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Cabinet Hears PIP Woes, No Solutions

Michael Peltier, News Service of Florida

11/3/2011

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Florida's no-fault automobile insurance market is wrought with fraud, litigation, inflated medical costs and a host of other maladies, but a panel set up to study the issue could reach no consensus on how to fix it, the governor and Cabinet were told Tuesday.

Following a report released a few weeks ago, the state's insurance consumer advocate told Gov. Rick Scott and the Cabinet that the only thing panel members could agree on was that the premiums for personal injury protection are skyrocketing as the number of claims filed continues to rise while the number of accidents remains the same.

"It's lawyers, providers and insurance companies fighting over a pot of money the consumers paid in and keep paying in at an extraordinary level," said Robin Westcott, Florida's insurance consumer advocate. "Each day seems to be worse."

Florida consumers are paying nearly $1 billion a year for personal injury protection insurance, or PIP, which was set up in the 1970s to keep minor medical claims out of court.

Westcott was called before the panel to update Scott and other state leaders on the results of a working group set up by lawmakers to come up with a slate of recommendations to curb rising costs in the program. Florida is one of about a dozen states that continues to require motorists to pay for such coverage.

After a series of meetings, however, the working group made up of representatives from health care providers, insurance companies, law enforcement and other affected parties concluded its work without reaching any set of recommendations. "Nobody agreed on anything," Westcott said.

The panel did say that caps on what insurers will pay for procedures has simply led to insurers being billed for multiple procedures at the lower amount eventually getting to the same total cost.

The panel also said providers, from massage therapists to MRI clinics and others, are increasingly going to court to try to get payments from insurers.

"The litigation is not coming from hospitals and MDs," said Florida Chief Financial Officer Jeff Atwater. "It's coming over disputes about how many times you can give a cold pack or a hot pack or a massage to someone after a questionable event has even taken place."

The lack of recommendations, however, did not stop the Cabinet from expressing concerns over a program that some would like to see go away but others say is the only insurance some traffic victims can collect on. Both sides in the argument, however, say significant changes are needed.

A report by the Florida Chamber of Commerce asserts that despite decreases in the number of crashes and steady population growth, PIP claims have risen from under $1.5 billion in 2008 to nearly $2.5 billion last year.

The number of staged crashes also appears to be rising based on the number of claims that have been referred to fraud investigators, which has more than doubled since 2007.

Companies have responded by raising PIP rates anywhere from 35.5 percent to 72 percent since 2009.

"There was real value for this at the time it was established," Atwater said. "Now every Tom, Dick and Harry can provide a procedure."

Florida consumers are paying nearly $1 billion a year for personal injury protection insurance, a $10,000 policy set up in the 1970s to keep minor medical claims out of court. The system is increasingly wrought with fraud and other cost drivers including higher medical costs, an expansion of services and increased litigation over who gets paid, the state's consumer advocate told the governor and Cabinet Tuesday. Robin Westcott, Florida's insurance consumer advocate, told the panel that unless changes can be made soon, consumers might be better off if the state did away with the no-fault system that may cause rates to rise and additional 10 to 25 percent over the next couple of years.