If Florida legislators needed any further evidence this spring that they must stop out-of-control fraud and litigation in the state’s Personal Injury Protection (PIP) auto insurance system, they now have all the proof they need.
Two recent missives – one from Florida Chief Financial Officer Jeff Atwater and another from Florida Insurance Commissioner Kevin McCarty – offer a jaw-dropping look at a PIP system that is costing consumers dearly and is in desperate need of an immediate legislative fix.
In short: Good and honest Florida drivers are seeing their PIP premiums double due to the billions of dollars being milked out of the system by fraudulent medical clinics and unscrupulous plaintiff’s attorneys, and statewide PIP claims and insurer payouts are surging skyward – all while the number of vehicle crashes in Florida is actually going down.
In an April 14 letter to the Senate and House leaders who will ultimately decide the fate of good PIP reform bills working their way through the Legislature this session, Atwater said he has documented “staggering increases in auto insurance premiums in Florida” which he believes “correlates directly to the PIP fraud epidemic spreading throughout our state.”
Atwater found that in areas of Florida where PIP fraud referrals are the highest, average PIP premiums have nearly doubled in two years, “even for Florida drivers with impeccable driving records.” In South Florida and the Tampa Bay area, average PIP premiums rose nearly 100 percent. In Orlando, Fort Myers, Jacksonville and the Panhandle, PIP premiums have jumped as much as 80 percent.
This is the reality of the estimated $1.5 billion “fraud tax” that all Florida drivers are paying annually – when criminals stage accidents and auto insurers are billed for unnecessary medical procedures, consumers pay more because insurers must spread these costs across all their policyholders.
Meanwhile, Commissioner McCarty’s office surveyed Florida’s auto insurers and found that between 2006 and 2010, closed PIP claims rose 40 percent and payouts by insurers rose 66 percent, totaling $8.7 billion. Between 2008 and 2010 alone, the average number of medical procedures associated with PIP claims that were billed by medical clinics rose 173 percent.
This surge in PIP claims, medical procedures and payouts comes despite the fact that the Florida Highway Patrol reports there were 33,000 fewer traffic crashes in Florida between 2005 and 2009, even though there were two percent more insured drivers.
The message is clear – the current PIP claims system is a gravy train for fraudsters, for thousands of questionable medical clinics that have popped up across Florida’s landscape, and for the plaintiff’s lawyers who are incentivized to file lawsuits over PIP claims because the current law allows them to increase their fees by 250 percent in PIP cases.
Florida can fix this. There are good PIP reforms bills in the Senate and House this spring that deserve passage in the Legislature and Governor Rick Scott’s signature. These bills are pro-consumer, pro-rate payer, and pro-taxpayer.
Senate Bill 1930 and House Bill 1411 would crack down on staged accidents and medical clinic fraud. Senate Bill 1694 and House Bill 967 would eliminate the attorney “fee multiplier” in PIP cases and ensure that lawyers don’t receive more in legal fees than motorists receive in medical benefits in PIP claims. Think about it: If an injured driver or passenger receives $10,000 in PIP medical benefits under an auto insurance policy, why should a plaintiff’s lawyer get $90,000 in legal fees in the same case?
The Florida Legislature has all the evidence it needs that the well-intentioned PIP system is broken and in need of repair. It’s time to act for the good of Florida’s consumers.
Steve Pociask is president of the American Consumer Institute Center for Citizen Research, a 501c3 educational and research institute. For more information, visit www.aciflorida.org.