Prepare now for end of no-fault

By ALEX SINK, Special to the Times
Published August 19, 2007

For 36 years, Floridians have taken for granted that if they suffer from injuries in a car accident, the first $10,000 in medical and related benefits are automatically covered by the no-fault law, commonly referred to by the medical benefits portion called PIP, or personal injury protection. In six weeks, when the law is set to expire, Florida will enter a new world.

I support the intent of the no-fault law, which is to ensure that Floridians receive medical treatment for injuries they suffer in an auto accident without delay and without the need to file a lawsuit to recover costs relating to these medical benefits. However, the law, and especially the PIP provision, has major flaws. A culture of fraud and abuse has grown around PIP, one that my fraud investigators fight every day. Medical costs are not managed well in the PIP system. Claims for PIP medical benefits should not be used to support unnecessary and costly lawsuits.

But the idea behind the law - the protection of Floridians and their assets - is the centerpiece of my role as chief financial officer. Although I want to make the no-fault law and PIP work, there is no indication that the Legislature will address this issue in next month's special legislative session. Therefore, with the impending sunset of the law, I have been working to increase Floridians' awareness about life after no-fault.

Auto insurance will be different when the law goes away. I have established a Web site as an educational resource at www.myfloridacfo.com/nofault/. On the Web page, you will find answers to questions about how drivers can protect themselves in a fault-based system and more.

Much has been reported about changes in auto insurance rates when no-fault expires. I encourage you to look beyond the cost savings and consider what you and your family need. In particular, you may decide to buy medical payments coverage or increase your existing uninsured motorist or other coverage to better protect you, which will add some cost to your auto insurance premium even if PIP costs are reduced.

I understand that the Legislature has been studying this issue for years, and well-intentioned members in the Senate and House of Representatives have proposed various reforms. The issue is complicated and the parties - hospitals, doctors, attorneys and insurance companies - rarely agree on reforms that Floridians need. The reality is that all interested parties will have to change the way they do business in order to fix PIP.

Whether or not we reform no-fault or PIP, I believe the following components should be included in any system of medical benefits for Floridians:

- Florida should require mandatory medical benefits insurance for owners and operators of motor vehicles regardless of who is at fault in the accident. This would particularly help the 20 percent of Floridians who lack health insurance.

- Medical benefits insurance should include mandatory cost containment provisions. For example, fee schedules, which set reimbursement rates for medical services and are common in Medicare, Medicaid and workers' compensation, have proven successful in containing costs.

- Florida must continue to combat all forms of insurance fraud, and any insurance program must include aggressive antifraud measures. Critics of the no-fault system point to fraud as a reason to allow it to sunset. Experience in other states has shown that fraud happens in any system, and we must remain vigilant against it.

One thing is clear: Before no-fault sunsets Oct. 1, all Floridians should examine their automobile insurance policies to ensure they have adequate coverage to protect themselves and their assets. I encourage Floridians to contact their insurance agents or companies in the next six weeks to discuss what changes will best suit their needs.

I call on the governor and Legislature to expand the call for the upcoming special legislative session to include no-fault and urge the parties to work together with the best interests of Floridians in mind. PIP can work. Compromise is needed. A reformed no-fault law or a suitable replacement will benefit Floridians directly by protecting families.

Who can argue with that?

Alex Sink is Florida's chief financial officer.

[Last modified August 18, 2007, 22:20:30]