National Association of Insurance and Financial Advisors of Florida: After much debate, meaningful reform of auto injury policies

Mar 21, 2012

The following article was published in the Daytona Beach News Journal on March 21, 2012:

After much debate, meaningful reform of auto injury policies

By Robert Lotane

“If at first you don’t succeed, try, try again.” That famous quote, a favorite of moms everywhere, may never have been so true as when applied to the multi-year effort to pass reforms to our state’s personal injury protection insurance law (PIP). Of course, some may have gone the route of Mark Twain when he famously said, “If at first you don’t succeed, try, try again … Then quit. No use being a damn fool about it.”

Fortunately, Gov. Rick Scott, Chief Financial Officer Jeff Atwater, Insurance Commissioner Kevin McCarty, Rep. Jim Boyd and Sen. Garrett Richter ignored Twain’s advice. Despite many unsuccessful attempts over the years, they all made one last Herculean effort to reform this portion of our automobile insurance system that provides easily accessible medical benefits for accident victims. However, since its inception. PIP has become riddled with fraud, and it costs Floridians too much money.

Under House Bill 119, in order to be reimbursable by PIP, a victim must be initially treated by a physician, osteopath, dentist, chiropractor, physician’s assistant or advanced registered nurse practitioner, or the services must be provided in a hospital or in a facility wholly-owned by a hospital, within 14 days of an accident. Coverage of up to $10,000 is available for medical treatment related to an emergency medical condition and for follow-up care related to the initial visit, based on a referral made by an appropriate medical professional for care in an approved medical facility.

Initial care must be administered within 14 days of the accident and subsequent approved care may be given beyond that window. For conditions which the approved medical providers determine are not emergency-related, $2,500 is available for care. Massage and acupuncture are not reimbursable. There is a $5,000 death benefit included.

The bill also allows a 90-day time period for investigation of claims where a reasonable suspicion of fraud exists and, in such cases, insurers’ legal representatives can ask questions of the insured under oath. Caps were not placed on the fees of lawyers representing policyholders, but some common-sense limitations were included in the legislation.

It is estimated that PIP fraud costs Floridians $1 billion annually, and state Commissioner McCarty has pledged to aggressively scrutinize insurer filings to make sure that any reduced insurer losses are passed along to policyholders. Under the law, he will also have an independent consultant calculate the anticipated financial impact of the reforms.

Additionally, insurers that do not file rates that include at least a 10 percent PIP cut for rates taking effect after Jan. 1, 2013, will have to explain in detail why they cannot.

And if insurers do not reduce PIP rates by 25 percent for rates taking effect on Jan. 1, 2014, they will “have some explaining to do” to the commissioner.

The legislation also provides a funding mechanism for CFO Atwater to expand his aggressive efforts to prosecute PIP fraud. It also includes enhanced and new penalties and fines for clinics and providers who unlawfully seek to obtain PIP reimbursement or obtain licensure.

The debate over this law was as spirited as any you will see. But knowledgeable observers agree this is a solid reform measure that aggressively attacks fraud while upholding the consumer protections of Floridians. It is long overdue.

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