It is unfortunate that lawmakers are not bound by the Hippocratic Oath, which carries the promise of doing no harm, because that is the inevitable result of the newly-reformed personal injury protection (PIP) statute in Florida. The PIP Reform Bill of 2012, held out by the governor and the majority of legislators as the bill to end all car accident fraud and to lower automobile insurance premiums for Florida drivers, represents nothing more than a ruse fueled by political corruption and corporate greed.
After Florida legislators disseminated and debated multiple versions of PIP reform bills, the House and Senate approved HB 119 on March 9, 2012. Governor Rick Scott, the bill’s major proponent, signed it into law on May 4, 2012.
The majority of the changes to Florida Motor Vehicle No-Fault Law, §§ 627.730-627.7405, Fla. Stat. (2012), go into effect on January 1, 2013. Under the new law, Florida drivers are still required to purchase a minimum of $10,000 in PIP coverage under their auto insurance policies. However, those injured in accidents may only receive the $10,000 in PIP medical and disability benefits if:
• the accident victim receives initial medical treatment for an emergency medical condition no later than 14 days after the auto accident;
• follow-up treatment is based on a referral by a medical doctor or chiropractor;
• such follow-up care is consistent with the underlying medical diagnosis rendered at the initial visit; and
• the claimant submits to an examination under oath (EUO).
Those who receive merely non-emergency treatment are only entitled to up to $2,500 in PIP benefits (as long as they were initially treated within 14 days of the accident). Additionally, massage and acupuncture are no longer covered under the new law, but fortunately chiropractic treatment remains covered as long as the criteria outlined above are met. The revised legislation also removes caps on attorney fees but prohibits judges from using multipliers to increase fees awarded in complex cases.
This radical departure from the existing 40-year PIP statute is replete with problems. It raises issues of constitutionality and myriad other legal questions to be decided by the courts. The law will allow insurers to delay or avoid coverage altogether under the guise of suspected fraud and failure to comply with its stringent new prerequisites, forcing consumers and health care providers to bear the cost of treatment. By contrast, nothing in the law requires insurers to reduce premiums, so drivers will pay the same amount for 75% less coverage. Simply put, its effects on Florida residents and health care professionals will be devastating, as explained in greater detail below.
The New Bill Raises Numerous Legal Questions
As a preliminary matter, the bill may be unconstitutional by requiring accident victims to submit to examination under oath before being eligible for benefits. The scope of the EUO is virtually unlimited and allows insurers to invade the insured’s privacy by asking questions that may improperly invade the victim’s right to privacy. Additionally, the new law is bound to generate significant litigation over the definition of a “medical emergency” as well as other stated grounds for denial of coverage by insurers.
Further, under basic contract principles, the PIP portion of auto insurance agreements may be void as illusory for lack of consideration. The revised statute makes it easier for insurance companies to deny $7,500 of the $10,000 in coverage on the pretext that the insured did not meet the strict 14-day, emergency treatment requirements. Insurers may, in turn, avoid paying the remaining $2,500 if accident victims do not answer the EUO questions to their satisfaction. The avertible, subjective nature of the new statute therefore raises questions of contract validity and bad faith.
The Law Encourages Delays and Coverage Denials
While the previous PIP law provided for prompt payment of claims by mandating payment within thirty days, the new statute allows insurers to delay payment for ninety days or deny claims outright upon any stated suspicion of fraud. This provides one of several pretexts for the delay and denial of payment, thereby eroding one of the underlying reasons for PIP.
Reduction in Fraud or Premiums is Unlikely
The greatest myth perpetuated by Governor Scott and legislators who support the new bill is that it will reduce fraud and insurance premiums. In reality, the law stands to benefit insurance companies rather than the insured victims or medical professionals. Florida legislators initially enacted the PIP statute in 1972 to ensure that anyone injured in an auto accident in Florida would receive prompt medical treatment of up to $10,000, regardless of fault. The newly-reformed legislation slashes those benefits by 75% to only $2,500 unless the insurer receives emergency treatment within two weeks of the accident, is referred by that emergency treating physician to another doctor for follow up care related to the initial emergency treatment, and submits to an EUO of virtually limitless scope.
Despite lawmakers’ stated policy behind the reformed law; namely, to reduce fraud in the form of staged accidents and to lower auto insurance rates, there is no logical connection in the law to fraud that would justify the dramatic reduction in benefits and increased burden on insured accident victims to meet numerous unreasonable requirements before receiving benefits. There is also no evidence of guaranteed or significantly reduced insurance premiums. The new law only provides for a 10% reduction in the PIP portion of auto insurance premiums, but insurers may simply avoid this reduction through a written explanation.
Even if the insurer provided a 10% reduction, the savings would be trivial. As a practical example, if the PIP portion of a typical auto policy is $360 per year, the insured saves $36 per year, compared to the $7,500 to $10,000 loss of coverage for medical costs. By contrast, the insurers’ required payout to consumers will drop from $10,000 to $2,500 or even zero, while the price of their premiums will likely remain the same.
The new bill also does not prohibit for-profit referral services that send accident victims to specific chiropractic clinics and lawyers in their networks. These were among the top targets and perpetrators of fraud, according to the governor, but the new legislation does little to thwart these schemes. As long as they are able to find a physician who is willing to state that the patient has a medical emergency, the participating clinic may use the entire $10,000 PIP benefit. On the other hand, if a doctor denies the existence of an emergency medical condition, only $2,500 in benefits may be used. That small amount is easily exhausted by initial tests, so longer-term therapy for an injured back, for example, becomes unaffordable.
Before passing the new PIP bill, legislators also considered mandating bodily injury (BI) coverage to offset the loss in coverage under PIP, but that measure was rejected. Unless an insured person has BI coverage and uninsured/underinsured (UM) coverage, therefore, he or she may have no means of recovering anything more than $2,500, particularly if the other driver was uninsured. Thus, people with legitimate injuries may run out of coverage more quickly, and the inability to pay may force many to file bankruptcy to discharge overwhelming medical debts.
Health Professionals are also Adversely Affected
As a result, the law is also potentially disastrous to health professionals treating accident victims, particularly if their injuries are for non-emergency treatment. Like their patients, health providers will be deprived of the right to prompt—or any—payment by insurers and may be forced to turn to their patients for payment. This will increase collection litigation, placing a greater financial strain on health professionals. In addition, the substantial reduction in available benefits will undoubtedly affect even the largest hospitals and clinics, and it will force many smaller clinics and doctors’ offices to close. The law also biases traditional medicine and discredits alternative, less invasive treatment such as acupuncture and massage, which are no longer eligible for PIP coverage.
Conclusion
In sum, the new PIP legislation effectively eliminates the $10,000 no-fault coverage that has served so many legitimately injured persons in Florida for the past 40 years. Drivers are still required to pay for $10,000 in coverage at the same premiums, but they are only entitled to $2,500 (or zero) in a narrower category of benefits while being subjected to more intrusive requirements. By affording insurers an easier way to avoid their contractual obligation to pay covered medical expenses incurred by injured drivers and passengers, the only parties who will benefit from the revised statute are the auto insurance companies and their political supporters.
