Bloomberg News

Florida Fraudbuster Urges Ban on Lawyer Crash-Referral Networks

November 29, 2011

Nov. 16 (Bloomberg) -- The chief financial officer for the state of Florida is calling for an end to heavily advertised accident referral services blamed for driving up the cost of treating auto accident victims.

Jeff Atwater, who as CFO oversees insurance investigations, wrote a letter yesterday urging the Florida Bar, which regulates lawyers, to “expeditiously institute a permanent ban against” referral services. They advertise hotlines such as 1-800-411- PAIN and 1-800-ASK-GARY, and urge car-crash victims to call for help finding a doctor or lawyer.

Many of the services are owned or operated by chiropractors. Lawyers can only accept clients that are referred by services registered with the Florida Bar, which has been considering new rules for the networks.

“I am appalled by the fact that these individuals, disguised as legitimate referral services, have been able to prey on society for so long,” Atwater said in the letter to the bar. “This must stop.”

Bloomberg last week reported on the close relationship between law firms and medical clinics in the ask-Gary network, which was founded by Sarasota, Florida, chiropractor Gary Kompothecras. A former chiropractor at Physician’s Group clinics owned by Kompothecras testified in a deposition that lawyers directed the clinics to cancel or order procedures depending on how much insurance a patient had.

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An attorney who had worked for one of the law firms in the network alleged clients were steered to clinics owned by Kompothecras in exchange for the firm getting referrals. Physician’s Group has said lawyers in the ask-Gary network have no requirement to send patients to its clinics.

The referral system boosts medical costs by adding to demand for services, with pain clinics often charging premium prices and working closely with lawyers that pursue maximum payouts for injury claims, according to patients, medical bills, internal e-mails and former employees.

Kompothecras and the law firm have denied those allegations.

Lawyer referral services are already “heavily regulated” by the bar and the auto insurance industry is to blame for attacks on referral networks, the ask-Gary network said in an e- mailed statement.

“The lawyer referral services exercise a first amendment right to promote services needed by the public,” the network said in its statement. “They enable smaller law firms to pool marketing dollars and they help Floridians find the care and representation they need.”

There are 72 registered referral networks in Florida, up from 10 five years ago, and they also operate in other states, including Georgia, Kentucky, Massachusetts and Minnesota.

‘Intolerable’ Relationship

Car-crash pain treatment is growing at a time when Americans are getting in fewer accidents. Insurers’ losses -- payments they made or expected on personal-injury protection claims -- rose to $13.4 billion in the U.S. last year, up 66 percent from 2006, the National Association of Insurance Commissioners estimates.

The number of people injured in auto accidents declined 14 percent to 2.2 million between 2006 and 2009, the last year of available data. Florida’s payouts for personal-injury protection were $2.4 billion last year, over a sixth of the U.S. total.

Atwater said in the letter that his office has received confidential tips “regarding the incestuous interactions between the participants” in the referral networks.

“It is intolerable for a quid pro quo relationship to exist between or among lawyers and health care professionals where the physical well-being of Florida’s citizens is concerned; not to mention the impact these improper relationships have on the cost of insurance premiums,” he said.

Officials at the Florida Bar didn’t immediately respond to a request for comment.

--Editors: Gary Putka, Anne Reifenberg

To contact the reporter responsible for this story: David Armstrong in Boston at darmstrong16@bloomberg.net

To contact the editor responsible for this story: Gary Putka at gputka@bloomberg.net


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