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Consumers Reducing Fraud by Getting Less — PIP Legislation


A problem with fraud exists.

In New York, officials believe that fraud is a crime and that the criminals perpetrating the crime should be arrested and punished.

In Florida, our lawmakers believe that fraud is a crime and that consumers should be punished.

So goes the course of a bill winding its way through the legislature, which will remove rights and benefits available to consumers under personal injury protection (PIP) insurance. It is not expected to reduce premiums paid by consumers for PIP coverage.

Apparently, Florida lawmakers like the bill. Given some of its provisions, the insurance industry has to absolutely be in love with the bill.

There is still uncertainty about the specific provisions of the bill, but there is one certainty: it will make insurance companies more profit than they already make and it will remove rights and benefits consumers currently have.

Some of the provisions harmful to consumers:

  • You get NO coverage for your injuries in a car accident unless you go to an emergency facility within 72 hours of the accident.
  • You will pay for $10,000 in PIP coverage, but if your injury is deemed “minor”, that limit goes down to $1500.

Since it is the insurance industry who is claiming they are hurt so horribly by fraud in PIP claims, why don’t they do something about it? It is cheaper for them to pay claims (a short term view) than to investigate and prosecute fraud (a long term view). So, the insurance industry and its lobbyists cooked up a bill that will maximize profits, maximize ability to deny claims and minimize coverage for consumers.

PIP fraud is likely to be pretty unsuccessful without a physician, an attorney and perhaps other professionals participating. Do I think that there are physicians and lawyers who are actively involved in pursuing fraudulent PIP claims and charges? I am sure there are some. Attorneys and doctors are no different than any other profession; they all have some “bad apples”.

In New York, the scheme to defraud under PIP laws involved a “cadre of corrupt doctors” – 10 in all, 100 phony medical clinics, and three lawyers.   New York Police Commissioner, Ray Kelly said “the ‘billing mills’ processed up to 150 purported patients each day, with doctors getting up to $10,000 a month “to show up once a week just to sign referrals.”

Why is the state of Florida and the insurance industry not getting together to discover and prosecute the “bad apples”? Because it is easier and cheaper to simply pass a law, which may reduce fraud, but at a cost to consumers and a net savings to the insurance industry.

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