The Florida Senate’s PIP fix might not be a fix at all – and it could bankrupt some auto insurers, says Insurance Commissioner Kevin McCarty.
McCarty has long been a fan of the House’s version of personal injury protection reform, but now he’s openly criticizing the Senate’s approach.
The Senate sent its no-fault car insurance reform package back to the House Wednesday. The Senate plan doesn’t cap attorney fees, allows judges to award fee multipliers in complex cases and permits chiropractors to perform initial evaluations for people injured in auto accidents.
All of that is problematic, McCarty said.
“There are some provisions in the Senate bill that we fear are going to exacerbate the problem,” he said.
Putting chiropractors on the front line, as the Senate does, is wrong, McCarty said. The House’s version doesn’t include chiropractors at all, though leaders said they are open to adding chiropractors to the list of medical providers that can be referred to for follow-up care.
Sen. Joe Negron, R-Stuart, the Senate’s point person on PIP, says McCarty's analysis is incorrect. Senators approved several provisions that will reduce premiums, including an amendment that requires insurance companies to either lower rates by 25 percent or justify why PIP costs haven’t changed, he said.
"The Senate PIP bill will result in a minimum 25 percent reduction in insurance rates,” Negron said. “By eliminating the clinic licensure loophole and cracking down on overutilization, the Senate proposal goes after fraud but still ensures that legitimate medical providers are paid in a timely manner."
There is some good in the Senate plan, McCarty said, such as removing acupuncture and massage therapy from the list of covered treatments and anti-fraud provisions. But he doesn't think it's enough.
McCarty’s opinions on the Senate proposal are mirrored by Gov. Rick Scott and Put the Brakes on Accident Fraud, a coalition of insurance, business and law-enforcement groups that supports the House’s approach. The public relations firm representing the coalition set up McCarty’s interview with the Times/Herald.
McCarty said his aim isn’t to bash the Senate but to encourage the upper chamber to move closer to the House’s position as they pass proposals back and forth. If legislators can’t reach an agreement by Friday, there is a chance they will be called back for a special session on PIP.
“I don’t mean to be critical, I just tell it the way it is,” McCarty said. “Some of the amendments that have been added undermine any potential for cost savings, and I am concerned about that.”
Here is a statement the Office of Insurance Regulation shared with the governor after the Senate approved PIP Wednesday:
According to the Office of Insurance Regulation’s actuarial analysis – even prior to the amendments added to the bill, it was doubtful that the impact would approach a 25% decrease. Allowing follow-up care to be unrelated to the diagnosis of the original physician and allowing chiropractors to be “gatekeepers” will make a decrease even more problematic.
The Office is especially concerned about the presumed factor change, specifically the requirement of a minimum 25% decrease without clear and convincing actuarial evidence. The 25% number has not been substantiated. At a time when many insurers already have inadequate PIP rates, this proposed mandatory decrease may have the unintended consequence of reducing the PIP premium to a level that will affect the solvency of some auto insurers, especially the smaller Florida domestic companies that write in the non-standard market.
The other amendments do not appear to provide any real benefit to the PIP market, and potentially could increase costs. All of the proposed changes will result in a severe strain on Florida’s auto market and on the Office to implement these changes in the prescribed timeframe. Not only would this strain Office resources, insurers will have to overhaul their IT systems to accommodate these changes. In addition, auto insurers would also have to modify their programs, submit and receive approval for all rate and form changes, and then implement these changes prior to the 45-day renewal notice requirement in statutes.
Given the significant issues that have been identified, the Office has serious concerns about whether the amendments to the Senate bill would accomplish the objectives established by the Governor and Legislature to reduce PIP costs.