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Local Legislators: Don't Let PIP Law Lapse: House Representatives Think Auto Insurance Plan Needs More Time

Aug 27, 2007

By Brian Neill, The Bradenton Herald, Fla.

Aug. 28--Republican leaders' current House proposal

--Would keep $10,000 personal injury coverage intact.

--Would cap attorney fees at $5,000 or three times the amount of the total claim payment, whichever is greater.

--Would provide $2 million for fraudulent claims prosecution.

--Would do away with the 20 percent co-payment currently paid by policyholders for PIP claims.

Local legislators think Florida's no-fault auto insurance law should be extended until the next legislative session rather than trying to hastily revamp the program before it expires Oct. 1.

"If you start making major substantive changes and you can't get agreement between the chambers and the members of those chambers, you stand a danger of it sun-setting," said state Rep. Bill Galvano, R-Bradenton. "The best way to prevent it from sun-setting is to extend it through at least next session."

Under current law, Floridians must buy personal injury protection, or PIP, which provides up to $10,000 in personal injury coverage regardless of who was at fault in an accident. The system was established through the Automobile Reparations Reform Act of 1971.

Last week, GOP leaders in the House introduced a bill that would keep PIP but change the way it is structured.

State Rep. Keith Fitzgerald, D-Sarasota, agrees that legislators should take more time to consider PIP before letting it lapse or pushing changes through too quickly.

"If we could come up with a good compromise that got the job done in short order, that's great," Fitzgerald said. "But at the very least, I think the idea of extending it longer so we can work out a solution, that sounds good to me."

Citing excessive fraud through staged accidents and physician overbilling, the insurance industry has supported the no-fault system's demise and promised consumers reductions in auto insurance premiums of $250 or more if PIP lapses.

"The system's just absolutely broken and does not benefit our customers in any way," said Chris Neal, spokesman for Florida's largest private insurer, State Farm. "There's no controls on the treatment. There's numerous problems. You get the attorneys fees that play into this. It's just one big mess. And again, it's only $10,000 in coverage. For a person who's been in a serious auto accident, this is going to do virtually nothing for them at all."

Others, like Galvano and Fitzgerald, disagree.

"I think it would be reckless to let it sunset, because it will have a tremendous negative impact on our health care delivery system," Galvano said. "Our hospitals would probably take a $3.5 billion hit (from unpaid medical bills)."

Added Fitzgerald, "I tell you something that folks in this region need to be worried about is one of our biggest hospitals (Sarasota Memorial) is a public hospital. And if they're not able to recover fees from people who cross their threshold, it's going to come from us. If PIP goes away, they're not thinking about the whole cost of health care going up, which it will."

About 40 percent of patients treated at hospitals and trauma centers for auto injuries rely on PIP because they have no health insurance, according to the Insurance Information Institute.

Currently, 12 states and Puerto Rico have some form of no-fault auto insurance, according to the institute.

Not surprisingly, Gary Jodat, founding attorney of the Jodat Law Group in Bradenton and Sarasota, believes capping attorney fees is a bad idea.

"I think people who like to put caps on fees are being brainwashed and poisoned by the insurance companies," said Jodat, who favors keeping PIP intact. "Because the reality is, if there are caps and the attorneys are told what they can charge, the quality of work will suffer and the availability of attorneys doing those types of cases will also deteriorate.

"It's a way that the insurance companies are trying to limit access to attorneys, limit access to the courts and continue to bill for their premiums, but have a better opportunity of not paying the benefits that an attorney would require them to pay."

Jodat also believes those with PIP coverage benefit because they're guaranteed payment for immediate treatment, versus other types of coverage that require insurance companies to assign fault before paying claims.

"Three-hundred dollars (in premium savings) is nothing if you're all of a sudden stuck with $10,000 in medical bills," Jodat said. "This is all about insurance companies trying to save money in what they pay out in benefits."

Both Fitzgerald and Galvano, an attorney, have issues with the recent House proposal sponsored by House Majority Whip Ellyn Setnor Bogdanoff, R-Ft. Lauderdale, and are unsure if the PIP issue will even be part of the upcoming legislative session in September.

Regardless, State Farm's Neal speaks of the end of PIP as a certainty.

State Farm and other insurers have already spent millions changing forms and rate schedules in preparation for PIP's end in October, Neal said.

"There is no way at this late day they could change that. If they did it would be an absolute train wreck," Neal said. "It costs millions of dollars to get ready for a transition, and of course, if we have to change it all back our customers will ultimately have to pay for it. Good riddance to the system. People have been paying way too much for inferior coverage for way too long."


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