The Florida Senate and House of Representatives are currently battling over what is, at least, the fourth concerted effort to reform Florida’s personal injury protection coverage law in the last decade. Under current law, private passenger motor vehicle drivers are required to carry $10,000 of no-fault first-party coverage (per person) in personal injury protection (“PIP”), for bodily injury sustained in a motor vehicle accident by the named insured, relatives residing in the same household as the named insured, persons operating the insured motor vehicle, passengers in the insured motor vehicle, and persons struck by a motor vehicle. In return, PIP provides the policyholder with immunity from liability for economic damages (medical expenses) up to PIP coverage limits and for non-economic damages (pain and suffering) for most injuries. With this form of no-fault protection, PIP was intended to ensure the first-party coverage of PIP for all drivers, while reducing the need to resort to litigation over small claims, cost, delay, and inconsistent legal interpretation of policy language.
Critics of the law continue to cite to results which contradict these goals. The state has witnessed staged accidents, fraudulent clinics, over-billing or billing for services never rendered, and purportedly over-zealous attorneys who have created a cottage industry for the sole purpose of quickly claiming the $10,000 in PIP benefits, after which they then sue the insurance company for benefits allegedly withheld. The Insurance Information Institute estimates that Florida drivers subsidize fraudulent PIP claims by some $50 annually per vehicle. Further, the state’s Insurance Consumer Advocate reported Thursday that PIP costs in Florida increased by 20 percent in 2011 alone, highlighting the need for immediate reform.
Reforming Florida’s PIP law has been a top insurance legislative priority this session for many stakeholders, with the strong support of Governor Rick Scott, Chief Financial Officer Jeff Atwater, Insurance Commissioner Kevin McCarty and others. And, while both chambers of the Florida legislature have recognized the need for reform, they each have embarked upon disparate paths for achieving reform with the real possibility of yielding disparate results.
The original House bill (HB 119) would replace the state’s current PIP law with a proposed “Emergency Care Coverage” insurance scheme. It would maintain PIP monetary benefit levels at $10,000 in medical coverage and provide loss wages and funeral benefits. It would require accident victims to be treated in emergency rooms, not clinics, and limit the window for seeking initial treatment to 72 hours. It would exclude massage therapists, acupuncturists and chiropractors from receiving PIP payments for medical treatments.
The Senate bill (SB 1860) would give accident victims up to 14 days to seek medical treatment. Accident victims could also seek treatment at a hospital or hospital-owned clinic, from a dentist and – as a critical distinction against the House bill – from chiropractors. Follow-up visits could be provided by physicians, including family doctors, chiropractors, physician assistants, and advanced nurse practitioners. Massage therapists and acupuncturists would not be eligible for reimbursement under the Senate bill. The Senate bill tries to rein-in utilization by limiting care to 24 visits or to services rendered within 12 weeks of an accident, unless the insurer approves additional treatment. Critics caution that this approach will facilitate additional litigation over insurer determinations as to the medical condition of patients for further treatment.
Another key area on which the House and Senate disagree concerns attorney fees. The House bill follows the state’s workers’ compensation model, which places caps of fees and eliminates contingency fee multipliers that can more than double fee awards. In contrast, the Senate bill leaves intact the current attorney fee reimbursement schedule.
The reduction of fraudulent PIP claims is expected to result in cost savings in the form of reduced insurance rates. To force attainment of this result, the the Senate bill calls for a 25 percent reduction in PIP rates, effective January 1, 2013.
Yesterday, Governor Scott waded into the fray stating:
“The Senate bill, it seems like it’s been written by special interest,” Scott said in Web video released by the Florida Chamber of Commerce on Thursday morning. “The Senate bill is not going to reduce the fraud at all. The House bill does, so we’ve got to focus on that.”
Florida Insurance Commissioner Kevin McCarty said the Senate’s PIP fix might not be a fix at all — and it could bankrupt some auto insurers. Commissioner McCarty further postulated that, “There are some provisions in the Senate bill that we fear are going to exacerbate the problem.”
If the Senate and House cannot come to an agreement today, the last day of Florida’s regular annual legislative session, the Governor will likely call a Special Session to deal with PIP reform.