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Lawmakers, Atwater Look At Pulling Plug On 'PIP'

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
The Florida Channel
State Rep. Bill Hager, R-Delray Beach

The state's personal-injury protection auto insurance system, known as "no-fault," would end in 2019 under proposals ready to go before lawmakers.
Rep. Bill Hager, R-Delray Beach, filed a proposal (HB 997) last week, two months after Insurance Commissioner Kevin McCarty tossed out the idea of, "Let's just repeal PIP and do nothing," as a way to further reduce fraud in the personal-injury protection system.

The repeal idea also appears to have backing from state Chief Financial Officer Jeff Atwater.

Atwater, who along with Gov. Rick Scott championed 2012 changes intended to fight fraud in the no-fault system, had maintained as recently as October that time was needed to see the impact of the legislative changes.

On Monday, a spokeswoman for Atwater said that the "time has now passed."

"Ultimately, it's a policy decision for the Legislature to make, but two years after the passage of the PIP legislation, it's time for the insurance industry to bring forward evidence that shows whether or not rates are going to come down," Atwater spokeswoman Ashley Carr said in an email. "If consumers aren't going to get the relief the legislation intended, then the time to repeal has arrived."

Sen. Jeff Brandes, R-St. Petersburg, filed the Senate version (SB 1112) of Hager's proposal on Dec. 11. The identical measures would require motorists to have a minimum of property-damage and bodily-injury liability coverage.

Under the decades-old no-fault system, intended to make insurance claims less adversarial than lawsuits, motorists are required to carry personal-injury protection coverage that includes $10,000 in medical benefits.

However, questions have grown over the limits of $10,000 in medical coverage, while efforts to remove fraud from the no-fault system have resulted in more coverage restrictions.

With lawmakers estimating that the average Florida motorist was paying $180 a year for the personal-injury protection portion of their auto coverage, a 2012 law set benchmarks for insurers to lower rates on the coverage. The law also required people involved in crashes to seek treatment within 14 days and allowed up to $10,000 in benefits for emergency medical conditions, while putting a $2,500 cap on non-emergency conditions.

State officials maintained the changes were showing signs of working.

In January, the Office of Insurance Regulation estimated the average no-fault annual payment was about $125.

The state agency also reported at that time that the average medical cost paid through PIP claims dropped 14 percent statewide from 2011 to the first three quarters of 2014, with the average payment down 28.7 percent in South Florida in the same time. But the numbers were still considered too preliminary to show the full impact of the law.

The changes also drew legal challenges.

A Leon County circuit judge in 2013 ruled the law illegally prevented injured people from using PIP coverage to pay for treatment by acupuncturists and massage therapists and limited the services from chiropractors. The ruling was eventually overturned. Still, some lawmakers believe the law will eventually fail a court challenge and have suggested the state replace PIP with bodily-injury coverage.

McCarty said at a Florida Chamber of Commerce insurance event in October that most motorists already have bodily-injury coverage. As a result, lawmakers might not have to do anything to replace PIP, which is also commonly known as no-fault.

"I'm not so sure that I'm ready to move to a more litigious auto system, but I think one thing to consider, particularly if we get an adverse decision on PIP, let's fix it or flush it," McCarty said. "We have done everything to fix PIP you could have possibly have done. We've had seven sessions on PIP. … A $10,000 benefit, really. Is it worth this amount?"

McCarty added that ending no-fault wouldn't impact many motorists, as "only a handful of people" buy just the minimum coverage, while those engaged in fraud would look for other outlets.

"We talk about the whack-a-mole. Fraud is rampant in this state," McCarty said. "Fraud looks for its weakest link. And if you eliminate (PIP), even if for just two years, in two years you would cut the pipeline off of PIP. You'd cut the supply of capital going into PIP."

It remains to be determined how much attention the legislation will get once the 2016 session begins in January.