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Our View: Put the Brakes on PIP Abuse

Insurance Journal

Originally published by The Daytona Beach News-Journal   |   View Story

Who suffers most? People with legitimate injuries, home damage or significant handicaps.

Too often, important consumer protections are threatened by greed. Consider the ever-growing number of “drive-by” lawsuits filed against businesses caught barely out of compliance with the Americans with Disabilities Act. Or the fast-talking pitchmen who pour into Florida following a big storm — convincing unwary, shell-shocked homeowners to sign contracts that funnel their insurance benefits through a third party and wrest away their control over home repairs.

Every time lawyers find a handhold in consumer-protection laws, a few firms rush to exploit it for their own gain — practically daring the state Legislature to raise the bar for all cases. It’s a challenge insurance companies and businesses urge lawmakers to take up, and too often, the response is overkill. New laws strip consumers of protections that make it easier for them to challenge their own insurance companies when claims are wrongfully denied.

Who suffers most? People with legitimate injuries, home damage or significant handicaps, who see their access to justice whittled away.

As reported by The News-Journal’s Frank Fernandez, another growing problem has finally reached Volusia and Flagler counties. A single law firm has more than doubled the caseload in Volusia County’s small-claims court, filing thousands of lawsuits in 2017 under the state’s Personal Injury Protection law, many of them based on cases that originated in other parts of the state.

That law — known as PIP — is meant to speedily resolve cases and pay benefits to Floridians who suffer relatively minor injuries in vehicular collisions. These people are the most vulnerable against big, well-funded insurance companies; often, policy holders can’t afford to litigate over a denied claim that at most, is worth $10,000.

So the Legislature tilted the rules in their favor, with a law that requires insurance companies to pay attorney’s fees if they are sued for denying coverage and lose. The idea is to encourage insurers not to drag their feet when presented with a legitimate claim.

Now, as Fernandez reports, there’s a new wrinkle. People with legitimate (or in some cases, questionable) claims are heavily solicited by clinics and other medical providers, who convince them to sign agreements known as “Assignment of Benefits” or AOB. These providers tell their patients that if they sign an AOB, the clinic will “take care of the paperwork.” It’s a tempting offer for a fast-food worker with little knowledge of the court system. But opponents say it’s spawned a cottage industry of questionable clinics that claim the same course of treatment for almost all their patients — regardless of actual injuries.

The pain goes beyond the patients. The Palm Beach Post reports the states’ 25 top insurers have increased the cost of PIP coverage by as much as 54 percent.

Every time, there’s one clear and obvious winner. “Everyone pays more in insurance premiums to make a handful of lawyers and vendors very, very rich,” the Florida Justice Reform Institute says, in a report issued last year. Does that apply to Simoes and Davila, the law firm handling the vast bulk of cases in Volusia and Flagler counties? As Fernandez reported in one notable case, attorney Kimberly Simoes claimed less than $790 for her clients — and nearly $40,000 in legal fees for herself.

Lawmakers can’t ignore something this big. But the proposed remedies — including a bill that would essentially end PIP, replacing it with a requirement that everyone carry coverage for bodily-injury liability — could hurt responsible Florida consumers who are injured by uninsured motorists.

The Legislature should go after this problem with a scalpel, not a chainsaw. One option, taking away the ability to sign AOB agreements, could reduce dubious claims without doing too much damage to consumers. Lawmakers should seek out other consumer-friendly ways to curb the greed, while protecting important rights.