No-Fault Injury Coverage Provision Set to Expire Oct. 1

By Kathy Bushouse, South Florida Sun-Sentinel

Mar. 27--The clock is ticking on Florida's no-fault automobile insurance law, with the requirement that all the state's drivers carry mandatory personal injury coverage set to expire Oct. 1.

Whether Floridians still will have to carry personal injury protection, or no-fault coverage, will depend on the Legislature, which this week will consider several proposals designed to revise the law and keep it in place, rather than have it disappear later this year.

Last year, then-Gov. Jeb Bush vetoed legislation that would delay the expiration of no-fault requirements, which means lawmakers must act this year if they want to keep the coverage intact. This year, as in years past, the debate over no-fault pits many of the state's insurance companies against doctors, hospitals and lawyers.

Florida's drivers are required to carry $10,000 of coverage that pays medical bills, regardless of who's at fault in an accident. Without it, medical costs from an accident would be paid by an accident victim's own health insurance and victims would have to sue for other damages, such as lost wages.

Proponents of no-fault argue it speeds medical payments to accident victims, and keeps cases out of court. Critics claim Florida's personal injury coverage has been used fraudulently, and that attorneys and medical clinics are seeing more benefits than accident victims.

For insurance companies and the trade groups representing them, eliminating requirements that drivers buy personal injury coverage means savings for consumers.

"We think no-fault is not fixable," said William Stander, assistant vice president for the Property Casualty Insurers Association of America. "It's rife, riddled with fraud, and if we just get rid of it, every Floridian is going to save that money that they're paying for it."

They point to Colorado, where a repeal of that state's no-fault law prompted a flurry of rate cuts by auto insurers. The same would happen here, insurers say -- State Farm, Florida's largest auto insurer, already has proposed an average 5.4 percent cut in its annual premiums if legislators let the no-fault law expire in October.

Floridians for Lower Insurance Costs, a group of business and consumer organizations whose backers include State Farm, Allstate, Travelers of Florida and the American Insurance Association, estimates Floridians will save an average of $250 a year if no-fault expires.

But doctors and hospitals say if no-fault goes away, it will cost Floridians in other ways, with higher health insurance costs and the possibility of higher taxes imposed by hospital districts if they have to treat accident victims who may not have health insurance to cover their medical bills.

Hospitals received in 2005 an estimated $350 million from auto insurance companies to cover bills for patients injured in auto accidents, said Ralph Glatfelter, senior vice president with the Florida Hospital Association. That money treated as many as 110,000 patients, of whom 40 percent didn't have health insurance, he said.

Should the state opt to no longer require no-fault coverage, those costs either would be shifted to health insurance, raising the price of that coverage, or would be taken on by hospitals, Glatfelter said. Allowing no-fault to expire "has the potential to personally impact people financially, physically, emotionally," he said. "It's very serious."

And with the 2007 legislative session nearing its halfway mark, legislators could have a number of proposals to consider on no-fault insurance. Legislation includes extending the no-fault law for another year or two years, enacting a fee schedule for medical payments, and requiring Floridians to buy higher levels of bodily injury coverage or medical payments coverage.

Whether legislators will have time to hear all the proposals is unclear. Last year, the debate over no-fault insurance was overshadowed by a push to fix Florida's property insurance market, so legislators opted for a year's delay -- which Bush vetoed. This year, property taxes have occupied many legislators, which could again give short shrift to the debate on no-fault.

A number of no-fault bills were filed before the session started in March, and will only receive a first hearing this week, said Paul Jess, general counsel for the Florida Justice Association, formerly the Academy of Florida Trial Lawyers. He hopes the Legislature doesn't rush to judgment on what to do about Florida's no-fault law.

"We think auto insurance deserves a lot more thorough treatment than that," Jess said.

Kathy Bushouse can be reached at [email protected] or 954-356-4667.

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Copyright (c) 2007, South Florida Sun-Sentinel

Distributed by McClatchy-Tribune Business News.

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