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PIP: Legislature Revises PIP, Effective Jan. 1 |
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10/05/2007 |
A reformed PIP/no-fault auto insurance system is on its way to the
Governor for his signature following House and Senate approval Friday.
The Governor is expected to sign the measure into law, re-enacting a
mandatory PIP/no-fault law effective January 1, 2008. Companies would
have until November 15 to submit notice and explanation to
policyholders.
The new PIP law includes a long-sought after medical fee schedule to help combat fraud that all stakeholders agree was rampant in the old no-fault system that expired this past Monday. And while some companies and some lawmakers maintain the reforms don’t go far enough, Rep. Ellyn Bogdanoff, the lead negotiator from the House, said earlier this week that, “not everybody is happy, but we put together a substantial amount of reform.”
Her counterpart in the Senate, Sen. Bill Posey called the compromise legislation a balance. “This bill is 100 percent consumer friendly. It won’t allow a consumer to exploit an insurance company. It won’t allow an insurance company to exploit a consumer.”
In a prepared statement, Florida Chief Financial Officer Alex Sink praised Senator Posey and Representative Bogdanoff’s leadership “for their success in developing a reform bill that protects Florida drivers, institutes cost controls and will help us better combat insurance fraud.”
In a policy brief posted on the House Majority Whip’s website, Rep. Bogdanoff says the reforms will combat fraud by expanding the time during which insurers can investigate reimbursement requests. Under the prior law, she explained, if an insurer failed to reimburse a care provider within 30 days, the provider could not sue until the provider sent a demand letter. Once the provider sent the demand letter, the insurer had 15 days to pay the claim, plus interest and up to a $250 penalty. The penalty was intended to create an incentive to expeditiously reimburse care providers. However, the brief points out, it seems that the 30/15 day window did not provide sufficient time for an insurance company to adequately investigate claims that might be suspicious. The bill increases the period after a demand letter is filed from 15 days to 30 days, thereby increasing the total period for investigation from 45 to 60 days.
The structure of the fee schedule allows reimbursement of charges according to:
• The usual and customary charges for physician and dentist services rendered in a hospital;
• 75 percent of the usual and customary charges of emergency services and c are provided by a hospital;
• 200% of services provided by Medicare.
The reforms also streamline claims processing by requiring joinder of similar claims and encouraging the use of electronic transmissions.
Current law allows for “joinder”-the joining of similar claims at judicial discretion to be handled together. Due to the discretionary nature of joinder, health care providers can file separate lawsuits against the same insurance company for each service for which they seek recovery. While defense attorneys may seek consolidation, litigating separate suits is more profitable.
Critics of the old PIP system say that contributed to overburdened court dockets, wasted judicial resources and excessive attorney’s fees.
The reformed PIP bill according to the Bogdanoff brief, requires all claims by the same health care provider related to the same injured person to be consolidated into one lawsuit against the insurer;
authorizes the court to determine if there is good cause for the claims to be brought separately;
authorizes the court to choose not to award attorney’s fees if it determines separate claims should have been consolidated.
The reformed legislation also provides a transition period to the new PIP, but it does not re-enact the old PIP for any period of time. The no-fault threshold will be re-enacted under certain circumstances, however:
• No party in Florida has protections of the no-fault threshold between October 1, when PIP no-fault sunsetted, and the effective date of the new PIP package-when it is signed by Gov. Crist, possibly next week.
• All Floridians will once again be subject to mandatory PIP and the no-fault law, on January 1, 2008 when the new PIP takes effect.
• Between the time the Governor signs the bill and January 1, no-fault threshold will apply following accidents in limited circumstances.
• According to FIC lobbyists, if both drivers in an accident had old PIP, the no-fault threshold applies to all parties.
• If one driver did not have old PIP the no-fault threshold applies to no one in the accident.
We are quoting the pertinent section of the bill: “This section does not apply the Florida Motor Vehicle No Fault Law, as revived and amended by this act, prior to January 1, 2008. However, for lawsuits for injuries arising out of an auto accident that occurred between the effective date of this act and December 31, 2007, inclusive, the limitations on lawsuits and tort immunity provided in section 627.737, FL Statutes, shall apply, if, and only if, the plaintiff and the defendant are insured for personal injury protection coverage that meets the requirements of the Florida Motor Vehicle Law that was in effect on September 30, 2007."
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