Posts Tagged ‘auto insurance’

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Florida CFO Atwater says new law sets up fresh challenges in fight against PIP fraud

Friday, July 6th, 2012

Florida CFO Jeff Atwater, whose office enforces the personal injury protection (PIP) law that took effect on July 1, says that provisions to reduce fraud will take time to take effect. Drivers should see some benefit. Just how soon and what to degree will become known over time.

The new law prohibits payments for massage or acupuncture treatments and restricts the payout for non-emergency treatment of accident-related injuries to $2,500. That should make a dent in the rampant PIP fraud perpetrated by unscrupulous clinics.

The law also requires more details in accident reports, which could reduce the number of staged accidents that are designed to generate fake PIP claims.

Will the provisions of the PIP law work? “We will know the answer to that in the next 12 to 24 months,” Atwater told the Orlando Sentinel.

As part of the new law, Atwater is creating a group to fight PIP fraud that self-funds investigations.  The money could come from the insurance and medical companies, and Atwater said fundraising details are still being worked out. He wants the group to pay for and share technology or data rather than fund prosecutions.

“That’s a bit of a pressure issue,” he said. “You don’t buy justice.”

Auto insurance companies are waiting to see how much the new law and new group can accomplish. The new law has an Oct. 1 deadline by which auto insurers must cut premiums 10 percent or give reasons why that’s not possible.  On Jan. 1, 2014, insurers must cut 25 percent or explain to the state why not.

“I really believe that the expectation that a 10 percent reduction and to follow with a 25 percent reduction is achievable,” Atwater told the Sentinel. “And even if it falls slightly short of those benchmarks, the people of Florida deserve that relief.”

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PIP fighter: Alexis Lambert of the Florida Division of Insurance Fraud

Friday, June 15th, 2012

In the battle against Personal Injury Protection (PIP) fraud, Alexis Lambert plays a huge role for the state of Florida. She’s communications director for Florida CFO Jeff Atwater and the Department of Financial Services.

Her duties include getting the news out about the Florida Division of Insurance Fraud, which is part of the department. The Coalition Against Insurance Fraud recently interviewed her about what she and her department are trying to accomplish:

 

  •  “Our key communications goal has been to educate Floridians about the impact of Personal Injury Protection (PIP) fraud on their bottom line. Although PIP fraud has been an issue in Florida for many years, we were surprised to find that many Floridians were not aware of the impact it was having on their auto insurance rates.”
  • “Public outreach is a key component to spurring change, and it is certainly an integral component in our mission to fight fraud. It is one component of a broader strategy to fight fraud and scams of all varieties.”
  • “More and more we are seeing the consumer as the reporter. This new form of reporting from a first person perspective can have a powerful impact on the fraud fighting message.”

For the complete interview, click here.

 

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PIP fraudster sentenced to 8 years in prison, $4.4 million in restitution

Monday, June 4th, 2012

Congratulations to the investigators and prosecutors who put a major criminal behind bars for committing staged accidents and seeking to profit from false Personal Injury Protection (PIP) claims.

Oscar Luis Franco Padron was sentenced on May 29 in federal court in West Palm Beach on multiple charges including conspiracy to structure financial transactions for his role in a staged-accident fraud scheme. He was ordered to serve eight years in prison and pay $4.35 million in restitution. He was the latest and highest-ranking member of the scheme to be sentenced, the U.S. Attorney’s office said.

Padron managed chiropractic clinics and recruited patients to stage accidents. Other defendants have admitted in their guilty pleas that they would find people who had auto insurance from particular companies and recruit them to stage accidents.

“This massive ring orchestrated phony automobile accidents and made a living by defrauding insurance companies of millions of dollars,” U.S. Attorney Wifredo A. Ferrer said in a statement. “Auto insurance fraud is not a victimless crime. Not only were the insurance companies defrauded, but this scheme also hurt consumers as our insurance costs continue to soar because of fraud.”

The defendants “coached the participants on how to perform the staged accident, what to say to the police officer who responded to the scene, and how to claim that they have been injured,” according to the U.S. Attorney’s office.

After the staged accident, the drivers in both vehicles would file false injury reports with their insurance companies, claiming that they and their passengers, often family members, were injured.

The staged accident participants then supposedly went to chiropractic clinics for treatment. Instead, they completed claims for treatment partially or never received and were told what to say if an insurance investigator interviewed them about their injuries or treatment.

Three Palm Beach County clinics were involved in the PIP fraud scheme: Chiropractic Office of South Florida, Healthcare R Us, and New York Medical and Rehab Center.

The PIP fraud scheme was uncovered and arrests made through a joint effort of the IRS, FBI, Florida Department of Financial Services, and Florida Department of Insurance Fraud. The U.S. Attorney thanked the National Insurance Crime Bureau for its assistance.

“Fraudsters and criminal enterprises have learned how to game Florida’s auto insurance system and every honest Floridian with a car on the road ends up paying,” Florida CFO Jeff Atwater said in the statement.

“Through partnerships with law enforcement and state attorneys, we will go after these criminals, put them in handcuffs, and deliver them to justice,” he said.

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Is it time to reform mandatory no-fault car insurance — again?

Wednesday, May 30th, 2012

No-fault insurance was supposed to reduce the expense of auto insurance by cutting down on the number of accident-related lawsuits. Any Florida driver who has tracked his auto coverage premiums or counted the number of “Accident!” billboards knows that’s not the case.

“Spiraling medical costs and rampant fraud have made the system a persistent target for reform,” writes Susan Ladika of Carinsurance.com in an article headlined “Reforming reform: Fixing no-fault insurance.” The report was published on the Nasdaq’s community website in May 2012.

States that repealed no-fault insurance saw premiums fall – 35 percent in Colorado, 31 percent in Connecticut, and 20 percent in Georgia, according to the article.

The big lesson may come from a RAND Corp. study that found that costs associated with medical care in no-fault states such as Florida were 40 percent higher than in states with systems that let people sue each other.

What’s to be done? Ladika said Florida took a big step with PIP reform that was enacted in May 2012.

Michael Carlson, spokesperson for the trade group Personal Insurance Federation of Florida, said in the article that consumers “shouldn’t be paying these outrageous PIP (personal injury protection) premiums.”

James Whittle, assistant general counsel for the American Insurance Association, a trade organization, concurs. He says in the article that there’s a “real hope people will see real savings as a result of the reforms.”

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Miami-Dade judge who helped medical clinic reassigned

Tuesday, March 6th, 2012


Thanks to the investigative reporting work of Carmel Cafiero of WSVN 7News, Miami-Dade Circuit Court Judge Ana Maria Pando has been reassigned from civil court. The move came after Cafiero first reported on lawyer complaints that she was biased toward a medical clinic that actively solicits people who have been in auto accidents.

 

 

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Gov. Scott and CFO Atwater see how PIP fraud accidents are staged

Monday, February 20th, 2012

On Feb. 16, Gov. Rick Scott and Chief Financial Officer Jeff Atwater saw first-hand how car crashes are staged. The fake accidents are part of a larger scheme to file phony Personal Injury Protection (PIP) claims and defraud insurance companies and their customers.

At the driving instruction area of Pat Thomas Law Enforcement Academy, the Florida Highway Patrol showed how people commit accident fraud. In one instance, people hide on the side of the road near a staged crash. After the vehicles collide, the people jump into the vehicles and claim they were injured.

Fraud from this and other staged accidents has pushed PIP insurance rates 30 percent higher each year, Scott said. He urged lawmakers to pass legislation that would reform PIP.

“That’s money back into somebody’s pocket so they can afford food or shelter, transportation, things like that, education for the kids,” Scott said in an article posted at WFCN, Jacksonville.

“This is the same thing. This is a billion dollars of fraud on the citizens of our state, money that should be back in their hands, not to somebody who’s running a clinic that’s taking advantage of the system, lawyers that are taking advantage of the system. So this to me is a no-brainer. Why we wouldn’t want to fix this and be aggressive at fixing this?”

Radio station WFSU in Tallahassee covered the event: WFSU report on staged accidents

 

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Government, business leaders call for PIP reform law with teeth

Monday, February 13th, 2012

Floridians are calling for reform of personal injury protection (PIP). Will legislators listen, or will all the bills that contain meaningful changes be killed, just as they were in 2011?

Gov. Rick Scott and CFO Jeff Atwater joined a broad coalition of Florida consumers, business leaders, law enforcement officials and concerned citizens in Tallahassee on Jan. 25. They urged legislature to “Put the Brakes on Accident Fraud and Abuse.

Scott, Atwater and former Florida Insurance Commissioner Bill Gunter said that fraud, abuse and excessive litigation were identified as problems in 1975. However, “PIP remains the domain of those who exploit the broken system in order to enrich themselves at the expense of consumers — further illustrating that the PIP system is long overdue for meaningful reform and the Legislature must act this session to end the nearly $1 billion fraud tax and stop accident fraud,” according to a joint statement.

“I urge the Senate and the House to work together on a comprehensive package that will actually get to the root of the problem and address this issue once and for all,” said Gov. Scott.

Others spoke out on the need for reform:

“I am a good driver, but with current trends, I will soon be priced out of the automobile insurance market.”

“Every day, I hear more and more deceptive and coercive advertisements that seem to encourage fraudulent claims,” said Cydnee Knoth, a Tampa resident who traveled to Tallahassee to urge the legislature to act on PIP.

“We cannot wait any longer for relief from the expense of fraud and litigation abuse.“

“Florida cannot sustain the ever-growing burden of a broken PIP system. Florida families and businesses continue to take the brunt of this unresolved billion dollar problem,” said David Hart, executive vice president of the Florida Chamber of Commerce. “We are hopeful and expectant that the 2012 Session will be marked by comprehensive change.“

“Florida’s no-fault system is creating problems for Florida’s businesses and consumers.”

“In order for this legislation to successfully impact Florida consumers and businesses, we truly believe it must have teeth to it,” said Tom Feeney, president and CEO of Associated Industries of Florida. “Florida consumers and businesses deserve nothing less.”

The coalition urged lawmakers to include these key reforms in a final bill:

  1. Reasonable limitations on attorneys’ fees to remove the incentive to file frivolous lawsuits at the expense of Florida drivers.
  2. Increased anti-fraud controls to identify suspicious claims and allow insurers time to investigate those claims to avoid unnecessary payments paid by innocent consumers.
  3. Enhanced controls on medical costs, through clarification of the medical fee schedule and other tools that rein in high utilization of questionable medical procedures, the costs of which are passed on to consumers.

A leading business group, Associated Industries of Florida also participated in the event. In a separate editorial for a Florida newspaper, Jose L. Gonzalez, vice president of governmental affairs, said effective legislation is needed because PIP fraud affects, “the neediest Floridians most, particularly those on fixed incomes.”

 

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PIP fraud update: Clinics fake car accidents and records to collect insurance claims

Wednesday, February 8th, 2012

PIP fraud is a big-time money crime, as three recent arrests make clear. Perpetrators collected more than $700,000 from insurance companies before investigators shut down their operations.

Those expenses show up in the insurance bills of Florida drivers. In 2008, a 40-year-old driver in Miami with an unblemished driving record was paying $582 in PIP premiums. That figured climbed 80 percent in two years to nearly $1,050 for the same coverage.

Anyone can fight PIP fraud by calling state investigators at 800-378-0445 to report suspected insurance fraud. Individuals who provide tips can remain anonymous and are eligible for a reward of up to $25,000 for information that directly leads to an arrest and conviction in an insurance fraud scheme.

The Department of Financial Services to date has awarded almost $250,000 to approximately 40 citizens as part of its Anti-Fraud Reward Program.

Here are three of the latest examples of criminal enterprise:

Case #1: Unlicensed clinic in Orlando area collects $500,000 from insurance companies

Investigators with the Florida Department of Financial Services have arrested Jean Colin, 43, and charged him with operating an unlicensed clinic, fraud, and filing false insurance claims.

Colin and Marc Maxis are accused of staging car accidents after which passengers filed claims for faked injuries and never received treatment. The clinic, Silver Star Health and Rehab in Orange County, pocketed $500,000, according to court records.

Investigators also discovered that chiropractor Judith McKenzie put her name on the clinic’s license, but that Colin and Maxis owned and operated the business. Neither is a physician.

Case #2: Car-crash mastermind in Miramar pockets more than $200,000 in PIP claims

Yasser Vega-Martinez, 34, has been arrested and charged with faking three car crashes that resulted in more than $200,000 in fraudulent insurance claims.

“These staged accidents are at the heart of the PIP fraud epidemic that is casting a shadow over Florida’s roads,” Florida CFO Jeff Atwater said in statement. “Every Florida family is affected by these fake crashes in the form of high auto insurance premiums. My office is determined to work toward policy reforms to curb this costly crime.”

Vega-Martinez set up three accidents between late November 2009 and June 2010, and sent people who had no real injuries to several Miami-Dade clinics: including GMC Rehabilitation Center, AB Diagnostic Center, The Osteomuscular Rehab Center Corp, Y & H Imaging, Grand Canal Rehab, Justin Medical Services, Florida Health Professionals Group Corp, Angels Diagnostic Group and C & C Therapy Center Corp.

Geico and State Farm paid out more than $200,000 in benefits related to the three faked accidents. Vega-Martinez, of Miramar, faces up to 120 years in prison if convicted on all charges.

Case #3: Operator of unlicensed Miami-Dade clinic submits fraudulent PIP claims

Juan M. Dieguez, aka Jorge R. Gonzalez, was arrested and charged with operating a health care clinic without a license, grand theft and insurance fraud, including making fraudulent PIP claims.

The Florida  Department of Financial Services’ Division of Insurance Fraud says that Dieguez has owned and operated Venetian Rehab Center in Miami-Dade County since October 2010. He was arrested while working at another clinic, Therapy-Diagnostic, Tech Medical.

Division investigators found that Dieguez absconded from probation following a conviction for Medicaid fraud in 1999. They also discovered that Dieguez’s brother opened Venetian Rehab in 2003 and Dieguez added his false identity as an officer in 2010. Dieguez faces up to 15 years in prison if convicted.

 

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Corruption at Miami-Dade auto accident clinics creates huge financial burden on drivers

Sunday, January 15th, 2012

Personal Injury Protection (PIP) fraud is widespread in Miami-Dade County, say state investigators. They found regulatory violations at 90 percent of the pain clinics that primarily or exclusively treat automobile accident victims.

The rampant abuse is the biggest reason that many Miami-Dade drivers pay upwards of $2,000 a year for their PIP coverage.

Investigators at the Agency for Health Care Administration found irregularities at 43 of 49 clinics during a three-day period. Some of the problems were egregious:

  • Medical staff  were hired without required background screening.
  • Many clinic owners had no prior health care experience.
  • One employee was retained even after a background check showed he should be fired.
  • One insurer was charged $19,000 for massage therapy for one patient.
  • Employees at some clinics said they had never seen a patient.
  • Staff at one clinic said they had not seen the owner or medical director in six months.
  • Many clinics had advertisements for law firms and attorneys who handle traffic accident cases.

The state agency may revoke licenses and file criminal charges. The Florida Division of Insurance Fraud, which has been highly active in rooting out PIP fraud, is conducting its own investigation.

These findings are typical of most PIP clinics now operating.  They all know how easy it is to rip off the PIP system. Florida needs PIP reform now to reduce the fraud tax that honest drivers and insurance companies have to pay. Legislators should pass PIP legislation to bring the problem under control.

PIP fraud in Florida could reach $1 billion this year, according to the Insurance Information Institute. Florida has the highest rate of PIP fraud in the nation, and Miami-Dade is a leading metropolitan market for the crime. The expense is absorbed by insurance companies and passed along to drivers.

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‘Four Pillars’ of Florida can bring PIP insurance relief to drivers

Monday, November 28th, 2011

Personal Injury Protection (PIP) insurance is in desperate need of reform, and Florida’s government leaders have outlined a plan to do just that. We should all show our support for changes that would that would reduce the PIP fraud premium that all Florida drivers pay.

Gov. Rick Scott, Chief Financial Officer Jeff Atwater and legislative leaders have pinpointed four areas where executive and legislative action can reduce PIP fraud and possibly auto insurance rates. The four pillars would attack the problem at its roots.

“Regrettably, our state’s auto insurance system has been taken over by a circling pool of pariah — fraud clinics, lawyer referral services and organized crime — that have been making their millions on the backs of every Floridian with a car in the driveway,” Florida CFO Atwater said in an official statement on Nov. 15, 2011.  “Today, we stop throwing consumers to the wolves and take action to drive down the cost of auto insurance for Florida’s consumers.”

The four areas of action:

  1. Fraud Prevention. Florida leads the nation in staged crashes and questionable claims, and often individuals not involved in the crash receive PIP benefits.
  2. Litigation Reform. From 2006 to 2010, PIP-related lawsuits pending at year-end increased by 387 percent. Attorney fees often far exceed the value of the $10,000 coverage and the damage amounts in dispute.
  3. Utilization and Provider Reform. Florida is above the national average in the amount of medical provider charges per claim and the number of procedures per claim. Florida must address fraud and abuse to reduce these occurrences.
  4. Accountability. Governor Scott and CFO Atwater called for a plan to gather the data needed to evaluate the legislation’s overall effectiveness to stop PIP fraud and abuse and drive down rates.

Florida drivers can help reform the PIP system by telling their state senators and representatives that reform is needed now. Drivers can also send statements of support to Gov. Scott and CFO Atwater.

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