Christine Jordan Sexton, Florida Tribune
October 27, 2011
An insurance trade group -- building on information first released this year by state regulators -- came out on Thursday in favor of far-reaching and likely controversial changes to the state's no-fault auto insurance system.
Motorists in the state are required by law to purchase $10,000 worth of personal injury protection coverage. But the current system has come under attack by critics who contend it fosters fraudulent claims.
Among the changes championed by the Property and Casualty Insurers Association of America (PCI) is a move to address an appellate court decision that a medical provider assigned PIP benefits cannot be forced by an insurer to an examination under oath. Insurers contend such examinations under oath could be used to snuff out what the insurance industry thinks are fraudulent medical claims, perhaps stemming from staged accidents.
And as the Republican controlled Florida Legislature moves ahead with eliminating regulations to become more business friendly PCI also would like to see a requirement that PIP clinics be licensed by the state Agency for Health Care Administration.
The other two recommendations are to implement utilization schedules for health care services and to eliminate attorney fee multipliers.
Alex Haggle, director of personal lines policy for PCI, said lawyers should not have the ability to have their fees increased substantially for representing PIP clients given the fact PIP Is supposed to be a no-fault system where attorneys aren't necessary.
Judges determine whether the fees should be multiplied given the complexity of the case.
"Talk about irony," said Haggle, whose association represents more than 1,000 member companies.
Florida Justice Association Deputy Executive Director and General Counsel Paul Jess said the attorney fee multipliers help ensure that people involved in car accidents and the providers who treat them are able to challenge insurance companies. If insurance companies didn't deny proper claims, Jess said, they wouldn't get sued in court.
"They (insurance companies) simply don't like paying attorney's fees when they litigate cases,'' Jess said.
PCI was less specific regarding how utilization schedules should be used. When asked whether PCI was supporting applying the utilization schedules used in the workers' compensation system Haggle said his group accepted that there were "multiple parties involved" in the PIP debate and that his association remained open on the issue.
The recommendations are the same that have been advocated by insurance industry interests who serve on the Insurance Consumer Advocate PIP working group brought together by Insurance Consumer Advocate Robin Westcott.
The group met four times during the past several weeks and exchanged in spirited debate, mostly on the same four issues that PCI is pushing for action on during the 2012 session. Westcott plans on issuing a PIP document summarizing the working group's discussions before the Cabinet on Nov. 1.
The recommendations were released along with a report PCI compiled, using Office of Insurance Regulation figures, which show that there is as much as $800 million in fraud in the PIP system. According to the National Insurance Crime Bureau, Florida led the nation in staged accident "questionable claims" from 2007 to 2009. During the same period, Tampa, Miami, Orlando and Hialeah were among the 10 U.S. cities with the highest rate of questionable auto claims.
Whether PIP should be eliminated or changed to crack down on fraud and abuse will be a top insurance issue during the state Legislature's 2012 session.
Because of the many different special interests from auto insurance companies, health insurance companies, physicians, lawyers, chiropractors and consumer advocates, it's a tough issue for the Legislature to tackle. Attempts to change the system and crack down on attorney fees died in the House in 2011 and the heavyweight issue, without debate, was included in one of the budget implementing bills. It eventually was removed, but the issue has simmered in the months since the Legislature adjourned.
Bob Passmore, senior director of personal lines for the PCI, said the recommendations that were floated are necessary regardless of whether the Legislature decides to make changes to the PIP system or to eliminate the no-fault system altogether. Paul Blume, PCI’s senior vice president of state government relations, said the recommendations were made to help keep automobile insurance premiums affordable.
Florida has had a no-fault PIP system in effect since 1972. The dollar limit hasn't been raised since 1979. At a PIP workgroup, Blue Cross and Blue Shield of Florida representative Steven Smith said benefits would have to be set at $61,673 to equal the value of $10,000 in health benefits in 1979.
Despite the fact benefits haven't been increased in 32 years, Blume said his group wouldn't support increasing PIP benefit levels because it would ultimately increase the costs of insurance coverage.