No-fault auto insurance law closer to renewal

By Stephanie Horvath

Palm Beach Post Staff Writer

Friday, March 31, 2006

It appears Florida's system of paying for medical care after a car crash will stay in place for at least another year.

On Thursday, the House Insurance Committee passed a bill that would reenact Florida's no-fault system, which was scheduled to sunset next year.

The Senate Banking and Insurance Committee also passed a bill renewing no-fault on Tuesday.

Both make some reforms to the system, though not as many as the insurance industry wants.

At issue is the required personal injury protection, or PIP, part of auto insurance policies. It provides $10,000 in medical care, disability and death benefits for a person after an auto accident, regardless of who is at fault.

In states without no-fault laws, health insurers pay for medical care after an accident, and people must sue to recover other costs like lost pay.

Rampant fraud and abuse led lawmakers to enact reforms in 2001 and 2003, and finally to vote to repeal the no-fault law on Oct. 1, 2007, unless it was renewed this year.

The no-fault law has been hotly contested, partly because the insurance industry is split over it. Some large insurers, like State Farm, Allstate and Nationwide, want to see the law repealed.

Others, like Progressive and Geico, want to see it renewed with significant changes, like medical fee schedules for doctors and limits on attorney fees. Those reforms have met strong resistance from doctors who care for car crash victims and lawyers who sue insurance companies.

All groups have been aggressively lobbying lawmakers. Rep. Dennis Ross, R-Lakeland, chairman of the House Insurance Committee, said his chamber's bill strikes a balance.

"I think we've been very, very sensitive to the health care providers out there," he said. "This doesn't affect what you charge. It does not prohibit attorneys' fees. This is a compromise... necessary in order to continue to move these issues forward."

The House bill would require PIP to pay an additional $10,000 just for emergency room care, leaving victims with another $10,000 for other care. It would also forbid attorneys from multiplying their fees except in certain situations and require motorcyclists between the ages of 16 and 20 to have insurance, including PIP. The bill would also make it a felony to create fake accidents on paper.

The Senate bill passed Tuesday included about $3.3 million in state money to give pay raises to state fraud investigators, hire as many as 19 new investigators and hire six new insurance fraud prosecutors.

The state Division of Insurance Fraud has said it regularly loses investigators to the Florida Department of Law Enforcement, which pays better.

In spite of PIP fraud, auto insurance rates are competitive.

The Florida Office of Insurance Regulation told the House committee on Thursday that no company had sought a rate hike of more than 10 percent in the last two years.

And the state's auto insurer of last resort only has 6,000 policies, compared with the 800,000 policies it had in the 1970s when the no-fault law was enacted.

Even though the House and Senate bills reenact the no-fault law, the issue is all but certain to come up again. The bills would force it to sunset again, the Senate's in 2009 and the House's in 2012.