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					For Immediate Release:                                                         Contact:
Thursday, February 24, 2011              Jim Quiggle, Sunshine Alliance, 202-393-7331
                                            Alia Faraj, Sunshine Alliance, 850-222-1996
                         Sam Miller, Florida Insurance Council, 850-386-6668 (ext 223)
                     Walt Dartland, Consumer Federation of the Southeast, 850-562-2086

                 CONSUMERS, INSURERS & STATE AGENCIES
                 JOINTLY PURSUE PIP ANTI-FRAUD REFORMS
                   Honest drivers taken for a ride by dummy dents

 TALLAHASSEE, FL— A statewide alliance of consumer advocates, insurers and
government agencies is pursuing legislative reforms to save consumers money and crack
down on rampant staged-accident rings that are looting Florida’s no-fault system and
raising auto premiums for honest drivers.

 “Honest Florida drivers are being taken for a ride by greedy staged-crash gangs. We
must make no-fault fraud a road to nowhere. Urgently needed anti-fraud reforms will turn
up the heat on swindlers, make the streets safer and help ease the pressure on honest
drivers’ auto premiums,” said Walter Dartland, co-chair of the Sunshine Alliance to Erase
Fraud, and executive director of the Consumer Federation of the Southeast.

  Phantom and fraudulently inflated injury claims by crooked medical clinics from setup
crashes have inflicted a “fraud tax” of nearly $100 in higher auto premiums annually for
typical two-vehicle Florida families, already facing a downturned economy, according to
the Insurance Information Institute.

 The Sunshine Alliance is advocating for increased consumer protections, effective tools
to help insurers and law-enforcement better combat PIP fraud and common-sense reforms
to help stop staged-accident rings from preying on innocent motorists.

Florida CFO Jeff Atwater supports effective no-fault fraud reforms and has made it a top
priority of his administration. “Floridians are getting ripped off by the cost of auto
insurance fraud, and the evidence is piling up right along with the bills,” said CFO
Atwater. “We must act quickly to enact reforms to help stop these losses and keep
Floridians’ hard-earned dollars in their pockets where they belong.”

 “Auto schemes are highway robbery and won’t be tolerated. Reforms will help put the
brakes on no-fault crime that is spreading too far, too fast and costing Florida drivers too
much money,” says Sam Miller, executive vice president of the Florida Insurance
Council.

 Staged crashes are spreading rapidly upstate throughout Florida from their traditional
strongholds south in Miami-Dade-Broward. Fake and phantom injury claims from
widespread and loosely organized fraud rings lie at the heart of spreading scams.
 Motorists also could be injured or killed if they’re maneuvered into staged crashes on
roadways.

 In another fraud trend, recruiters for crash rings try to badger real crash victims into
unknowingly seeking treatment from crooked clinics.

 Staged crashes and bogus medical treatment will add about $1 billion in fraud costs to
Florida’s no-fault auto system by the end of 2011 if the current trends continue, says the
Insurance Information Institute. Cumulative costs of auto-insurance fraud from 2009
through 2011 could exceed $1.5 billion if nothing else is done to address the problem, III
says.

 Florida is the nation’s ground zero for PIP fraud. Florida leads the nation in generating
suspicious claims involving staged crashes, adds the National Insurance Crime Bureau.
Tampa, Miami and Orlando rank among the top five cities nationally for suspected staged
accidents, NICB says.

  Florida also accounts for 30 percent of questionable claims involving staged crashes.
Widespread no-fault fraud is a driving factor in skyrocketing auto premiums in Florida.
In fact, fraud steals $100 from the pockets of Florida’s two-car families each year.
Progressive Insurance has cited PIP fraud as the “driving factor” behind rate increase
requests due to “increased fraud activity.”

                                           #####


Background Information

NO-FAULT FRAUD: DUMMY DENTS FLEECE FLORIDA DRIVERS


• The trend: crash rings spreading fast, far. A rising tide of bogus injury claims by
rampant staged-crash rings has turned Florida into America’s epicenter for no-fault auto
insurance fraud. These schemes are so widespread that they‘re imposing a large “fraud
tax” on drivers in the Sunshine State. The cons also expose innocent motorists to
potentially dangerous setup crashes on Florida’s roadways.

• The target: no-fault. Florida drivers must carry at least $10,000 in personal injury
protection (PIP) insurance. No-fault insurers pay to 80 percent of a policyholder’s injury
claims, regardless who caused the crash. Motorists gain insurance protection, peace of
mind, and no haggling in court over who’s at fault. Florida is one of 12 states with no-
fault coverage. But widespread swindles have exploited the system for years, turning no-
fault into a personal piggy bank and ATM for cheaters.

Anatomy of PIP schemes...
• Fraud rings. Most no-fault schemes are engineered by often-large and loosely
organized fraud rings. The rings typically include recruiters (also called “runners”), fake
passengers hired to act injured, and crooked medical providers who conduct expensive
insurer-paid batteries of bogus tests and treatments at shady storefront clinics (also called
“medical mills”) and medical testing centers. One staged crash can generate tens of
thousand of dollars in fraudulent claims.

• Sham operations. Thousands of medical mills operate around the state. Many are
sham operations created solely to bilk insurers in get-rich-quick schemes. They’re
literally fraud factories that mass-produce fraudulent crash-injury claims.

• Staged crashes. Most no-fault fraud involves setup crashes, including phantom
wrecks. Here are three of the most-common kinds of setup crashes:

1) Ring members ram each others’ cars, often on streets or parking lots...

  2) Many setup crashes also never even happen, and involve no cars. Crash rings create
phony medical records and treatment histories involving ghost accidents that happen
solely on paper...

3) Stage-crash rings also maneuver innocent motorists into collisions.

• Pretend passengers. Recruiters for crash rings typically hire people to pretend they’re
injured car “passengers.” The bogus passengers receive fraudulent testing and treatment
billed to no-fault insurers.

• Soft-tissue injuries. The injuries generally involve vague soft-tissue problems such as
whiplash. Unlike broken bones that show up in X-rays, treating whiplash involves
subjective medical judgment. Soft-tissue “injuries” thus can be hard for auto insurers to
challenge as fraudulent.

• Injury or death. No-fault fraud also is a public-safety concern. Honest motorists can
be killed or injured if they’re maneuvered into crashes. This has happened in other states.
An innocent grandmother named Alice Ross died when her car ran out of control in a
botched setup crash in Queens, N.Y.

• News trend: exploiting real crashes. Many no-fault rackets exploit real crashes:
Aggressive “runners” try to entice and even bully legitimate crash victims into seeking
fraudulent testing and treatment of whiplash — even if the victims don’t have neck or
back pain. Most often, recruiters identify crash victims from police accident reports the
recruiters pick up at law-enforcement offices. Recruiters then phone the victims or knock
on their doors, often within hours of the crash. Recruiters also monitor police radio calls
and show up at accident scenes.
—The goal: Steer often confused and disoriented victims to a specific (and fraudulent)
clinic. The victims may not know they’re being led into a fraud scheme. Their health also
may be jeopardized by marginal medical care from swindlers whose main goal is to
maximize their illegal no-fault profits.

By the numbers...

• The typical Florida family with two vehicles paid a “fraud tax” of nearly $100 in
higher no-fault premiums in 2010. Given current trends, the “fraud tax” could rise to
nearly $170 by the end of 2011 — an increase of fully 72.3 percent. The total “tax” could
cost Florida policyholders and auto insurers $1.5 billion between 2009 and the end of
2011 if fraud remains unchecked. (Insurance Information Institute)

• The average no-fault loss rose 23.7 percent from 2006 through 2010 ($7,847, up from
$6,344). (Insurance Information Institute)

• The frequency of no-fault claims rose 46.2 percent between 2Q 2008 and 3Q 2010.
(Insurance Information Institute)

• Florida ranks No. 1 in America for questionable claims involving staged crashes, and
has three of the top five cities. Tampa is the nation’s 2nd-worst city for staged accident
questionable claims (behind New York). Miami ranks 3rd and Orlando 4th.
  (National Insurance Crime Bureau)

• Questionable claims involving staged crashes rose 58 percent statewide between 2008
and 2009, with Tampa posting a 290-percent increase. (National Insurance Crime
Bureau)

• The cost to insurers to cover out-of-control no-fault fraud is rising 70 percent per year.
Those costs eventually will be passed along to Florida drivers in higher auto premiums.
(Insurance Information Institute)

• The amount of “pure premium” required to cover expected no-fault losses soared 87.1
percent between the start of 2008 and 3Q 2010. Pure premium is the money required to
pay expected losses. (Insurance Information Institute)

• PIP fraud accounts for 40 percent of case referrals to Florida Division of Insurance
Fraud. Since July, the division has presented 174 PIP fraud cases for prosecution, made
109 arrests and recorded 110 convictions. (Florida CFO)

• Elements of fraud appeared in 10 percent of all no-fault claims closed in 2007. Almost
one of every three no-fault claims closed in Florida in 2007 involve over-billing or
excessive utilization. (Insurance Research Council)

• Florida residents provided hotline tips to the state Department of Financial Services
that helped uncover cases that stole more than $1.5 million in fraudulent insurance
billings. Four of the cases involved PIP fraud. The tipsters recently received $55,000 in
rewards. The division has given $209,000 in rewards for insurance-fraud convictions to
date. (Florida CFO)

No-fault reforms...

• Supporting the reforms is the Sunshine Alliance to Erase Fraud. It’s a unique
partnership of Florida consumer leaders, insurers and government agencies. The Sunshine
Alliance was formed in 2010 to pursue no-fault reforms.

• The legislation works to save consumers money, close loopholes that allow fraudulent
no-fault claims, and enable exposure and arrest of more no-fault swindlers.

Consumer Action

Florida consumers can take action:

• Know the warning signs that you’re being set up for a staged crash.

• Report suspicious crashes, medical providers and clinics online to the Division of
Insurance fraud or call 1-800-378-0445. State CFO Jeff Atwater’s office provides
rewards of up to $25,000 leading to the arrest and conviction of PIP and other insurance
offenders.

• Don’t let pushy recruiters try to bully you into treatment at shady clinics if you’re in a
real crash. Ask your insurer for reputable clinics that’ll give you the decent medical care
that you deserve.

Sunshine Alliance to Erase Fraud (SAEF)

The Sunshine Alliance is working for meaningful no-fault reforms in Florida.
SAEF was initiated by the Consumer Federation of the Southeast...Florida Insurance
Council...and Coalition Against Insurance Fraud.

Other organizations that have participated in or contributed to the Sunshine Alliance
include:

AARP...Allstate...American Insurance Association...Blank & Meenan...Direct
General...Farmers Insurance...Florida Chief Financial Officer...Florida Consumer Action
Network...Florida Division of Insurance Fraud...Florida Farm Bureau...Florida Insurance
Consumer Advocate...Florida Partners...FloridaPIRG...Foley & Lardner...Geico...
Goldstein Law Group...Insurance Information Institute...Liberty Mutual...Lisa Miller
Associates...National Association of Mutual Insurance Companies...National Insurance
Crime Bureau...Nationwide Insurance...Property and Casualty Insurance Association of
America...Southern Fidelity Insurance...Travelers Insurance.

More information...
Walt Dartland,Consumer Federation of the Southeast (Sunshine Alliance Co-Chair)
850-562-2086
wdart76@yahoo.com

Sam Miller,Florida Insurance Council
850-386-6668 (ext. 223)
smiller@flains.org

Jim Quiggle,Coalition Against Insurance Fraud
202-393-7333
jamesq@InsuranceFraud.org

Alia Faraj,Ron Sachs Communications
850-222-1996
850-212-8317 (cell)
alia@ronsachs.com

				
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