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This booming business is made possible by Florida's insurance laws. Florida is a "no fault" insurance state. If someone crashes into your car, your insurance is supposed to pick up the tab for treating your injuries, and the other person's insurance will cover theirs. It doesn't matter who caused the accident. The idea is to avoid the cost of expensive lawsuits and skyrocketing premiums.
All Florida drivers are required to carry a minimum of $10,000 in personal insurance protection (PIP) insurance. If you're injured in an accident and can't work, that $10,000 is supposed to cover 80 percent of your medical bills and/or 60 percent of your lost wages, according to the state Department of Financial Services.
Ideally, doctors would provide only the services that are medically necessary and the insurance companies would pay the bills promptly. But the system gets perverted by doctors who inflate fees and lawyers who profit from battling insurance companies to collect those fees. There are various ways that fraud can occur. Some people stage car accidents or fake injuries simply to collect the PIP money. In other cases, a patient has a legitimate but minor injury. His doctor knows that a pot of $10,000 is available, so to get the entire amount, the doctor will run up the patient's bill with expensive tests and treatment he may not need.
"It's become a dollar target," says Lynne McChristian, Florida representative for the Insurance Information Institute, an industry-funded nonprofit. "And people will find that the benefits magically end when you reach that $10,000 limit."
In Florida, the problem is especially severe. "Florida leads the entire nation in PIP fraud," says John Askins, director of the state's Division of Insurance Fraud."You are talking about tens of thousands of fraudulent claims. We have always been overwhelmed."
Lawyers make money from accidents and PIP claims too, because they step in to fight skeptical insurance companies and force them to pay the doctor bills. The lawyers charge hefty hourly fees and take a percentage of any insurance monies won.
If a doctor exaggerates a patient's injuries to get paid more, "it's insurance fraud," McChristian says. "And it's not a victimless crime, because we all pay more for insurance because of these kinds of situations."
As of 2007, Florida was the fifth-most expensive state in the nation for auto insurance, according to the National Association of Insurance Commissioners.
Although decrying fraud in the system, some personal injury lawyers and doctors say PIP is necessary to cover urgent medical care for car accident victims without other forms of health insurance. In 2007, the state Legislature considered ending the PIP requirement. The Florida Hospital Association protested, saying that 40 percent of people sent to emergency rooms after a crash have no health insurance other than PIP.
"Without PIP, consumers' health insurance policies will rise to cover their injuries — as well as those of the uninsured," Rich Morrison, corporate vice president of the association, said at the time. "Robbing Peter to pay Paul and shifting the medical costs of uninsured motorists to insured ones is not in the best interest of Floridians."
And Cris Boyar, a Margate personal injury attorney, argues that insurance companies are also to blame for driving up costs. Insurers "routinely and unreasonably deny valid claims," Boyar wrote in an October 2010 Florida Bar Journal article. They "drive up legal fees by causing expensive and protracted litigation."
No investigative agency has publicly accused 411-PAIN of criminal wrongdoing, and Sohan and Rodriguez's lawsuit does not directly accuse 411-PAIN of PIP fraud. Instead, it says the two men were misled into using the company's services, so that 411-PAIN could "secure insurance payments and reimbursement for medical services." The class-action lawsuit, filed in Broward Circuit Court, alleges false advertising, deceptive trade practices, and a civil conspiracy. According to the complaint, the company used "1-800-411-PAIN to conduct a massive advertising and marketing campaign, using fraudulent misrepresentations as a method of procuring patients." They also "unlawfully solicit clients... on behalf of lawyers pursuing personal injury claims."
Based on their investigation of the company, Sohan's lawyers believe that 411-PAIN, which calls itself a "medical and legal referral service," has a formula for collecting PIP money, plus extra cash. First, the hotline refers a client to a chiropractic clinic that will burn through his PIP money by having him visit the doctor nearly every day, undergoing multiple treatments. The doctors may even inflate the severity of the diagnosis, saying the client's injuries are so serious that they go beyond the $10,000 PIP coverage. They will charge the patient, say, $5,000 more than the PIP limit, thereby saddling him with a medical debt that can be resolved only through a lawsuit.
Meanwhile, the hotline sends the client to a personal injury lawyer — which wouldn't be necessary if the client didn't have so many medical bills to pay. The lawyers file a claim against the other driver's insurance company — the person who supposedly "caused" the crash. Using the injured client's stack of medical treatments as evidence, the lawyer will ask for thousands of dollars in damages, in addition to the $10,000 that was already billed to PIP.