Florida Senate Banking and Insurance Committee Report: February 2, 2012
Feb 2, 2012
During its meeting today, February 2, 2012, the Senate Banking and Insurance Committee (the “Committee”) considered a number of insurance related bills, including SB 1860 by Senator Joe Negron, relating to Personal Injury Protection (PIP) insurance. To view the Committee packet, click here.
SB 1844 Relating to Alien Insurers
Before addressing PIP Reform, the Committee considered SB 1844, sponsored by Senator Jack Latvala relating to alien insurers. SB 1844 is intended to revise a provision exempting alien insurers from the requirement to obtain a certificate of authority; would create an exemption from certificate of authority requirements for an alien insurer issuing life or annuity contracts covering persons who are not residents of the United States if certain requirements are met; and would provide that alien insurers issuing policies or contracts in Florida are subject to the unfair insurance trade practices laws contained in Chapter 626, Florida Statutes.
Senator Alan Hays filed two amendments. Amendment 425232 was a delete everything amendment. The amendment specifies what an alien insurer must do to maintain eligibility, and provides that the Office of Insurance Regulation does not have a duty or responsibility to determine the financial condition or claims practices of an alien insurer. Sen. Hays’ amendment would also impose penalties on an alien insurer for not complying with the statute.
Senator Hays described his second amendment, Amendment 256156, as correcting a statutory citation.
Both amendments were adopted by unanimous vote. SB 1844, as amended, passed favorably as a committee substitute by a unanimous vote.
SB 1860 Relating to Motor Vehicle Personal Injury Protection Insurance
SB 1860, sponsored by Senator Joe Negron, would amend the laws governing PIP insurance.SB 1860 addresses PIP medical benefits, the payment of PIP benefits, the PIP medical fee schedule, automobile insurance ratemaking, the licensure of mandatory clinics, crash reports, PIP insurance fraud, circumstances for the suspension of a health care practitioner’s license suspension, electronic record requirements, creation of an auto insurance fraud direct support organization, and would also provide for a PIP data call.
Senator Negron stated that SB 1860 reforms PIP from start to finish. The PIP system designed to provide citizens with peace of mind by having funds available to pay for lost wages and medical bills from an automobile accident, but the system has been plagued by fraud. Senator Negron indicated that Governor Rick Scott and Chief Financial Officer (CFO) Jeff Atwater want to retain some the elements of the PIP system and eliminate the fraud. The best way to fight fraud is to enforce the law with the CFO at forefront. Yesterday, the CFO announced an arrest made for filing fraudulent claims.
Senator Negron advised the Committee that the number of PIP claims submitted for massage therapy and acupuncture treatments have increased more than any other procedure, with massage therapy claims increasing by 40 percent. Due to this extraordinary growth, massage therapy and acupuncture treatments have become the most expensive claims in PIP. According to Senator Negron, removing massage therapy and acupuncture as procedures covered for PIP reimbursement would save tens of thousands of dollars.
Furthermore, Senator Negron indicated that provider claims have been denied due to simple errors appearing in a claim form. Senator Negron stated that it is not fair for a provider to be denied payment without being told the reason for the denial. SB 1860 would provide that if the insurer does not pay a claim because of an error in the claim form or submission, the insurer must notify the provider and give the provider 15 days to submit a revised claim form correcting the error(s).
SB 1860 would also provide that if there is dispute between an insurer and an insured or an assignee and the PIP policy limits are reached, the insurer must notify the insured or the assignee that policy limits have been reached within 15 days of the PIP limits being reached.
Senator Negron stated that SB 1860 clears up any confusion as to the requirements for a clinic to become licensed and be eligible to receive reimbursement for services rendered to PIP insureds. Further, SB 1860 would provide a licensed health care practitioner found guilty of insurance fraud would have his or her license revoked for five years and may not receive PIP reimbursement for 10 years.
Senator Negron concluded his presentation noting that the majority of Floridians are not crooks, and simply want to o get better following an accident and get back to work. Legitimate healthcare professionals need to get paid in timely matter with reasonable rates. Senator Negron believes that this bill achieves balance.
Committee Member Questions
Senator Michael Bennett commented that Texas has implemented laws to prevent uninsured motorists. He asked if this issue is addressed in this bill. Senator Negron responded that the bill does not currently address uninsured motorists, but he is open to suggestions on how to rectify issue.
Senator Garrett Richter had filed three amendments, but withdrew Amendments 791184 and 220258. Amendment 791184 was a strike-all amendment that would require a “gate keeper” physician to first see and recommend follow up care for those claiming PIP benefits. Amendment 220258 would eliminate the use of a contingency fee risk multiplier in PIP litigation.
Senator Richter then explained Amendment 527256, which proposed to remove the provision in SB 1860 that prohibited the award of attorney fees awarded to plaintiffs in claims for benefits under the PIP statute from being included in insurance rates. Senator Richter stated that all successful businesses recover their costs through price. Senator Richter stated that Senator Negron eliminated a sound business tenet by including this provision in SB 1860.
Also, Senator Don Gaetz filed several amendments (Amendments 224150, 104666, and 760588) which were withdrawn. These amendments provided that a reasonable sum of attorneys fees be awarded in favor of the prevailing party. One of the problems that exist in PIP is that it has become too litigious and that these amendments would chill unnecessary lawsuits. Senator Gaetz was asked not to offer the amendments at this time and wait until the bill was heard by the Budget Committee. Senator Gaetz agreed to this request and the amendments were withdrawn.
Senator Bennett asked Senator Negron to respond to Senator Richter’s amendment. Senator Negron consented to the amendment, however, he does not want a situation where insurers can vigorously litigate claims, pay the attorneys fees for both parties, and pass the costs through filings to Office of Insurance Regulation to increase rates. The insurer would not have an incentive not to go to court if this happens.
Senator Eleanor Sobel asked what recourse the consumer has if the insurer’s legal fees are passed to the consumer through rate increases. Senator Richter explained that the amendment retains current law. Currently, an insurer’s legal fee expenses incurred in defending PIP claims are included in rate filings submitted to the Office of Insurance Regulation.
Senator Bennett proposed a compromise where the insurer not be allowed to include the cost of legal fees in rate filings if the insurer loses the case. Senator Bennett stated he was not willing to offer this proposal as an amendment, but it was a thought.
Senator Richter said that Senator Gaetz has reserved the right to file his amendments and discussion on this issue has not ended. Ultimately, the Senate wants to pass responsible legislation to stop premiums from going up.
Public testimony was given for and against Senator Richter’s amendment, which ultimately passed on a voice vote.
Senator Gwen Margolis filed Amendment 578696 which included a provision relating to attorney referrals. This amendment was withdrawn.
Numerous public appearance cards were presented in favor and opposition of the SB 1860. Public testimony was heard from representatives of the Florida Justice Association, he Florida Chiropractic Association, the American Insurance Association, the Florida Chamber of Commerce, The Florida Police Chief Association, MetLife, Nationwide, the Florida Consumer Action Network, the Florida Justice Reform in favor of the SB 1860. Also, public testimony was heard from the Florida State Massage Therapy Association and the Florida State Oriental Medical Association against the bill.
Mark Delegal testified on behalf of State Farm Mutual Insurance Company and noted that he was troubled by the removal of examinations under oath (EUOs). Senator Negron stated that EUOs were essentially depositions where attorneys asked questions. He commented that insurers cannot have it both ways by complaining about the increase in litigation, but request a litigation tool. He stated that the Senate should be cautious in permitting EUOs because they will add more litigation.
SB 1860 passed favorably as amended as a committee substitute by a unanimous vote.
SB 1862 Relating to Public Records/Donor Identifying Information/Division of Insurance Fraud
SB 1862 by Senator Negron would amend the provision relating to the Automobile Insurance Fraud Strike Force created in SB 1860. SB 1862 creates a public records exemption for all identifying information of donors or prospective donors to the Automobile Insurance Fraud Strike Force, a direct support organization of the Division of Insurance Fraud. The effective date of the bill would be the same as SB 1860, if SB 1860 is signed into law. SB 1862 passed by a unanimous vote.
SB 1620 Relating to Insurance
SB 1620 by Senator Richter would change a number of provisions relating to the regulation of insurance companies, insurance agents, insurance adjusters, and insurance coverage. Specifically, the bill (i) provides that a salvage motor vehicle dealer is not required to carry certain insurance on vehicles that have been issued a certificate of destruction; (ii) revises provisions specifying which insurers are not subject to certain filing requirements relating to reinsurance; (iii) provides that provisions relating to insurance adjusters do not apply to individuals who conduct data entry into an automated claims adjustment system for portable electronics insurance claims; and (iv) revises provisions relating to the notice that an insurer must provide to an insured regarding the nonrenewal, cancellation, or termination of a commercial residential property insurance policy.
Several amendments were filed by Senator Richter. Amendment 604062 revises the language in the bill to retain the current law regarding provisions relating to the notice an insurer must provide to the insured regarding the nonrenewal, cancellation, or termination of a commercial residential property. Amendment 929464 added language relating to insurance agents sharing of commissions and prohibiting certain rebates. The remaining of the amendments filed by Senator Richter made minor technical revisions to the bill. Senator Sobel filed Amendment 227828 which permits anyone having relevant information to participate in the mediation process. All of the amendments were adopted by a vote of 9-0, except Amendment 377322, which was withdrawn by Senator Richter. SB 1620 passed as amended as a committee substitute by a unanimous vote.
SB 0910 Relating to Public Employees
SB 0910 was filed by Senator Hays. Senator Hays filed a delete everything amendment which revised provisions relating to benefits paid from the premium tax by municipality or special fire control district that has its own pension plan to be applied retroactively; revised the definition of compensation or salary for the purposes of police officers’ pensions; revised provisions relating to benefits paid by the municipality that has its own pension plan to be applied retroactively; and provided a declaration of important state interest. Senator Hays also filed an amendment to the delete all amendment to require a mutual consent to the retirement benefits. Both of the amendments were adopted.
In describing the bill, Senator Hays explained that the Division of Retirement of the Department of Management Services (DMS) is responsible for administering the Florida Retirement System and monitoring the actuarial soundness of local government retirement systems that are not part of the Florida Retirement System, as well as pension plans for firefighters and municipal police officers. The current situation in several cities is that pension plans are underfunded. Senator Hays explained that this bill would focus on using premium taxes to make pension funds whole instead of increasing benefits. The Police Benevolent Association voiced opposition to the bill. Senator Steve Oelrich encouraged Senator Hays to work with the Police Benevolent Association to reach a middle ground on SB 0910. The bill was adopted as amended as a committee substitute by a vote of 7 to 1.
SB 1428 Relating to Renewal of Commercial Lines Insurance Policies
SB 1428 by Senator Chris Smith addresses the renewal of a commercial insurance policy. The bill provides that upon the expiration of the term of commercial lines insurance policy, the insurer may transfer the policy to another authorized insurer under the same ownership, management, or control as the original insurer. This type of transfer would be treated as a renewal of the policy, rather than a cancellation or nonrenewal. Senator Smith filed an amendment to the bill to address concerns raised by the Office of Insurance Regulation. Senator Smith’s amendment provides the insurer must provide notice to the policyholder of its intent to transfer the policy within 45 days before the effective date of the transfer. The amendment also clarifies that bill this is not applicable to residential policies. Senator Smith’s amendment passed unanimously, and the bill, as amended passed by a unanimous vote.
SB 1814 Relating to Uniform Home Grading Scale
SB 1814 by Senator Smith addresses the uniform home grading scale. The bill would repeal the language requiring the Financial Services Commission to develop a uniform home grading scale by 2007 to grade the ability of a home to withstand the wind load from certain tropical storms or hurricanes. The bill passed unanimously.
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