Pinching PIP Perps: The Fight Against Auto Insurance Fraud
Want to know who to blame for rising auto insurance rates? I can give you names. Actually, the Florida Dept. of Insurance Fraud can give you names—of the arrests made in just one month of those who make a living by filing fraudulent insurance claims.
Personal Injury Protection (PIP) is also known as no-fault auto insurance coverage. It provides up to $10,000 in medical benefits for those involved in a car accident, no matter who is at fault for the crash. Even if the driver is the only one paying for PIP coverage, passengers also get $10,000 in protection under the driver’s insurance policy if they don’t have PIP coverage of their own. Some say the $10,000 is a target amount for unscrupulous medical providers who give treatment until the money runs out.
In February, 43 people were arrested for stealing money from you, me and all other honest drivers. If that doesn’t sound like a high number, here’s one that will get your attention. The bills sent to insurance companies to pay for the fraud schemes associated with these February arrests is over $777,000. In one month. Some months, there are even more arrests, and the fraud dollar amount fluctuates as well.
So, why are you paying for fraud? Insurance rates are the cost of claims, and these costs get factored in. Drivers in Florida pay about $58 more than they should due to criminals who think it is okay to fake a car accident or fake an injury and send a bill to get a payday. Thankfully, they get caught. Insurance companies work hard to investigate suspicious claims, and so do law enforcement officials.
The Division of Insurance Fraud is very busy. Handling cases related to no-fault auto insurance keeps them that way. The Division’s statistical report for the 2011-2012 fiscal year showed it made 496 arrests for auto insurance fraud. That’s over 40% of all its arrests. (Workers’ comp fraud is #2 at 22% of arrests made last year.)
Take a look at pages 6 and 7 of the PIP Source newsletter published by the state. It has names of individuals, the so-called “clinics” providing services to “injured” people, and the metropolitan area where the crime took place.
Last year, the Legislature passed an auto insurance reform bill in an attempt to address some of the issues contributing to fraud. The law took effect three months ago – in January 2013. That’s not enough time to know if the reforms are working, particularly because all auto insurance policies have not yet transitioned to the new rules. (The changes take effect as policies renew.) But legislators are looking at alternatives to PIP already, including abolishing it altogether. Here’s hoping that whatever develops forces fraudsters to look for a legitimate line of work.