Florida Lawmakers Send PIP Insurance Reform Bill to Governor

Florida lawmakers have succeeded in passing a compromised car insurance reform bill that is expected to yield savings for the average consumer by reducing coverage provided by minimum policies.

The House voted 80-34 and the Senate voted 22-17 on Friday to send the proposal to the governor for approval. If it’s approved, the changes will go into effect in July 2012.

Reform of the state’s no-fault car insurance system was one of the main priorities this year for many legislators and Gov. Rick Scott, who says rising levels of fraud and perennial rate increases in the car insurance industry have reached a crisis point.

But even some of the bill’s major supporters note that the increased access to cheap car insurance is to come not from reductions in fraud but from new limits on benefits.

In debate over one of the earlier versions of HB 119, Rep. Mike Horner noted that he loved Rep. Jim Boyd’s bill but that “the main reason rates get reduced is it’s less coverage than we have now.”

The Current Coverage System and Effects of the Florida PIP Reform Bill

Both now and when the proposed changes go into effect—assuming the governor gives his approval—Florida drivers are required to carry at least $10,000 in personal injury protection (PIP), a type of no-fault insurance that compensates the policyholder and any other individuals covered under the policy for their medical expenses after a crash.

But what is covered under a basic PIP policy will change.

PIP currently covers the following, up to the policy limits:

  • 80 percent of reasonable medical expenses
  • 60 percent of loss of income
  • Up to a $5,000 death benefit

There is no time window in which policyholders must seek medical treatment to get benefits, and the spectrum of medical care providers that are eligible for reimbursement under the system is relatively wide, ranging from acupuncturists in a licensed clinic to hospitals providing standard, non-emergency medical care.

The legislation currently sitting on the desk of Gov. Scott, however, puts greater constraints on the levels of coverage and the types of medical care providers that are eligible for reimbursement.

With the proposed changes, PIP would cover the following, up to the policy limits:

  • 80 percent of reasonable medical expenses related to an “emergency medical condition”
  • $2,500 worth of care related to a non-emergency medical condition
  • 60 percent of loss of income
  • A $5,000 death benefit

An “emergency medical condition” is defined in the bill as an injury that if untreated could lead to serious jeopardy to the patient’s health, serious impairment to bodily functions or serious dysfunction of an organ or body part.

Further, policyholders would only be able to use those benefits if they initially receive medical treatment within 14 days of the accident. Acupuncture and massage therapy are specifically excluded from coverage in the bill, and the only entities that can be reimbursed through PIP are hospitals or facilities wholly owned by a hospital, facilities wholly owned by licensed physicians, physical therapy offices or licensed health care clinics with certain accreditations.

Changes Not Related to Coverage

The bill also makes a handful of changes that are intended to help curb abuse of the state’s no-fault system and to hopefully help reduce costs somewhat.

Police would have to file out longer, more detailed crash reports in more circumstances in order to help stop Floridians from saying they were injured in a car accident when in fact they weren’t involved at all.

The state would set up a not-for-profit entity that would have the sole goal of investigating and prosecuting insurance fraud. While the organization would be set up by the state, it would be funded by private entities.

Insurers who reject or only pay a portion of claims would have to provide “an itemized specification or explanation” of why certain benefits were denied. Claimants then have 15 days to submit a revised claim.

If insurers suspect that a claim has elements of fraud, they must notify the policyholder within 30 days of the claim that it will be investigated, after which the insurer has 60 days to conduct the investigation.

Insurers who have established a pattern of failing to pay valid claims will be considered to be engaging in “unfair or deceptive” trade practices.

The bill says insurers must reduce rates by at least 10 percent once the act goes into effect and by at least 25 percent by 2014. The only consequence for not doing so, however, is that they need to provide a detailed explanation of why they could not do so.

Reform Effort Saw Many Fluctuations before Reaching Gov. Scott’s Desk

The road to getting this bill passed was pretty turbulent, with a lot of debate in both chambers over appropriate levels of coverage and whether the bill was good or bad for consumers.

For instance, the bill in its original form totally scrapped PIP and instead replaced it with “emergency care coverage” that would have covered only emergency medical care provided for emergency conditions diagnosed within 72 hours of a crash.

And there were numerous attempts down the road to get limited doses of acupuncture and massage therapy covered by PIP, although all of those failed.

Many members of committees that reviewed the bill in its early stages called it “anti-consumer,” as did many House democrats in final debate on the bill.

In the end, both opponents and supporters of the bill thought that their position was more consumer-friendly.

Opponents believed they were championing consumer’s interests because they were trying to stop the limitations on benefits.

Supporters thought they were protecting consumers by making sure average coverage costs get put under control.

How consumers ultimately feel about the bill will be seen after July 2012, when the changes go into effect.




About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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