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PIP stands to change or die under new proposal

Christine Jordan Sexton, 11/10/2011 - 07:44 PM

Florida's no-fault auto insurance system will be eliminated in four years unless the Legislature reviews and agrees to re-enact the law under a proposed committee substitute that will be "workshopped" by the House Insurance & Banking Subcommittee next week.

A 23-page amendment released to HB 119 on Wednesday would make substantial changes to the mandatory no-fault insurance program, including eliminating a contingency fee multiplier that allows attorneys fees in complicated cases to be inflated. The amendment would also crack down on fraud by requiring clinics to register with the state and by placing utilization controls and fee limits on certain services.

Florida Insurance Council Executive Vice President Florida Insurance Council Sam Miller said the bill shouldn't be perceived as a repeal of the no-fault insurance known as personal injury protection. Motorists in Florida are required to carry $10,000 worth of PIP coverage.

"These are very important changes that can return PIP to being effective again and make PIP what it was always intended to be," Miller said. "It if works, it is likely the Legislature will repeal the repealer."

If not, the now-mandatory program with its $10,000 in benefits regardless of who is at fault, will be repealed in July 2015.

The bill places limits on the amount of services rendered by chiropractors and massage therapists, capping payment at either 24 treatments or 12 weeks of care from the initial visit, whichever is less.

The bill also would limit the charges at ambulatory surgical centers to 80 percent of the workers' compensation fee schedule.

A top legislative priority of the insurance industry and others is to limit attorneys’ fees in PIP claims. On small claims, or those under $500, attorneys could  receive 15 times the disputed amount, not to exceed $5,000. 

For disputed claims between $500 and $5,000 attorneys could receive 10 times the disputed amount not to exceed $10,000. 

For the largest bills -- those between $5,000 and $10,000, attorneys fees would be limited to five times the disputed amount, limited to $15,000.

Florida Justice Reform Institute president William Large called the restrictions on attorneys’ fees the most important provision in the bill.  Large said that PIP was created in the early 1970s to be a no-fault system without “endless litigation.”

“Now,  you’ve got people making a fortune over ice packs,” Large said.

To crack down on fraud beginning Jan. 11, 2013, the bill would require any clinic that receives more than 30 percent of its gross income from PIP policy benefits to register with the state.

The bill also allows insurance companies to enter into preferred-provider relationships with hospitals and physicians but the carrier would be required to offer its policyholders an unmanaged care insurance plan. The PPO product must be discounted. Carriers would be able to limit payment for nonemergency care that is provided outside of network. 

An insurer would be able to contract with an existing PPO network in order to offer the managed care automobile insurance option.

The Office of Insurance Regulation is required under the proposed committee substitute to conduct a data call within 24 months of the changes becoming effective. The information in the data call must include the number of PIP claims filed, the number of independent medical examinations conducted  -- both under oath and not -- and the number of claims denied.

The proposed committee bill also would require insurers to file new rates within 18 months of the new law.

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