Florida’s mandatory automobile insurance no-fault law is beset by runaway personal injury protection (PIP) costs — including the nation’s highest incidence of staged accidents and nearly $1 billion in automobile insurance fraud.  

On March 9, 2012, a bill was passed in the Florida House and Senate to reform PIP and reduce fraud.  The bill is intended to rein in the cottage industry of trial attorneys and corrupt medical clinics, and create new fraud-fighting tools and reduce costs, while passing the cost-savings along to consumers in the form of lower rates.  In fact, the legislation prescribes that PIP insurers make rate reductions of 10% by October 1, 2012 and 25% by January 1, 2014, or provide a detailed explanation if insurers fail to provide these full reductions.

 It all sounds good, but lower prices first require less fraud, which raises two challenges for policymakers to consider.  First, the bill does not take effect until July 1, 2012, providing little opportunity for cost-savings to occur and for consumers to see lower rates by October 1st.  The promise of lower rates, while sounding Charlie Crist-like, provides an unrealistic goal that may doom the bill’s success.  That would be unfortunate for consumers.

Second, the cottage industry of trial attorneys, medical clinics and fraudsters that feed on PIP dollars may already be looking to exploit loopholes in the new law, according to recent news articles.  For example, one Tampa medical staffing company has offered to send doctors to chiropractors’ offices to sign forms and get more insurance dollars, stating:

“Chiropractors: Don’t miss out on your $7,500.00!  We have the medical doctors you need now! …The full $10,000 PIP medical benefit is available only if a physician, osteopathic physician, dentist, or supervised physician’s assistant or advanced registered nurse practitioner determines that the insured has an emergency medical condition. Otherwise, the PIP medical benefit is limited to $2,500…..Our physicians will do assessments, fill out and sign forms that state the insured has an emergency medical condition.” 

This kind of action appears to undermine the cost-saving provisions in the new bill.  One thing is certain – higher industry costs from fraud and lower consumer prices cannot happen at the same time. 

As the head of an organization that fights for consumers, I applaud Governor Scott, Chief Financial Officer Jeff Atwater and legislators for taking bold steps to fix the state’s historically problematic no-fault auto insurance system.  Now is the time for vigilance. 

Let’s reduce the fraud today, so that consumers can see the benefits tomorrow.

Steve Pociask is President of the American Consumer Institute Center for Citizen Research, a consumer educational and research nonprofit institute

Published in the Tallahassee Democrat on 4/20/2012