One Frustrated Florida County Tackles Auto Insurance Fraud On Its Own

One county in Florida has decided not to wait on state lawmakers’ promise to address the insurance fraud and fix the state’s automobile no-fault law. It has passed its own ordinance to crack down on fraudulent medical clinics.

The Hillsborough County Board of Commissioners, by a unanimous vote, passed a series of regulations that will require medical clinics to obtain a county license if they primarily treat people involved in automobile accidents and earn the majority of their income through auto personal injury protection insurance claims.

Commissioner Kevin Beckner said the new ordinance is needed if the county has any hope of stopping the fraud that he said is costing county residents up to $350 each in higher premiums.

‘In Hillsborough County, we are paying $15.5 million in higher premiums due to fraud,’ said Beckner, citing a National Insurance Crime Bureau report. ‘This is impacting everyone’s rates and is having a significant impact on our local economy.’

Hillsborough County, which includes Tampa, has become ground zero in the debate over PIP (personal injury protection) fraud. The NICB ranks Florida number one in staged accidents with the number of such accidents in Hillsborough County increasing by 166 percent between 2008 and 2009.

The county also has seen a proliferation of medical and pain clinics that primarily treat PIP patients. In Hillsborough County alone there are an estimated 158 such clinics, compared to 74 in Pinellas County, 22 in Pasco County, 20 in Manatee County and 17 in Polk County.

Beckner¸ who headed the initiative to enact the ordinance, said the regulations are narrowly drawn and are based on the experience of law enforcement officials that investigate clinics and PIP fraud.

‘We wanted to be clear how clinics operate, what it takes to shut fraudulent clinics down, while protecting legitimate clinics,’ Beckner said.

Based on a 15-month study on the issue by local officials, law enforcement, and other interested parties, the ordinance requires PIP medical providers to obtain a county license.

A PIP medical provider is defined as any person, clinic, or other business that received 50 percent of their patients in the form of referrals that they directly or indirectly pay for. The ordinance also defines a PIP medical provider as any person or clinic whose PIP clients accounted for 90 percent of their gross income or bills insurers more than $200,000 in PIP claims annually.

The ordinance doesn’t apply to clinics where the majority of the physicians are surgeons or to clinics that only provide magnetic resonance imaging, computed tomography, or positron emission tomography services. Clinics owned by publicly help corporations, affiliated with a medical school, or owned by a federal tax-exempt corporation are also exempt.

Targeting a clinic’s operations, the ordinance requires clinics to be open for business at least three days a week, during regular business hours from 9:00 a.m. to 5:00 a.m., to see walk-in patients or allow patients to make appointments for services, therapy, and other treatment.

A physician must oversee the clinic’s operations and be physically present at the clinic at least three days a week for four hours per day. A physician may not serve or operate more than five PIP medical provider clinics. A license application requires a nonrefundable fee of $500 and a $1,500 annual fee.

Failure to comply with the ordinance can result in a $500 fine and up to 60 days in jail. Also, physicians whose clinic license has been revoked are prohibited from operating another clinic for five years.

While fully supported by the commission, the ordinance is not without its critics.

Cindy Barsa, who has operated several clinics in Tampa, said the new ordinance added a layer of regulation to an already overregulated industry.

‘This is a lot of expense for a lot of people that really should be left to the state and the medical boards to look after,’ Barsa said. ‘These clinics should answer to them, not to the county commissioners.’

Other critics also complained that the ordinance was an example of government overreach since it dictated the working hours of physicians and placed limits on their source of income.

However, proponents of the ordinance, who included insurance agents, said it is necessary to stem the growing fraud problem, which is pushing up driver premiums.

Jeanett Foley, owner of Bruners Insurance Agency, said she was losing 15 to 20 clients a day because people could no longer afford to pay the premiums. As a result, she said, she likely will have to close down one of her three agencies in the area.

‘Up and down the street in Hillsborough County I’ve seen agencies shutting down and I’m going to have to be one of those,’ Foley said.

The Hillsborough County ordinance is the first of its kind in the state. Officials say it allowed under the county’s home charter, which grants it the authority to enact regulations affecting the health, safety, and welfare of its residents.

The county’s action reflects the frustration many have with state lawmakers’ failure to reform the state’s PIP law. Although state officials have said that PIP reform will be a top priority when the Legislature meets next year, there are no guarantees that reform will actually pass.

‘It is a very complex issue when you involve lobbyists from every legal, insurance and medical profession,’ said Melissa Snively, representing the Florida chapter of the National Association of Insurance and Financial Advisors.

Beckner said that is all the more reason that Hillsborough County can no longer wait to act. ‘At a local level we are responsible for the safety and well-being of our residents,’ said Beckner. ‘If the state doesn’t act, then it is our responsibility to protect our citizens.’