By Stephanie Horvath
Palm Beach Post Staff Writer
Friday, January 13, 2006
Florida’s system of paying for medical care after a car accident will disappear unless lawmakers act this year.
Florida’s no-fault automobile insurance law, which has been in place since the 1970s and has been beset by fraud, will sunset unless the legislature renews it. With the deadline looming, the House and Senate insurance committees both met this week to hash out its pros and cons.
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Under the current system, car accident victims get a guaranteed $10,000 in medical, disability and death benefits, in return limiting their right to sue for noneconomic damages like pain and suffering.
The idea is to get accident victims quick medical care, avoid lawsuits that can clog up the courts and reduce auto insurance prices.
All Florida drivers must purchase at least $10,000 in personal injury protection, or PIP, coverage.
But rampant fraud and abuse led legislators to enact reforms in 2001 and 2003, and finally to vote to repeal the no-fault law on Oct. 1, 2007, unless it was renewed this year.
Most health care and attorney groups want to keep the no-fault system, but the insurance industry is split on the issue.
Some, like State Farm, Florida’s largest insurer, want to let the law sunset, while others, like Progressive, want to renew it with changes that they say would close loopholes.
“The majority of companies are split 50-50 on whether we should repeal no-fault or keep it,” said Sam Miller, vice president of the Florida Insurance Council. “Some companies are afraid going back to tort would be worse than what we have now.”
So far the legislative committees have not taken any action.
Sen. Bill Posey, R-Rockledge, has introduced a bill that contains tougher penalties for drivers and licensed professionals convicted of fraud and that allocates money to hire more state prosecutors who specialize in insurance fraud. Similar bills have been filed in the House.
To clamp down on auto fraud, some insurers want the no-fault law to set fees for medical care and to restrict attorney’s fees.
But doctors and attorneys say such measures will make it harder for genuine accident victims to see a doctor or have their day in court.
Much of the fraud is perpetrated by medical clinics that seek out people on accident reports and run up charges for unnecessary treatments or ones they don’t perform.
Many of those clinics are in South Florida, which is home to 65 percent of the state’s licensed clinics.
“We know clinics are behind a lot of the fraud if not most of the fraud,” Eric Miller, the director of the state Division of Insurance Fraud, told House members Tuesday.
Staged accidents are also a problem, Miller said. People buy old cars and crash them, create “paper accidents” by falsifying documents or intentionally cause accidents involving unsuspecting drivers.
Fraud raises insurance rates. According to a Senate report, Florida saw auto insurance prices climb between 1999 and 2003, but they dropped or increased very little over the last two years.
“I think it’s going to be important to get information from the carriers as to the costs,” said Sen. Walter “Skip” Campbell, D-Tamarac. “We want our constituents to be able to buy car insurance.”
PIP fraud referrals to the Division of Insurance Fraud have increased 327 percent in the last three years, Miller told the House and Senate insurance committees this week.
He attributed some of that growth to a better reporting system.
“It’s not that the problem is going away,” Miller told the House panel. “It’s getting worse or we’re getting better at policing it.”