Tort reform and fraud have become the two big targets as Florida lawmakers are finally gearing up to tackle the state’s no-fault auto insurance law.
Taking a divide and conquer approach, the House Insurance and Banking Subcommittee has approved a bill that seeks to rein-in medical and litigation costs, while two other lawmakers have unveiled a bill designed to crack down on fraud.
Florida drivers must carry at least $10,000 in personal injury protection and insurers are required to pay 80 percent of PIP claims, regardless of which driver is at fault. The law was designed to ensure that drivers have some coverage and eliminate the need to litigate small claims. Insurers, however, say the mandatory coverage has become a feeding trough for unscrupulous medical providers, fraudulent lawyers and organized crime rings.
After nearly doing away with the law in 2006 and 2007, lawmakers have tried repeatedly to reform the system with middling results. This year, given the support of Chief Financial Officer Jeff Atwater and a sympathetic governor, Rick Scott, insurers are starting to feel that this may be their best chance at comprehensive reform in decades.
The House Subcommittee approved a bill (CS\HB967) that largely follows the recommendations made last month by Property Casualty Insurers Association, the Florida Chamber of Commerce and the Associated Industries of Florida. The bill primarily focuses on two main cost drivers, medical costs and litigation expenses, with the goal of containing those costs through the use of fee schedules and other means.
Under the bill, arbitration would become the overriding method of resolving PIP claims and the state’s circuit courts would have sole jurisdiction over unresolved arbitrations. Attorneys’ fees in no-fault law cases would be capped at $10,000 or three times the disputed amount, whichever is the lessor. The bill defines “reasonable” attorneys’ fees and resolves disputes between the state’s First and Fifth Courts of Appeal by eliminating the so-called “contingency risk multiplier” that currently allows judges more latitude to award fees.
House lawmakers also looked for ways to reduce medical expenses by tying services to fee schedules. The bill would set PIP medical reimbursements to rates used by Medicare and allows insurers to use a schedule of maximum charges for medical equipment, care and services rendered by clinical laboratories. It would also limit the services performed in ambulatory surgical centers to 80 percent of the state’s workers’ compensation fee schedule.
William Stander, assistant vice president for PCI, said the bill shows lawmakers are serious about implementing lasting reforms. “The committee’s action shows the legislature has recognized the urgent need for PIP reform in our state,” he said.
Just hours after the House Insurance and Banking Subcommittee approved its committee bill (CS/HB967), Representative Jim Boyd (R-Bradenton) and Senator Ellyn Boganoff (R-Ft. Lauderdale) rolled-out their PIP bills whose primary emphasis is combating fraud.
At a press conference, Boyd and Boganoff voiced their determination to crack down on the organized fraudulent practices that they said are driving up auto insurance premiums. “We need to ensure that bad actors cannot continue to take advantage of hard-working Floridians,” said Boyd. “Our efforts will also address one of the root causes of rising auto insurance premiums; unscrupulous health providers, attorneys and individuals working in fraud rings to pad their pockets.”
Backing up Boyd and Boganoff is CFO Atwater and the consumer group the Sunshine Alliance to Erase Fraud. Walt Dartland, co-chair for the group, said the proposed reforms are necessary to continue the state’s efforts to reduce fraud.
“Stage-accident gangs are committing highway robbery and this crime wave is spreading,” said Dartland. “These much needed reforms will protect our hard-earned dollars and set-up another roadblock against no-fault gangs that are driven to deceive.”
The “Comprehensive Insurance Fraud Investigation and Prevention Act” is a laundry-list of proposals pulled from Atwater’s recommendations, the insurance industry’s positions, and the goals of consumer groups. It would give law enforcement officials and insurers more time and tools to investigate suspicious claims. And in what amounts to a budget shifting move, Atwater would be given the discretion to fund auto-fraud investigations with the caveat that funding does not trigger any tax increases.
“I am serious about putting these crooks behind bars and eager to implement reforms that will help reduce fraud in our auto insurance market that is costing Floridians hundreds of dollars a year in increased premiums,” said Atwater.
In addition to pursuing those who are ripping-off the system, Boyd also wants to reward citizens who comply with the law by providing premium discounts for using clinics suggested by insurers.
There is widespread support for the bill in both the House and Senate. The House Subcommittee on Banking and Insurance is expected to schedule a vote on Boyd’s bill this week where it is expected to be approved.