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Lawmakers Now Ready To Push ‘No Fault’ Off Florida Roads

There is little chance Florida lawmakers will abandon the “no-fault” auto insurance system during the upcoming legislative session, giving more time to a 2012 reform effort backed by Gov. Rick Scott.

Senate Banking and Insurance Chairman David Simmons maintains that the four-decade-old Personal Injury Protection, or no-fault, system can’t be fixed and needs to be abandoned before courts possibly could strike down the 2012 law.

However, the Altamonte Springs Republican, who has led key Senate insurance issues, doesn’t plan during the legislative session that starts Tuesday to advance any measures that would replace no fault with a bodily-injury coverage requirement.

“You can be assured that if there is some catalyst, such as a court ruling or that the insurers are able to build a coalition to get some movement on getting rid of PIP, you can be assured that I’ll be the first one to file a bill,” Simmons said. “But I’m not going to do anything until there is a greater consensus among both the stakeholders and the legislators.”

While a challenge to the law is now before the Florida Supreme Court, the emergence of such a catalyst, Simmons said, could take a couple of years.

That should be good news for Scott and state Chief Financial Officer Jeff Atwater, who championed the 2012 reforms and have maintained their support for the changes aimed at reducing rampant fraud in the system that caused premium increases.

With some of the law’s changes only going into effect last year, quickly abandoning the reform effort could be seen as a failure of one of their policies.

Scott, in a statement from his office Thursday, noted that since the law went into effect, Florida drivers have seen their PIP premiums drop by an average of 13 percent.

“Two years ago, PIP premiums were expected to increase by an average of 29 percent in Florida — and we fought to keep the cost of living low for Florida families,” Scott said in the statement. “That’s why we worked to pass legislation to lower PIP rates by increasing licensing standards for medical clinics, establishing strong penalties for those who commit PIP fraud, and creating a statewide anti-fraud task force.”

Simmons said he’s talked with Scott and Atwater but doesn’t share their view on no-fault. Yet the senator also isn’t ready to go as far as some national insurers who he says are in favor of ending no-fault.

The move to bodily injury coverage wouldn’t require much change for the majority of Florida motorists. The state Office of Insurance Regulation has estimated that more than 70 percent of motorists already have some bodily injury coverage.

The impact would be on post-crash recoveries.

Under PIP, motorists can receive up to $10,000 to cover medical costs from crashes, regardless of who is at fault. But bodily injury coverage would send more people to court as injured parties would seek to recoup expenses from at-fault motorists.

Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America, said many in the industry contend the 2012 law should be given time to take hold.

“You typically need a couple years of implementation to get credible data to weigh out the effect of the reforms,” Brown said. “It’s just human nature. On the day this bill was passed, folks were immediately asking ‘What happened? Where’s the change?’ But really it was ongoing into 2013 as the changes rolled on to consumers’ policies.”

He added that some insurance companies have held off on implementing the recommended reductions to no-fault premiums until the court battle is concluded.

The 2012 law, considered a last-ditch effort to maintain the no-fault system, set benchmarks for insurers to lower rates on personal-injury protection coverage. It required people involved in motor vehicle crashes to seek treatment within 14 days, allowing up to $10,000 in benefits for emergency medical conditions, while putting a $2,500 cap on non-emergency conditions.

A Leon County circuit judge ruled the law illegally prevents accident patients from using PIP coverage to pay for treatment by acupuncturists and massage therapists and limits the services from chiropractors.

But the 1st District Court of Appeal in October reversed the ruling, saying challengers needed a “factual” motorist who had been harmed by the law, rather than a hypothetical “Jane Doe” as listed in the lawsuit, for the case to proceed.

If the Supreme Court sides with the challengers, the fight will return to the lower courts. If the Supreme Court sides with the state, the challenge is expected to be reintroduced with new named plaintiffs.

Meanwhile, the expected rate savings also haven’t been as dramatic as first envisioned.

The reforms required insurers to submit rate filings to the Office of Insurance Regulation on October 1, 2012 and January 1, 2014. Cumulatively, the two rate filings were expected to reflect a drop in PIP rates of 25 percent or insurers must show why they could not meet that goal.

In January, the state office reported that of the top 20 insurers by market share in Florida, 14 lowered rates for the no-fault coverage, half reaching the 25 percent mark. However, a majority of firms raised overall rates.

As an example, Geico General Insurance Co., the state’s largest auto insurer, reported a 25 percent reduction in its PIP rates, which translated into only a 0.6 reduction in its overall auto-insurance rate.

“A system that is so fundamentally flawed will have to be changed,” Simmons said. “Every three years the Legislature has gone back and done PIP reform. You just look at PIP, it’s a patient that has bandages all over it from trying to be fixed, and it’s still as sick as can be.”

Simmons has been working on legislation to replace PIP since the end of the 2013 session, and a measure (HB 267) filed in the House by Rep. Carlos Trujillo, R-Miami, would repeal the “Florida Motor Vehicle No-Fault Law” and allow Floridians to carry only bodily injury coverage.

Trujillo’s measure, filed Nov. 5, has yet to be brought up for a committee vote.

by Jim Turner, The News Service of Florida