TALLAHASSEE – In 2012, the Legislature passed a bill reforming Personal Injury Protection, the fraud-plagued auto insurance coverage that pays the first $10,000 of your medical bills in an accident, no matter who is at fault.
In 2014, lawmakers may repeal it altogether.
"The whole point is that the system is exceedingly dysfunctional and the best way to deal with that is to do like 45 other states and that's go back to mandatory [bodily injury liability coverage]," said Sen. David Simmons, an Altamonte Springs Republican, who is chair of the Senate Banking and Insurance Committee.
Simmons has been working on a repeal bill since last spring, when a Tallahassee circuit judge declared the 2012 reforms unconstitutional. Circuit Judge Terry Lewis ruled that provisions banning PIP payments to massage therapists and acupuncturists, and limiting payments to chiropractors, were an impermissible denial of benefits.
The bill was a last-ditch effort by lawmakers and the insurance industry to combat what they called brazen provider fraud that has pushed PIP premiums in urban areas to as much as $1,000. It also required accident victims to seek treatment – preferably from an emergency room – within 14 days of the accident – to be eligible for the full $10,000 in benefits.
In return for the limits on providers, the bill required that insurers cut rates by 10 percent in 2012, and 25 percent in 2013, or explain why they did not.
Chief Financial Officer Jeff Atwater, who pushed for the reforms, has said that he wants to wait for the 1st District Court of Appeals to rule on the appeal of Lewis' ruling before the Legislature takes any more action.
But Simmons wants to start working on the problem now.
"We need to be ready for the 1st DCA opinion," he said. "We also need to be ready for just the idea of moving on. No decision has been made as of yet. But it is important to lay the groundwork."
Q: So what is the proposal?
A: Simmons wants to remove the requirement that all drivers carry PIP. Instead, drivers would have to carry what's called bodily injury liability, which covers injuries to the other party if you cause the accident. About 70 percent of drivers carry BI coverage now.
Q: So, would BI protect me in an accident, the way PIP does?
A: No. If you cause an accident, the other party would have to sue you. Or vice versa.
Q: Would it save me money?
A: The devil is in the details. Since most drivers today carry both PIP and liability coverages, dropping PIP would save them money, at least initially.
How much would depend on how much BI coverage lawmakers require. The years-old standard was a policy that would pay up to $10,000 per person and $20,000 per accident. If lawmakers require more, that would reduce or even eat up any savings from repealing PIP. And historically, more litigation means higher costs.
Simmons has asked the Office of Insurance Regulation to provide him with cost and/or savings projections in time for a hearing during the first week of November.
Q. What's happened in other states?
A. Twelve states, including Florida, have no-fault auto insurance. Others have repealed their no-fault system over the past few years, including Colorado in 2004. According to a 2008 study by the Insurance Research Council, the change worked. The average injury payment per vehicle, which had reached $306 by 2002, dropped to $223 after the repeal.
The Rocky Mountain Insurance Information Institute reported that an average annual premium dropped from $1,289 in 2003 to $872 in 2007 for Colorado drivers with full coverage.
Q: What do insurers favor?
A: Companies are waiting to see how the 1st District Court of Appeal comes down on the case that invalidated the PIP reforms. "We think it was a worthwhile reform effort, and we'd really like to see if it works because we haven't been really able to apply it, " said Michael Carlson, executive director of the Personal Insurance Federation of Florida.
Q: Would there be less fraud if PIP is repealed?
A: There's no way to know for sure, but Simmons thinks so because many claims would have to go through the courts. PIP was an easy target, he said. "Anytime you put a fund of money some place and say you only have to say 'I hurt' to get it, is very problematic," Simmons said. "It creates open season for fraud."
Still, one reason no fault was adopted 35 years ago was because of rampant fraud in liability claims.
Q: What are its chances of passing?
A: Simmons is a forceful and effective lawmaker, but there seems to be little interest from the House in eliminating PIP.
Article by Kathleen Haughney, Tallahasee Bureau