Florida Insurance Commissioner Kevin McCarty Discusses PIP Reform: February 7

Feb 7, 2012


Florida’s insurance industry has reached a “critical crossroads” when it comes to Personal Injury Protection (“PIP”) and reform must occur or the system will eventually have to be repealed, Florida Insurance Commissioner Kevin McCarty said during a media teleconference today, February 7, 2012, coordinated by “Put the Brakes on Accident Fraud,” a PIP reform advocacy group.

“Right now I think fixing the system we have and lowering costs and ferreting out fraud is the way to go,” Commissioner McCarty said when asked if the PIP system should be discarded.  He said he believes “reform is imminent” and, if it doesn’t occur, it will result in the repeal of PIP.

PIP was originally established to help Florida accident victims by reducing delays and legal costs, streamlining the payment process and providing payment for drivers to cover their medical costs, he noted.  

A study on PIP presented to the Florida Cabinet last year revealed alarming statistics, Commissioner McCarty recollected.  The study showed that the number of drivers in Florida remained constant from 2008 to 2010, while the number of accidents decreased.  But, during that same time period, the amount of paid PIP benefits skyrocketed by as much as 50 percent, he explained.

“The fraud in PIP has become systemic . . . and pervasive,” he said.

Florida’s Legislature must limit providers and venues that provide PIP coverage, create a reasonable fee and utilization schedule, reduce litigation costs and improve investigation methods to cure the growing systemic abuses, Commissioner McCarty continued.  “Our goal is to create system that makes sure insured drivers receive prompt medical care and not create a pot of gold for unscrupulous providers and fly-by-night clinics.”

If reforms are approved, any rate reductions from a reduction in PIP claims would likely be reflected in future rate filings, Commissioner McCarty said.  “Our office will be vigilant in reviewing and making sure that any of the cost savings that the Legislature passes will be passed on to Florida’s consumers.”

He said substantial savings could be made by “squeezing the fraud out of the system.”

When asked why the State of Florida doesn’t get rid of PIP altogether, Commissioner McCarty said he believes it should be a public policy issue to ensure that people have some minimum amount of coverage if they are injured in an automobile accident.

“I think both the Governor and Chief Financial Officer are concerned if we don’t make substantive changes in our PIP system, that it’s time for us to either fix it or get rid of it.

“The heightened awareness of groups like ‘Put the Brakes on Accident Fraud’ is raising this to a level of public awareness and I think the Legislative leaders of both House and Senate are focused on fixing the problem this year,” he added.

Florida and New Hampshire are the only two states that do not require bodily injury coverage, he noted.

Commissioner McCarty said pending bills in the House and Senate each have elements aimed at addressing PIP fraud.  The House bill restricts compensation to very small subset set of provider groups, which would probably be the most limiting, he explained, but would insure the most cost savings.

The Senate approach would improve methods of investigating fraud, while targeting some of the litigation costs and utilizations, he said.  

“There are elements of both pieces of legislation that will make comprehensive reform,” he concluded.



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