No Fault Is Added To Special Session

Sep 26, 2007

By Russell Ray, Tampa Tribune, Fla.

Sep. 27--A deal to preserve Florida's no-fault auto insurance law will be added to the special legislative session that begins next week, legislative leaders said Wednesday.

Before lawmakers take up the issue, the law that requires drivers to buy at least $10,000 of personal injury protection will expire. The PIP protection pays for medical treatments no matter who causes the accident.

Insurance companies contend a change by the Legislature would be costly. Reviving the law days after Monday's expiration would cost millions of dollars, an expense that would be passed on to customers in the form of higher rates, industry officials said.

All the work that went into the preparation of no-fault's end would have to be undone. The automated systems companies use to issue policies would have to be reprogrammed, and more notices would have to be issued to inform customers of the changes in rates and policies.

"That cannot be done overnight. To reverse what they've already done is going to take time and resources," said Allison North-Jones, spokeswoman for Floridians for Lower Insurance Costs, a coalition of auto insurers that pushed for the end of the no-fault law. "Any time auto insurers incur an expense, it is going to be passed on in the form of higher premiums."

Rep. Ellyn Bogdanoff, R-Fort Lauderdale, who negotiated the compromise to save PIP with Sen. Bill Posey, R-Rockledge, downplayed industry claims that rates will rise if the no-fault system is restored soon after it expires. "Sounds like a scare tactic. It's not going to cost millions. If it's going to cost millions, I would like them to present the empirical data to the Office of Insurance Regulation," she said.

The agreement to save PIP must be approved by the Legislature and Gov. Charlie Crist. It faces strong opposition from the state's big auto insurers, who say the no-fault system is plagued with fraud and should be allowed to sunset.

"This is going to be a food fight to the very end," Bogdanoff said.

Among other things, the agreement, if approved:

--Caps PIP payments to 200 percent of what Medicare pays for the same treatment.

--Provides $2 million to law enforcement to prosecute fraud.

--Requires that PIP clinics be owned or managed by a doctor.

--Caps the cost of emergency room care to 75 percent of what is customary.

--Requires a fee schedule for medical treatments.

"This is the culmination of a tremendous amount of input over the last three to four years," Bogdanoff said.

Fraud-Fighting Tools

The fee schedule, Bogdanoff said, "is going to attack the abuse in the system -- the overcharging." But limiting payments to doctor-owned clinics is perhaps the best fraud-fighting tool in the agreement, she said.

"A lot of the fraud occurs in these fly-by-night clinics that pop up on the street corners and bring in people," she said.

For months, House and Senate lawmakers were deadlocked over how to deal with the fraud.

But as Oct. 1 drew closer, fears of another insurance crisis began to grow, and lawmakers were more willing to compromise, Bogdanoff said.

"Everybody was a little more agreeable," she said. "Six months ago, I could not have gotten a fee schedule."

After Monday, Florida drivers will have at least $10,000 of PIP coverage unless they cancel it, said Sam Miller, spokesman for the Florida Insurance Council, an industry trade group. Coverage continues until the driver's policy renews.

"If you are insured on Sept. 30, you will be insured on Oct. 1 unless you stop paying your premium," Miller said.

There's a bigger concern for Florida motorists: No-fault's expiration means Florida drivers will be more vulnerable to lawsuits because restrictions on filing accident lawsuits will disappear come Monday.

"It's going to be much easier for somebody to sue you after Monday," Miller said. "Hopefully, you have liability coverage already."

After Monday, Florida drivers will still be required to carry $10,000 of property damage liability coverage, which pays to repair the damage a driver causes to another person's vehicle. Drivers who have a car loan or lease a vehicle still will be required by lenders to carry collision coverage, which covers damage to their vehicles.

If a driver does not have it already, bodily injury liability coverage may be worth buying if the state's no-fault law is not restored. Bodily injury pays for injuries a driver caused and prevents a driver from being sued. Without it, a driver may have to pay those expenses.

Insurers Promise Lower Rates

State Farm and Allstate, the state's biggest auto insurers, have promised to lower rates if the no-fault system is allowed to stay expired. They are urging legislators not to support the new agreement.

The end of no-fault undoubtedly has led to confusion among insurers and customers. Its rebirth likely would lead to more questions. "There is going to be some confusion and some problems, but there's not going to be chaos," Miller said. "The vast majority of states don't have no-fault, and there's no chaos in those states."

Reporter Russell Ray can be reached at (813) 259-7870 or [email protected].

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