Legislation to repeal Florida’s longstanding Personal Injury Protection (PIP) no-fault insurance system is gaining traction in the legislature this year. On Wednesday, the House unanimously passed HB 719 to repeal PIP and replace it with mandatory Bodily Injury (BI) coverage despite opposition from hospitals, medical providers and insurance companies. A similar Senate bill (SB 54) is also moving through the legislative process.
PIP covers up to $10,000 in medical expenses and/or lost wages paid directly to those in an accident regardless of who is at fault in a car accident.
Proponents, led by trial lawyers who testified in support of the bill, argued a BI system will reduce insurance costs. Opponents of the bill provided information to House members that just the opposite occurred in Colorado after that state changed from PIP to Mandatory BI. In Colorado, both rates and the number of uninsured have skyrocketed in the past few years.
The last major changes to PIP took place in 2012 and that has led to a decrease in auto insurance fraud. Many, including CFO Jimmy Patronis, fear that both rates and the number of uninsured will increase if Mandatory BI passes The Florida Office of Insurance Regulation, led by David Altmaier, echoed this sentiment.
Here is a look at some of the potential changes if the bill is passed.
Under a BI system, if you are injured in a car accident that is not your fault, the other driver (usually through his insurance company) is responsible for your medical bills.
Here’s the catch: the at-fault driver’s insurance company won’t pay your doctors directly or reimburse you after every doctor visit. A driver is only reimbursed after the case is settled.
Instead, drivers either pay upfront for medical expenses or providers wait for payment based upon a letter of protection and are reimbursed after the insurance company settles the claim by the at-fault driver. A settlement could take months or even years, depending on how long the court case takes or if the insurance company agrees to settle.
Your medical care may also be disputed by the at-fault driver’s insurance company. This could leave you liable for medical care that was not covered by the settlement of your claim.
Of course, most doctors and hospitals want to get paid right away. If the injured driver is unable to pay for their medical bills, providers often send the bills they owe to a collection agency for payment.
That’s where your own insurance steps in. If the injured driver has health insurance, Medicare or Medicaid, the driver would submit their doctor bills to their insurance company after you pay the deductible and that’s if the injured driver has an optional “Medical Payment” coverage (“Med Pay” for short) insurance. The insurance company may reimburse you for any out-of-pocket costs after your health insurance has paid the claim to the medical providers first.
If you don’t have health insurance, Med Pay coverage, or any other means to pay your medical bills up front after an accident, you will need to hire a lawyer to ask your doctors to wait for payment from the at-fault driver’s insurance company and help you keep those bills out of collections in the meantime.
So, you pay out of pocket for your medical costs, even if you have insurance, and in time you will hopefully get reimbursed — but only if you have a lawyer.
Keep in mind that when you do settle with the other driver’s insurance company, you may need to use a portion of that settlement money to reimburse your health insurance, Medicare, or other people who have treated you and not been paid. This whole process requires strategy and careful negotiations with providers and health insurance companies.
Bottom line: drivers who can’t afford the new deductibles or to pay upfront for medical care after an accident will not only owe their doctors, but their lawyers as well.
The legislation still has two more committee stops in the House while the Senate bill is ready for the chamber floor. Most observers believe more opposition is likely due to the expected rise in insurance costs as well as the initial out-of-pocket costs associated with Mandatory BI.
In past years, bills that have such a statewide impact are usually only taken up after select committees can accurately assess the costs associated with the change to the current system.