Reform for PIP Squeaks Through on Final Day of Session
After intense debate throughout the 2012 legislative session, the Florida House of Representatives and Senate reached a compromise on reforms for Florida’s Personal Injury Protection (PIP) auto insurance system. The bill and its reform proposals were the subject of considerable analysis and discussion prior to the session and throughout its two-month term. Insurance Commissioner Kevin McCarty called for reforms due to escalating rates attributable to fraud and abuse, and both Governor Rick Scott and CFO Jeff Atwater were outspoken about the need to change the system.
The House supported strong reforms throughout the session and ultimately passed the compromise bill with the Senate by a comfortable 80-34 margin. The Senate, however, was slower to embrace substantial reforms. After working with the House on the compromise proposal, it still came down to a close 22-17 vote to pass the final package.
The bill contains a number of changes designed to limit rising PIP costs due to abuses in the system. The bill establishes a 14-day period in which injured persons must receive their initial care. It also provides that only $2500 of the $10,000 PIP limit may be used for non-emergency care. The bill contains limitations on chiropractic care excludes coverage for massage therapy and accupuncture.
The Office of Insurance Regulation within 60 days of the bill’s becoming law will published a report estimating the rating impact of the bill (a so-called presumed factor). By October 1, insurers will be required to make rate filings incorporating the impact of the bill. If an insurer’s rate filing does not provide for at least a 10% rate reduction for PIP, the insurer will be required to explain the reasons in detail. A second filing benchmark of a 25% reduction takes effect in 2014.
The bill also contains new anti-fraud provisions. Insurers may notify insureds within 30 days if they suspect fraud, and the insurers then will have 60 days in which to investigate the suspicious activity. In addition, the bill will allow for the creation of a non-profit fraud-fighting corporation, which will be funded by the industry and administratively housed with the Department of Financial Services.
Altogether, Governor Rick Scott was pleased with the bill. He commented, “This is a triumphant moment for the residents of Florida. Members of the Legislature heard our call to put Floridians ahead of special interests and combat the fraud that has become a billion dollar tax on drivers.”
Insurance Commissioner Kevin McCarty likewise was pleased, saying “The Florida Legislature, along with Governor Scott and CFO Atwater, clearly recognize that it is critical that we change the incentives in the system to reduce PIP fraud.”