New No-Fault Law Signed by Governor

PIP statute becomes modern-day legal Lazarus

The Florida Motor Vehicle No-Fault Law was “resurrected” in the recent Special Session of the legislature and Governor Crist immediately signed the bill into law last week. The effective date of the revived law is January 1, 2008.

After the 2007 legislature failed to take any action during the regular session, it appeared that the No-Fault Law, also known as the PIP Statute, was dead and buried on October 1, 2007 pursuant to the automatic “sunset” provision of the statute. But like the Biblical character Lazarus, the law has now come back to life.

All persons subject to the revived No-Fault Act will be required to maintain coverage for Personal Injury Protection. For existing policies, unless modified by the insured(s), PIP coverage with the same deductibles and exclusions that applied to the previous policy will continue to apply. PIP coverage will be automatically added to new policies on January 1, 2008 if not already in place.

The new statute contains few differences from its predecessor. The legislature reenacted the prior law practically unchanged. But there are some notable changes which are outlined below.

One substantive difference is that the law now requires insurers to immediately reserve $5,000 of the total benefits available for the payment of emergency services care or hospital in-patient care. The reserve must be established when the insurer is first placed on notice of the accident and must be held for a minimum thirty (30) day period after the notice. After the thirty (30) day period, the reserved funds may then be used to pay other claims.

Additional time has been given to insurers to respond to pre-suit demand letters. The prior statute provided fifteen (15) days for insurers to pay the claim, plus interest and the statutory penalty, in order to avoid litigation and the obligation to pay attorney’s fees. Under the new law, the response period is expanded to thirty (30) days.

The limitations on reimbursements to medical providers have also been expanded. The fee schedules applicable to Medicare and Workers Compensation benefits are referenced in subsection 5(a)(2) of the statute and those schedules will apply to certain types of treatment. There are different limitations for emergency transport, emergency care by both hospitals and physicians, non-emergency in-patient and out-patient care. The statute should be reviewed for the specific amounts of all the new limitations.

In an effort to further reduce litigation, the new statute also requires that all claims of a provider arising from the treatment of the same injured person must be brought in one action. This provision will dissuade providers (and their counsel) from filing new suits for each and every treatment rendered in an effort to increase the insurer’s liability for attorney’s fees and costs.

One of the more interesting provisions relates to accidents occurring during the “hiatus period” between the October 1, 2007 “sunset” date and the January 1, 2008 effective date of the revived statute. For any accident between those dates, the limited tort immunity and injury threshold provisions under the Act will only apply if both the plaintiff and the defendant were insured for PIP as it existed prior to the sunset. By contrast, if one party failed to maintain the coverage, neither immunity nor the threshold will apply. A significant increase in lawsuits for minor accidents could result from this legislative window. Care must be taken in establishing the date of the loss as claims are reported over the next three (3) months, so that the claim can be properly handled under the old statute, the new statute, or as one in the “hiatus period.”

Unfortunately, the legislature has not even attempted to “fix” most of the real PIP problems in its passage of this bill. The reason for the imposition of a “sunset” date in the original statute was to force lawmakers to either work towards a true overhaul of the No-Fault system or allow it to pass to the “statutory graveyard.” When the overhaul was not undertaken and the statute expired as a result of the sunset provision, an outcry from the medical profession and health care industry (supported by Florida’s new CFO/Treasurer, Alex Sink) was heard which spurred the legislature to quickly act without time to consider and formulate any sweeping changes in the substantive provisions of the law. It will be interesting to see if serious debate will take place in the 2008 legislature to address the core issues of the No-Fault law which have long been recognized as needing legislative remedies.

Should you have any questions about the implications of the new statute or the handling of these claims, please feel free to contact us for any information or assistance we may provide.