PIP Legislation Fails in Florida House Health and Human Services Committee

Earlier today, April 25, 2011, the Florida House of Representatives Health and Human Services Committee considered PCS For CS/CS/HB 967 and CS/HB 1411 by Representatives Horner and Boyd relating to Personal Injury Protection (“PIP”) Insurance.  The Proposed Committee Substitute (“PCS”) combined portions of HB 967 (the “Legal-Fixes Bill”) and HB 1411 (the “PIP Fraud Bill”) into a single act of legislation. 

Representative Horner opened by noting that Florida is facing a serious situation with respect to PIP fraud and that each Floridian pays a $50 “fraud tax” on his or her automobile insurance policy as a result of the increasing PIP fraud problem.  Representative Horner advised that the PCS represented a comprehensive bill to address fraud.  Representative Boyd added that the PCS was prepared in order to appear “extra transparent” in the process, and that certain contentious provisions contained in the prior iterations of the bills were removed, including the arbitration provisions and caps on attorneys’ fees.  Representative Boyd also added that the PCS had a broad coalition of support.

Representatives Horner and Boyd proposed a series of amendments, each of which were technical or clarifying in nature and all were adopted without objection.

Representative Renuart, who is also a physician, stated concern about possible “unintended consequences” that would result if the PCS passed.  The PCS provided that the 30-day period within which an insurer must pay a PIP claim would be tolled where the insurer investigates a fraudulent insurance act with respect to any portions of a claim for which the insurer has a reasonable belief that a fraudulent insurance act has been committed.  Representative Renuart was concerned that this provision could be used to indefinitely postpone payment, particularly since the term “reasonable belief” was not defined in the statute. 

Additionally, Representative Renuart noted that the bill did not provide for any time frame for the insurer to conduct its investigation.  Furthermore, Representative Renuart was concerned about the portion of the bill providing that a claim would be denied if the physician’s records contained false information and queried whether physicians would be denied payment for their services where the false information comes from the patient.  Representative Boyd addressed this question by noting that this provision was intended to cover material misrepresentations, and would not include an instance where a patient mistakenly provides erroneous information to their doctor.  Representative Boyd later noted in his close that the PCS provided that a medical provider may not be denied payment solely due to false information coming from the patient.

The floor was then open to public testimony, where a number of lawyers and doctors spoke in opposition to the PCS.  The main objections to the PCS were the provisions allowing for insurers to take examinations under oath (“EUO”) of medical providers and the limitation on attorney’s fees.  It was alleged that the EUO provision would be “catastrophic” to doctors, who would not agree to attend the EUO and be “grilled” by the insurance company.   Those speaking in opposition on the EUO issue contended that doctors would refuse to treat PIP patients.  Insureds would need to turn to hospitals to receive care for their injuries, that would increase the cost of care.  Additionally, it was alleged that insurers would abuse the EUO process by seeking physician EUOs on almost every claim.  One speaker cited testimony taken in a case against one insurer alleging that the insurer, as a practice, required EUOs of all claimants.

Further, the lawyers speaking out against the bill claimed that the attorneys’ fee limitation would result in fewer attorneys willing to undertake PIP litigation on behalf of claimants, and that only newer, inexperienced attorneys would agree to handle these cases.  One speaker claimed that there were only a handful of attorneys that work on these cases, and that there are “not a lot of lawyers lining up” to bring PIP suits.

Ashley Mayer, from Florida Chief Financial Officer Jeff Atwater’s office spoke in favor of the bill, indicating that the PIP fraud problem is bad, and is getting worse.  PIP premiums are increasing approximately 30 percent and the State and its citizens are being “attacked” by PIP fraud, she said.  In response to a speaker’s allegation that neither the Florida Department of Financial Services nor the Florida Office of Insurance Regulation prosecute insurers that fail to pay legitimate claims, Ms. Mayer asserted that both agencies have a host of tools to address insurer compliance.

An insurance company representative stated that the PIP system was put in place in part to eliminate litigation and noted that the number of lawyers speaking out in opposition to the bill was demonstrative of the cottage industry that has sprouted from the PIP fraud problem.

In debate, Representative Renuart stated his belief that there were too many areas of the bill still to be addressed in such a short time frame.  He indicated that doctors would stop seeing PIP patients, and would end up losing more money if they had to sit through EUOs rather than treat patients in their office.  Representative Porth argued that, while commendable, the bill casts too broad a net and would increase the cost of care by shifting patients to hospitals for services.

Closing on the PCS, Representatives Horner and Boyd noted that it is not easy to address fraud, and that this bill was all about consumers and rising auto insurance premiums.

Following closing, a roll call vote was taken, where the bill failed.  

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