Florida insurers sticking it to consumers on PIP

With the state in the vice grip of a crippling recession, Floridians are getting squeezed everywhere they go – at the gas pump, in the grocery checkout, on the unemployment line, under the crush of tax increases.

Amid the pain, the insurance industry has seen fit to jack up rates on a basic necessity for every Floridian who depends on a car to get around: state-mandated personal injury protection insurance.

State Insurance Commissioner Kevin McCarty said recently that car insurance premiums have risen by as much as 100 percent in the past five years for some policyholders.

Insurers want you to believe they have no choice, that fraudsters who stage accidents and fake injuries have so hoodwinked the system that every Florida driver must pay $50 extra each year just to cover the industry’s PIP losses.

Strangely enough, insurers won’t reveal closely guarded statistics to prove their loss calculations are either accurate or fraud-related. They spit out scary numbers – that PIP costs them $1.40 in claims for every dollar they collect in premiums – and expect everyone to not only take them at their word, but echo it in demanding PIP reform.

But hard numbers suggest the industry’s fraud assessment is grossly exaggerated, with staged accidents representing less than half of 1 percent of the total reported from 2007 to 2009 and with just 4 percent of all PIP claims ending in fraud convictions.

Meanwhile, as the industry passes the buck on unsubstantiated loss estimates to cash-strapped consumers, a recent report showed U.S. insurers’ net profits grew 63 percent from 2009 through the first three quarters of 2010 – despite the recession.

Now, the same leaky logic propping up artificially inflated PIP premiums is being used to chip away at the only consumer protections requiring insurers to honor their policies.

Just months after a public outcry helped defeat anti-consumer changes to Florida’s no-fault law, determined insurers are rallying their all-powerful lobby to try again this session.

The industry says the changes are needed to curb fraud and keep rates steady. Remarkably, though, their proposals do nothing to target fraud, but they would do plenty to help insurers delay and avoid payment on legitimate claims, a favorite practice of a deep-pocketed industry.
Among the most harmful are proposed limits on attorney fees for those suing insurers (but not for insurers’ pricey lawyers), allowances for longer delays in paying claims when insurers allege fraud (even without merit), and requirements that medical providers submit to onerous onsite inspections and under-oath examinations before claims are paid.

If passed, these changes would render much of PIP’s consumer protections toothless and afford insurers unregulated power to decide when and whether they honor the policies their customers paid for.

That was hardly the intent of Florida’s no-fault law, designed to keep fender-bender lawsuits out of court and ensure consumers automatic and speedy access to medical services of up to $10,000, no matter who’s at fault.

There’s good reason the law requires insurers to pay reasonable attorney fees if challenged claims are successfully resolved: to level the playing field for ordinary citizens without the resources to take on billion-dollar companies.

Still, industry-friendly reforms have given insurers several opportunities to pay valid claims, even months late, without penalty. Many refuse, denying even the smallest reimbursements and drawing out lawsuits with delay tactics that run up the legal fees they’ll pay when they lose. Then the insurers bellyache that the fees are excessive – like a glutton who orders a massive meal, then disputes the bill when he’s done eating.

With strict caps on plaintiffs’ attorney fees, insurers want to make it economically impossible for competent lawyers to take PIP cases, knocking out the one advocate fighting on behalf of the little guy.

But PIP attorneys are not the only ones in insurers’ sights. The industry also wants legislation that would put the screws to medical providers who dare treat accident victims.

Before a claim is paid, under one proposal, providers would have to submit to deposition-like examinations under oath, with no controls or limits. Another proposal would require onsite inspections of clinics whenever an insurer deems fit. Both bills would give the industry an unprecedented ability to harass their adversaries and make it difficult to challenge denied claims.

Talk about the fox guarding the henhouse.

Imagine the fallout:

  • Policyholders would be forced to buy coverage they can’t count on
  • Medical providers would have to accept fewer accident patients and lay off staff to make up for lost business
  • Thousands of nurses, x-ray techs and other Floridians would lose their jobs
  • And insurers would get even richer off still-inflated rates while denying valid claims with impunity

Insurers have Floridians over a barrel. State law requires motorists to buy no-fault insurance, for their own protection. But this guaranteed business has created a monster – a powerful industry with enough resources to hire top-dollar lawyers to fight its own customers and high-priced lobbyists to draft industry-friendly legislation to protect profits.

It’s up to Floridians to stop the madness. Call your legislators today, and tell them it’s time they look out for the little guy. They’ve looked out for special interests long enough.

Claude Hanuschak is president and chief operating officer of Diagnostic Professionals Inc. in Fort Lauderdale.


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