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Florida officials blast personal-injury protection auto insurance 'fraud tax'

Aaron Deslatte, Orlando Sentinel

11/2/2011

TALLAHASSEE — Members of the Florida Cabinet blasted auto-insurance fraudsters and marginal health-care providers Tuesday for driving up the costs of personal-injury protection auto coverage, which they say is sticking drivers with a $910 million "fraud tax" built into their premiums.

Florida Chief Financial Officer Jeff Atwater, along with Gov. Rick Scott and Republican lawmakers, have singled out Florida's PIP law for reform in the 2012 legislative session. Atwater tapped Robin Westcott this summer as Florida's insurance consumer advocate, and she has led a working group studying the increases in paid losses under Florida's "no fault" PIP system designed to reduce insurance costs by avoiding litigation over minor injuries in crashes.

The group's report, presented to the Florida Cabinet Tuesday, says that although the number of drivers in Florida has held steady in recent years and the accident rate has decreased from 1.76 per 100 licensed drivers in 2005 to 1.52 last year, insurance costs have exploded.

Direct losses have climbed from just over $1.6 billion in 2005 to $2.3 billion last year. Variable losses -- a calculation that includes things like legal defense costs, taxes, licenses and policyholder dividends -- have gone from $2 billion to $2.7 billion in that time frame.

"What we're getting billed for is fraud, fraud, fraud, fraud," Atwater said.

The report noted that the average number of procedures per PIP claim has exploded since 2007 as facilities such as massage clinics have increased billings. "Not every possible kind of service provider [should get] a shot at running up the claims," Atwater said.

In addition, the report concludes, "staged accidents" have more than doubled since 2008.

Gov. Rick Scott said the extra costs amounted to a "tax for the right to live in Florida."

Medical providers and trial lawyers have been sparring over the shape of potential legislative reforms -- whether lawmakers should eliminate the $10,000 in required PIP coverage, or instead place new limits on the types of services covered and where lawsuits could be filed.

adeslatte@tribune.com or 850-222-5564. Follow him on Twitter @adeslatte.