Florida Weighs Whether to Continue Personal Injury Coverage

After her car accident, Sarah Capps suffered from a sore shoulder and back. What she thought were common pains turned out to be six herniated discs.

Were it not for the protective medical coverage that every Florida car insurance holder must pay for in a policy, Capps would never have known in 2004 about her more severe injuries. Just starting a new job, she didn’t yet have health insurance and couldn’t pay for the doctor visit on her own.

“If there wasn’t anything there I wouldn’t be getting help,” said Capps, a program organizer for the Florida Consumer Action Network, which supports the continuation of Personal Injury Protection.

Also known as Florida’s no-fault law, PIP is set to expire in October if lawmakers do nothing – which is exactly what the majority of the powerful insurance lobby wants to happen. The system is wrought with fraud that artificially drives up costs for insurers and consumers, they said, and is broken beyond repair.

The Senate Banking and Insurance Committee rebuffed those claims on March 27, unanimously approving SB 1880 that attempts to reform PIP and extends it until January 2009.

PIP currently covers up to $10,000 – 80 percent of medical expenses, 60 percent of loss of income and a $5,000 death benefit – for a driver no matter who is at fault in an accident.

Trying to partially placate insurers, the bill also contains a cap on medical reimbursements they would have to pay to the hospitals, doctors and clinics that treat accident victims – an idea those powerful interest groups oppose.

The compromise is the “last ditch effort to save this bill for the people who really need it,” said Sen. Bill Posey, R-Rockledge, the bill’s sponsor.

Everyone agrees the premise behind PIP – that motorists can get basic medical care if they are in an accident, even if they don’t have health insurance – was a noble one. But most now agree that the system, instituted in 1971, is too easily defrauded, mostly by greedy businessmen who run shady clinics that bill multiple times for the same service, or charge for services that aren’t necessary.

“It’s probably a good deal for the average guy in the street,” Posey said. “It’s also a good deal for the crooks.”

In fiscal year 2005-2006, 3,159 PIP fraud tips were received by the Florida Department of Financial Services. Those tips resulted in 307 arrests and 225 fraud convictions, according to the department.

Mike Stangherlin, a Temple Terrace chiropractor, said he sees about five PIP patients a year who have previously gone to other clinics that used up all $10,000 worth of coverage through fraudulent billing. These patients haven’t received the appropriate care by the time they get to Stangherlin, while the previous clinic gets the reimbursement.

“We just need to crack down on these clinics that kill the PIP in a month doing unnecessary stuff,” Stangherlin said.

Most car insurance companies don’t believe anything can be done to adequately protect PIP from fraud. They want PIP – which was formed to keep lawsuits following car accidents at a minimum – to give way to a system where lawsuits will determine who is at fault and how much they should pay.

State Farm said they will reduce rates an average of $180 a car if PIP is allowed to expire. The company makes money on PIP, said spokesman Justin Glover, but believes consumers pay a lot more for the coverage than what they get in return.

“Our view is there’s too many problems and it’s not politically possible to get the reforms that are required to fix the problems,” Glover said. Without PIP, insurance companies would offer optional medical benefits coverage to consumers, he said.

But hospitals, doctors and health providers said the insurance companies want to shift the cost burden onto the health industry, which is already plagued by skyrocketing rates.

The $350 million that is paid out under PIP by insurance companies every year will have to be made up somewhere, they said. They argue that local taxes may have to be raised to help emergency rooms – which by law cannot turn anyone away – treat accident victims without health insurance.

“We’re going to create a huge new growth spurt in our uninsured and our cost shift to private health insurance,” said Rich Rasmussen, spokesman for the Florida Hospital Association. “We are the only provider in this whole network of service providers where someone presents himself and we have to treat them no matter what.”