Call Now For A FREE Consultation

(727) 451-6900

Get a Free Consult

Personal Injury Protection: PIP Reforms Come With Many Unanswered Questions

06.26.2012 by | Insurance

Personal injury protection (PIP), the segment of auto insurance that every registered Florida driver is required to purchase, is about to undergo a major restoration that state officials believe will result in a reduction in premiums for millions of drivers.

In the meantime, Chief Financial Officer Jeff Atwater, who is responsible for making sure the reforms actually work, says drivers will have to wait before they note significant savings on their monthly statements.

For many months, Legislature has debated over how to rectify the system that pays the first $10,000 accumulated in medical bills in an auto accident, regardless of who was at fault. Lawmakers have made a deal to put stricter limits on certain medical treatments that injured motorists can receive. They have also established a new organization intended to battle the fraudulent claims that insurers say is endemic in PIP.

Starting July 1, Florida law will ban the use of no-fault PIP funds to pay for massage or acupuncture treatments and will place a cap on the payout for non-emergency treatment of accident-related injuries at $2,500.

Atwater will soon become president of the fraud-fighting group. Instead of state funding, the group must raise its own funds, most likely from insurance companies and the medical community. The money will be distributed to various law-enforcement agencies, which will help them fight insurance fraud.

At the moment, no one knows exactly how the group will operate. Apart from the fact that the CFO, Attorney General and other officials will set appointments with the organization from the insurance and medical industries, details of specific protocols remain unclear.

Atwater says fundraising options are still being figured out, however, he doesn’t expect a multimillion-dollar budget. Also, he hopes that the group will focus their efforts on funding and sharing technology or data that may help economic-crime units, rather than having insurance companies fund prosecution teams. “That’s a bit of a pressure issue,” he stated. “You don’t buy justice.”

Insurance carriers are already saying that an Oct. 1 deadline for a 10% premium reduction may not pass. In the event the reduction is denied, the company must provide an explanation as to why the request is not possible. The following deadline is set for Jan. 1, 2014, in which insurers must reduce their rates by 25%, or explain to the state why they refuse. That explanation section of the bill was suggested by Atwater, sponsor Sen. Joe Negron, R-Stuart, and incoming Senate President Don Gaetz, R-Niceville.

“We’re certainly going to monitor it very carefully over the next couple of years,” Negron stated. “I want to watch and make sure insurance premiums go down.” Insurance companies are keeping a close eye on the matter too, apparently with skepticism. “I will be curious to see what [Atwater’s] expectations are,” said Michael Carlson, executive director of the Personal Insurance Federation of Florida, a lobbying group. “If there is going to be significant rate changes, we’ll have to let 2013 unfold.”

PIP payouts have been steadily rising, which the industry attributes to an increase in staged automobile accidents, especially in Central and South Florida regions. According to the Office of Insurance Regulation, since 2009, State Farm’s PIP rates have increased by 94.6%, Geico’s by 87.6% and Progressive’s by 50.2%.

Put into perspective for a 40-year-old woman residing in West Palm Beach, means paying $700 a year in 2012, for a popular national insurance carrier, with an expected increase to about $900 in 2013, without any changes to the law. In Orlando, that same driver will pay roughly $400 this year and about $550 in 2013.

The reason insurers remain skeptical about the laws new effort to reduce rates is that many questions remain unanswered. The most important being what effect, if any, will Atwater’s fraud-fighting group have on fraudulent claims. Another is how “emergency medical conditions” will be defined.

Under the new law, an accident victim must see a physician, which may include a chiropractor, within 14 days of the date of the accident. If they require any type of “emergency” treatment, a doctor can bill up to $10,000. If not, doctors can only bill up to $2,500. Unfortunately, insurers have already witnessed solicitations from questionable doctors who promise, for a fee, to claim that a patient has an “emergency medical condition” so the physician can collect a full $10,000 for the patient.

Consumer advocates fear that patients will not be able to receive the care truly needed if they sustain an injury such as a whiplashed neck or herniated disc that is extremely painful, because the injury may not qualify as an emergency. Atwater understands that Legislature may need to tweak the definition of emergency treatment. The state has also contracted to pay $150,000.00 to an actuarial analysis company, Pinnacle Actuarial Resources, in which they will analyze the measure and declare whether the expected savings are sensible and realistic.

“I really believe that the expectation that a 10 percent reduction and to follow with a 25 percent reduction is achievable,” Atwater said. “And even if it falls slightly short of those benchmarks, the people of Florida deserve that relief.”

For more updates regarding changes in Florida no-fault PIP law, please continue to follow our Florida Personal Injury Attorney blog at If you have been physically injured in a Florida auto accident, call you injury law attorneys at: (727) 451-6900 for a free consultation and case evaluation.

Written by Matthew Dolman