Governor Rick Scott on Friday signed into law massive changes to the state's auto-insurance laws that he and lawmakers say will stamp out fraud and reduce the cost to motorists of no-fault insurance, which pays medical expenses in an accident regardless of fault.
By helping reduce fraudulent auto-accident claims, this legislation will benefit the pocketbooks of every Florida family who drives an automobile," Scott said. "I am glad to do my part in keeping the cost of living low in Florida, and I will continue to work to find ways to do so."
The resulting changes to personal-injury-protection (PIP) insurance range from limiting how quickly an injured person must seek treatment to creating an organization to fight insurance fraud.
But how effective the new law will be is still a major question for consumers and the auto-insurance industry.
"We hope that when the bill is fully implemented that consumers will realize savings," said Michael Carlson, president of the Personal Insurance Federation of Florida.
But consumer advocates worry that there will simply be a reduction in services without a corresponding cut in insurance premiums.
"This law shifts the burden of accidents to the victims, limits consumer choices and leaves insurance companies with more ways to avoid paying legitimate claims," said Bill Newton, executive director of the Consumer Action Network.
Here are the details on the new law and how it affects Florida motorists:
Q: What are the major changes in the PIP law?
A: Drivers will still have to carry personal-injury-protection insurance, but there will now be limits on treatment in the event of an accident. They must seek treatment within a 14-day window, and only emergency medical conditions warrant the full $10,000 worth of treatment reimbursed by PIP. The law also tightens licensing requirements for medical clinics that seek to have their services paid for by PIP.
Q: Can I still go see a chiropractor if I'm hurt in an accident?
A: Yes, but nonemergency care will be reimbursed only up to $2,500. Consumer advocates and trial lawyers have said they fear $2,500 is too low of a maximum payment and will not adequately cover care for physical problems such as back pain that might not qualify as emergency conditions.
Q: What does the law classify as an emergency condition?
A: That is still unclear and may be the subject of future lawsuits. The measure defines an emergency medical condition as something that seriously jeopardizes a patient's health, impairs bodily functions or causes dysfunction of any bodily organ or part. Broken bones or internal bleeding obviously fall under emergency medical conditions, but something such as herniated discs might be debatable. The state Office of Insurance Regulation is working with insurers and the medical community to help reduce the gray areas.
Q: Are massages and acupuncture still entitled to reimbursement?
A: No. A report issued by state Chief Financial Officer Jeff Atwater's office last year identified massage therapy for treatment of "soft-tissue" injuries such as sprains and whiplash as one of the top costs pushing up PIP rates. It was one of the first services that lawmakers decided to ax from the coverage.
Q: How much have PIP costs risen?
A: From 2008 to 2010, the amount insurers paid out rose from $1.45 billion to $2.45 billion. According to the Office of Insurance Regulation, in 2008, an unmarried 25-year-old man in West Palm Beach paid a $376 PIP premium. For 2013, that amount is projected to rise to $992.50. In Orlando, the increase was roughly from $239 to $594 for the same period, and in Tampa, $392 to $1,176.
Q: The big question: Will all of these changes make the cost of PIP coverage for motorists go down?
A: Maybe. Under the new law, insurers are asked to decrease PIP premiums by 10 percent by October or explain in detail why they can't. Carlson and officials from other insurance groups have said they are unsure whether insurers can cut rates that quickly because the changes will have been in effect for only a few months by then. The real test, Carlson said, will be to see whether rates go down by 2014, when insurers are supposed to reduce premiums by 25 percent or, again, explain why they are unable to.
Q: How will the new law combat the fraud we've heard so much about?
A: Crash reports written up by police will now contain the names of all passengers, so that uninvolved persons cannot go to a clinic and claim they need treatment. Also, any licensed health-care practitioner found guilty of PIP fraud will lose his or her license for five years and may not receive payment for PIP services for 10 years. Chief Financial Officer Jeff Atwater is also charged with creating an organization dedicated to fighting PIP fraud.