Florida lawmakers and Gov. Rick Scott were quick to congratulate themselves for legislation aimed at curbing fraud and abuse under the state's auto accident insurance law, which passed on the last day of the legislative session. But it may not be that great for consumers. Starting Jan. 1 — Scott is expected to sign HB 119 — victims of accidents with injuries short of an emergency will be entitled to just $2,500 in personal injury protection coverage (known as PIP) for medical bills and lost wages — just one-fourth of the current $10,000 limit. If car owners don't see commensurate decreases in their premiums starting in 2013 and beyond, lawmakers and Scott should be held to account.
From the beginning, reforming the state's PIP law has been an exercise in balancing special interests such as health care providers who rely on it to ensure prompt payment, trial attorneys who fight insurance companies on behalf of consumers and health care providers, and insurance companies that don't want to pay more than they have to. But reform was desperately needed as the current system — which provides up to $10,000 of coverage for accident victims — has become a gold mine for criminal entrepreneurs and unscrupulous professionals.
By one estimate, the fraud or trumped-up medical expenses being financed under the so-called no-fault system amounted to a $1 billion increase in premiums for Floridians.
Several provisions of the bill make sense: tougher licensing requirements for medical clinics, broader use of long-form accident reports, a new antifraud statewide task force and stiffer penalties for providers caught defrauding the system. But it was the House's insistence that the state reduce coverage limits for nonemergency injuries to $2,500 and require victims to receive medical care within 14 days of an accident to qualify for PIP coverage that could impact consumers the most. It's not hard to imagine someone who suffers a soft-tissue back or neck injury in an accident quickly exceeding that $2,500 limit for both medical care and lost wages. That means costs will simply shift to victims' traditional health insurance plans, assuming they even have them, or could require litigation to force the at-fault driver's liability insurance to pay, assuming he even has such coverage.
What will Florida auto insurance customers get in return? Supposedly a 10 percent decrease in their personal injury protection premium by Oct. 1 and 25 percent by 2014 — unless the insurance company can convince regulators that that's too much. Scott will undoubtedly declare victory when he signs this bill in coming weeks. For consumers, it's far less certain.