Most types of insurance policies operate on a fault basis, meaning that the insurance provider of the party at fault will cover the resulting damages or losses. However, certain states also offer coverage on a no-fault basis, permitting the insured to file a claim with their own insurance company regardless of who was at fault in an accident.
One of the most common forms of no-fault insurance is known as personal injury protection insurance or ‘PIP’. It provides cover for healthcare costs, lost wages, and other injury-related costs sustained in a car accident.
While this no-fault system can offer insured individuals a faster means of compensation during difficult times it is also susceptible to exploitation. According to statistics published by the Department of Insurance and Financial Services in Michigan, 18% of PIP claims resulted in payments that had the appearance of fraud and/or the exaggeration or inflation of amounts claimed. In this article, we will examine some of the fraudulent activities related to PIP insurance and the steps that can be taken to combat them.
Runner Fraud
Following a car accident, the personal details of the PIP policyholder are accessed by a third party who is referred to as a ‘runner’. Acting as an intermediary in the fraudulent scheme, the runner will reach out to the policyholder and offer to assist them in securing medical care for their injuries.
Even if the policyholder has not sustained any injuries, a runner may persuade them to attend a specific medical center, on the basis that they will receive a cash payout upon resolution of their case.
The medical center, which is complicit in the fraud, will agree to fabricate or exaggerate any injuries and then submit a fraudulent claim to the insurance company of the policyholder with the assistance of a personal injury attorney who is also participating in the fraud. The PIP funds are then distributed among the parties who took part in the fraud, with very little being left for the policyholder, who is also the victim of the fraud.
Staged Accidents
In this scenario, a medical center will engage a third party to orchestrate a relatively minor accident between two vehicles with the purpose of submitting a fraudulent insurance claim. The medical facility will then exaggerate or falsify the injuries of the policyholder following their staged accident, to obtain a PIP payout.
If you have been involved in a staged accident or would like further advice on fraudulent insurance claims, consider contacting an experienced attorney at Sadaka Firm who can help you further.
Steps to Combat PIP Fraud
The following steps can be taken to help combat fraud in this area:
- Make runner fraud a felony rather than a misdemeanor to deter individuals from participating in such activities.
- Revoke or suspend the license of medical practitioners or centers that engage in insurance fraud schemes and also levy fines upon them. The potential for public disclosure and reputational damage can also serve as a powerful deterrent.
- Raise the level of evidence required in no-fault insurance claims by insisting that claimants present a witness who has direct knowledge of the facts of the case and the claims being made.
Conclusion
These measures can help reduce the incidence of fraudulent activity in this area, ensuring the legitimacy of no-fault claims.
Featured image by Andrea Piacquadio at Pexels
