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After arrests of attorneys, chiropractors and clinic employees for PIP fraud in Florida – is Michigan next?

November 10, 2014 by Steven M. Gursten

Why the PIP fraud problem in Michigan by unethical injury attorneys and doctors continues to grow


I’ve written from time to time on how certain unethical personal injury attorneys in Michigan are engaging in PIP (personal injury protection) fraud.

Two things have caused the escalation of PIP fraud in Michigan.

One was the draconian change in our third-party auto accident injury threshold laws, which ironically, the insurance companies and activist Republicans on the Michigan Supreme Court helped to create.

The second is the ability of lawyers, chiropractors and No Fault “victim rights” advocate companies to download police reports from the Internet, and then target car accident victims by sending letters, calling homes, and in some cases, even knocking on doors. When I first meet with clients in my own cases, it’s very rare if they haven’t already received multiple solicitation letters from attorneys.

It’s unfortunate, because I personally feel this is also incredibly demeaning to the legal profession. But it’s still legal and certain lawyers and law firms are exploiting this as a way to aggressively contact potential auto accident clients in this state.

The profit potential is immense for the doctors and personal injury lawyers who engage in PIP fraud.  After all, there is no third-party injury threshold to meet.  It doesn’t matter how bad the case is or may be – any future third party settlement (for injuries and pain and suffering against the wrongdoer driver’s insurance company) is just gravy.  The real money is in the medicals.  Doctors work up big bills, and the lawyers who work with them take one-third to 50% of the bills (they can charge 50% because it is a contract action between the doctor and the lawyer, not a personal injury action where the contingent fee would be capped at one-third of the recovery).  These lawyers are making a lot more from the doctor bills than they ever did representing people in car accidents, when many defendants only have $20,000 in bodily injury insurance.  And they are doing this in volume. Very large medical bills are racked up, and the lawyer takes his attorney fee on the medical expenses in the first-party No Fault case.

In Michigan, there are now new laws that prohibit the direct solicitation of a car accident victim by attorneys for the first 30 days after a car wreck. But this new law hasn’t made a dent in the problem. While penalties for lawyers who break the law are strong: including jail time and fines of up to $60,000 – the 30-day time limit  for a lawyer to contact a crash victim is way too short.  I was outspoken that the time period should be lengthened to at least  90 days, to give auto accident victims peace of mind, to see if they can recover from their injuries, and time to decide if they even need to hire an attorney.

The idea is to stop this feeding-frenzy where accident victims are being  pounced upon by attorneys, and especially when people are more vulnerable such as immediately after a car accident. After the change in our laws, the only thing that has arguably changed is that the attorney feeding frenzy now starts at day 31, instead of within a day or two after a car accident, as was happening before.

And the 30 days does nothing to stop PIP fraud, which is  alive and well in Michigan.  It’s interesting to me that we have a Republican attorney general in Bill Schuette, and we have almost unchecked power by the auto insurance companies in this state with all three branches of government now entrenched in Republican hands. Yet nothing seems to be done to stop this problem.

I have many friends who are defense attorneys and insurance claims adjusters – probably more friends who are defense lawyers than plaintiff lawyers, because I spend all my time with defense attorneys and adjusters. All my defense friends tell me how many of the insurance companies now have dedicated PIP fraud units aimed at certain law firms in Michigan. These are supposedly special units of lawyers and claims adjusters who only handle cases from these law firms.

Yet year after year, nothing happens. Crime pays.

It’s really too bad. Because if these personal injury law firms are breaking the law and engaging in PIP fraud, then it hurts everyone in my profession – including the majority of lawyers who still play by the rules and are in this business because they truly like people and want to help them. The irony is it costs insurance companies millions in these small nuisance claims when the medical and transportation bills get worked up to these big numbers.  I’ve written many times on this blog that the priorities of the insurance companies are completely misplaced. Instead of trying to cap PIP medical benefits, which devastates those who need it most, they could instead save millions by more aggressively going after these lawyers and doctors.

Perhaps Michigan could take a lesson from Florida, where some personal injury attorneys, chiropractors and certain medical clinic employees allegedly involved in a massive PIP fraud scheme were recently arrested.

The arrests, made in late October in Martin, Miami-Dade and Palm Beach counties, follow a year-long undercover investigation by the Florida Department of Financial Services’ Division of Insurance Fraud, according to a press release from Jeff Atwater, Florida’s Chief Financial Officer.

Atwater said the undercover work has “exposed a crime ring responsible for potentially hundreds of thousands of dollars in fraud.”

Here’s how the investigation played out: An undercover detective became a patient broker for the ring. The targets indicated they would compensate the undercover detective for referring patients under the guise of “marketing.” During the meeting, in which the brokering agreement was discussed, the principal targets all agreed to pay the undercover detective for bringing patients to specific clinics. Several times during meetings, the principal targets mentioned it was illegal to directly pay for patients, hence the marketing disguise.

Even as I write these words, I think of the son of two clients of mine who just told me last week that a lawyer walked unsolicited and uninvited into his mom and dad’s hospital room after they were terribly injured in a collision with a SMART bus in West Bloomfield.

My point, sadly, is all of this is getting worse. A lot of the reason for this is that nothing is being done to stop it.

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