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Effects of New PIP Law Unclear

Florida’s new Personal Injury Protection law has what some are calling a “glitch” that one lawmaker said could lead to “needless chaos and costs”

Representative Rick Kriseman, a Democrat from St. Petersburg, said he’s worried about the effect some of the “drafting errors” in the state’s new Personal Injury Protection, or PIP, legislation could cause.

“It puts some licensing requirements in place for healthcare providers, and the bill goes into effect July first of this year. But it also provided some exceptions to those licensing requirements. The problem is the exceptions don’t go into effect until January of 2013.  So what that does it is creates a six month gap for those provides who would fall into the exception, and would not need the license, but they aren’t exempted from the license for that six month period," Kriseman said.

The concern is that during a six month window many hospitals and clinics won’t be able to legally submit claims under PIP. It’s an issue some say could have a number of consequences like leading to battles between health care providers and insurers over payments during that gap. Some worry it will end in healthcare providers being forced to accept lower payments, rather than getting nothing, others say it could end in medical providers choosing not to treat PIP patients during the six month window. The Agency for Healthcare Administration has issued a memo in an effort to remedy the situation, but Kriseman questions the agency’s authority.

“You know them opining that both the licensure requirement and the exception become effective on January first. They’re basically creating or amending the statute without the authority to do it,” Kriseman said.

Meanwhile insurance companies say they have no intention of using the “glitch” to their advantage and the Office of Insurance Regulation says it intends to make sure they don’t. Florida OIR Director of Government Affairs Monte Stevens said the agency has talked with insurers and made it clear that they’re expected to continue paying claims. 

“I do not believe that insurance companies are going to act that way, and if we get wind that they’re doing that, then we will hold them accountable," Stevens said.

The intention behind the new legislation is to reduce PIP insurance fraud – a big problem in the state—and along with it, hopefully, reduce the cost of the coverage. But Representative Kriseman said he’s heard from constituents saying their insurance is going up. Specifically he said the auto insurer Amica’s  customers have told him their rates will increase due to the new legislation. But Amica officials said that’s not quite right. Shannon Rodgers is an Assistant Vice President with the company.

“We won’t know yet, because really it hasn’t taken affect. We’re going to need to see how this plays out over the next several months and the next several years to see what that’s going to end up doing, because our hope is that it’s going to lower claims costs, but only time will tell whether that actually happens,” Rodgers said.

Rodgers said Amica is planning to file a rate request with the Office of Insurance Regulation, and while the insurer is still looking into the impact of the new regulation, she said if rates do go up it’s probably not because of the new law, but effects left over from the high rate of fraud in Florida. And she said the increase will probably be lower than it would have been without the new law.  And Monte Stevens said it would not be unusual for an insurer's rates to rise. He says most people carry a comprehensive insurance policy.

Then PIP is only about 20-percent of your premium. So you could get a savings of 1/5th of your premium basically. Not a 20-percent drop in your premium, but a 10-percent drop on your 20-percent of your coverage. So you may get increases in your other types of coverage that you have,” Stevens said.

The new legislation is set to take effect in July. Kriseman has written a letter to Governor Rick Scott asking him to look into these issues, but Scott has not yet replied.