Florida's automobile insurance market needs a big fix. Fraud and abuse under the state's mandatory personal injury protection coverage — known as PIP — has led to skyrocketing rate increases. But a big fix should not create more problems than it solves. The Florida House plan for fixing the so-called PIP problem by forcing all car accident victims to go to emergency rooms within 72 hours, plus stringent caps on plaintiff attorneys' fees, would create a whole new set of anticonsumer problems. The Senate has a far more reasonable plan to significantly reform the system.
PIP coverage, also called no-fault insurance, exists for a reason: It helps accident victims regain their lives as soon as possible after a crash, regardless of ongoing investigations. Victims of car accidents have access to up to $10,000 in necessary medical coverage and lost wages, regardless of who caused an accident.
But in the past decade, enterprising criminals and unscrupulous professionals have learned how to game the system, either by staging accidents or maximizing medical payments under PIP — even in an era of greater auto safety technology and fewer crashes. The result: Benefits paid by insurers under the no-fault law have jumped 70 percent since 2008. The state insurance regulator says that for every $1 insurance companies have collected in premium, they're paying $1.40 in claims — even after most companies have raised their PIP premiums by 50 percent or more.
One of the causes is massage and acupuncture care. According to one industry data collector, massage therapists paid under PIP collected an average of $4,350 per claim, while acupuncturists collected $3,674. Both those average payments were exponentially higher than the average $1,826 collected by physicians or $1,613 by emergency rooms. Legislation in the House and Senate changes the law to prohibit massage and acupuncture, either directly or indirectly by limiting who can provide the health care that is covered under the law.
That single reform — eliminating massage and acupuncture from covered care — should drive significant savings. But the House's solution (HB 119) would go too far by changing PIP to a system called Emergency Care Coverage. To access up to $10,000 in coverage, every victim would have to be first examined by an emergency room doctor within 72 hours of an accident. That makes sense for major trauma, but for lesser injuries it will just further crowd emergency rooms, delay medical care and increase patients' recovery costs.
The House plan also caps attorneys' fees for those who sue insurance companies. The limits are so harsh that doctors or victims would have trouble finding a lawyer who would challenge an insurance company's payment, giving insurers nearly carte blanche to deny or shortchange claims.
Both the House and Senate (SB 1860) legislation embrace a commonsense suggestion for rooting out fraud. Under both bills, when accidents include passengers as well as a driver, law enforcement would use longer-form reports that document exactly which passenger was traveling in which car. That simple effort, investigators believe, will discourage criminals who stage accidents and then send several unidentified people to a clinic for PIP care claiming they were in the accident.
Insurance companies contend the Senate bill doesn't go far enough, that unscrupulous professionals will still be able to milk the PIP system. That remains to be seen. The Senate's more cautious approach is a better plan than one that would create a whole host of other consumer problems.