Appeal Filed Against Injunction Delaying Florida PIP Reforms

Florida’s legislative package overhauling how car insurance claims for benefits work is facing another obstacle against reforms after a circuit court judge recently granted an injunction delaying its implementation.

The Office of Insurance Regulation (FOIR) responded with a court appeal last week.

Leon County Judge Terry Lewis granted the injunction after a February hearing, siding with a group of healthcare professionals who said reforms passed last year by lawmakers unfairly shut them out of eligibility for compensation awarded under the state’s no-fault auto insurance laws.

Under no-fault, Florida drivers must purchase personal injury protection (PIP) coverage requiring insurers to pay medical expenses for their own policyholder when he or she is injured in a crash, regardless of who was at fault for it.

Those expenses were passed onto drivers through increasingly costly PIP premiums that, according to the Insurance Information Institute (III), make up about a fifth of overall auto insurance premiums in Florida.

The cost of an average no-fault claim shot upwards from $5,812 in 2008 to $8,796 in 2010, according to the III, which attributed much of the spike to a parallel increase in staged accidents and medical bills accompanying such crimes.

Insurer-backed reforms were heavily debated before lawmakers finally pushed HB 119 through as a legislative reform package, with major provisions taking effect in January. Insurers said that an explosion of staged accidents and shady claims for medical treatment had overrun the system and narrowed access for the state’s motorists hoping to find cheap auto insurance.

HB 119 established new conditions governing compensation for medical treatment under PIP coverage, including:
–making $10,000 PIP benefit cap available only for “emergency medical conditions”
–introducing a $2,500 benefit cap for nonemergency medical conditions
–nixing massage and acupuncture treatments from benefits eligibility
–requiring that policyholders get treatment for an injury within two weeks after a crash to be eligible for PIP benefits
–lengthening the length of time an insurer had to investigate a suspicious claim
–establishing years-long license and benefits suspension periods for those convicted of PIP-related crimes

Judge Backs Injunction, Questions No-fault as ‘Reasonable Alternative’

In his decision, Lewis said that the provisions setting a 14-day window for treatment and axing certain medical treatments from eligibility violated state law.

“[The provisions] violate the right of the people to have access to the courts to seek redress for their injuries,” Lewis said in his ruling.

Lewis also reviewed the background of Florida’s no-fault law, which was passed in 1971.

He said the no-fault law “replaced a pure free market approach with a government-controlled system in order to address a perceived problem,” adding that it was “just one example of this experiment with socialism and the trend away from those libertarian principles of individual liberty and personal responsibility.”

The latest no-fault setup, which includes last year’s reforms, flirts with the “outer limits of constitutional tolerance,” Lewis said in his ruling, adding that “I believe it does.”

Lewis also questioned the effectiveness of the no-fault law since its origin as a “reasonable alternative” to tort systems. This alternative, he said, was meant to “lessen court congestion and delays, reduce automobile insurance premiums, and reduce the possibility that economic calamity might overwhelm accident victims and force them to accept unduly small settlements of their claims.”

Whether or not the no-fault law has fulfilled its aim is now up for debate, according to Lewis.

“Is the no fault law still a good deal?” Lewis said in his ruling. “Is it still a reasonable alternative to the rights guaranteed to citizens? … The answer to those questions is probably, like beauty, in the eye of the beholder and reasonable people may disagree.”

Lewis’ decision on the injunction was filed on March 15, with the FOIR’s appeal delivered to relevant litigators less than a week later on March 21.

The appeal serves as a “stay of the injunction” pending a ruling on the case from the First District Court of Appeals, according to Anita Durham, an FOIR communications staffer.

Durham told Online Auto Insurance News that FOIR received the injunction on March 20. The FOIR has notified Florida’s auto insurers and all “interested parties” about both the injunction and appeal.

Another injunction filed with a state district court fell short in January, when U.S. District Court for the Middle District of Florida Judge Richard Lazzara denied efforts to stop the reforms.

Florida Gov. Rick Scott told local media outlets there that he still stands behind the reform package, which he championed when he took office in 2011.

Local media outlets also reported that senators will introduce a piece of legislation next week that repeals no-fault auto insurance in lieu of a traditional tort system requiring that medical claims under bodily injury coverage be brought to court for resolution.

The Sunshine State Home to ‘Questionable Claims’

The National Insurance Crime Bureau (NICB) highlighted the Sunshine State as home to a glut of suspicious claims that has increased in number between 2010 and 2012; the NICB reported that most of those are medical claims were centered in Palm Beach, Broward and Miami-Dade counties.

In a separate report on organized crime, the bureau also found that such groups perpetrating insurance-related graft gravitate to states where PIP coverage is required. According to the report, Florida ranked atop rankings for the number of “organized group/ring activity” (OGA) claims between 2008 and June 2012, but the state had lesser year-to-year spikes that the bureau linked to lawmakers’ reform efforts.

Such criminal activity appears to be moving to other no-fault states, according to the NICB, including Michigan and Minnesota, the latter of which is where lawmakers are discussing reforms and enforcement measures to fight no-fault fraud.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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