Minn. Gov. Signs Bill Banning Managed Care Services in No Fault Auto Claims

Minnesotans may need to brace themselves for a sharp rise in auto insurance premiums as a result of legislation recently signed by Gov. Jesse Ventura that severely restricts insurers ability to contain medical costs covered under personal injury protection (PIP) coverage.

The National Association of Independent Insurers (NAII) opposed Senate File 1226, which eliminates managed health care services for a person entitled to no-fault benefits. It is estimated that auto insurance premiums could increase 10 percent for consumers under this legislation.

“This is a step backwards and amounts to an open invitation to higher medical expenses,” Laura Kotelman, counsel for NAII, commented. “Despite language stating that medical expenses must be reasonable and necessary, the PIP medical care system will become an easy target for unscrupulous providers seeking to abuse the system with excessive and unnecessary treatments.”

The bill results in auto insurance being the only insurance dealing with health benefits that does not permit or encourage managed care. Both workers’ compensation and health insurance are statutorily permitted to use managed care. “Senate Bill 1226 allows medical providers to charge virtually any price they desire with no consequences. With little or no medical cost containment permitted, increases in claim costs and auto insurance premiums can certainly be expected,” Kotelman noted.

Insurers are also concerned about conflicting provisions in the bill that will cause confusion and increase litigation. One section of the bill requires insurers to pay a minimum of $20,000 for medical expenses arising out of an auto accident and prevents insurers from developing any pre-established limitation on benefits. However, it goes on to say that medical expenses must be reasonable and necessary. “These contradictory statements will make it difficult for insurers to comply with the law and implement cost control measures. Under this law, insurers could be forced to pay $20,000 for every claim or face being sued by medical providers. These lawsuits will only add to the cost of insurance,” Kotelman said.

Other states such as Florida and New York have experienced the effects of not having the necessary checks and balances incorporated into their PIP auto insurance systems. “Insurers saw the average PIP claim shoot up more than 70 percent in New York over a five-year period. We hope that this doesn’t happen in Minnesota,” Kotelman added.

Topics Carriers Auto Claims Minnesota