Florida Appeals Court Lifts Challenge Against PIP Reform Law

A Florida appeals court ruling recently overturned a challenge to car insurance reforms that lawmakers passed last year in an effort to curb an increase in claims-related fraud.

Many of those reforms had been put on hold by the court challenge, but the latest decision, delivered Wednesday by the First District Court of Appeal, means they will now take full effect.

The court said it overturned the challenge because it was based on the claim that the reforms restricted motorists’ access to the courts but was not brought to the court by the motorists who would have had their access restricted.

The Property Casualty Insurers Association of America (PCI) applauded the reversal but also said that it does not anticipate that rejected challenge to be the last.

The auto insurance overhauled many parts of the state’s no-fault law, which requires every driver to purchase personal injury protection (PIP) coverage from a Florida car insurer. PIP compensates insured drivers for medical bills from crash-related injuries, regardless of who caused the crash.

Appeals Court Ruling Rebuffs Circuit Court Decision

The challenge to the reforms was originally brought to the court by a small group of health care providers who had been cut out of eligibility for PIP compensation by the newly enacted reforms.

They challenged the reforms on the grounds that they restricted motorists’ constitutional right of access to the court.

The plaintiffs actually named in the court documents included: Robin Myers, an acupuncturist; Gregory Zwirn, a chiropractor; Sherry Smith, a massage therapist; and  Carrie Damaska, also a massage therapist.

However, the challenge also included “provider plaintiffs” that were listed as “John Doe” and represented health care providers that the challenge’s backers said would lose substantial business because of the reforms.

Another plaintiff was listed as “Jane Doe,” representing all of Florida’s drivers who faced fewer PIP benefits and restricted access to the court as a result of the reforms.

The appeals court said that the challenge lacked “the real parties in interest.”

“[The] injured motorists whose ability to sue tortfeasors has been impermissibly limited are absent from this case,” according to the three-judge panel handing down the decision.

The decision also said that the health care providers tried to “bootstrap” groups of plaintiffs together but “made no colorable showing of standing to proceed.”

The Florida Office of Insurance Regulation noted in a statement on Thursday that the court did not rule on whether the reforms would be considered valid if the case had been brought to the court by the proper plaintiffs.

HB 119 Instituted Tighter Controls

The law’s reforms were contained in a bill called HB 119 that underwent an intense debate in the state Legislature before Gov. Rick Scott signed off on it last year.

HB 119 instituted tighter controls on who could receive PIP-related benefits and amounts of compensation.

The legislation changed the no-fault law, downsizing the maximum amount that injured drivers could get from their Florida car insurers for medical expenses and lost wages. Under the no-fault law’s reforms, motorists have to prove that they have an “emergency medical condition” to obtain the maximum $10,000 amount; otherwise, the maximum is $2,500.

Other reforms include barring acupuncturists, massage therapists and chiropractors from PIP payments and shortening the time frame that injured drivers have to report a crash.

However, the reforms had not gone into full effect after facing the court challenge from health care providers, who said their their eligibility for PIP-related compensation was unfairly cut by HB 119.

State regulators appealed that challenge, saying that blocking the reforms essentially hamstrung Florida’s car insurance industry. Auto insurers in Florida have delayed filing rates with insurance regulators as they waited for the state’s courts to rule on the challenge to HB 119.

PCI Says Challenges to Reforms Leave Florida ‘Stuck in Neutral’

PCI said that it was “pleased” with the ruling. Donovan Brown, state government relations counsel for the nationwide trade group, said the injunction’s reversal will allow consumers to “receive the benefit of these PIP reforms becoming fully effective.”

“The injunction has held up these reforms and delayed their ability to do what was intended to curb fraud and stop the $1 billion fraud tax on Florida consumers,” he said in a statement, referring to reports showing that Florida’s car insurance industry has been dogged for years by organized crime activity and a high number of questionable car insurance claims.

Florida officials discussed the high rate of iffy claims with the National Insurance Crime Bureau (NICB) at a spring conference in Orlando, where NICB president Joe Wehrle said that, between 2010 and 2012, car insurers in the Sunshine State saw a 22.5 percent increase in the number of questionable claims.

Brown said PCI does not expect that the latest appeals court reversal will end the challenges to reforms from “those that make a living profiting off of PIP” through such questionable claims.

“We hope that does not happen and Florida’s consumers will no longer be stuck in neutral,” Brown said.

Meanwhile, some lawmakers have targeted the PIP system and suggested that it be replaced entirely.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com 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.

No comments yet.

Comment on this article