Major Florida PIP Reform Effort Dies in Committee

The industry’s push for comprehensive reforms to Florida’s no-fault personal injury protection (PIP) insurance law came to an abrupt end in Florida after a House committee by a single vote margin rejected a comprehensive reform bill.

Despite a widespread coordinated effort on the behalf of state officials, insurers and consumer groups such as the Coalition Against Insurance Fraud and the Sunshine Alliance to Ease Fraud, the House Subcommittee on Health Care and Human Services by a 9 to 8 margin voted down HB 967/HB 1411, which represented the most far reaching attempt to reform the state’s no-fault law since 2007.

The combined bills contained provisions designed to reduce fraud, lower litigation expenses and control the cost of medical services. Among other things, the combined bill would have tied personal injury protection (PIP) medical reimbursements to Medicare rates and allowed insurers to use a schedule of maximum charges for medical services. The bills also featured limits on attorneys fees, gave insurers more time and tools to investigate claims and granted state officials more resources to combat fraud.

William Stander, regional vice president, Property Casualty Insurer Association of America, expressed disappointment over the demise of PIP reform. He said that the industry had been fairly convinced that with a new Legislature that advertised itself as the most pro-business in history, there was a good chance of achieving reform. But in the end, pro-business or not, lawmakers decided not to move forward on the PIP.

Part of the reason the PIP bills were pushed aside might be that lawmakers are preoccupied with another insurance issue of some urgency: what to do about property insurance and the state’s Citizens Property Insurance Corp.

“With everybody’s eyes on property our challenge was to convince lawmakers there is a [PIP] crisis even though it may not be felt yet at the retail level,” Stander said. “But between property and the opposition of lawyers and medical providers, PIP reform proved to be too tough an issue.”

At the center of the debate was an attempt to rein-in claimant attorneys fees. Under HB 967, attorneys fees would have been capped at $10,000 or three times the dispute amount, whatever is the lesser. The bill defined “reasonable” attorneys fees and sought to resolve a dispute between the state’s First and Fourth Courts of Appeals be eliminating the “contingency risk multiplier,” which judges can use at their discretion to award larger fees.

In the face of strong opposition to the provisions, the industry tried to pivot and set claimant attorneys fees at $200 per hour. Even so, the combined opposition of attorneys and health care providers who make up a large portion of the lawyers’ caseload provide to be too much to overcome.

Paul Jess, representing the Florida Justice Association, said that the insurance industry has itself to blame for the defeat of PIP reform. Pointing to the provisions on attorneys and provisions that giving insurers almost an unlimited time period to investigate claims, Jess said the bills were less about fraud and more about cutting insurers’ costs at the expense of injured drivers.

“If the bills had only dealt with fraud, they would have had more success,” Jess said. “But they over-reached and loaded them up with provisions that would make it easier to deny and not pay claims.”

Looking forward, Stander said that given this year’s outcome the industry is going to have to do a wholesale evaluation of its approach to auto reform. In 2006, the industry convinced lawmakers to repeal PIP, a decision that lasted only months due in part to a split in the industry’s position. That issue, however, will likely be revisited in the coming months.

“It is possible that reform is just not possible,” Stander said. “As companies survey their losses and expenses, it is possible that more and more would support a repeal of PIP.”

Although it took the House subcommittee’s vote to formally end the prospects for legislation this year, the Senate previously had tipped its hand over the chances for PIP reforms. SB 1930 and SB 1694 had passed through the Senate Banking and Insurance Committee with less than enthusiastic support.

At the time, Senator Joe Negron (R-Palm Harbor) predicted that support for the bills would “dry up” if changes weren’t made to bills. “Let’s not go to the extreme and act like every person involved in an auto accident is a potential crook,” he said. “People are involved in accidents and do have injuries.”

Negron’s prediction became true when the Senate Judiciary Committee, which traditionally is sympathetic to the trial bar’s positions, walked away from its last committee meeting of the year without voting on the two bills.

Meanwhile, the Senate Budget Committee approved several amendments to a catch-all bill of miscellaneous insurance measures, SB 1215. Among the amendments are ones requiring police to gather more information about crash victims and another establishing civil penalties for fraud violations that would be used to fund a non-profit entity charged with looking into fraud.

While expressing his disappointment over the failure of the comprehensive reform bills, Chief Financial Officer Jeff Atwater, who has been a vocal supporter of the more comprehensive PIP reforms, expressed his support for the few measures left that might eventually become law.

“Absent much-needed reforms, fraud left uncheck will further drive up auto premiums, forcing Floridians to pay more in tight budget times,” he said. “At worse, it would leave more Florida drivers with no choice to go uninsured, putting us all at greater financial risk when we’re behind the wheel.”

The Office of Insurance Regulation recently released a report that found PIP claims rose 40 percent between 2006 and 2010, while at the same time insurers costs rose by 66 percent. Overall, insurers have paid out $8.7 billion since 2006 while Tampa and Miami ranked among the top five in the nation in bogus accidents.

Topics Florida Carriers Fraud Legislation Property