The Office of the Insurance Advocate is investigating the causes and solutions to Personal Injury Protection (PIP) fraud. Its working group held an all-day meeting on the matter on Oct. 10.
Robin S. Westcott, Florida Insurance Consumer Advocate, leads the group, which includes representatives from the medical and insurance industries, including Michael Neimand, an appellate attorney with the Office of the General Counsel at United Auto Insurance Corp.
The group heard from two experts in its morning session:
- Albert Rosati, General Manager of ExamWorks, said that the no-show rate for independent medical examinations is about 50 percent, and can be higher in cases involving attorney representation
- Dr. Ashley Booth-Norse of the Florida College of Emergency Room Physicians said that the current $5,000 set-aside for emergency care is being used to pay hospital liens, or is applied to a deductible. She suggested strengthening the language of the law to clarify that the set-aside may not be used to settle liens and that the deductible does not apply.
The working group also discussed licensing of medical clinics, as much of PIP fraud comes from that source. Most group members said that exemptions to the license requirements should be tightened to allow an exemption for only one location. Some argued for eliminating all exemptions.
In the afternoon session, a form titled “Application for Florida No-Fault benefits” was criticized first by Jeff Scott of the Florida Medical Association. He said it could be used as an administrative tool to reject legitimate claims.
Michael Neimand of UAIC said that instead of adding a claim form, the PIP statute should be amended to limit the ability to demand PIP benefits to policyholders and their attorneys.
Scott said that that limit would injure physicians. Niemand responded that an exception could be worked out for first responders and emergency medical providers.
The working group then discussed the idea of annually setting PIP reimbursement rates at the Medicare rate on a given date. The idea was proposed during the 2011 legislative session. The group agreed that a schedule might reduce fee disputes. Scott stated the medical association would support the idea provided that the minimum PIP rate were based on the 2007 Medicare reimbursement rate.
The group agreed that changing the maximum PIP benefit, currently $10,000, was not central to PIP reform. Repeal of PIP would also not be essential. Ralph Gladfelter of the Florida Hospitals Association said replacing PIP with bodily injury coverage was a near-catastrophe for Colorado’s trauma care system.
A representative of the Florida Justice Association stated that most states have made bodily injury coverage mandatory because too many accident victims were left uncompensated under PIP systems. Colorado’s problems were solved through adoption of a medical payment system. The association thinks a combination of bodily injury and personal injury protection coverage would be the most effective solution.
Allen McGlynn of State Farm said that other states have healthy auto insurance markets because they have attorney fee schedules, utilization controls, “loser pays” attorneys’ fees, appropriate investigation tools, no contingency risk multipliers, and no threat of a catastrophic bad faith claim.
The attorneys’ representative responded that insurance companies have long sought a fee schedule and now want further reform of litigation that would encourage underpayment of benefits. He said that more than 10,000 lawsuits for underpayment have been filed over the last 18 months against State Farm, USAA and United Auto.
Neimand said that of United Auto’s 790 open cases, 600 were claims of underpayment by providers. United was paying the prescribed Medicare rate, but providers demand higher payments because the Medicare fee schedule was not incorporated in United’s contract.
Westcott concluded the meeting by restating the group’s desire to reform PIP instead of repeal it, while aggressively seeking PIP policy that would reduce litigation.