How Florida Lawmakers Are Addressing PIP Fraud

Jan 29, 2012

Florida’s no-fault insurance requirement is set to undergo major changes this legislative session.

Right now, Florida drivers are required to have $10,000 worth of personal injury protection, or PIP, for payout in a crash regardless of who is at fault.

But fraudsters have taken advantage of this system, and auto insurance rates are skyrocketing.

Florida is one of the most expensive states for car insurance, according to the Insurance Information Institute. A fender bender can cost an insurance company tens of thousands of dollars.

Walt Dartland was targeted in a staged accident years ago in Miami, but he says he knew immediately what was up. Dartland is a former deputy attorney general and is now executive director of the Consumer Federation of the Southeast.

“All of a sudden they just plain stopped, and because I was going so slow, I basically hardly touched them,” said Dartland. “They immediately got out of the car, and I tried to tell them we better call the police department and get a report on this. They said, ‘no, no, no, no.’ They pulled the car across the highway and walked right into a chiropractor’s office.”

The way this works is a clinic owner will recruit a group of people to stage a minor accident. No one is actually hurt, but the passengers go straight to the clinic. No treatment is given, and claims of ten-thousand dollars per person are filed under the driver’s PIP coverage. The money is split between the passengers, clinic operators and lawyers.

Florida’s No-Fault Law was supposed to cover economic losses and medical treatment for crash victims without the need for a lawsuit to establish who’s to blame. But in the last five years, the state has seen a 275 percent increase in PIP related lawsuits.

Gov. Rick Scott calls PIP fraud a billion dollar tax on Florida’s citizens. He addressed a rally at the Capitol.

“You are sick and tired of a billion dollars a year in fraud,” said Scott. “You’re tired of it. You’re tired of scammers taking advantage of you.”

Cydnee Knoth lives in Tampa and came to Tallahassee to complain about her premiums. 

“PIP is the biggest thing I pay for on my insurance, more than liability,” said Knoth. “I carry $100,000 worth of liability, and that is cheaper than carrying $10,000 of personal injury.”

Tampa and Miami are among the top 10 most expensive cities for car insurance because of staged accidents.

Chief Financial Officer Jeff Atwater says moving to one of those cities can increase your monthly insurance payment by $50 to $100.

“The average family in Miami Dade County with a teenage driver is now paying over $3,200 a year for the value of coverage that’s only worth $10,000.”

Atwater says the Florida Legislature mandated no-fault coverage and the legislature must fix it.

But he doesn’t want PIP to go away.

“I would say there is value in a no-fault system, that someone can get quick care and coverage when they have access to no other healthcare,” said Atwater. “For us in Miami Dade, there is well over 25 percent of our population that has no other healthcare other than what’s offered in PIP.”

The Florida House and Senate have two competing bills for PIP reform.

The House version is supported by Gov. Scott, CFO Atwater and the business and insurance industries. It requires accident victims to seek treatment at a hospital, not a clinic, within 72 hours. It also puts a cap on attorneys’ fees. The bill has passed one committee so far.

The Senate version is supported by attorneys, chiropractors and some consumer groups. It requires police to use long form reports at accident scenes. It provides for more regulation of clinics and creates a fraud task force. It has not been taken up by any committees.

Both versions would force insurance companies to eventually lower their rates.

Changes in the bills are expected, but Atwater thinks some kind of reform will pass.

“I believe there’s one last good fight in us, and I believe it’s this year.”