House Panel Gets Earful on Insurance Fraud
In what is likely the opening of a multi-act play that may not conclude until at least next year, a House panel on Wednesday heard a litany of horrors from insurance regulators, law enforcement and state officials over the costs of staged automobile accidents, fake medical treatment and fraudulent claims.
For three hours, the House Banking and Insurance Subcommittee were deluged with facts and figures showing Florida dubiously near the top in the nation when it comes to the frequency and severity of fraudulent personal injury claims brought on by a small but highly organized networks of doctors, attorneys, chiropractors, massage therapists and citizens willing to file trumped up claims in exchange for cash.
The average Florida driver pays $50 a year per vehicle to pay for fraudulent claims under the state’s no-fault insurance system that critics say has propelled Florida’s automobile insurance rates to fourth highest in the country.
“It’s more than unfair, it’s unconscionable,” Florida Chief Financial Officer Jeff Atwater told committee members Wednesday.
The issue will pit business groups against trial attorneys and medical providers over a number of issues involving reimbursements, clinic regulation, attorneys fees and who is eligible to collect PIP damages. Shielded in the past by a more sympathetic Senate, the trial bar especially faces a tougher audience this time around with more conservative leaders and wider majorities in place in both chambers.
Wednesday’s hearing was an industry affair with representatives national and statewide insurance groups urging lawmakers to shut the door on a cottage industry they say is costing millions both tot eh public and private sectors.
Committee chairman Bryan Nelson, R-Apoka, said a major fix may not happen this session as his committee awaits a survey by the Office of Insurance Regulation on personal injury fraud that won’t be available until April. But Nelson said lawmaker will work around the edges this session with possible legislation addressing fraud and clinic licensure.
“This is the crisis today,” Nelson, an insurance agent, said to open the workshop during which no bills were presented. “Hurricanes are a crisis for tomorrow. (Fraud) is an issue from the Panhandle to the Keys.”
Tampa leads the state and is second behind Los Angeles in the number of questionable claims filed during the first half of 2010, according to the National Insurance Crime Bureau, an industry-backed nonprofit group. The city has taken over the top spot from Miami, which has been targeted by fraud investigators. Orlando has the second highest rate for questionable claims.
Florida is one of 12 states that offer no-fault insurance, which pays claims regardless of who caused the accident. Florida’s s no-fault system, enacted in 1971, allows victims of an accident to receive $10,000 payments for personal injury surrounding a crash if they agree not to go to court.
Backers say it allows victims of crashes to get help more readily in the event of an accident that causes relatively minor injuries by not forcing victims and insurance companies to go to court. Critics of the system say it promotes fraud by encouraging victims, many of whom are contacted by attorneys and clinics, to file claims from accidents that did not cause injury, to receive some or all of that payment.
“Like sinkholes, a cottage industry has developed around (personal injury protection) insurance,” said Robert Simmons, regional counsel for Allstate Insurance Co.
State health officials say part of the problem is the loose definition of health clinics, which can run the gamut from a bono fide physician centers to one-person shops that run mobile health services to homebound patients.
As of Jan. 20, the Agency for Health Care Administration reported there were 3,417 clinics and 7,956 exempted facilities licensed in Florida
Nelson conceded that it may be difficult for lawmakers to enact a series of regulations on health care providers, given the mantra of newly elected Gov. Rick Scott that regulations are strangling Florida’s recovery.
Still, Nelson said he hopes to tackle portions of the problem this year.
Absent from the speakers’ rostrum Wednesday were representatives of the heath care industry and the trial bar. Asked after the meeting when he planned to address the committee, Florida Hospital Association lobbyist Ralph Glatfelter shrugged his shoulders. “I don’t know,” he said.
By Michael Peltier
The News Service of Florida