PIP used to pay for spiritual healing before 2008. The issue of rampant fraud has never been proven. The only way to establish such an allegation is if the insurers release the total number of pip claims, the total pip claims of suspected fraud and the total number of claims with real fraud. Until that day comes, the noise coming from the insurers only seeks to limit the amount of treatment so they make larger profits.

  • Justin

    The real fraud is our criminal governor, Rick Scott

  • http://autoinsurancepress.com/2012/04/rick-scotts-pip-dream-comes-true-huffington-post-blog/ Rick Scott’s “PIP Dream” Comes True – Huffington Post (blog) | Auto Insurance Press

    [...] issues plaguing Florida …Steve Pociask: What goes up must …Tallahassee Democrat (blog)Fraudsters quick to find loopholes in new Florida PIP lawsOut Of The Storm News (blog)all 2 news [...]

  • http://www.trufortebusinessgroup.com/ Florida Business for Sale

    This is seems to good action against theu00a0Auto fraud. But we need to change theu00a0governoru00a0as well.

  • http://commercialautoinsuranceco.com/governor-rick-scotts-dream-for-pip-reforms-on-the-verge-of-reality/ Governor Rick Scott’s dream for PIP reforms on the verge of reality

    [...] Since 2006, I have been the victim of two minor crashes where the $10,000 of PIP benefits took care of the treatment by my chiropractor. I did not make a third party claim against the at-fault person. That is the way PIP is supposed to work; you have a threshold of $10,000 before you can file a lawsuit. I was not injured to the extent that I required emergency room treatment. I did not sustain an emergency medical condition. However, my treatment by the licensed massage therapist was essential to my recovery because she found the precise areas of connective tissue that caused the pain. The new law will adversely affect persons suffering the same kind of injuries because without a finding of an emergency medical condition, the maximum my PIP will pay is $2,500. The massage therapist services will no longer be payable. Moreover, the threshold of $10,000 is still in the law. Somehow something is not Constitutional here considering drivers, through the Legislature, gave up the right to file a lawsuit if their pain and suffering did not exceed $10,000. Sen. Negron was horribly misadvised as to the intent of what PIP is supposed to cover.u00a0 He was quoted saying that its original character was emergency treatment to get you back on your feet.u00a0 This gross misunderstanding contradicts that PIP used to pay for spiritual healing before 2008. The issue of rampant fraud has never been proven. The only way to establish such an allegation is if the insurers release the total number of pip claims, the total pip claims of suspected fraud and the total number of claims with real fraud. Until that day comes, the noise coming from the insurers only seeks to limit the amount of treatment so they make larger profits.Source: outofthestormnews.com [...]

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