Another jurisdiction to experience serious auto insurance fraud problems is Florida. In March of this year HB 119 passed in the State Senate and House after some heavy duty lobbying by Gov. Rick Scott.
The new Florida personal injury protection (PIP) law was adopted in 1972 to make
sure anyone injured in an auto accident would quickly get money to treat
their injuries. The legislation provided that a driver’s insurance
company pay up to $10,000 to cover medical bills and lost wages after an
accident, no matter who is at fault.
PIP costs have
risen by $1.4 billion since 2008, largely because of the runaway fraud
that threatens the system, most notably in the metropolitan Miami and
Tampa areas. Florida ranks first nationally in staged accidents.
The legislation requires an accident victim to obtain treatment
within 14 days in an ambulance or hospital, or from a physician,
osteopathic physician, chiropractic physician, or dentist. The full
$10,000 PIP medical benefit is available only if a physician,
osteopathic physician, dentist, or a supervised physician’s assistant or
advanced registered nurse practitioner determines that the insured has
an “emergency medical condition.” Otherwise, the PIP medical benefit is
limited to $2,500.
Follow-up services and care requires
a referral from a physician, osteopath, chiropractor or dentist.
Massage therapists and acupuncture was eliminated from eligibility for
Another provision in the bill requires the Office of Insurance
Regulation to hire an independent consultant by September to calculate
the savings expected from the Act.
The bill includes a
10 percent rate reduction on PIP that’s not guaranteed. If insurers who
offer PIP do not provide their customers a minimum 10 percent rate
reduction by October 1, 2012, they must explain in detail why not. A second rate filing
required on Jan. 1, 2013, proposes insurers have a 25 percent premium
reduction for policyholders unless they can show why they’re unable to
provide the cut.
Of the 44 rate filings that were approved by the state's Office of
Insurance Regulation by mid-November, the average PIP savings has been 2.5 percent. That reflects about a fourth of the 141 filings from companies
selling all types of car insurance, with the rest still under review. As of December 13, 2012, there were 98 filings approved.
Florida regulators are optimistic that the state’s no-fault auto reforms
are having a positive effect on the market and will eventually cut
premiums for drivers. But for now they are telling the public that the
recent law changes will likely only temper the size of insurers’ PIP rate requests as opposed to actually
decreasing drivers’ premiums.
Regulators expect that the January 1, 2013 filings will represent a fuller picture of the influence
of the reforms on the market.
Insurers have been reluctant to make deep cuts in their PIP rates because
they want to see whether the law can withstand legal challenges. A group
of health care providers filed suit in Leon County Circuit Court
arguing the law is unconstitutional. The case centers on a decision by
lawmakers to eliminate licensed massage therapists and acupuncturists
from the list of approved PIP providers while setting a medical fee
schedule based on Medicaid. In addition, the $2,500 benefit limit for
non-emergency services will result substantially decrease chiropractor
fees. Those three categories of providers represented the three highest average medical fees per PIP patient.
The first challenge of Florida’s reform to its personal injury
protection system has failed with a denial of an injunction last week that would
have stopped the law’s implementation. This is just a short-term procedural victory and the case will now
proceed to trial.