Bureau: Shady Auto Insurance Claims Centered on South Florida

A review of Florida insurance claims submitted in 2012 shows that the number of suspicious medical claims filed under its no-fault car coverage system has jumped since 2010 and is concentrated in three southern counties.

The National Insurance Crime Bureau (NICB), an investigative agency for the industry, highlighted the Sunshine State at this week’s Insurance Fraud Management Conference in Orlando, where NICB President Joe Wehrle discussed the 22.5 percent jump in the number of questionable claims (QCs) between 2010 and 2012 in Florida.

QCs are claims referred to bureau investigators for further review because they were identified as having one of seven indicators of possible fraud.

The bureau released its full report on QCs nationwide last month showing that, although California was by far the leader in 2012 with 21, 935 QCs, Florida generated the second-highest number of QCs with 10,693.

Florida Reforms Aimed at Reducing Crime, Costs

Florida sports a no-fault system of auto coverage in which insurers compensate their own policyholders when they are injured in crashes, a process that state politicians, including Gov. Rick Scott, said needed reform to cut down on ballooning claim costs.

Scott finalized a legislative reform package last May that included tightening conditions for medical treatment compensation awarded under the personal injury protection (PIP) coverage that underpins the no-fault car insurance system.

However, reform supporters and trade organizations urged caution, saying that the ultimate goals of reform—less crime and lower prices for Florida auto insurance consumers—would take time to play out.

QCs Commonly Related to Auto, PIP, Medical Treatment

In its latest review of QCs in Florida last year, the NICB found that a PIP-related loss made up nearly half of all QCs. The top three cited loss types, all of which were auto-related, made up more than three-fourths of all QCs.

Categorized by policies, personal auto insurance coverage was the most-cited policy type by a mile, making up 91 percent of QC submissions in 2012.

The top reasons that insurers referred claims they found to be odd to the NICB worked out more evenly, but the most common were medical-related. “Faked/exaggerated injury” led the pack with 1,440 QCs, followed by “medical provider” at 1,414, “excessive treatment” at 1,328 and “billing for services not rendered” at 1,157.

The analysis also found that nearly half of all of Florida’s QCs last year were generated from three counties: Palm Beach, Broward and Miami-Dade.

Miami-Dade County led the other two by far, with 3,530 QCs there versus 929 in Broward County and 755 in Palm Beach County.

The bureau concluded from its findings that “medical fraud in South Florida is still a significant problem facing NICB member companies.”

NICB’s Focus on Florida Goes Back Years

The NICB founded its first “major task force” comprising specialized agents and analysts to investigate suspicious medical claims in South Florida in 2002. That task force was joined by another in Central Florida in 2010 to address the state’s pre-reform, no-fault law that had allowed “auto policy medical fraud to thrive,” the bureau said last year.

Such crimes have mushroomed into complicated schemes from which illicit organizations and groups are the beneficiaries, according to another NICB report released earlier this year. That report identified Florida as home to the most claims relating to “organized group/ring activity” between 2008 and the first half of 2012.

That report also pointed to PIP systems as being especially vulnerable to such organizations, which perpetrate ploys including staged auto crashes and medical document forgery that swipe compensation from insurers via phony auto insurance claims. Michigan and New York also require PIP coverage and were other high-ranking states for OGA claims.

Wehrle cast the problem of crime in the industry as a war that must be won.

“We have a shared responsibility to win this conflict,” he said in a statement.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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