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Fraud, Massage Therapy Driving Up No-Fault Coverage

Jim Turner, Sunshine State News

11/2/2011

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Personal injury protection auto insurance is about to collectively crash the $1 billion mark for Florida motorists because of a need to cover the costs of fraud and massages.

The “no-fault” coverage, a hallmark of the state since 1971, has grown 70 percent in the past two years and the rates could skyrocket another 40 percent within a year.

The increase is primarily due to a rising number of fraudulent claims mostly in the state’s metro areas and a business exemption enacted several years ago that allows some massage health clinics to avoid state filing requirements regarding vehicle injury treatment.

In some cases the treatment may be giving an individual an ice pack.

With a study on the issue expected to be delivered to the state Cabinet in a few days, the insurance industry has complained that without the rate increases many companies couldn’t afford to remain in Florida.

“How can you afford it?” asked Gov. Rick Scott, who equated the projected overall cost to add a half million dollars to the $910 million sticker price that state motorists currently collectively pay for the coverage.

Florida Chief Financial Officer Jeff Atwater is supporting efforts to reform the no-fault system in the 2012 legislative session.

”Regrettably, to keep these companies here we have to make our business models work and if we have a system that provides this much fraud, where every dollar collected is a dollar lost, the commissioner has no choice but to keep increasing the premiums so they can stay in Florida,” Atwater said.

Staged accidents have grown 58 percent from 2008 to 2009 and an additional 39 percent the following year, according to figures from the CFO’s office.

Florida requires no-fault coverage of at least $10,000 in personal injury protection in the event the driver or any passenger is injured in a crash. The coverage is good for 80 percent of medical expenses and 60 percent of lost wages.

Officials say there shouldn’t be an increase in the average cost for no-fault insurance because the number of registered motorists in Florida has held steady at just under 16 million while the number of crashes is down from two per 100 drivers in 1996 to one and a half per 100 in 2010.

However, a big reason no-fault medical protection has grown, according to Robin Westcott, the state's insurance consumer advocate, is that a little less than a decade ago the state created exemptions for certain health clinics, particularly massage centers, to provide medical care for those recovering from accident injuries.

With the exemption, the massage clinics file directly to the insurance companies rather than to the state or any health provider.

Insurance companies, in turn, question medical treatments not prescribed by doctors.

Meanwhile, Westcott said in a state where 21 percent of residents have no health care coverage, police agencies have reported that 25 percent of drivers during random checks lack adequate motor vehicle insurance.

With only 10 states still requiring no-fault, Westcott said the state should consider a tort system with bodily injury coverage that is not mandated.

“We will soon have people paying $4,000, $5,000 for a $10,000 benefit,” Westcott said. “That is not fair.”

For a retired couple, the cost has grown from $249 a year to $627 in the Tampa area, while the same couple in Hialeah covered by State Farm would have seen rates go from $468 a year in 2008 to $1,021 this year.

After the Cabinet meeting, David Hart, executive vice president of the Florida Chamber of Commerce, urged legislators to look at the issue in the 2012 session, noting that Florida’s average medical claims are 66 percent higher than the national average, and the number of massages prescribed as a PIP-related injury treatment has increased by 251 percent in the last five years.

Reach Jim Turner at jturner@sunshinestatenews.com or at (850) 727-0859 or (772) 215-9889.