Florida House of Representatives’ Insurance and Banking Subcommittee Passes Three Insurance-Related Bills; Reviews PIP, Money Services Fraud Prevention Reports

 

Florida House of Representatives’ Insurance and Banking Subcommittee (“Subcommittee”) met today, November 2, 2011. 

The meeting was called to order by Chairman Bryan Nelson. 

On the agenda was HB 4059 by State Representative Larry Metz, which would repeal the requirement of an annual report of the aggregate net probable maximum loss, financing options and potential assessments for the Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corporation (“Citizens”).  The Subcommittee passed the bill by a vote of 13-1.

The Subcommittee also heard HB 4061 by State Representative Mack Bernard, which would repeal the statutory authority for Florida’s Uniform Home Grading Scale.  Nothing in current law requires the use of the Uniform Home Grading Scale.  HB 4061 was passed by a vote of 12 to 2.

State Representative Jim Boyd presented HB 245 to the Subcommittee.  The bill would allow surplus lines carriers to participate in Citizens depopulation programs.    The following four technical amendments were adopted to the bill:

• Amendment 1, which makes a technical change to correct the name of a bureau within the Florida Department of Financial Services (“DFS”) that would collect and hold the specified premium on Citizens’ policies assumed by surplus lines insurers;
• Amendment 2, which clarifies that surplus lines insurers would have 10 days during which to deposit additional premium with the DFS, if required;
• Amendment 3, which makes a technical change to replace the term “admitted carrier” with “authorized carrier.”  “Admitted carrier” is not defined in Florida law.
• Amendment 4, which changes the effective date of the bill from July 1, 2012 to “upon becoming law.”  This would cause the bill to be implemented upon being signed by the Governor.

Some members of the Subcommittee expressed concern that HB 245 does not require a disclosure that would inform a policyholder that surplus lines policies are not regulated by the Florida Office of Insurance Regulation.  The current disclosure only informs a policyholder that surplus lines carriers do not have coverage from the Florida Insurance Guaranty Association.  Legislators agreed that this would be addressed at the bill’s next committee stop.  HB 245 passed the Subcommittee by a vote of 13 to 1.

 

Anti-Fraud Presentations

 

Money Services Business Workers’ Compensation Fraud

Florida Chief Financial Officer Jeff Atwater was recognized by Chairman Nelson.

CFO Atwater gave a brief overview of the efforts of his Office to combat both workers’ compensation fraud and personal injury protection (“PIP”) fraud.  He thanked Legislators for their assistance in these areas.

Representatives from the DFS and the Florida Attorney General’s Office made a presentation to the Subcommittee on the Money Services Business Workers’ Compensation Fraud Work Group (“Work Group”). 

First, Major Jeffrey Branch of the Florida Division of Insurance Fraud outlined how money services fraud is perpetrated and who the fraud “players” are. 

Margery Lexa, Assistant Statewide Prosecutor for the Florida Attorney General’s Office of Statewide Prosecution, detailed the Florida Attorney General’s efforts in combating this type of fraud. 

DFS representative Ashley Mayer outlined the Work Group’s recommendations.  State  Representative Daniel Davis said he will be filing a bill to implement some of them and added that he is looking forward to doing so and working with the other Subcommittee members on the issue.

 

Florida Insurance Consumer Advocate’s PIP Working Group

Florida Insurance Consumer Advocate Robin Westcott made a presentation on the efforts of the PIP Working Group, in which she explained the legislative history of PIP’s implementation and subsequent changes to the statute.  She noted that, in recent years, reforms to PIP have concentrated on combating fraud. 

Floridians pay an estimated $900 million “fraud tax,” Ms. Westcott explained. While the number of automobile accidents in Florida has declined, the losses from PIP have increased. She noted that the legislative focus should be on the providers and venue, over-utilization of treatments, electronic filing of PIP claims and litigation.

Chairman Nelson asked Subcommittee members who had attended several statewide PIP Fraud Summits for their thoughts on the issue. 

Representative Bernard noted that that there is a need to control policyholder costs, as well as address the increase in the number of staged accidents. 

State Representative John Patrick Julien stated that he felt that the true victims of PIP fraud are those who are struggling to pay premiums, since PIP coverage is required.  The Subcommittee members spoke of how some people are unable to afford the coverage.

Legislators also discussed the reasons why PIP was re-enacted in 2007.  Ms. Westcott noted that there is a social benefit to requiring PIP, and that PIP provides hospitals with the cash to run emergency rooms and trauma centers.  A sunset of PIP could lead to costs increases in other lines, such as health insurance. 

She explained that the State of Colorado repealed PIP and now requires bodily injury liability.  Also, in Colorado, many drivers choose to purchase coverage for medical payments, but that coverage is not mandatory.  She said that Legislators should to “try one more time” to reform PIP before deciding to repeal it.  

With no further business before the Subcommittee, the meeting was adjourned.

To view the meeting packet, click here.

 

 

 

Should you have any questions or comments, please contact Colodny Fass.

 

 

 

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