If you are wondering where your Personal Injury Protection (PIP) premiums go, look no further than the courthouse. More than half of Florida individuals and clinics hire lawyers to pursue insurance claims.
Those attorneys charge $300 to $500 an hour to fill out paperwork and shuttle it to the clerk of court. The lawyers then ask county court judges to approve their legal bills and order insurance companies to pay them. Sometimes, the lawyers who say they are working for the little guy collect tens of thousands of dollars when the client is seeking is a few dollars.
The percentage of PIP claimants nationwide represented by attorneys rose to 36 percent in 2012 from 31 percent in 2007, according to a study by the Insurance Research Council. It comes as no surprise to us or another auto insurer that Florida leads the nation, where more than half of claimants hired attorneys in 2012.
“The attorney involvement trends shown in this study undercut two of the envisioned benefits of no-fault auto injury systems: a less adversarial settlement process and more timely payments,” Elizabeth Sprinkel, senior vice president of the council said in a press release. “The role of attorneys is implicated in many of the factors driving up the cost of auto insurance.”
The study found that in cases where attorneys represented claimants that individuals were much more likely than those without a lawyer to receive treatment in a pain clinic and were more likely to be involved in apparent claim abuse.
PIP fraud investigations have found that people involved in staged accidents and other illegal efforts to cheat the PIP system signed over their benefits to the clinic that was supposedly diagnosing and treating them. The clinics hired attorneys to sue auto insurance companies when the claims were investigated and sometimes denied.
The study was part of the council’s continuing research into auto injury claims. More than 35,000 auto injury claims were examined and 12 insurers that represent 52 percent of personal driver market participated.