An accident runner, a chiropractor, and the push to curb no-fault insurance

Avery Gordon, general counsel for SMART, the regional bus service serving metro Detroit, has seen it before and seen it often. He said it usually goes like this:

“One of our employees is involved in an accident,” something minor, with no serious injuries. “The driver is at home, a few days after the accident, and gets a call (from someone who says), ‘I hear you’ve been in an accident.’”

The caller names a doctor, and tells the driver, “We’re calling to set up an appointment,” Gordon said. The driver might say yes, there was an accident, but I wasn’t hurt and don’t need to see anyone. The caller will tell the driver that soft-tissue injuries may take several days to announce themselves, and calls back the next day, or the day after, always saying, “Let’s set up an appointment.”

“They're supposed to think it’s their employer, SMART, calling,” said Gordon. Setting the appointment is setting the hook. Reeling in the fish is the rest of the game.

What Gordon is describing is not unique, and not just for transit companies. Lawsuits and legal filings by insurance companies and others describe an insurance fraud network of “accident runners,” who work with lawyers and doctors to find clients involved in auto accidents and milk their (often unnecessary) medical treatments for maximum payouts, through private insurers and under Michigan’s no-fault insurance law.

As Michigan policymakers grapple with reform of the state’s no-fault law, and as the state’s insurance rates remain among the highest in the nation, cases like these are illustrative of how the culture of insurance abuse works here, and are among the reasons the insurance industry is pushing to curb Michigan’s no-fault law.

Of course, critics of the insurance industry counter that a multitude of factors, including the controversial use of motorists’ credit scores and educational background in setting rates, also impact Michigan insurance rates. In addition, critics also contest the portrayal of the state’s no-fault law as giving “unlimited” lifetime coverage for catastrophic injuries, noting the law only allows recovery for “reasonable charges” incurred by injury victims.

How it works

Rife with details that sound like they were taken from a Carl Hiaasen novel – such as a Florida-based business operating as – a 2013 civil RICO case filed in U.S. District Court against Universal Health Group and others by AllState Insurance and its affiliated companies paints a picture of how the alleged fraud works. The suit argues that “the singular purpose of the defendants’ scheme and network was to exploit Michigan’s unlimited no-fault benefits by generating as many bills as possible by doing as much treatment as possible.”

The insurers say accident victims are contacted by “runners,” who obtain public police reports listing the names of everyone in a vehicle when it crashes. The runners steer them to particular lawyers and doctors, often chiropractors, who invariably order overpriced tests, make vague diagnoses (soft-tissue injuries are often the go-to diagnosis because they are difficult to refute) and send patients to treatments that go beyond common medical practice, sometimes lasting for months longer than soft-tissue injuries generally take to heal.

“(Michigan has) an unlimited pot of money. No other state has that. That attracts people who are unscrupulous and want to get their hands on it,” said Loni Conarton, communications director for the Insurance Institute of Michigan, an industry group backing no-fault reform.

In a counter-complaint filed in response to the State Farm suit, the defendants object on various legal grounds, pointing out that medical services were rendered, and that the insurers are improperly objecting to private medical decisions.

Those seeking to maintain Michigan’s current no-fault law say the lack of a cap on how much the seriously injured can recover outweighs the bad that comes from people who abuse the system. Michigan is notable for its generosity toward people injured in auto accidents; victims are entitled to recover unlimited “reasonable” medical expenses over their lifetime for catastrophic injuries. When the state’s no-fault law was enacted in 1978, the legislature also established the Michigan Catastrophic Claims Association, to reimburse private insurers for any claim in excess of $545,000. Each Michigan motorist is assessed $150 per vehicle to fund this pool of money.

Advocates for victims and others say this benefit is essential for the most horrifically injured to lead manageable lives afterward. Though even they concede the fund can provide a tempting target for abuse.

A court deposition in one case, filed by two passengers on a Capital Area (Lansing) Transportation Authority bus that was hit by a car, pulled a curtain back on a typical operation. The passengers were suing the transit authority for medical claims. In testimony, Nicola Pavelka, a registered nurse who worked for United Wellness, one of the companies under the Universal Health Group Umbrella, said she was paid a $94,000 salary and promised a finder’s fee (never paid, she said) to recruit doctors to work with the company’s various clinics in southeast Michigan.

Pavelka said chiropractors associated with the company saw some patients “five and six times a week” for chiropractic manipulation, and that the clinics had relationships with plaintiff attorneys looking for “a full-service gas station,” the term used to describe a single office or clinic where patients can receive all of their care. “So they didn’t have to chase all over everywhere to get reports” on their clients, she said.

The emphasis on providing a high volume of treatment was matched by generous billing, typically six times the Medicare rate, which was excessive, Pavelka said. One physical therapist working in the United Health Group clinics was allegedly fired for objecting to the aggressive treatment, and Pavelka herself said she quit when patients were subjected to what she considered unnecessary surgeries – including one scheduled to be done by Dr. Aria Sabit, a Birmingham neurosurgeon who in May pleaded guilty to defrauding private and government insurers for $11 million since 2011.

The case against the Lansing bus system was dropped by the plaintiffs but the insurance industry maintains that abuse is a statewide problem.

Complaints of questionable insurance claims in Michigan made to the National Insurance Crime Bureau, a law enforcement-industry nonprofit partnership, jumped by 122 percent between 2009-13 – from 2,971 to 6,601, with most claims originating in Detroit, Dearborn or Warren. Those claims were “related to medical fraud, namely billing for services not rendered, overzealous solicitation of patients, upcoding and other abuses,” an NICB press release contends.

Who needs money most

But the flip side of Michigan’s benefit, others point out, is generosity, much of it extended to people who have suffered grievous injuries. Efforts to restrict Michigan’s no-fault law picked up a powerful enemy in L. Brooks Patterson, the longtime Oakland County Executive, who came out strongly against SB 248, the most recent focus of reformers.

Patterson, who along with his driver was seriously injured in an auto accident in 2012, has been outspoken about protecting Michigan no-fault ever since. The extra money paid per car, he wrote in a recent op-ed for the Oakland Press, is a small price to help people like his driver, who was left a quadriplegic by the crash, live something close to a normal life.

SB 248 would replace the MCCA with the Michigan Catastrophic Claims Corp., which would take over the former agency’s work, with some changes, among them limiting the amount that could be paid by insurance benefits for attendant care; and limiting the amount an insurer would have to pay to “the average amount the person or institution customarily accepted from all sources, not including cases involving personal protection insurance, Medicaid, or Medicare.” To put it simply, those who care for the most injured would see their compensation capped, and medical expenses would be paid on an average, not actual basis, which attorney Steven Gursten, who blogs on the topic regularly, called “a gift to car insurance companies.”

Conarton, the industry spokeswoman, counters that the bill preserves unlimited medical care – some health-care executives disagree – but the most important reform would be instituting an insurance fraud authority, something Michigan lacks, one of only eight states without one. Such a group would be supported by the insurance industry and provide support and financial assistance to prosecutors investigating fraud, who frequently don’t have the staff or budgets to go after these sorts of non-violent crimes, Conarton said.

“The model (for a fraud authority) would be the Automobile Theft Protection Authority,” Conarton said. That group, established in 1992, has “significantly” improved the auto-theft climate in Michigan, she added. A fraud authority would also analyze data to identify clusters of activity around the state, so efforts could be concentrated there.

All well and good, said George Sinas, legal counsel for the Coalition Protecting Auto No-Fault in Lansing, a nonprofit comprised of medical and consumer groups.

But, Sinas said, abuse of the system works both ways. Little love is lost between the insurance industry and CPAN – a recent press release by the latter group has the title “No-Fault Lies and the Lying Liars Who Tell Them” – and CPAN’s mission is in its very name. Sinas and others acknowledge the problem of high insurance rates in Michigan is partially linked to fraud, but says SB 248 is more about protecting the insurance industry than residents.

“If we’re going to get to the bottom, we need to look at more than just a few bad lawyers, but also the insurance industry,” Sinas said. “When the no-fault statute went into effect, one of the central pieces (driving the reform) was that the tort system (for litigating personal injury cases) was too adversarial. Everything was a fight. No-fault said, ‘You’re in an accident, you get benefits.’ But exactly the opposite has taken place. Virtually every single case is turning into an argument with the insurers.”

Fraud debate

Fraud happens in other public programs, but we don’t overhaul the system as a result, Sinas said. “CPAN has taken a very strong position that where fraud exists, it must be eradicated,” he said. It’s not only a crime, but it jeopardizes the integrity of the system. It must be stamped out.”

Many of the suits filed in recent years, both against and on behalf of insurers and doctors have been settled or otherwise dismissed. The AllState RICO suit is still pending, although settlements have been reached with some of the defendants, according to someone close to the litigation., after a flashy launch in 2009, still has a web presence (complete with its logo of a man slipping on a banana peel), but the site’s functionality appears to have vanished, and the phone is no longer answered. Universal Health Group and United Wellness have non-working numbers or full voicemail boxes.

Pavelka, the nurse/whistleblower, was at the time of her deposition dealing with insurers in a different context -- getting a new house built. Two and a half months after she quit her job, her house burned to the ground, an act of arson, she said. No culprit was ever arrested.

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David L Richards
Tue, 08/25/2015 - 9:52am
Unfortunately, the media invariably and needlessly confuses the issue of no-fault changes because multiple issues are mixed together under the general term no-fault. The general concept of no-fault, that in some cases for some benefits, fault should not be a factor in automobile accident insurance benefits, is one issue. The uncapped amount of benefits for catastrophically injured is a second issue. The measure of the reasonable cost of medical treatment is a third issue. Fraud, as emphasized in this article, is a fourth issue. All of these can be addressed, or not addressed, separately with little overlap.
Tue, 08/25/2015 - 10:18am
Take some of the money from the Catastrophic Claims fund and fund the roads! It is unbelievable that Michigan pays the highest insurance rates in the nation. We need a break - can never get ahead because fees and taxes keep going up and the paycheck doesn't stretch far enough. It only makes sense to have reform in this industry for all Michigan people.
Tue, 08/25/2015 - 10:30am
I absolutely agree . . . . you very clearly identified each issue separately, which is how they should be discussed. Attempting to bundle the issues together through legislation only makes it harder to implement the individually targeted programs and procedures that are necessary to effectively lower the costs of automobile insurance for Michigan residents.
Richard scott
Sun, 08/30/2015 - 8:34am
Thoughtful sorting of an issue with many independent variables. Mr Pontoni's link below is helpful Retired, I once had th privilege of examining patients with musculoskeletal symptoms. Patients who are frauds can often be well coached and clever. There are those whose soft tissue injuries are masked and those who have closed head injuries with devastating long lasting issues in memory, personality disorder. We now know that some of the longest persisting problems following head injury in football are in those without loss of consciousness. While we all think that the kinetic energy causing injury in accidents is related to the force applied, but now we may have learned that the brain can be shaken up in what we believe are minor injuries to the vehicle. Old book, "out of my head" describes head injury in bike auto accident in which the initial neuro exam was normal, but the bike rider took years of work to recover her ability to function at the pre injury level. Sad to read about a fraudulent surgeon with 11,000,000$ in bills.
Tue, 08/25/2015 - 10:20am
Time to aggressively go after fraud, strip citizenship from those found guilty of fraud, along with deportation to wherever they will be accepted. Too many In today's society make their living at the expense of others. Just think how many phone calls you have received that start with words like "your free medical device is ready for pick-up, just press 1 now", or how many ads on TV talk about free blood sugar monitors or supplies delivered free to your door. This abuse is all over.
Tue, 08/25/2015 - 1:42pm
Strip citizenship and deport fraudsters? To where - Ohio? We're talking about Michigan people here, remember? There is no evidence that indicates Michigan's fraudsters are from anywhere else.
Tue, 08/25/2015 - 4:26pm
Anywhere outside of the U.S. Some people do not deserve to be in a civilized society.
Not rich
Fri, 08/28/2015 - 3:39pm
^^ case in point.
Tue, 08/25/2015 - 10:37am
"...morally flexible lawyers ..." what a nice pc phrase! but the only thing about the doctors is that they are "overactive"? what happened to "do no harm" Why do our professions not monitor their members? Why do these people still have licenses to practice? Do codes of professional ethics have no meaning?
emily vincent
Tue, 08/25/2015 - 10:45am
Thank you for your discussion & definition of the issues.
Tue, 08/25/2015 - 11:18am
Having personally experienced the impact of catastrophic injury from an auto accident and the justified benefits of insurance coverage to mediate them, Michigan residents would be foolish to eliminate their no-fault options to save $150 per year! No one knows when they may be injured so tragically that their lives, financial and societal well-being will be plunged into the abyss of life-long dependency and critical medical care. It's not a risk worth taking!
Tue, 08/25/2015 - 3:33pm
I lost my wife after 5 years of mental and physical disabilities caused by an auto accident. It was certainly a relief that I did not have to worry about the price of he care. $150 was certainly worth not adding one more debilitating problem to such a sad and difficult time.
Sat, 08/29/2015 - 4:55pm
I'm all for protecting our premiums by going after fraud, but there are already measures the insurance companies have to protect them We need protection for the insured. Geez, I thought that being 65 with a good driving record would finally get me a good rate, but every time I shop I hear "I can't get anything as good as you are paying". My wife was injured standing 10 feet from the road at the Dream Cruise in 2010. We are required to have insurance which is a contract for services in the event of an accident. And then we have to sue our insurance company to get the benefit, while our attorney collects a third. We are still paying expenses and soon will have to sue again. We had State Farm at the time, and so did the driver who caused the injury. State Farm basically defended him against us. As for the nonsense above about deporting people, how about deporting State Farm, AA and Allstate?
Tue, 08/25/2015 - 11:42am
Let's deal with the fraud instead of lumping all sorts of "reform" into a single bill. The problem is people taking money that they aren't entitled to... strip doctors and lawyers of their licenses to practice, if they're involved in fraud, not victims of car accidents of the benefits they deserve.
Tue, 08/25/2015 - 12:02pm
I wish that the article included a reference to efforts made by groups like the Michigan Association for Justice to curb this behavior. In 2013, two bills were passed by the legislature to make this behavior more difficult: Public Act 218 of 2013 (Effective: 1/1/2014) Sponsored by Rep. Ellen Lipton Amends 1949 PA 300 (MCL 257.1 - 257.923) Public Act 219 of 2013 (Effective: 1/1/2014) Sponsored by Rep. Joseph Graves Amends 1931 PA 328 (MCL 750.1 - 750.568) Link to summary of the bills: Attorney members of the Michigan Association for Justice testified in favor of these changes and continue to be leaders and good examples for how to be supportive of accident victims.
Mon, 11/09/2015 - 5:29pm
I love the information. Have these bills passed? Is this now law?
Cap't Don
Tue, 08/25/2015 - 12:08pm
Why is MIchigan unique in this respect? Also know and think that "No Fault" can exist separately from Catastrophic Claims which is the unique part of Michigan insurance compared to ALL other States. New Jersey tried this approach for a short term and abandoned it as too costly and not serving people but serving the insurance companies. Do you really think that accident victems in the other 49 States have it worse than what Michigan might be without Catastrophic Claims? If nothing else is done, the State of Michigan should confiscate the $20 Billion, yes BILLION claims fund balance and then contract Blue Cross/ Blue Shield of Michigan or another like medical management firm to manage the payouts to avoid the fraud that exists today. What we have now is the insurance companies speculating the loss need coverage and collecting the funds from each insured vehicle at an average of $200. The now have $20 billion in that fund and claim a future forecast shortfall. They also pay the incoming expensess including those padded or fraudulent. It is a single collector/payor system that servs itself as well. I say take it away and make it an agency of the State of Michigan contracting the work to something like BC/BS that would be compensated for service and not be the holder of the funds.
Chuck Fellows
Tue, 08/25/2015 - 2:13pm
Follow the money and dig a little deeper. the low profitability and high of insurance companies is not caused by no fault, catastrophic claims or auto theft. October 13, 2013 CRC study: " Auto insurers have little market power to negotiate (health care) lower prices, in part because of the language of this statute, in part because they generate a lower volume, and in part because of other provisions in the Insurance Code. The reason is not no fault. It is within the health insurance industry and the Michigan Insurance Code. Source: , Page 9.. So the first "fix" is to the insurance code, not creating another agency or taking benefits from those most vulnerable. Instead of blaming the victim of an accident reference the November, 2013 report from the Consumer Federation of America "What Works: A Review of Auto Insurance Rate Regulation in America and How Best Practices Save Billions of Dollars". ( which provides solutions to the cost of auto insurance. Legislators, pundits and the insurance industry are caught in the thick of some very thin thinking.
Jim V
Tue, 08/25/2015 - 2:46pm
Start by going after the fraud. The MCCA is completely overfunded, so let's reduce the per vehicle shakedown to $50 per vehicle. Take control of the fund away from the insurance companies and place it in the hands of an independent agency. Anytime there's a pot of $20 billion dollars waiting to be used, you can be sure that the Shylocks and suits will be first at the trough.
Tue, 08/25/2015 - 3:51pm
Someone commented that it is worth the $150.00 per year per car for the assurance of your lifelong care in the unfortunate situation of a serious injury in an auto crash. That may be reasonable statement if you are middle class and have only one car. I am paying $600.00 per year because I have four cars. I have to pay the $150.00 assessment on each car - even if the car is on PLPD only, and has a very low value. What about the poor? They may be able to afford an inexpensive PLPD policy - but maybe not with the added $150.00 per year. Currently I have a low value car with PLPD insurance and the actual cost of the insurance is 40% of my premium and 60% is the MCCA assessment. - No wonder those with financial challenges opt to drive without insurance. How about collecting the MCCA fee only on cars with full coverage? This would allow for much less expensive insurance possibilities for financially strapped citizens, and prevent the high level of uninsured drivers.
Sun, 08/30/2015 - 9:08am
My son likes cars and has 4 in his yard. He wants to put insurance on all of them but even plpd is $300 each per month. It's sad that someone in the motor city can't enjoy their cars. I have full coverage, no accidents, for $2000 a year. I made a $1800 claim that wasn't my fault. My insurance went up 900 because " you're not accident free"
Tue, 08/25/2015 - 4:01pm
Thank you for the thorough and informative coverage of the issues surrounding Michigan’s No Fault auto insurance system. No Fault fraud is a crime and its perpetrators must be identified, caught, prosecuted and punished. But abuse and misuse of Michigan’s No Fault auto insurance system is not limited to just “insurance fraud network[s]” such as those described in your reporting. Auto insurers are guilty, too, of abusing and misusing the system. They pay hired-gun, insurance doctors to conduct so-called “independent medical examinations” - or IMEs - whose primary purpose is to assemble “findings” and “conclusions” that the auto insurer can use to rationalize denying and/or cutting-off payment of an auto accident victim’s No Fault medical benefits. But that’s not all. Because there is no “authority” to police auto insurers’ conduct and because Michigan has no “bad faith” law or punitive damages law and because Michigan’s Consumer Protection Act won’t protect auto insurance consumers against unscrupulous auto insurers, auto accident victims are vulnerable to other forms of abuse by Michigan auto insurance companies: (1) An auto insurer lying and fabricating its own rules for what an auto accident victim must show in order to collect No Fault wage loss benefits; (2) an auto insurer trying to trick auto accident victims by stubbornly and wrongfully continuing to use an “unenforceable” venue provision in its UM/UIM (the same one that the Michigan Court of Appeals declared “unenforceable” eight years ago in 2007; (3) an auto insurer trying to dupe an auto accident victim into forfeiting all present and future No Fault medical benefits by including “Full and final settlement of PIP claim” on the victim’s No Fault wage loss check; (4) an auto insurer trying to avoid paying UM benefits by pursuing a legal strategy that was rejected by the Michigan Court of Appeals in 2014; and (5) an auto insurer making a low-ball settlement offer to an auto accident victim who did not have a lawyer, but, ultimately, settling the case for 3900% more once the auto accident victim retained a lawyer. Thank you again for your coverage of this issue and I hope these comments help to illustrate another perspective on “how the culture of [No Fault auto] insurance abuse works here” in Michigan.
Tue, 08/25/2015 - 4:38pm
How would this whole issue be changed if we had a single payer healthcare system? Would seperate care costs still come from the state level fund, or would everything come from the single payer insurer? I'm honestly curious- this just occurred to me while reading this.
Lola Johnson
Tue, 08/25/2015 - 5:08pm
It is sheer nonsense to talk of stripping citizenship from a 3rd or 4th generation American. for Fraud, of all things. that is what prisons are for. We need to address rampant fraud on both sides of the debate. If some think it's okay to rip off the insurance company, that might be because the insurance company thinks once it has your premium, the money is for their sole use, and they should never have to part with it. So they find all kind of loopholes and delay tactics to avoid paying for needed care, with the hope that you will die sooner. Anyone who defrauds others ought to go to prison. How about a few perp walks?
Tue, 08/25/2015 - 7:53pm
I am more impressed with the conversation here than I have been with most of what we see in these articles. I believe we have two main issues with all this. 1. FRAUD: I believe no one should ever advocate that anything be eliminated as there is "fraud" in it. If we did, we would have to eliminate almost everything. If we don't have a "Fraud Task Force" we should by now! It probably could be funded by it's own recovered benefits? 2. The very definition of "Automobile Insurance". I believe that with the implementation (however slow and difficult) of the Affordable Health Care Act we may (for the first time since the automobile was created) finally have the chance to have "Auto Insurance" for "Autos", and "Health Care Insurance" for "People?" And, as a possible deterrent for those finally convicted of automobile or health care "insurance fraud", as punishment the culprits could be made legally exempt from all health care and no-fault auto insurance advantages and benefits!
Tue, 08/25/2015 - 9:17pm
The MCCA catastrophic claims cost is much higher than $150 because it is levied per vehicle. I have four cars and two motorcycles and must pay the $150 six times each year. The per vehicle charge is unfair to auto and motorcycle enthusiasts and makes the cost to vehicle collectors outrageous.
Wed, 08/26/2015 - 10:41am
As a retired Firefighter, I ran on those who would need care for the rest of their lives, and went on calls to Adult Care homes where those head injury, and major injury patients lived out their days, with care. If we do this, who do you think picks up the shortfall? Medicaid. In other terms, the taxpayer. Also, it never ceases to amaze me how "Fraud" is charged when it's trauma patients, or those on assistance, but I just read that the Pentagon is clueless as to the whereabouts of over 8 Trillion dollars. Where are the shouts of fraud and reforming that system?
chuck md
Fri, 08/28/2015 - 3:06pm
As in every walk of life there are the who will cheat the system. Rather than penalizing the victim(s) of an injury penalize the cheaters. Aggressively seeking out and prosecuting a few of the healthcare provider, legal services provider and anyone else involved (including the fraudulent victim) will go a long way in rectifying the problem. Loss of license, and/or fine and/or prison time will work very well. Also, set the payment schedule for services at the prevailing standard (e.g. BC//BS, Medicare etc.) and not usual and customary charges. I bet this will go a long way in fixing the problem.
Fri, 09/25/2015 - 5:58pm
Suggesting that the unseemly solicitors of "soft tissue" claims and the catastrophic claims fund are in any way connected is just plain wrong. The CAT fund doesn't get involved until the auto insurance company has paid out over $545,000.00 in benefits. Only the most horrifically injured persons reach that amount. Limiting the lifetime medical benefits of the catastrophically injured is the least compassionate thing we could do as a society. Is that how we wished to be judged? But after all, Michigan is a state where the politicians set arbitrary limits or "caps" on cases for victims of medical malpractice rendering jury verdicts an illusion and again, only affecting victims who are the most damaged, and no one seemed to care that it directly contradicted the right to trial by jury in all cases over $20.00 as guaranteed by the 7th amendment found in our Bill of Rights. Real conservatives would never would have done such a thing.