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Kevin G. Fitzgerald, Esq.
(414) 297-5841
Paul W Lowell
(850) 513-3380
Erika Lorenz Alba
(904) 359-8721


Political Backdrop

Two constant truths exist in the politics behind a legislative session. These truths exist whether one is concerned with Congress in Washington DC, a state Legislature, or even a local city council or county commission. The first truth is that it is always easier to kill a bill than to pass a bill. Change, by its very nature, takes great effort and while it takes much collaboration among competing interests to achieve passage, a single group can usually thwart a bill’s success. The second truth is that when one can be harmed by others simply doing absolutely nothing, one is in a precarious position. During every legislative session, these two truths work in tandem and often result in the failure of even the most compelling issues to be resolved. Thus, it becomes very easy to understand why most citizens have little more than contempt for their elected bodies.

The Florida Legislature is now finishing its 2012 session. In nine out of ten years, the Florida legislative session begins in early March and lasts for sixty days. 2012 is different because it is a redistricting year. The Florida Constitution states that in a redistricting year, the legislative session remains 60 days in length, but shall start in January rather than March so as to allow sufficient time for the Legislature to draw, and the Florida Supreme Court to review, new legislative and Congressional district boundaries. The early session also allows legislators more time to campaign in their newly drawn districts before the November election as many of them will be running in districts which are completely different than in 2010.

Members of the Florida House of Representatives are elected for two year terms while Florida Senators are elected for four year terms. Normally, this means that only 20 of the 40 Senate seats are up for reelection in any given election year. However, in a redistricting year, all 120 House of Representatives and all 40 Senators are up for reelection. Thus, it goes without saying that all things are political during this legislative session as each legislator is first concerned with his or her own survival.

In the background of this hyper-political environment, Florida is grappling with a billion dollar crisis: a program not so affectionately known as PIP.

What is PIP?

In 1971, Florida enacted its Motor Vehicle No-Fault Law. Florida is one of only a dozen states that utilizes a No-Fault system. 1 "PIP” refers to personal injury protection, a key component in Florida’s No-Fault automobile insurance statute. Florida law mandates that every consumer of automobile insurance purchase $10,000 in personal injury protection in addition to any other coverage they select.

PIP provides up to $10,000 insurance coverage for bodily injury sustained in a motor vehicle accident by the named insured, relatives of the insured residing in the same household, persons operating the insured’s motor vehicle, passengers in the insured’s motor vehicle, and persons struck by the insured’s motor vehicle. Benefits payable under PIP include:

  • 80% of reasonable medical expenses
  • 60% of loss of income, and
  • Death benefit of $5000 or the remainder of unused PIP benefits, whichever is less.

The purpose of PIP coverage is to provide medical benefits to drivers who are injured in an automobile accident, regardless of who’s at fault. Florida is a true No-Fault state in that there are clear limitations on the right to bring a lawsuit arising from a motor vehicle accident. In contrast, under a tort liability system, a negligent party is responsible for damages caused, and an injured party has the right to sue the at-fault driver to recover economic and non-economic damages. The PIP statute protects the insured from tort actions by others for pain and suffering or inconvenience arising out of a vehicle accident, except in limited cases where the injured person has significant and permanent loss of an important bodily function, a reasonable degree of medical probability of permanent injury, significant and permanent scarring or disfigurement, or death. Only where those thresholds are met, does Florida allow a tort cause of action to commence.

PIP is also designed to significantly speed up a victim’s ability to collect payment for their injuries. Florida law requires any PIP benefits to be payable by the insurer within 30 days after receipt of the claimed loss, and benefits not paid within 30 days are deemed overdue exposing the insurer to an enforcement action by the Office of Insurance Regulation. The 30-day rule is a bright line rule and applies even where the insurer suspects fraud is present.

Rampant Fraud Equals Dramatic Auto Insurance Rate Increases

Since its inception in 1971, PIP has been controversial as it has become fraught with fraud. The Legislature has tried in 3 prior legislative sessions to reform PIP,2 and in each of these sessions, proposals began as true reform measures, but as a result of intense pressure from competing stakeholders, were watered down to offer just minimal, if any, true fraud reform. Those committing fraud simply found new loopholes in the law, and Florida’s fraud problem has now reached new heights.

As early as the year 2000, a Statewide Grand Jury was convened for the purpose of investigating the PIP system. The Grand Jury issued an official report stating “despite increased resources and efforts made by honest health providers and law enforcement, there is little downside for persons engaged in this fraud. These cases are complicated and expensive to investigate; therefore, prosecutions are difficult and disciplinary actions are rare.” 3 Many of the recommendations made by the Grand Jury were later enacted into law; however, PIP fraud continues to be rampant, and the findings made 12 years ago by the Grand Jury still remain true today. In fact, most would argue that the situation has only become worse.

In 2011, the Florida Office of Insurance Regulation (OIR) issued a report compiling their findings from 31 insurance companies that participated in an OIR data call requesting PIP data from 2006-2010. 4 The OIR found that from 2006 to 2010, the number of PIP claims have increased by 28%. Not surprising given the increase in claims, from 2008-2010, PIP benefits paid by insurers have increased by 70% ($1.43 billion to $2.37 billion).

OIR conducted a more comprehensive PIP analysis for the five insurance carriers with the largest market share in the Florida marketplace: State Farm Mutual, GEICO, Progressive American, Progressive Select, and Allstate. The OIR found that between January 1, 2009 to February 1, 2012, PIP claims made to these five insurers increased 57.08%. During the same period, auto insurance rates increased by an average 19.1%. 5 These dramatic rate and claims increases have occurred even though there has been a decrease in:

  • The number of licensed drivers in Florida (15,579,603 in 2008 to 15,553,387 in 2010) ,
  • The frequency of auto crashes in Florida (1.56 crashes per 100 licensed drivers in 2010 to 1.52 crashes per licensed driver in 2010), and
  • The number of crash-related injuries in Florida (199,658 in 2008 to 195,104 in 2010).

Almost immediately upon being sworn into office in January 2011, Florida’s Chief Financial Officer Jeff Atwater appointed an Insurance Consumer Advocate whose first assignment was to oversee a 30-plus member working group focused solely on reforming PIP. The Consumer Advocate issued a report in December 2011. The Consumer Advocate’s Report found a rapid increase in the number of procedures billed from 2005-2010. The Report states

“The largest increases were found for ‘Massage, 15 minutes’ and ‘Therapeutic Exercise, 15 minutes’ which each increased by approximately 2.6 million units from 2005 to 2010. Specifically, ‘Massage, 15 minutes’ increased from approximately 1.42 million units in 2005 to over 4.05 million units in 2010, while therapeutic exercise increased from approximately 713,000 units in 2005 to 3.36 million units in 2010. These two procedures are now the two most commonly billed procedures in the PIP system.

The Consumer’s Advocate’s report also presented data on increases in the average charge per claimant by provider. Average charges by massage therapists saw the greatest increase, increasing from $2,887 in 2005 to $4,350 in 2010. The second largest increase was by acupuncturists, whose average charge increased from $2,754 in 2005 to $3,674 in 2010. In contrast, the average charge by an orthopedic surgeon only increased $126 from 2005 to 2010, billing on average the comparatively smaller figure of $2,810 in 2010. As of 2010, massage therapists and acupuncturists issue the largest average charges o any medical provider that bill within the PIP system.” 6

Of course, before one can file a fraudulent claim, one must first have the auto accident. While not all fraudulent claims arise from fraudulent auto accidents, most do. Law enforcement call it the "panic stop." A driver slams on the brakes and forces the car behind it into a rear-end collision. The driver who was hit pretends to be hurt. Often times it is the clinic owner who will recruit a group of people to stage the accident. No one is actually hurt, but the passengers will go straight to the clinic for “treatment.” No treatment is given but a PIP claim of $10,000 will be filed with the insurance company. The proceeds are then split between the colluding passengers, clinic operators, and lawyers.

Overall, in 2010, insurers paid out over $1.04 for every premium dollar collected. This has had a direct negative impact on auto insurance consumers who have seen their automobile insurance premiums increased to cover these skyrocketing costs. According to the OIR Report, a 19% increase in PIP claims paid compounded with a 9% increase in the severity of PIP claims will result in a 29% increase in pure premium this year. Tampa and Miami are now among the 10 most expensive cities for car insurance because of staged accidents. As stated by Chief Financial Officer Atwater, “the average family in Miami-Date County with a teenage driver is now paying over $3,200 a year for the value of coverage that is only worth $10,000.”

Florida Legislature: 2 Houses: 2 Approaches

There is broad conceptual agreement that PIP needs to be reformed: some even argue that it should be repealed. However, it has proven nearly impossible for the House and Senate to agree on exactly what PIP reform should encompass. Reforming PIP involves stakeholders including trial lawyers, insurance companies, consumer groups, and multiple medical providers such as hospitals, physicians, chiropractors, massage therapists, and acupuncturists. Reaching consensus within these industries is difficult let alone among these competing groups.

As expected, the House and Senate each introduced their versions of PIP reform. As originally introduced in the House, HB 119 (Boyd) contained several provisions that were unsuccessful in the 2011 legislative session but would have addressed a number of issues that were vital to insurance companies. However, in January, HB 119 was drastically amended and would have completely repealed Florida’s No-Fault statute and replaced it with a new type of coverage called the Emergency Care Coverage (ECC). This new type of coverage was based primarily on PIP but would have dramatically narrowed the scope of coverage of medical benefits and made Florida’s No-Fault statute the most stringent in the country. For example, under the ECC, injured persons would have been required to visit an emergency room in order to preserve their PIP benefit eligibility.

The ECC represented a huge deviation in public policy and caused a severe reaction from legislators and stakeholders. For decades there has been a movement to move patients out of emergency rooms and the ECC reversed that course by requiring all PIP claimants to go directly to the emergency room. The ECC eliminated a patient’s ability to visit his or her own doctor as the initial point of entry. While such a radical change found support in the House, HB 119’s approach had no chance to pass the Senate. Thus, in February, HB 119 was again amended and now proposes to create a new type of coverage called “medical care coverage” which is substantially modeled after Florida’s current No-Fault statute. Specifically, HB 119

  • Eliminates chiropractic care as a covered PIP benefit.
  • Requires an injured person to seek care in a hospital emergency room or out-patient clinic affiliated with a hospital within 72 hours of the accident in order to be eligible for the full $10,000 PIP benefit,
  • Allows up to $1,500 in PIP benefits to individuals who either timely present for treatment at a hospital and are told they do not need hospital treatment or who do not present at a hospital but timely seek treatment with a licensed physician, dentist, physician assistant, or registered nurse practitioner.
  • Requires insurers to file new forms and rates to the OIR by December 1, 2012 to reflect the cost savings resulting from this bill,
  • Caps attorneys fees and requires fees to be calculated without regard to any contingency risk multiplier,
  • Tolls the 30-day payment requirement if an insurer has a reasonable suspicion that fraud is present and allows 60 days to investigate the suspected fraud, and
  • Retains the ability of insurers to require examinations under oath and makes compliance with all policy terms by the insured a condition precedent to eligibility for benefits.

The Senate has taken a much slower approach. As currently written, Senate Bill 1860 (Negron), keeps the current framework of PIP intact and makes important but much more modest changes. The most significant provision contained in SB 1860 is that the PIP medical benefit reimbursement for massage and acupuncture is eliminated.7 The bill requires insurers to give priority to the payment of the $5,000 death benefit over PIP benefits and mandates that insurers maintain a log of PIP benefits paid by the insurer to each insured. Additionally, SB 1860

  • Requires entities providing health care services to be licensed under the Health Care Clinic Act in order to receive PIP reimbursement, 8
  • Requires law enforcement to complete long form crash reports and submit them to the Florida Department of Financial Services for all crashes involving passengers or when any party involved complains of pain or discomfort,
  • Provides that a health care practitioner found guilty of insurance fraud will have his or her license revoked for 5 years and may not receive PIP reimbursement for 10 years,
  • Creates a direct support organization designed to receive money from private persons who will fund state agencies, state attorneys’ offices, and the statewide prosecutor for the purposes of preventing, investigation, and prosecuting motor vehicle insurance fraud, and
  • Requires the OIR to perform a comprehensive PIP data call and publish the results by January 1, 2015.

Current language as outlined above notwithstanding, SB 1860 is still being heavily negotiated. In fact, since February 27th, 18 separate proposed amendments have been filed on the bill. While many of these amendments will fail, one set of amendments was jointly filed by the author of SB 1860 and the Chairman of the Senate Banking & Insurance Committee. This set of amendments is the most likely to be adopted and will bring SB 1860 somewhat closer to HB 119 in the House. These proposed amendments:

  • Allow for medical payments under PIP only if the initial service and care was supervised, ordered, or prescribed within 14 days of the motor vehicle accident,
  • Provides that initial service and care can only be given by a physician, osteopathic physician, chiropractic physicians, dentist, physician assistant, advanced registered nurse, practitioner, emergency transport professional or in a hospital or similar facility.
  • Provide that the $5,000 death benefit award under PIP is in addition to the medical and disability benefits available,
  • Limit reimbursement for all treatment to the lesser of 24 treatments or to services rendered within 12 weeks after the date of the initial treatment, whichever comes first, unless the insurer authorizes additional services,
  • Exclude massage and acupuncture treatment from being reimbursed regardless of the person, entity, or licensee providing massage or acupuncture. Specifically states that a licensed massage therapist or licensed acupuncturist may not be reimbursed for medical benefits under PIP,
  • Require an insurer who rejects a portion or all of a PIP claim to provide an itemized specification or explanation of the rejection within 30 days of the claim and allow a claimant to have 15 days to submit a revised claim,
  • Allow a toll of the 30 day mandatory payment requirement for an additional 30 days where an insurer has a factual basis that there is a probability of fraud. Where fraud was found not to exist, requires the insurer to pay the claim as well as simple interest,
  • Require any claim denied for suspected fraudulent insurance acts to be reported to the Division of Insurance Fraud, and
  • Provide that certain entities currently exempt from health clinic licensure statutes must nonetheless be licensed to receive PIP reimbursements.

Although both bills offer significant reform and are a step in the right direction, neither bill addresses several critical areas of concern to insurers. For example, neither bill conditions a PIP benefit payment upon an injured person attending an independent medical examination. Although HB 119 does contain a provision establishing a rebuttable presumption that a claimant’s failure to attend two independent medical exams is unreasonable and would jeopardize a claimant’s future medical benefits, insurers would prefer that the same presumption be based on the failure to attend one independent exam and impact the entire PIP medical benefit rather than just future benefits. SB 1860 fails to address this issue at all.

Moreover, neither bill addresses the assignment of PIP benefits to medical providers. Medical providers who provide services in exchange for an assignment of a claimant’s benefits should be subject to the same terms and conditions as the injured party would be if he or she had filed the claim on his or her own behalf. This change is needed so that insurers can use fraud-fighting tools, such as independent medical exams and examinations under oath, when claims are assigned to medical providers.

Each bill is moving through its respective legislative chamber. Because the two bills are so different, procedurally, the House and Senate will need to convene a conference committee with the goal of finding consensus as only one bill can ultimately make it to the Governor’s desk for signature. There is clearly much negotiating occurring among members within each House. 9 What remains to be seen is whether consensus can be achieved between the two Houses. The Legislature is scheduled to adjourn on March 9, so any action will need to be taken very soon. 10

Likelihood of True Reform Passing the Legislature

In 2010, Floridians elected a conservative Governor, Rick Scott, and a Legislature where Republicans hold a two-thirds majority in both the House and Senate. With the conservative Governor Scott at the helm and such large Republican majorities in the House and Senate, there has been great optimism that this time true reform can be achieved. Governor Scott uses every public appearance to advocate reform proclaiming that PIP fraud represents a billion dollar tax on Florida’s citizens.

It is difficult to think of an issue which is more complex and difficult to solve as it directly affects the five most powerful special interest groups: the business community; the medical community consisting of two distinct groups: traditional service providers such as hospitals and doctors and non-traditional medicine such as chiropractic, acupuncture, and massage therapy; insurance carriers who foot the immediate bill of paying inflated and false claims, consumer groups who represent individuals who ultimately pay for inflated and fraudulent claims through higher auto insurance premiums; and plaintiffs attorneys, many of whom earn their livelihood representing PIP claimants.

As this article goes to print, it is remains unclear whether the Legislature will be able to reach consensus and pass meaningful PIP reform. Notwithstanding the clear need for PIP reform, there is no consensus between the House and Senate on how significant that reform should be. There are still nine days left in the 2012 legislative session so anything is possible. Unfortunately, even after years of known fraud, abuse, and financial loss, Florida taxpayers are now living both constant truths: it is much easier to kill a PIP reform bill than to pass a PIP reform bill, and if the Legislature fails to reach consensus, the citizens of Florida will be harmed just by its leaders doing nothing.


1 . Currently 12 states have no-fault auto insurance laws. Florida, Michigan, new Jersey, new York, and Pennsylvania have verbal thresholds. The other seven states – Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah – use a monetary threshold. Three states, New Jersey, Pennsylvania, and Kentucky, have a “choice” no-fault law where motorists may reject the lawsuit threshold and retain the right to sue for any auto-related injury.

2 . 2001, 2003, and 2007 legislative session

3 . Report on Insurance Fraud Related to Personal Injury Protection, In the Supreme Court of Florida, Case No. 95746 Fifteenth Statewide Grand Jury, p 3

4 . “Report on Review of the 2011 Personal Injury Protection Data Call,” Florida Office of Insurance Regulation published on April 11, 2011.

5 . “Report on Review of the 2011 Personal Injury Protection Data Call,” Florida Office of Insurance Regulation published on April 11, 2011.

6 . Florida Senate Bill 1860 Bill Analysis and Fiscal Impact Statement, Banking and Insurance Committee, p 6. (February 2, 2012) quoting from the Office of the Insurance Consumer Advocate Report on Florida Motor Vehicle No-Fault insurance (personal Injury Protection, p 23 (December 2011). Florida Senate Bill 1860 Bill Analysis and Fiscal Impact Statement, Banking and Insurance Committee, p 6. (February 2, 2012)

7 . Massage as defined in s. 480.033, F.S. and Acupuncture as defined in s. 457.102, F.S.

8 . The only exceptions would be for licensed hospital, licensed ambulatory surgical centers, or entities wholly owner by hospitals, licensed physicians, licensed chiropractors or jointly owned by such practitioners and specified family members.

9 . During the last week in February, 7 separate sets of amendments were proposed to the House bill, and from 18 different sets of amendments in the Senate.

10 . The Governor also has the discretion to call the Legislature into a special session if they fail to address the problem during the regular session.