Florida Governor Signs Long-Awaited Auto Insurance Anti-Fraud Bill

Florida’s decade long attempt to reform the state’s automobile no-fault insurance law has finally paid off.

Gov. Rick Scott, flanked by rows of law enforcement officials and state officials, signed into law HB119, a measure that was a centerpiece of his successful 2010 run for governor. Sponsored by Rep. Jim Boyd (R-Manatee), the new law is a comprehensive re-write of the state’s automobile personal injury protection insurance law.

Among other things it requires accident victims to report an auto-related injury and seek treatment within 14 days. The policyholders could receive up to $10,000 in benefits for emergency medical care and $2,500 for other less serious injuries. The law also specifies that massage therapists and acupuncturists are no longer eligible to receive medical payments.

The new law has a host of anti-fraud provisions and attempts to control litigation costs by prohibiting the use of contingency risk multiplier when calculating attorney fees. It changes medical payments and includes a detailed list of approved medical providers who are eligible to receive PIP payments.

Scott thanked law enforcement officials, saying that “when they get involved, things get done.”

He also singled out the state’s Consumer Advocate Robin Westcott for leading a six-month study group on the issue that for the first time focused on PIP’s cost to consumers.

He highlighted Insurance Commissioner Kevin McCarty’s role in putting the numbers together to show just how much insurance rates are being affected by PIP rates. “You were very helpful in the last week getting this thing done,” he said to McCarty.

Scott wryly noted that those affected adversely by the law are already looking for ways around the law. He cited an email from an unnamed medical provider that promised to fill out the paperwork showing an alleged accident victim had a serious injury thus being eligible for the higher benefit amount.

“They are already out there trying to game the system,” said Scott.

Since the bill was passed by the Legislature, two issues have emerged as concerns.

The first is a loophole that could affect medical provider payments.

For example, medical providers and entities may charge insurers and injured parties a reasonable amount for services, which could include the use of the federal Medicare payment rates. That portion of the bill is effective July 1.

However, as of January 1, 2013, the new list of approved medical providers limits payments to groups such as physicians, hospitals, and chiropractors, and no longer includes massage therapist and acupuncturist..

Provider groups are worried that insurers will ignore the July 1 deadline and not make medical payments until the January 1 provider list becomes law. That could result in some medical providers now covered under the PIP law not receiving payments and with little recourse to do something about it.

The state, however, is already taking steps to head off any problems.

Florida Office of Insurance Regulation Jack McDermott said regulators plan to deal with the issue through rules and executive orders.

One solution already moving forward is a draft rule by the Agency for Health Care Administration, which would clarify which medical provider gets paid and during what time period.

“The purpose of the bill was not to create a six month gap,” McDermott told reporters. “AHCA has publically said that are going to issue rules to clear this up and we’ve encouraged insurers privately that PIP providers should be paid.”

Insurers are also wary of any rate cuts that are called for before the expected savings from the law are realized.

As of October 1, all insurers must submit a rate filing with the OIR that reflects a 10 percent reduction in the PIP portion of their rates and provide a detailed reason why it is unable to do so. A similar provision kicks in on January 1, which contemplates a 25 percent reduction in PIP rates.

The law calls for an actuarial study to be conducted by an independent firm that will project the law’s expected impact on PIP losses.

OIR spokesperson Amy Bogner said that regulators would still have the authority to ensure that insurers comply with state law. She pointed to that portion of the state’s rating law that requires rate changes to be actuarially justified and not “excessive, inadequate, or unfairly discriminatory.”

The legislation “would not change our current duties and our responsibilities,” Bogner said.

Following the law’s passage, Florida Insurance Council Vice President Sam Miller said that insurers are already contemplating how the new PIP law will affect their rates. He said that while the rate language concerns insurers, the fact that it is not a mandate creates the expectation that the rate decreases will be based on numbers and not just arbitrary political decisions.

“Companies are concern that rates will be rolled back before there our corresponding losses,” said Miller. “But we expect the law to operate on actuarial data and that the OIR will administer it fairly.”