PIP fraud has a lot of people complaining but not enoughof them doing anything about it. Slick plaintiff lawyers andso-called consumer groups have so demonized auto insurancecompanies that it has become difficult to convince voters andlegislators that action is needed now.

The advertising and public relations assault has hidden thetruth about PIP fraud in Florida:

• Tampa Bay, Orlando, and South Florida are among the worstmarkets in the nation for staged accidents and PIP fraud.
• The fraud tax was $50 per driver last year. For United AutoInsurance Co. customers in Miami-Dade County, the figure is closerto $500 because non-standard drivers bear the brunt of fraudcosts.
• Insurance companies settled almost 20,000 PIP-related lawsuitsin 2010 and had another 10,000 pending at year-end. Each of thosefigures totaled 5,000 or less in 2007.
• Since 2004, the average claim paid out for PIP claims has goneup 22 percent.
• Florida drivers pay higher premiums than those in other states,about $1,055 annually here versus $789 nationally. Remove the largerural areas of the state from the equation, and Florida is probablythe most expensive state in the country.

Sadly, the Florida Legislature did nothing to address PIP fraudin the 2011 session. Representatives and senators went before themedia to declare that PIP and accident fraud were major issues andthat they were committed to eliminating abuses. Yet for all theirtalk, they passed none of the legislation important to the Floridainsurance industry. Most bills died in committee, and the few thatmade it to the floor were either watered down or voted down.

Trial lawyers, doctors, chiropractors, medical clinics, andothers who benefit the most from PIP locked arms to blockade everyreform that would hurt their pocketbooks. Rather than acknowledgethere is a fraud problem and work honorably toward a solution, theylobbied against all bills.

Trying Again in 2012
PIP legislation will be introduced in  2012 by Rep. Jim Boyd, R-Bradenton, and Rep. Mike Horner, R-Kissimmee. Their bill provides, among otherthings, that insurers have the right to conduct reasonableinvestigations, revise discovery provisions, and deny payment toclaimants who violate certain provisions. This is a good bill butmust be revised to include attorney fee reform if it is to have anyhope of curbing PIP fraud.

Sen. Gwen Margolis, D-Miami, has filed a billthat would require medical or lawyer referral services to conformto The FloridaBar rules regarding advertising and solicitations. Clearly,that racket has gotten out of hand. The company behind the 411-PAINcampaign spends upwards of $10 million annually on advertising.

In the Margolis bill, The Florida Bar would review and possiblyprohibit the television ads and billboards that drive accidentvictims to a toll-free number that routes the calls to lawyers'offices. The measure would close a loophole that currently enableslawyers to get around Bar rules by using a middleman to chasepotential clients. The law would also stop a medical referralservice from sending patients only to clinics in which the servicehas a financial stake.

Will the measures pass? I'm not optimistic. The same lobbyingforces that shot down every meaningful attempt to clean up PIPfraud will fight those bills and any others that threaten theirlivelihood. And they will probably succeed again even though thepublic, the media and local governments are squarely in favor ofreform.

Even if a bill regulating lawyer-marketing companies passed bothchambers and was signed into law, it would face a severe andprobably successful First Amendment test from well-heeled companiesand their attorneys. Given a federal court ruling in October thatstripped The Florida Bar of some of its control over lawyeradvertising, the outlook is not promising.

A Different Solution
I see a different solution to PIP fraud, one that depends less onlegislators and more on the insurance industry and consumers. Asinsurers, we need to direct our time and money to cleaning up thestreets and the courts.

In his first nine months in office, CFO Jeff Atwater has donemore to fight PIP and accident fraud than any of his recentpredecessors. In May, Atwater said, "I am committed to crackingdown on PIP fraud, putting these thieves behind bars and findingnew ways to combat this pervasive crime."

He has backed up those words with actions. Under his direction,state law enforcement has conducted raids and crackdowns across thestate. Atwater also has worked with local law enforcement officersand private investigators to find and arrest those who stageaccidents and then file phony medical claims.

The CFO is not alone. Law enforcement officials in hard-hitcounties have formed task forces and assigned undercover officersto break up criminal rings. Local police officers have taken thetime to educate the public on how to spot and report accident andPIP fraud.

The good news: The efforts are working. Accident organizers arebeing chased out of hotspots such as Hillsborough County; clinicsare being shut down.

To effect change, insurance companies andtheir customers should support efforts to increase public funding(no, not raise taxes) for state and local investigators. The moredetectives we have on the job, the sooner we can drive criminalrings and shady medical center operators out of the state. That's afirst step.

Second, we need to close local loopholes on medical clinics. TheHillsborough County Board of Commissioners led the way in Septemberwhen it tightened regulations on medical clinics that primarilytreat people involved in automobile accidents and earn the majorityof their income through PIP claims. The same rules should beadopted in Florida's other 66 counties.

Third, we need to hold the courts accountable. There are enoughlaws currently on the books to put a noticeable dent in PIP fraud;the issue now is enforcement of the rules when a lawsuit is filedin county court.

Fix the Fees
Most important, we have to fix the fee system. State Farm paid$8,000 on one claim to the plaintiff and $550,000 in fees to theplaintiff's attorney. I am sure that every insurer in the state hasa similar horror story.

Through our investigation of court records, we found attorneyswho were collecting more than $500 an hour to file and litigate PIPlawsuits. Forget fair. Is that figure reasonable? No, but countycourts routinely approve outrageous billable hours and rates, evenif they bear no relation to the magnitude of the case.

Only in a PIP lawsuit will a plaintiff attorney send an insurer20 written discovery requests that bear no relation to the case ordefenses raised, and demand depositions on top of it.Why?  Because the lawyer knows that the paperwork andhours of meaningless interviews will boost his fees.

Florida had a big problem with workers' compensation cases untilthe amounts paid to attorneys were reduced. Within a few years, thenumber of lawsuits filed dropped dramatically and premiums wentdown.

Why? Lawyers who advertised, "Were you injured on the job?"could no longer command outrageously high fees for their veryordinary services. As a result, workers' compensation insurancepremiums dropped and those obnoxious ads disappeared fromtelevision and billboards.

Florida can learn from that lesson and the fee scheduleinstituted in New York, where auto accident-related lawsuits havealso been a problem. The system no longer allows attorneys to takehome big paychecks for routine PIP work. Our state also shouldadopt a fee schedule that is either a flat fee or a percentagefigure in cases where the claims are minimal.

PIP fraud is a cancer in our industry. While we can never curethe problem, we can treat it in such an aggressive fashion that wedrive it into remission and make Florida a better place to dobusiness and, not so coincidentally, a better place to be adriver.