Possible end of road for no-fault insurance

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Efforts to drive fraud out of the state’s no-fault auto insurance system may not get a full test run. 

The Senate Banking and Insurance Committee on Tuesday began looking at the possibility of replacing the system, just a year after a major overhaul that is now tied up in court. Lawmakers last year tried to tackle fraud in the state’s Personal Injury Protection, or PIP, insurance system, but the changes ran up against a Tallahassee circuit court judge, who last month blocked, at least temporarily, part of the law.

That has lawmakers now looking at simply scrapping PIP, the required coverage for other motorists injuries that was intended to avoid car crash claims getting tied up in court.

“I think it’s clear that PIP has got a defined life in the state of Florida,” said Committee Chairman Sen. David Simmons.

Simmons is confident that if lawmakers were to decide next week to move forward with a bill to replace the no-fault system that premium prices for most Florida drivers would come down. He pointed Tuesday to an Office of Insurance Regulation report that nearly 90 percent of Florida drivers with insurance already are covered with some form of bodily injury protection.

“All of this certainly leads to the conclusion that for many policy holders in the state of Florida they would see a reduction in policy premiums by getting rid of PIP,” Simmons said. 

The trade off to bodily injury coverage as the bargain basement of coverage, is that without no-fault, court cases would be expected to increase as crash victims have to recoup medical coverage from the party at fault.

Insurance companies quickly lent their support to discussions of replacing no-fault, the state system that was designed in the 1970s to steer people away from court after auto accidents by providing up to $10,000 in medical crash coverage regardless of the party at fault. 

“We understood that the monumental effort to try one last time to reform PIP was important, we supported that,” Michael Carlson, executive director of Personal Insurance Federation of Florida, told the committee. “On behalf of about 45 percent of the marketplace, despite the chilly temperature in this room, we are warming up to this idea. We think that after years, decades of attempt to reform PIP, to drive out fraud, I think we have reached the point of impasse.”

Backers of the 2012 no-fault reform had hoped that nearly 70 percent of the cost in claims prior to last year’s law would be eliminated with the end of repayments for non-emergency massage therapy and acupuncture treatment.

However, Judge Terry Lewis sided with the claim by chiropractors and massage therapists that the law illegally prevents accident patients from using PIP claims to pay for their treatment.

Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America (PCI), said,”“Since the passage of the 2012 PIP legislation, and through the immense amount of time and resources dedicated to implementation of this legislation which substantially took effect in January 2013, PCI and its member companies have urged caution and patience with respect to providing the PIP law adequate time to work. PCI believes that the recent issuance of a temporary injunction against these PIP reforms has kneecapped the law’s full potential.”

The state has already filed an appeal with the strong backing of Gov. Rick Scott, but some supporters of the 2012 law said the reform effort has effectively been “kneecapped” by the judge.

Paul Jess, representing the Florida Justice Association, a trial lawyers group, said that even without Lewis’ ruling, the “new PIP isn’t going to work any better than the old PIP.”

The new law required insurance companies to cut the rates on the no-fault portion of coverage by at least 10 percent starting Oct. 1 or demonstrate why they couldn’t. A second filing, where rates are expected to drop 25 percent, is set for Jan. 1, 2014.

Material from Jim Turner of the News Service of Florida was used in this post.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.