What you need to know:
- The share of PIP claimants represented by an attorney was 36% in 2012, up from 31% in 2007.
- Claimants represented by a lawyer typically “waited longer for payment of claims” compared to those who had no representation.
- Florida was the no-fault state with the highest rate of attorney involvement. More than half of Florida PIP claimants hired an attorney in 2012.
A new study shows that more drivers are hiring attorneys for claims they file under personal injury protection (PIP) coverage, a coverage type that was first created with the goal of reducing litigation in car insurance claims. The study, published by the Insurance Research Council (IRC), shows that more than 1 out of every 3 PIP claimants hired an attorney in 2012, which is more than double the rate in 1977.
Under PIP coverage, the policyholder’s insurer compensates him or her for medical bills related to a crash, regardless of whether or not that policyholder shared any fault in the crash. This is supposed to help reduce the number of car insurance claims that make it to court.
But the percentage of PIP claimants who hired an attorney recently increased 5 percentage points, going from 31 percent in 2007 to 36 percent in 2012.
According to the IRC, half of claims submitted under bodily injury liability involved attorneys in 2012. That was a only slight increase compared to 2007, when that figure was 49 percent.
Here is a further breakdown of the numbers provided by the IRC:
|Year||% of BI claimants represented by an attorney||% of PIP claimants represented by an attorney|
The IRC said that claimants represented by a lawyer typically “waited longer for payment of claims” compared to those who had no representation. Among other findings in the study, according to the IRC, auto injury claimants with lawyers were:
- “much more likely” than claimants without lawyers to “receive treatment in a pain clinic” and receive an MRI for similar injuries
- “more likely” to be linked to “apparent claim abuse”
- on average, awarded lower “net payments” than lawyer-less claimants after payments are adjusted for attorneys fees and other expenses
“The attorney involvement trends shown in this study undercut two of the envisioned benefits of no-fault auto injury systems: a less adversarial settlement process and more timely payments,” said Elizabeth Sprinkel, IRC’s senior vice president, in a statement. “The role of attorneys is implicated in many of the factors driving up the cost of auto insurance.”
The IRC’s analysis looked at more than 35,000 auto injury claims that were closed with payment over the last three decades.
IRC: More than Half of Florida PIP Claims Involve Attorneys
PIP coverage is required in some states, and it’s been in those so-called “no-fault” states where controversy has brewed in recent years.
“Corrupt lawyers” are often a key ingredient to “medical mills” that criminals set up to produce bogus claims, according to the Insurance Information Institute (III), which added such operations are typically based in no-fault states “where PIP benefits are generous.” The National Insurance Crime Bureau (NICB) has also reported on PIP-based auto insurance systems and their vulnerabilities to crime.
In October 2013, authorities said they uncovered a PIP scheme in Minnesota that rang up more than $1 million in kickbacks. Lawmakers responded with a push for legislative reforms of the PIP system. Minnesota drivers are required to have at least $40,000 in PIP coverage per auto accident.
According to the IRC’s recent study, the highest rate among no-fault states of PIP claimants hiring attorneys for injury claims was in Florida, where more than half did so in 2012.
In Florida, PIP coverage is required and provides benefits of up to $10,000 to a driver suffering an “emergency medical condition” from an auto accident; a $2,500 PIP benefit is the maximum allowed in Florida for “nonemergency medical conditions.”
Florida’s two-tiered system of PIP benefits was just one of the many points of debate between lawmakers in 2012, when they implemented major reforms of the state’s no-fault system. The push for reform was fueled by what some lawmakers said was an alarming increase in fraudulent PIP claims.