Despite Bush veto, Florida legislators vow to revive no-fault bill in 2007

Irate Florida legislators, upset after Gov. Jeb Bush vetoed the state’s no-fault auto insurance law, are vowing to place the topic of no-fault insurance and the personal-injury-protection bill on the front burner during the spring sessions of the 2007 Legislature.

As passed by the Florida Senate and House, SB 2114:

• extended the sunset provision to Jan. 1, 2009; and

• appropriated $1 million to fight insurance fraud and simplified the crash reports.

The bill passed the Senate 38 to 0 and the House on a 118 to 1 vote, the lone opponent being Rep. Don Brown, R- DeFuniak Springs.

SB 2114 passed the Legislature during the final week of the 2006 spring session and forwarded to the governor.

Bush vetoed SB 2114, and unless the Legislature reintroduces it in next year’s spring session, it will sunset Oct. 1, 2007. At that time, Florida will return to a traditional tort system for settling auto claims.

The governor’s announcement ended three weeks of speculation about how he would react to SB 2114, which was enacted a week before the Legislature adjourned on May 5.

Key issues in 2007

“Florida’s no-fault and PIP insurance laws will be key issues on the 2007 Legislature’s agenda,” Rep. Leslie Waters, R-Pinellas, told Insurance Journal. “We have to keep PIP and no-fault and strengthen it,” Waters said.

Waters, who retired from a large insurance company before being elected to office, said she was disappointed when Gov. Bush vetoed the no-fault PIP bill.

The representative agreed with the governor, in that SB 2114 wasn’t the best and didn’t have enough teeth, but she thought it could have been amended and beefed up at a future date.

While doing her homework about the success or failure of no-fault and PIP legislation, Waters talked to a Colorado representative about that state’s experiences after eliminating no-fault and PIP. “Two years ago, after Colorado’s Legislature eliminated no-fault and PIP it became a disaster,” Waters maintained. “A crisis resulted after the Colorado legislation was changed, emergency services and hospitals couldn’t get paid and policyholders had to hire attorneys and settle claims in court.

She said Florida’s legislators found themselves stuck between a rock and a hard place. “We didn’t want to go down what looked like it would be a nuclear path,” Waters said. “If we had spent more time on auto, it would have detracted from property-casualty issues.”

According to Waters, in cases like this, the head of the Insurance Commission often makes a formal declaration, saying that no-fault and PIP legislation should be a priority, and that other considerations will take a back-seat until a revised bill on that topic is hammered out.

Legislative study

Just last fall, the Florida Senate Banking and Insurance Committee conducted a study of the no-fault law to assess the system. The report looked at affordability, availability, provision of benefits including litigation costs, adequacy of coverage and loss costs. It concluded that Florida’s no-fault system had serious problems. It found that high medical costs and utilization of medical services continue to drive PIP costs.

In addition, the report said that incidents of PIP fraud and abuse, primarily involving health care fraud, are at an all time high.

During 2006, while legislators were considering the no-fault PIP legislation, numerous industry associations lobbied Florida legislators to voice their opinion. Most held that, since its inception in 1971, no-fault, PIP provisions had undergone more than 50 amendments and changes–none of which had accomplished any worthwhile changes but had instead watered it down and made it useless, in their view..

Industry urged veto

Soon after SB 2114 was approved, industry associations voiced opposition to the bill and urged its veto. They applauded Gov. Bush for his veto.

William Stander, regional manager for Property Casualty Insurers Association of America, said the bill did nothing other than perpetuate a system which, according to the statewide grand jury, is “riddled with fraud and abuse.”

“The American Insurance Association and others in the industry have for several years urged legislators to pass substantive reforms aimed at removing the ongoing, growing fraud and abuse from no-fault’s personal injury protection system,” Cecil Pearce, AIA Southeast region vice president, said.

The National Association of Mutual Insurance Companies joined others in hailing the veto. “In vetoing Senate Bill 2114, Gov. Bush has shown us that a courageous leader isn’t afraid to back away from making a tough decision,” David Reddick, NAMIC senior state affairs manager, said.

Topics Florida Fraud Legislation Colorado