Personal Injury Protection Reform Signed Into Law

Gov. Rick Scott signed legislation Friday to reform auto accident fraud in Florida, this year’s number one consumer protection issue. But consumer groups say it could have been better.

The Governor's Office says this is meaningful legislation that will lower the cost of auto insurance premiums for Florida drivers by limiting fraud in Personal Injury Protection (PIP) insurance. Accident fraud would have cost average Floridians over $1 billion this year if PIP reform was not passed. The changes will go into law in July and consumers should start seeing changes after Jan. 1, 2013.

“Growing up in a family without a lot of money, I truly understand the value of the hard-earned dollar for Florida families,” Scott said in a statement. “By helping reduce fraudulent auto accident claims, this legislation will benefit the pocketbooks of every Florida family who drives an automobile. I am glad to do my part in keeping the cost of living low in Florida, and I will continue to work to find ways to do so.”

According to the Florida Office of Insurance Regulation, the number of Florida drivers has remained stable, and the frequency of crashes has declined from 2006 to 2010.

In spite of these facts, the number of PIP claims opened or recorded increased 28 percent. In addition, the payment on PIP claims increased 66 percent during the same period.

These claims have caused auto insurance premiums to burden Florida families. For example, a family in Miami making $40,000 a year can pay nearly 14 percent of their annual salary on personal injury protection, according to the Governor's Office. Legislation that stops fraud and reduces costs will protect these families. 

Insurance companies are required to file to show they've lowered insurance rates or explain why they can't lower the rates, The Gainesville Sun reports:

"In return for the expected savings, the Legislature is requiring each insurer to submit rate reduction filings of at least 10 percent by Oct. 1, 2012, and another by Jan. 1, 2014, that is at least 25 percent of their rate of July 1, 2012, or explain in detail why they cannot meet those savings.

Bert Gindy, vice president of government affairs and compliance for Florida Farm Bureau Insurance headquartered in Gainesville, said the bill is "pretty good" in that it should cut down on a lot of fraud and is good for consumers.

"If it lowers our cost, it will lower their premiums, and that's the idea of it," he said."

Some consumer groups in Florida believe fraud will just come in another form instead, The South Florida Sun-Sentinel reports:

"The fraudsters will just find another way," said Bill Newton, executive director of the Florida Consumer Action Network. "They're not going to look at a new law and say, 'Gosh, I have to change professions. Let me go to the community college and sign up for a class to learn some new skills.'"

Newton also told The Palm Beach Post that the bill could have been better and mirrored Colorado's efforts where no-fault insurance was dropped:

One option: End personal injury protection (PIP) insurance and instead require bodily-injury liability insurance, which by one estimate is carried by 76 percent of Florida drivers.

Auto insurance premiums dropped by 35 percent after Colorado became the latest state to kill a no-fault system in 2003, according to a 2008 consultant's report forColorado's governor . That's a net result after a modest rise in rates for bodily-injury liability insurance, which Colorado requires.

Average yearly savings per vehicle: $322.

Instead, the insurance companies will limit conusmer choice and help the insurance industry with their profits, Nelson told The Palm Beach Post.

Included in the legislation signed Friday:

•  The law requires that the accident victim receive initial treatment within a 14 day window. Benefits may not be used as payment for massage and acupuncture.

• Both the short and long crash report must be used, depending on the circumstance, by the participating officer.

• Benefits can now be denied if the insured refuses to be examined under oath about information relevant to the claim only.

• Provides judges the opportunity to review attorney fees to ensure that each attorney doesn't over inflate the hours or amount of skill involved and represents reasonable legal services. 

• All clinics eligible for reimbursement must pay a licensure fee and sign fraud notices regarding fraudulent, misleading or false claims.

• Medical providers and entities may charge the insurer and injured party only a reasonable amount for services and care rendered.  

• A licensed health care practitioner found guilty of fraud relating to PIP services loses his/her license for five years and may not receive reimbursement for PIP services for 10 years.