State Officials Target 'Fraud Tax'

By: Jim Saunders, Health News Florida
By: Jim Saunders, Health News Florida

THE CAPITAL, TALLAHASSEE, March 16, 2011 --

With Florida a hotbed for staged auto crashes and shady medical clinics, state lawmakers today began working on proposals to revamp the personal-injury protection insurance system.

A House subcommittee this morning approved a controversial bill that would limit fees for attorneys who sue insurance companies in disputes about so-called PIP claims.

This afternoon, House and Senate sponsors and state Chief Financial Officer Jeff Atwater are scheduled to hold a news conference to detail broader bills that include beefing up fraud investigations and penalties.

One of the proposals in those bills also would allow insurers to offer premium discounts to customers who agree to use networks of "preferred" medical providers after accidents --- an idea that would give insurers more certainty about the doctors and clinics that provide treatment.

Rep. Mike Horner, a Kissimmee Republican who is sponsoring the bill dealing with legal fees, said the combination of legislative proposals would help reduce what he described as a "fraud tax" that is driving up the costs of auto insurance in Florida.

"We've got a major problem with PIP fraud in this state,'' Horner told the House Insurance and Banking Subcommittee, which voted 13-2 to approve his bill (HB 967).

State and insurance-industry officials say Florida has seen a huge increase in recent years of rackets that use staged accidents and fly-by-night clinics to file bogus PIP claims. Under the state's no-fault auto insurance system, motorists are required to carry $10,000 in personal-injury protection coverage to pay medical bills.

Based on numbers from an insurance industry-backed group, the state insurance consumer advocate released a report in November that cited a 58 percent increase in "questionable claims" from 2008 to 2009. What's more, the report indicated that fraud was spreading across Florida, with Tampa replacing Miami as the top city for questionable claims.

But legislative debates about changing the PIP system are always politically difficult. At least in part, that is because of the huge number of interest groups that have a stake in the issue --- including insurers, doctors, hospitals, chiropractors and trial lawyers.

That difficulty was evident this morning, as trial lawyers opposed Horner's bill and said it would do little to address PIP fraud. Among other things, the bill would limit attorneys' fees in PIP cases to $10,000, as opposed to the current system that allows judges to award larger amounts based on the work involved in a case.

Paul Jess, a lobbyist for the Florida Justice Association trial lawyers group, said people committing fraud don't take their cases to court. He called the attorney-fee issue a "red herring.''

"We believe the way to address fraud is to find the people who are committing fraud and throw them in jail,'' Jess said.

But the bill had the backing of insurance-industry groups and business organizations such as the Florida Chamber of Commerce and Associated Industries of Florida. Those groups tangle with trial lawyers on a wide range of issues that involve limiting lawsuits.

The bill, however, also had the support of John Askins, director of the division of insurance fraud in Atwater's office. He said attorneys will go to court to help clinics get questionable claims paid.

"Don't think for a minute they (attorneys) give two hoots about the patient,'' Askins said. "They don't.''

But Todd Copeland, an Orlando attorney whose clients include MRI clinics and accident victims, said insurers have a huge incentive to try to reduce the amounts they pay for treating legitimately injured motorists. He said the fee limits in Horner's bill would prevent him from handling PIP cases, which he said cost at least $15,000 to $20,000 to go to trial.

"This is a big business --- the business of not paying medical providers and not paying medical providers in a timely fashion,'' Copeland said.


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