Florida's faux no-fault fix: The saga continues

Over the years, there have been many attempts to fix, sunset or even repeal Florida’s no-fault system. The result has consistently been the same: Florida remains the most fraud-prone state in the nation with motorists paying some of the highest insurance premiums around.

Last year, legislators finally succeeded, passing a bill to repeal PIP (personal injury protection) while mandating bodily injury coverage. This bill was vetoed by the governor. Now we are into 2022, and the no-fault insurance repeal re-emerges.

This year we have HB 1525 and SB 150 taking a slightly different tack but still seeking to repeal the no-fault law and replace it with mandatory bodily injury coverage starting January 1, 2023.

The ailing Florida insurance industry

While well-intended, the concern is that these bills do not go far enough to fix what is ailing the insurance industry in Florida. After all, we are a state where runaway jury verdicts on questionable injury claims have become commonplace. Residents are barraged with trial lawyer advertisements boasting of large verdicts.

Adjusters are routinely threatened with bad faith for simply doing their job of investigating claims. From Jacksonville to Miami and Pensacola to Key West, accident victims are being diagnosed with “disk” injuries that in most other states will be nothing more than soft tissue damage or aggravation of a pre-existing condition.

In looking at this year’s legislation, the bills again seek to eliminate the mandatory $10,000 in PIP coverage currently required of motorists, replacing this with a requirement for motorists to have mandatory bodily injury coverage. Currently, Florida does not require motorists to carry bodily injury coverage.

The general consensus among consumer groups and the media is that this will result in a disproportionate number of lower-income residents having to pay more for insurance. While coverages could go up for those who currently drive without BI coverage, others who do currently carry such coverage will potentially see decreases in premiums. There is also concern that more Floridians will opt to simply not have insurance. While Florida is already among the leaders in the nation with more than 20% of vehicles on the road being uninsured, this could potentially happen due to the legislature lacking the foresight to penalize those who opt to break the law by barring them from suing for pain and suffering as many other states have done with great success.

From a personal responsibility standpoint, abolishing PIP is the right thing to do. Far too many people drive around with basic mandatory coverage of PIP and PD only and have had no requirement to be responsible when they injure others. Florida is the ONLY state that has no requirement for drivers to carry BI coverage. While two states (New Hampshire & Virginia) don’t require auto insurance, both do have requirements to post some type of bond to protect the general public. This has resulted in Florida uninsured (UM) and underinsured (UIM) premiums being among the highest in the nation.

The second critical factor is that PIP was designed to limit litigation by barring suit for soft tissue injuries. For decades, the majority of injury claims presented by motorists are just that and are most often paid, despite the tort threshold that was supposed to limit these claims. An effective PIP law is only as effective as the enforcement of the thresholds designed to keep litigation in check, which Florida has failed to do over and over again.

The third critical factor is fraud. PIP fraud is rampant throughout the state, and PIP litigation has become a highly lucrative cottage industry. While this reform may address both of these costly problems, fraud is not going away. I began my career investigating insurance fraud in south-central Los Angeles, where there is no PIP. It is a tort system used by cappers to enlist pawns to stage accidents and pursue third-party BI claims. Until fraud in Florida is addressed with specificity, it will continue at an ever-increasing rate.

Recommendations for legislators

To truly make this new legislation work for the benefit of consumers, legislators should consider the following:

• The elimination of PIP creates its own new set of challenges. While it is one less coverage that will be prone to fraud, the shenanigans we see today will simply be pushed to BI and UM (uninsured motorist) line coverages, so any savings will be dubious at best.
• We need to modify the negligence law so that parties more than 50% at fault for a loss are barred from recovering damages from a third party. Currently, under Florida’s pure comparative negligence doctrine, a person who is 99% at fault is still allowed to sue for damages.
• No pay, no play. Florida needs to bar uninsured motorists from the recovery of non-economic damages, a solution effectively implemented in several states.
• Cap attorney fees.
• Cap tort damages for “pain and suffering.” Include a “loser pays” provision that applies to not only the plaintiff but their counsel.
• Allow “bad faith” only in the rare situations in which an insurer truly does not honor its fiduciary duties. Enact penalties for trial lawyers who engage in so-called bad faith “setups.”
• Allow a reasonable amount of time to investigate suspicious claims.
• Give law enforcement the teeth necessary to pursue fraudsters while holding insurers harmless during their investigations.
• Enact caps associated with Medicare and/or workers’ compensation and on treatment for soft tissue injuries, which comprise the vast majority of cases clogging our courts.
• While the proposed legislation is well-intended, it is unclear if there will be a quantifiable benefit to Floridians. Two things we do know: staged accidents will continue at an alarming rate and, if prior legislation to fix auto insurance in the Sunshine State is any indication, premiums will not decrease.

Additional steps needed

This is precisely why there are additional steps that the legislature should take to ensure a truly meaningful bill that will benefit consumers. By understanding the greater problem, legislators can give teeth to whatever bill they ultimately pass. Getting rid of PIP is the first step, but do not think for a second that rates will decrease or fraud will go away unless a bigger, bolder approach is taken.

Christopher Tidball is an executive claims consultant with SecondLook, a  speaker and author of multiple claims improvement books, including “Re-Adjusted: 20 Essential Rules to Take Your Organization from Ordinary to Extraordinary” and “Deep State,” a fictional insurance fraud thriller. To learn more, visit ctidball@2ndlook.net. Views expressed are the author’s own.

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