Another Staged Accident Story Reminds Drivers to be Alert to Florida Auto Insurance Scams

Florida State Rep. Jim Boyd, R-Bradenton, helped pass legislation in 2012 aimed at reducing the tremendous number of staged accidents and injuries in the state, and deter claims made after accidents in which victims had not even been present.

Once estimated as a billion-dollar industry in Florida due to the ease of receiving PIP payouts from insurance companies, Boyd’s changes helped strengthen requirements for medical evidence and stipulated that police reports list everyone involved, including all of the passengers.

Credited with reducing personal injury insurance costs and premiums, Boyd feels that the updated law put a dent in a serious problem where opportunistic scam artists still turn dents and dings into major injuries.

One such example of heavy-duty suspicions stemming from a marginal accident was featured in a recent Tom Lyons’ column in the Herald-Tribune.

In Lyons’ piece, a Sarasota retiree was supposedly involved in an accident when backing out of an on-street parking spot. This driver felt the accident was so small that he wasn’t even sure it happened. However, the driver of the other car claimed that he caused the collision and filed a police report. The retiree was issued a ticket.

He later found out from his insurance company that the woman driving the other car filed an insurance report claiming she and her passenger suffered trauma and were feeling pain in their neck, legs and back. The retiree says, “his insurance company is about to take a hit, but he’s not at all sure it is a legitimate one.”

Some unscrupulous staged accident rings rely on each other to carry out these scenarios to receive insurance reimbursement, according to the article. Although some parties face charges in the end, it isn’t easy to know when someone is faking an injury. It is even harder, as demonstrated in the retiree’s case, to prove the circumstances surrounding the injury are bogus.

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Filed under Fla. Stat. 627.736 (2008), Insurance Fraud

Insurance Scammers Target Unsuspecting Drivers in Staged Auto Accidents

It could happen to anyone. A stopped driver waves you on and then slams into your car, causing an accident that looks like it’s your fault and has produced injuries.

A recent story on News4Jax.com revealed how insurance scammers did just that to two victims, both of whom found themselves in the midst of staged accidents either when driving in traffic or pulling out of a parking spot.

One of those victims was one of 80 targeted by a group of schemers, according to postal inspectors.  Total losses in this case came to $130,000.

Drivers who are involved in an accident that seems like it may have been staged are advised to make careful records. Although inspectors say these aren’t easy scams to avoid, they recommend documenting details—both the accident victims and any vehicles at the scene—with photos and video if possible.

The Coalition Against Insurance Fraud provides different scenarios that scammers typically use to stage auto accidents. The organization’s site also provides steps innocent drivers can take to prepare themselves and fight back.

One suggestion is that a driver count how many passengers are in the other car, get their names, phone numbers and driver’s licenses. Accident victims are also advised to get the other car’s license number, and to take cell phone photos of the damage caused to both cars, as well as the passengers in the other car.

 

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Filed under Insurance Fraud

4th District Court of Appeal Denies Rehearing in PIP Benefit Dispute

The Fourth District Court of Appeal has denied motions for rehearing by appellants in a PIP case decided in the insurer’s favor. The case was the consolidation of two separate PIP cases.

Insureds in both cases sought treatment for injuries sustained in separate accidents and assigned their PIP benefits to their treatment providers. One of the insurers, State Farm, reduced the amount paid to Northwood Sports Medicine, and Northwoods subsequently sued. Prior to that filing, the insured’s PIP benefits were exhausted. State Farm moved for summary judgment; Northwoods amended its complaint to allege that State Farm reduced payments in bad faith. The trial court granted the motion for summary judgment on the sole ground of exhaustion of benefits.

Likewise, in the second case, the insured assigned his benefits to Wellness Associates of Florida. USAA Insurance Co. reduced the payments to Wellness, and Wellness filed a complaint for damages. At the time the suit was filed, less than $14 in unpaid PIP benefits remained and, while the lawsuit was pending, PIP benefits were exhausted. USAA moved for summary judgment, Wellness amended its complaint to allege bad faith, and the trial court entered summary judgment based upon exhaustion of benefits.

For jurisdictional reasons, the appellate court transferred the Northwoods case to the circuit court. The question that the appellate court answered in the affirmative in the Wellness case is whether post-suit exhaustion of benefits absolves the insurer from responsibility to pay an otherwise valid claim where the exhaustion occurred after the insurer: (1) paid an amount that the provider claims is less than required by the contract; (2) received a pre-suit demand letter notifying the insurer of the medical provider’s dispute; and (3) was served with the filed complaint.

In its rationale, the court extended its decision in Simon v. Progressive, rejecting the “reserve or hold” theory by which an insurer is to put money in reserve if it denies or reduces a claim until that claim is resolved. The court concluded that “where the reasonableness of the provider’s claim is in dispute, post-suit exhaustion of benefits extinguishes the provider’s right to further payments, as long as exhaustion is prior to the establishment of the amount to which the medical provider is entitled to under PIP.” The court concluded that post-suit exhaustion of benefits—as was the case in Wellness—should be treated no differently than pre-suit exhaustion of benefits, as long as the amount of PIP benefits to which the provider is entitled has not been established. The court therefore affirmed the final judgment of the trial court in Wellness.

The case in the District Court of Appeal of The State of Florida Fourth District, January Term 2014, is Northwoods Sports Medicine and Physical Rehabilitation, Inc., (A/A/O Suzanne Cabrera), and Wellness Associates of Florida, Inc., (A/A/O Daniel North), Appellants, v. State Farm Mutual Automobile Insurance Company and USAA Casualty Insurance Company, Appellees, Nos. 4d11-1556 and 4d11-3796, [March 5, 2014]. Click on the link to read the June 4, 2014 ruling in the case.

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Filed under Case Law, Fla. Stat. 627.736 (2008)

Three PIP Scammers Sentenced in Jacksonville Fraud Scheme

Three men, who staged car crashes and subsequently filed false Personal Injury Protection (PIP) claims through rehab clinics, were recently sentenced to multiple years in prison for their role in an insurance fraud scheme based in Jacksonville.

According to a news story on News4Jax.com, the defendants were described as “mid-level recruiters,” who were arrested as part of a larger scheme that investigators from the Division of Insurance Fraud and State Attorney’s Office first uncovered in 2012. More than 20 people were arrested as a result of this investigation.

The participants would fake accidents and then go to clinics that prosecutors say were owned by the organizers of this scheme. These clinics provided bogus treatment for non-existent injuries.

George Orlando Ortiz Jr., 33, was sentenced to 9½ years in prison. He pleaded guilty to four counts of committing a staged motor vehicle accident, false insurance claims and schemes to defraud.

Also getting sentences were Noylan Barreto, 21, who received a three-year prison term and 10 years probation on two counts of committing a staged motor vehicle accident and one count of false insurance claims, and Freddie Alberto Freytes, 43, who received six years in prison on two counts of committing a staged motor vehicle accident and three counts of false insurance claims.

Insurance companies ran up a tab of more than $150,000 in claims resulting from accidents involving Ortiz, Barreto and Freytes.

Ringleader David Rodriguez Lopez, who we wrote about in our FL-PIP blog on December 11, 2013, was convicted and sentenced to 15 years in prison on charges of: schemes to defraud over $50,000, filing false insurance claims totaling over $100,000, and helping stage a deliberate automobile accident.

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Filed under Insurance Fraud

Attorney Fee Conflict Settled in Advanced Chiropractic v. UAIC

On May 29, 2014, the Florida Supreme Court issued a decision settling a conflict over the timeliness of filing for attorney’s fees.

The case originated in Broward County with an action filed by Advanced Chiropractic against United Automobile Insurance Co. (“UAIC”) for PIP benefits. During the course of the action, the attorney for Advanced moved offices and filed a change of address with the Clerk of Court. Two months later, Advanced and UAIC entered into a settlement agreement in which UAIC agreed to pay Advanced’s attorney’s fees. The trial court judge subsequently entered an order of dismissal in the case.

Advanced’s attorney never received a copy of the dismissal because the Clerk of Court failed to update its records concerning the address change. Once he learned of the dismissal, months later, counsel for Advanced filed a motion for attorney’s fees. Because the motion was filed past the mandatory 30-day deadline, the attorney moved to vacate the order of dismissal based on excusable neglect due to the court’s failure to update its records.

In a hearing on the motion to vacate the dismissal, the attorney for Advanced and an employee of the Clerk of Court both filed unsworn statements. The county court found that Advanced had established excusable neglect, vacated the order of dismissal, and allowed Advanced’s attorney to file a motion for attorney’s fees.

UAIC appealed the decision to the circuit court, contending that counsel for Advanced had not established excusable neglect. The circuit court held that, because the statements from the attorney and the Court’s employee were unsworn, there was not sufficient evidence to support the finding of excusable neglect. The circuit court therefore reinstated the order of dismissal.

Advanced appealed to the Fourth District, asserting that the circuit court had failed to apply the correct legal standard. The Fourth District concluded that Advanced had been denied due process and therefore quashed the decision of the circuit court.

Advanced then filed a motion for attorney’s fees. UAIC opposed the motion on the basis that it was untimely pursuant to the FL Rules of Appellate Procedure. The District Court dismissed UAIC’s argument based on the Rules of Appellate Procedure, but nonetheless denied the motion for attorney’s fees on the basis of the FL Supreme Court’s 1991 holding in Stockman v. Downs, which requires parties to plead entitlement to attorney’s fees.

The Fourth District held that, pursuant to the Stockman decision, the request for attorney’s fees must be made in the pleadings which, in this case, would be the petition, the response, or the reply. Because Advanced did not request fees in the petition or reply, the district court held that the motion was untimely. The state Supreme Court then agreed to review the case to consider whether the Fourth District misapplied the Stockman decision.

In the Stockman case, the Supreme Court addressed whether a prevailing party could raise entitlement to attorney’s fees for the first time by motion after trial. The Court held that a claim for attorney’s fees based upon a contract or statute is waived unless it is made in the pleadings. The Court explained that the fundamental concern is that the parties have notice of the claim as it may affect the decisions of the parties with respect to the case.

In distinguishing Stockman from this case, the Court noted that Stockman involved a request at the trial level and that the primary concern—lack of notice—is not implicated in the case at hand. Since Advanced requested attorney’s fees in both the county and circuit courts,   UAIC could not contend unfair surprise when Advanced again claimed entitlement to attorney’s fees. Consequently, the Court quashed the decision in the court below and remanded to the district court for a determination of the amount of attorney’s fees to which Advanced is entitled.

The case is Advanced Chiropractic And Rehabilitation Center, Corporation vs. United Automobile Insurance Company, Supreme Court of Florida, Case No. SC13-153, May 29, 2014.

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Filed under Case Law

Hollywood Police Look for Insurance Fraud during Traffic Stops

Broward County drivers traveling through Hollywood may be part of routine traffic stops that police are conducting throughout Wednesday to make sure drivers have appropriate auto insurance.

According to an article in the May 28 Sun Sentinel, agents from more than 20 insurance companies are helping police officers spot fake documents.

The joint operation between the National Insurance Crime Bureau and Hollywood Police aims to check drivers and crackdown on insurance fraud, which occurs in about one in every four drivers in Florida, the Insurance Research Council (IRC) says.

Penalties will vary with the level of the offense. Motorists with expired insurance cards are likely to receive a citation. Arrests may be in store for drivers with fraudulently altered insurance documents, according to officials.

Florida is one of the leaders in insurance fraud. According to the IRC, almost 24 percent of all Florida drivers don’t carry auto insurance, putting it in the top five states.

Operations like this one will help to drive down insurance rates and ensure coverage for those involved in auto accidents, the article explained.

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Filed under Insurance Fraud

Miami-Dade Clinic Owner Arrested for PIP Fraud in ‘Operation No-Med Services’

Aurora Hernandez, who owned and operated Magic Hands Medical Services, has been arrested on PIP fraud charges for allegedly organizing and billing a staged accident.

According to an announcement by Florida Chief Financial Officer Jeff Atwater, her arrest is the latest in an aggressive crackdown called “Operation No-Med Services.” This investigation, which began in May 2013 and involves four accident clinics in Miami-Dade County, has led to the arrests of a medical doctor, two clinic owners, five medical licensees, six staged accident organizers and six other co-conspirators.

The Division of Insurance Fraud (DIF) said that its investigation revealed participants from five staged accidents were referred to clinics, including Magic Hands, for treatment that was not provided but still billed to insurance companies in excess of $408,000.

“I am proud of our investigators for their commitment to keeping fraudsters off the streets and out of the pockets of hard-working Floridians,” said CFO Atwater. “Every act of fraud drives up the cost of insurance and we refuse to allow those selfish acts to continue.”

For her role in the scheme, the 32-year old Hernandez faces a maximum of 235 years in prison.

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Filed under Insurance Fraud