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Understanding the coming changes to Florida's car insurance laws

Dr. Debra Hoffman, with her chiropractic patient Paige Montgomery, says new limits on the amount of money for injuries could drastically reduce services available to accident victims.
Published Mar. 31, 2012

TALLAHASSEE — The long list of suspected car insurance scammers now includes food truck vendors.

The state Division of Insurance Fraud reported last week that 15 people have been using restaurants-on-wheels in Miami to stage accidents and collect hundreds of thousands of dollars in insurance money.

The particulars of the Miami case are novel, but the scam itself is not. Lawmakers and Gov. Rick Scott made curbing fraud in the state's no-fault car insurance law a top priority for 2012.

The proposed solution — which passed on the final day of the legislative session — alters how drivers use their insurance, attempts to reduce the number of crash-related lawsuits and seeks to lower insurance rates.

Will it work?

Only time will tell.

Some of the fixes will roll out over the summer, after Scott signs the bill into law as expected. But drivers won't see their policies change drastically until 2013.

The measure (HB 119) includes a requirement that insurance companies reduce personal injury protection premiums at least 10 percent by Oct. 1 and 25 percent by 2014.

There is a catch.

Insurers can ask the state to be exempt from the rate cuts, as long as they provide backup documentation.

"There is a strong alliance of senators who are going to hold the insurance companies' feet to the fire and make sure they reduce rates dramatically," said Sen. Joe Negron, the Stuart Republican who helped craft the changes.

New limits on benefits

Lawmakers say personal injury protection (PIP) reform restores no-fault car insurance to its core mission.

"My goal was to put PIP back into its original character as emergency treatment to get you back on your feet," said Negron, who led the reform efforts with Rep. Jim Boyd, R-Bradenton.

That is why the law bars massage therapist and acupuncturist from treating patients under PIP. Those services were contributing to rising costs and were deemed less of a necessity compared with other treatments, legislators said.

Starting in July the following changes will go into effect: tougher licensing standards for medical clinics, a new statewide anti-fraud task force, wider use of long-form accident reports, and stiff penalties for providers caught defrauding the system.

However, Florida drivers won't see their PIP coverage change in a major way until 2013.

Beginning Jan. 1, people injured in auto accidents will have 14 days to seek initial treatment — under current law there is no cutoff — and that first visit will carry more weight.

Only people diagnosed with an "emergency medical condition" will be eligible for the full $10,000 PIP benefit. Medical doctors, osteopathic physicians, dentists, physician assistants or advanced registered nurse practitioners will be authorized to make the determination.

Those with less severe injuries will receive only $2,500. Soft-tissue injuries that are common in car accidents, such as soreness, swelling and bruising, are not expected to be considered emergencies.

Although a wide selection of medical professionals will still be allowed to treat accident victims, including physical therapists and chiropractors, they will be expected to perform necessary screenings and treatments for $2,500 or less.

That could drastically limit the services that are provided, one Temple Terrace chiropractor said. An MRI alone costs as much as $1,400, said Debra Hoffman, who has been practicing for 32 years.

"If you're using $1,400 of that just to find out if they have a herniation, then that leaves $1,100 worth of care," she said. "And that doesn't go too far."

She also worries about the new two-week window to seek initial treatment. Many people in car accidents refuse care initially and only seek medical help when aches and pains persist, Hoffman said.

Supporters say that is how the system is supposed to work because PIP was only intended to help people with their immediate needs after an accident. Let other types of insurance — the at-fault driver's liability coverage or private health policies, for example — take care of the rest, they say.

New legal wrinkles

The law also tries to reduce the number of PIP claims that end up in court, but it could create new areas of litigation as well.

Most lawsuits are filed because doctors disagree with insurance companies on how much they are owed. Negron said that in some instances the changes take the side of doctors. In other cases, they favors insurers.

For example, the law clears up ongoing disputes about how certain costs should be calculated by factoring in the fee schedule under Medicare. It also clarifies that insurance companies can examine patients under oath when investigating possible fraud and eliminates a provision that allowed judges to drastically increase the amount of fees awarded to plaintiff attorneys.

"I think we should see a substantial reduction in litigation because we identified the major sources of litigation and solved those problems," Negron said.

However, both sides are bracing for new areas of disagreement and say the PIP reforms could lead to more lawsuits.

It happened the last time the Legislature tried to fix PIP in 2007. That year, lawmakers agreed to tie service costs to Medicare's fee schedule — which resulted in a drastic increase in billing disputes that ended up in court.

Lawmakers believe they settled that issue this year. But the new "emergency medical condition" provision could be a new flash point.

Paul Jess, general counsel of the Florida Justice Association that represents trial lawyers, said there is no question PIP lawsuits will increase after January. Because the "emergency medical condition" definition will determine whether or not patients are eligible for $2,500 in benefits or $10,000, there will be disagreements.

"That's a pretty big disparity, so you can bet that there will be litigation over what is and is not an EMC," he said.

Michael Carlson, executive director of Personal Insurance Federation of Florida, an organization that represents some of the largest insurance companies, said Florida judges will likely have determine where to draw the line.

"Are we going to have to rely on the courts in Florida to determine whether a certain kind of sprain is an EMC?" he said. "A bulged disk in your spine, is that an EMC?"

How soon and how clearly the courts clear up gray areas will determine whether rates ultimately will drop. If the number of lawsuits fails to subside, or even rises, premiums likely won't decrease.

"Lawsuits in PIP are exactly what we don't want to have," Carlson said. "They slow down the PIP claim process. They add to the cost of PIP claims."

Effect on premiums

Insurance companies say benefits of the PIP changes will take months, if not years, to materialize.

That means drivers should not expect to see their car insurance costs decrease anytime soon.

"The real attempt to control costs doesn't go into effect until next year," Carlson pointed out.

Insurers want to see how the PIP reforms play out — mainly whether the number of staged accident, fraudulent claims and lawsuits decrease — before they decide whether rates can be reduced without affecting their bottom lines.

"I think we probably need 18 to 24 months of effective implementation of all the various provisions of the bill to see what the experience is," Carlson said.

Jess disagrees.

Once the new provisions go into effect in January, insurance companies should be able to make adjustments, he said.

"The coverage is so limited, clearly insurance companies are going to be paying out much less in claims," he said. "...What is certain is that companies in the average case are going to be paying out $2,500 rather than $10,000."

If companies don't bring their rates down quickly, they may draw the wrath of legislators who acquiesced to many insurers demands while crafting the changes.

"I am going to be watching PIP insurance rates like a hawk," Negron said, "And I expect for them to go down dramatically or the insurance industry will have a lot to answer for."

Tia Mitchell can be reached at tmitchell@tampabay.com or (850) 224-7263.

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