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House panel OKs bill to eliminate long standing PIP program, despite opposition

03/27/2017 05:08 PM EDT


In lieu of the PIP policy drivers will instead be required to carry a minimum bodily injury policy
of $25,000 and $50,000 for bodily
injury or death to two or more persons. Getty

TALLAHASSEE—The House Insurance and Banking Committee on Monday approved HB 1063,which eliminates Florida’s long-standing law requiring drivers to carry $10,000 of personal injury protection insurance and along with it the no-fault program that provides people access to health care for injuries stemming from automobile accidents without having to first file a lawsuit sue in court.

In lieu of the PIP policy drivers will instead be required to carry a minimum bodily injury policy of $25,000 and $50,000 for bodily injury or death to two or more persons.

State Rep. Erin Grall, a Vero Beach Republican and sponsor of the bill, told the committee that the PIP system is rampant with fraud and that Florida several times has tried to respond to that by altering the program. In 2012, to address increasing PIP costs, the Legislature limited the dollar amount of PIP coverage for an accident to $2,500 unless the injuries required emergency attention.

To underscore the problems with fraud, Grall told the committee that before the changes 60 percent of the injuries stemming from car accidents were considered non-emergency. Since the change, she said, 4 percent of claims filed are for non-emergency medical conditions.

“It just gets tweaked in a different way and we squeeze it in different parts,” she said.

Pinnacle released a report in September that showed the sweeping changes made to the state’s mandatory personal injury protection yielded an average 15.1 percent savings in PIP auto insurance premiums. The report estimates that eliminating the PIP requirement would generate an overall reduction of about $81 annually per car for the average driver.

Several insurance lobbyists who testified on Monday expressed concern that HB 1063 would eliminate the no-fault system and require drivers to sue for benefits, but that the proposal does not make any changes to the state’s third- party bad faith laws.

"Right now, in cases where a policyholder has low policy limits and is sued on a claim with clear liability and big damages, the plaintiff's lawyer doesn’t settle the case for those low policy limits,” William Large, president of the Florida Justice Reform Institute said in a statement. “Instead, they set arbitrary and unreasonable time frames and multi-conditional demands, making it impossible to settle an undisputed claim. The result is lucrative multi-million dollar settlements and payouts that greatly exceed policy limits of policyholders. That would only get worse under a system of mandatory bodily injury insurance.”

But Grall called bad faith a separate issue and said that the Legislature should be mindful of the details of the decision to eliminate PIP and replace it with a new system. The Legislature “can’t anticipate a problem that does not yet exist.”

Lobbyists representing health care providers, though, opposed the bill, including the Florida Medical Association and the Florida Osteopathic Medical Association. They said health care providers wouldn’t be paid for providing needed health care services. Additionally there were concerns that there would be increases to health insurance as injured drivers turned to their health insurance policies to cover their health care needs as opposed to filing a lawsuit in court.

Florida’s financial responsibility laws currently require drivers involved in an accident to prove that they have the ability to pay monetary damages in the amount of at least $10,000 for injury or death for one person and $20,000 for injury or death to two people as well as $10,000 in property damage.

The bill does not change financial responsibility for property damage but it does increase the minimum coverage requirements for bodily damages.

According to staff analysis, Florida is one of 17 states (including the District of Columbia) with mandatory PIP requirements. But only nine states, including Florida, have compulsory PIP laws and no fault laws. Five states including Texas, which does not have a compulsory PIP law, allows drivers the option to choose no fault protections.

Policies issued on or after January 1, 2018 would be precluded from selling PIP coverage, which provides drivers with lost wages and health care costs.

During her closing remarks, Grall told the committee that she would be open to eliminating bad faith but only if there was a mandatory rate rollback, a move insurers traditionally have opposed.