The accountant tapped the bumper of the van in front of her while creeping along in Tampa's rush-hour traffic. The van's driver said he was fine. Then he called an accident referral service.
When the dust settled months later, the bills topped $52,000, all paid by the accountant's car insurance company.
That kind of outcome isn't surprising in Florida, where staged auto accidents, exaggerated injury claims and other kinds of auto insurance fraud and abuse are expected to cost Floridians $658 million in higher premiums this year.
The Insurance Research Council estimates that one claim in 10 made under Florida's no-fault insurance system is outright fraud, and one in three is exaggerated or overbilled. About 27 percent of personal injury protection claims involve a visit to a pain clinic, the IRC says, while one-third of them involve an MRI, and 43 percent include chiropractic care.
TV and radio ads from lawyer and accident referral services and pain clinics crowd the airwaves. People involved in auto accidents are urged to immediately call a referral service, with the implication they can receive big bucks for their injuries.
One clue to their clout: The Florida State Fairgrounds' new performing arts venue is called the 1-800-ASK-GARY Amphitheatre. A referral service owned by a Sarasota chiropractor bought the naming rights last year.
An accident, or an opportunity?
Much of the blame has been laid at the feet of Florida's no-fault insurance law, which requires all drivers to carry $10,000 in personal injury protection coverage for injuries suffered in a car crash, regardless of who was responsible for the accident.
Ads emphasize that amount.
"What people hear is: 'I've been in an accident. I'm going to get $10,000,' " says Insurance Information Institute spokesperson Lynne McChristian. In reality, the money usually goes to a highly developed web of medical practitioners and the referral services who scout out clients for them.
If someone calls a referral service, they're often sent to a pain management clinic, which may not be overseen by a doctor, McChristian says. Some of those clinics "exist just to fraudulently bill insurance companies."
Florida also ranks tops in the nation for questionable auto insurance claims tied to staged accidents, with more than 3,000 in 2009. That's nearly twice as many as New York and California, which ranked second and third respectively, according to the National Insurance Crime Bureau (NICB).
In other cases, car owners have conspired with auto body shops to set off air bags, helping to total out cars on which they no longer wanted to make payments.
"Innocent people's insurance is underwriting all this fraud," says Frank Scafidi, spokesperson for the NICB.
Suspicious activity runs the gamut. Scafidi says it might involve things such as:
- Claiming an accident occurred when it never did.
- Having someone drive his vehicle into a tree and say it was a hit and run.
- Inventing an accident to explain existing damage.
More frightening are organized fraud rings, where several people working together climb into a car and drive in a way that causes an innocent motorist to rear-end the vehicle. The members of the fraud ring then claim everyone in the vehicle that was hit sustained soft-tissue injuries, which don't show up on X-rays, Scafidi says.
"The no-fault system just makes it easier and more lucrative" to perpetrate fraud, he says.
What does car insurance fraud really cost you?
In the end, the money paid to cheaters comes out of the pockets of other Florida drivers.
We compared car insurance quotes for a 24-year-old male on a paid-off 2006 Honda Accord.
Our driver would pay anywhere from $96 to $656 annually for $10,000 worth of personal injury protection coverage in Pensacola. Move him to the fraud hot spot of Hialeah, outside Miami, and $10,000 in medical payments coverage would cost $1,168 to $2,820 a year.
With the deductible already at $1,000, there's also no way to cut those premiums other than doing some car insurance comparison.
Efforts at reform have become a business and political priority, both in Florida and in another no-fault state, Michigan. The average personal protection claim in Michigan dwarfs even that of Florida, and average rates there are the highest in the country.
Florida's state chief financial officer recently asked the Florida Bar to permanently ban lawyer referral services. Bloomberg News reported the Florida Division of Insurance Fraud is investigating accident referral services, and said the FBI has begun to make inquiries.
Law enforcement and insurance companies are working on the problem at street level.
An accident report is the only time a law enforcement official can offer his or her own opinion, rather than just state facts, Scafidi says. For example, the officer may write that the accident scene and the scenario described don't add up.
Insurance companies also can make judgments on a case-by-case basis. Deciding if a claim is questionable is "all subjective," Scafidi says. Sometimes car insurance companies will forward questionable claims to the NICB for the agency to review and investigate.
State Farm alone has more than 1,000 employees who work full-time investigating suspicious claims. They forward some to the NICB and state fraud bureaus, says State Farm spokesperson Lisa Weathersbee.
State Farm currently is teaming up with the NICB to try to combat car insurance fraud through an advertising campaign that began earlier this year.
Rather than just targeting State Farm customers, the insurer opted for a wider campaign that urges all Florida motorists to contact the NICB if they suspect fraud, Weathersbee says.
"Auto fraud was impacting every Floridian's wallets and personal safety, so we wanted to inform every Floridian," she says.