Florida’s auto accident personal injury protection coverage was established in 1970 with the goal of reducing exploitation. Unfortunately it has recently been plagued by fraud and staged car accidents. Lawmakers in Tallahassee are revisiting the law, looking for ways to eliminate the fraud and reduce consumer costs. Consequently, the Gear Up Florida campaign, a group of insurance companies, the Florida Sheriff’s Association and Associated Industries of Florida is calling for reform of the PIP system. According to Florida Today, they argue it is not only the rampant fraud that makes PIP insurance so costly; it is also “frivolous lawsuits.”
Of course, the insurance industry never really defines what they mean by frivolous lawsuit. They use the term to exaggerate the problem so they can scare people into getting what they want. It works so well because there are some frivolous lawsuits. But if you were able to pin them down on a definition, you would see that their definition of frivolous is any claim they have to pay.
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The truth is the real problem with PIP is not frivolous lawsuits. You can see this clearly when you look at the statistics. For example, the insurance industry points to the fact that there has been an increase in lawsuits filed in Tampa and South Florida. However, they fail to point out that there has also been a large increase in the population. When you take into account the population increase, it is clear that the overall rate of auto accident lawsuits per capita has remained flat in most parts of Florida.
The real problem with the system is fraud and not frivolous lawsuits. Fraud comes in the form of overbilling, billing for services that are not needed, and staged car accidents. Some claim that the Tampa area and South Florida are known for insurance fraud and a high rate of staged car accidents. According to Florida’s Chief Financial Officer Jeff Atwater, “Our state’s auto insurance system has been overtaken by a circling pool of piranha fraud clinics, lawyer referral services and organized crime.” While he may be right, that does not mean the solution should punish the people that have legitimate claims or the good medical doctors and good personal injury attorneys that are trying to help them.
Many options are being considered to tackle the problems with PIP insurance. Option one is championed by the business coalition. This option allows insurance companies to take more time to investigate “suspicious claims” rather than requiring them to pay promptly and in good faith. It also limits attorney’s fees and gives insurance companies power to try and ensure clinics and doctors’ offices are legitimate. This option gives insurance companies too much power because it will give them leverage to deny legitimate claims by categorizing them as “ suspicious.” It will also limit the patient’s ability to challenge the insurance companies decision because the limit on attorney’s fees will make it unprofitable for a lawyer to help the patient. Lastly, it will give the insurance company too much control over what doctors a patient is allowed to treat with.
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The Justice Association supports option two. This would require police officers to do more investigation at crash scenes and fill out more paper work to classify how severe car accidents are. So-called PIP clinics run by massage therapists would not be permitted except with the same oversight of most non-doctor facilities. Finally, health-care providers that report fraud would be afforded whistleblower protection. While this option eliminates the problems with consolidating too much power in the hands of the insurance companies, it may drain limited public funds by placing such a high demand on the states already financially strapped law enforcement system. In addition, it is unclear that in the end it will do much to address the fraud problems.
The best option may very well be to abolish PIP altogether and replace it with a mandatory bodily injury requirement. Under this option, the injured party would have to prove the other person involved in the collision was at fault to obtain payments from the mandatory bodily injury provision. Without the personal injury protection money from which to draw, the fraud incentive disappears. Those that would defraud the system will leave Florida. Since the excess fraud cost would be gone, the cost of the mandatory bodily injury insurance would be far cheaper than the cost of PIP insurance. Not only will this reduce costs it would make it less profitable to stage car accidents.