Senate Banking and Insurance Committee Report: April 5, 2011
Apr 5, 2011
The Senate Banking and Insurance Committee (“Committee”) met today, April 5, 2011, to consider a number of bills, including two bills aimed at curbing personal injury protection (“PIP”) fraud.
SB 1836 Captive Insurance
Before addressing PIP fraud, the Committee considered SB 1836 relating to captive insurance. Senator Miguel Diaz de la Portilla, the sponsor of the bill, explained to the Commottee that the bill is intended to make Florida more attractive to the captive insurance market. He briefly explained what a captive is, noting that there are over 4,000 captives worldwide.
A Strike All amendment to bill was filed by Senator Alan Hays. Senator Diaz de la Portilla supported the Strike All amendment and encouraged the Committee members to adopt it. He noted that Vermont has several domiciled captives and strives to create a favorable environment to attract more. Delaware similarly boasts favorable conditions for captives. According to Senator Diaz de la Portilla, “this creates business, creates jobs.”
A representative from the Beacon Council spoke in support of the Strike All amendment, noting that similar laws have been adopted in over 30 states. She further noted that captives are required to hold annual meetings in their state of domicile so there will be an economic benefit from increased tourism as well.
The Committee adopted the Strike All amendment, and then passed the bill as amended by a vote of 10 to 0. The next committee of reference is the Senate Budget Committee.
SB 1930 PIP Fraud
SB 1930, sponsored by Senator Bogdanoff, is referred to as the PIP “Fraud” bill. After some confusion regarding which amendment to SB 1930 was being considered, the Committee took up Senator Bogdanoff’s “Strike-All” amendment, number 328022. Senator Bogdanoff explained that the amendment continues to address major issues consistent with the original bill, but it “dials back” on some controversial issues. Numerous public appearance cards were presented and it became clear during public testimony on the amendment that the Committee would run out of time. Senator Bogdanoff extended invitations to interested parties to present their issues with the amendment to her prior to the next Committee meeting, noting that they should first reach consensus within their groups if possible. At that point the meeting was adjourned prior to any vote on SB 1930 or its amendments, and prior to any consideration of SB 1694, which is the PIP “Legal Fixes” bill sponsored by Senator Richter.
Senator Bogdanoff’s Strike All Amendment
During the Committee meeting, Senator Bogdanoff highlighted some of the differences between the original bill and the Strike All amendment:
- The insurer must pay or deny the claim within 90 days (rather than 120 days in the original bill);
- Includes acupuncturists in § 627.736(1)(a);
- Provides claimants with two opportunities to appear for an examination under oath before triggering the rebuttable presumption that failure to appear is unreasonable;
- Provides that Chief Financial Officer and Attorney General will each appoint one state attorney to the Board of Directors of the Automobile Insurance Fraud Strike Force, rather than the Attorney General making both appointments;
- Bifurcation of legitimate and fraudulent claims such that fraudulent claims are not due payment, but legitimate claims are;
- With respect to the fee schedule, changes “may” to “shall.”
Public testimony was heard from representatives of the Florida Justice Association, the Florida Chiropractic Association, the Department of Financial Services, and the Division of Insurance Fraud. The issues raised and discussed include the following: concerns that doctors will be inconvenienced by having to submit to examinations under oath; medical record production requirement as a condition precedent to payment of claims is not limited in scope; patient countersignature requirement will be difficult to implement since most doctors use outside billing services; examinations under oath of doctors are not limited in scope; the preferred provider network will consist of insurer-friendly doctors that will be a disadvantage to consumers.
Ashley Mayer, Director of Legislative Affairs for the Department of Financial Services, spoke in support of the amendment. She informed the Committee that there is a sixty (60) percent increase in the number of PIP fraud cases reported to the Division of Insurance Fraud. She warned members of the Committee that failure to act to address the fraud problem will result in private carriers leaving the market and the Florida Automobile Joint Underwriting Association becoming the only available option. Interestingly, Senator Fasano noted that he is asked by his senior constituents why they have to purchase PIP coverage since they have Medicare, suggesting that it may be time to abandon the No Fault Law. Ms. Mayer responded that the goal of the CFO’s office is to fix PIP to meet its original intent, and she “hopes” they “won’t have to go there.”
Colonel John Askins of the Division of Insurance Fraud impressed upon Committee members that the fraud problem is pervasive. He explained that clinics are set up just for the purpose of committing fraud. While he believes the penalties for committing fraud are appropriate, the dockets are “jammed” and it is hard to get prison sentences imposed. According to Colonel Askins, the amount of fraud is so voluminous, meaningful legislative reform must be passed. In response to a question by Senator Hays, Colonel Askins stated that his top three priorities for addressing PIP fraud include: 1. Capping attorney fees; 2. Tighter regulation of clinics; and 3. Sending more fraud perpetrators to prison through tougher laws and more prosecutors.
Other Bills on the Agenda
CS/SB 1072 relating to recording of real property documents and SB 1754 relating to health insurance, were both passed favorably by the Committee. SB 1882 relating to telemedicine coverage was temporarily passed. SB 1694 relating to motor vehicle personal injury protection insurance and SB 1500 relating to foster care providers were not considered by the Committee.
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