Former Florida Director of Insurance Fraud John Askins: PIP fraud is a billion-dollar industry

Dec 28, 2011

The following commentary by former Florida Director of Insurance Fraud John Askins was published in the Tallahassee Democrat on December 27, 2011:

With the possibility of real and much needed reform proposed by Gov. Rick Scott and state Chief Financial Officer Jeff Atwater, members of the Florida Justice Association (formerly the Academy of Florida Trial Lawyers) are predictably becoming vocal in an attempt to downplay the magnitude of “PIP” (personal injury protection) fraud that is victimizing honest citizens in Florida.

I suspect that lurking behind this effort is a cadre of unethical personal injury lawyers who are desperate to protect the goose that is laying the golden eggs.

Executive Director Debra Henley’s assertion that “in no way is auto-accident fraud the epidemic that the industry tries to claim” is erroneous. The low number of reported staged accidents cited by Henley in an effort to diminish the problem is meaningless unless we are to believe it includes accurate self-reporting of previously undetected staged accidents by criminal organizations.

In fact, this is what I learned first hand during more than 30 years as a state law enforcement officer with the Division of Insurance Fraud:

Highly organized criminal enterprises are perpetrating a massive $1 billion a year fraud throughout Florida by herding tens of thousands of uninjured auto accident “victims” into thousands of auto accident clinics. These clinics (more accurately described by CFO Atwater as “fraud mills”) have been set up for the sole purpose of exhausting the $10,000 individual PIP limit through fraudulent billing made to insurance companies.

The massive fraud is accomplished through solicitation of individuals involved in real (but minor) accidents, the intentional “staging” of crashes, and an unrelenting number of advertisements by personal injury lawyers and auto accident clinics through radio, television, the Internet, billboards, bus benches, etc. Standing behind the auto accident clinics are unscrupulous lawyers who file frivolous lawsuits to ensure that not only are the fraudulent claims paid, but that they are handsomely rewarded themselves by friendly judges.

This is the modern version of “ambulance chasing,” but ambulances aren’t needed,  because nobody is injured.

Sure, it would be very helpful to double the size of the state Division of Insurance Fraud to investigate these fraud rings. But then more prosecutors, criminal court judges and jail space would be needed. And the problem would still exist, due to the sheer size of it.

More than 50 years ago a (Miami) Dade County grand jury concluded that personal injury fraud was not a law enforcement problem but a problem of ethics that could be solved only through concerted efforts of the legal and medical professions. Without question, the overwhelming majority of individuals in these fine professions are honest and are in no way involved in personal injury fraud.

But disciplinary action taken against offending doctors, lawyers and chiropractors has generally ranged from lax to nonexistent.

The overwhelming majority of insurance company personnel are equally honest and believe that legitimate injury claims should be settled promptly and fairly, despite repeated assertions to the contrary by some trial lawyers. But there will always be
individual cases not handled fairly that may require intervention or sanctions by the Office of Insurance Regulation.

My observation has been that when insurance companies try to combat suspected fraud, they are not afraid of doctors, chiropractors or massage therapists. They are afraid of the outrageous fees repeatedly awarded to unscrupulous personal injury lawyers who are milking the system.

The Legislature needs to support the proposed measures to reduce fraud, including a reasonable cap on attorney’s fees.