In yet another multi-party scheme that allegedly abused Florida's notoriously flawed personal injury protection (PIP) system, authorities have arrested 19 people and issued warrants for six others.

According to a release by Florida CFO Jeff Atwater, Valerie Marshal, a 24-year-old licensed massage therapist and the proprietor of Indian Rehabilitation Center, Inc. (IRCI) was arrested at her Tampa home last week, along with 18 others for their suspected involvement in a string of staged accidents and fraudulent insurance claims.

The state attorney's office believes Marshal opened IRCI in September 2011 with the intent of defrauding insurers and quickly enlisted individuals to orchestrate staged accidents for which they would feign injury and, in many cases, only pretend to obtain medical treatment at her clinic. Those implicated in the case include accident participants, accident facilitators, clinic billing personnel, and clinic managers.

Law enforcement officials were able to shut down the Jacksonville, Fla.-based clinic following an investigation conducted by the Florida Department of Financial Services' Division of Insurance Fraud and the Duval County State Attorney's office. Their combined investigative efforts uncovered fraudulent medical billing practices related to 80 IRCI patients and more than $228,000 in claims filed with insurance providers. In addition to the 19 apprehended, the state attorney's office issued six arrest warrants (currently outstanding) for others involved in the scheme.

A New Year, Chapter In PIP

Large busts such as this may eventually deter would-be criminals from committing PIP fraud, thereby alleviating the exorbitant "fraud tax" Floridians pay in higher premiums.

"These large-scale accident clinics are at the root of the PIP fraud problem in Florida," CFO Atwater says. "We must stay one step ahead of the ring leaders [of] these schemes so [our] drivers are protected and safe on the roads."

Aside from investigative due diligence, staying "one step ahead" means imposing stricter guidelines, as evidenced by the amendments to the Florida Legislature that took effect on January 1, 2013.

"Florida has more cases of PIP fraud than any other state in the nation, and Orange County is the third highest source of fake auto insurance claims in the state" says Lynne McChristian, the Florida representative for the Insurance Information Institute (I.I.I.). "[Residents] are paying more than they should for auto insurance because insurers are paying more than they should for claims."

Ostensibly, the newly revised PIP guidelines make it harder for auto claimants to collect, thereby weeding out the fraudsters from the truly injured. As part of the changes, individuals injured in car accidents must adhere to a 14-day window during which they can seek initial treatment as opposed to the previous policy that imposed no time limit. Furthermore, policyholders are now eligible for $2,500 in coverage, a marked decrease from the $10,000 previously allowed.

These reforms also force insurers to reduce their PIP rates by at least 25 percent by 2014; however, insurers may be able to petition the government to be excluded from such requirements.

Despite the Fla. law's mixed reception thus far, some industry experts feel stricter guidelines—and stiffer penalties—represent the most viable option at present.

"This is a measure to keep those costs in check, and consumers will eventually benefit if the measures work as they are intended," McChristian concludes.

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19 Fraudsters Nabbed As Florida PIP Reform Takes Hold

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