Forget that one in six Floridians is without health insurance.The Florida Hospital Association's number one legislative prioritythis spring is auto insurance. Florida's no-fault system ofinsuring drivers is set to expire Oct. 1. If the legislaturedoesn't act, the state will revert to the traditional fault-basedsystem, where drivers and their insurance companies seekcompensation from the party responsible for a crash.

Under the state's no-fault law, Florida drivers must carry$10,000 in personal-injury-protection insurance — and auto insurersmust pay personal-injury claims within 30 days.

Lack of Coverage

“PIP cannot be repealed without providing an alternative form ofmandatory coverage,” said Bill Bell, general counsel to the FloridaHospital Association. But the Florida hospital industry faces abattle to retain the state's no-fault auto insurance industry. Mostof the big auto insurers in the state want to eliminate no-faultbecause it's too inviting to scam artists and health providerstrying to bilk the system.

Lawmakers attempted to address the fraud problem in legislationpassed last year. But Governor Jeb Bush decided the bill didn't gofar enough and vetoed it. That means the legislature this springwill get one last attempt before the sunset provision kicks in. Andthere's nothing like a deadline to get lawmakers' attention.

State Farm, which insures three million Florida vehicles, madeit clear last year that it would like to see the law sunset. Dittofor Nationwide. This year, Allstate has joined the push. Still,many observers think there is a middle ground between dumpingno-fault outright and maintaining the status quo. A staff report tothe Senate Banking and Insurance Committee last year recommendedthat a no-fault law be re-enacted with two major changes: a medicalfee schedule that would limit payments for various types ofinjuries, and limitations on lawyer fees.

Pushing for PIP

Groups representing lawyers and doctors and other medicalproviders will continue to fight limitations on their fees. TheFlorida Justice Foundation, formerly the Academy of Florida TrialAttorneys, wants PIP restored, but if it does go away it favors amandatory requirement that all drivers carry bodily injury coverageof at least $25,000 per person and $50,000 per accident, said PaulJess, the foundation's general counsel.

If PIP can't be saved, The Florida Hospital Association agreeswith the foundation's position on requiring bodily injury coverage.It also thinks the bodily injury coverage should be limited tohospital emergency departments and subsequent inpatient hospitaland physician care.

Limiting payment to hospitals and doctors aims to reduce thepotential for fraud by clinics and chiropractors. Media andlegislative reports for years have outlined numerous cases of fraudfrom unscrupulous clinics and chiropractors who sometimes stageaccidents and operate sham injury-treatment clinics.

Many hospitals across the state are already reeling from thenumbers of uninsured patients they must treat. If PIP goes away,they fear their tally of uncompensated care will only increase.Ironically, hospitals have spent years arguing the $10,000 from PIPdoesn't come close to meeting their actual costs of treating manycar-injury patients. But now, the hospital industry is desperatelytrying to retain the amount.

Bell, of the hospital association, said the average autoaccident admission costs $54,000, or more than five times higherthan the PIP requirement. Florida's 23 trauma hospitals would feelthe impact the most if no-fault is repealed, Bell added.

Split on the Issue

Auto insurance reform continues to put the Florida InsuranceCouncil into a pickle. That's because its members are still spliton the issue, even as most of the big carriers have come out forrepeal. FIC spokesman Sam Miller said the fraud concerns theindustry has raised are outside of hospitals. But insurers realizeif PIP goes away and is not replaced, hospitals will take a big hitfinancially. Hospitals in Florida are already struggling to findspecialists who will cover emergencies. If PIP is eliminated, thatjob would become even more difficult.

Health insurers don't want PIP repealed, Miller said. That'sbecause they fear they will be left paying for auto victims'injuries, which in turn would force everyone's rates to increase.If you are keeping score at home, auto insurers who want toeliminate no-fault will have to take on the hospitals, healthinsurers, and attorneys to get their way. Putting lawyers, doctors,health insurers, and hospitals together makes for an awfullypowerful coalition.

“If I had to guess, the legislature will pass a bill that wouldreplace PIP with something such as mandatory bodily injury,” Millersaid.

The big unknown in the debate over auto insurance is whatposition Governor Charlie Crist will take. He has not looked intothe issue, according to a spokesman. Since the property insuranceissues dominated his campaign last fall, he didn't have to take aposition on auto insurance.

Marking Up Costs

In January, State Farm Insurance Co. threw the latest punch onthe issue when it sued the state's largest hospital system,complaining of grossly inflated prices for the medical treatmentgiven auto-accident victims. State Farm accuses the 17 hospitals inthe Orlando-based Florida Hospital chain of marking up costs by 225percent to more than 1,000 percent, with the mark-ups varyingwidely among the hospitals, according to the lawsuit, which wasfiled in Orlando.

But the State Farm suit clearly was aimed at more than justAdventist Health System/Sunbelt Inc., the Florida Hospital system'sparent company. In the suit it described Florida's no-faultauto-insurance law as “unconstitutionally vague” on the criticalquestion of what a reasonable charge is for a given medicalservice.

With no-fault claims required to be paid within 30 days,insurance companies argue, they do not have enough time toinvestigate each one. Though focusing on hospital prices ratherthan fraud, State Farm's lawsuit complains that the 30-day clockforces it to pay inflated hospital rates or risk litigation. Thesuit details a number of examples of inflated prices at FloridaHospital facilities that it says are based on billing data from thefederal Centers for Medicare & Medicaid Services. Markups onradiology services, for example, were put at 905 percent at FloridaHospital DeLand, 745 percent at Florida Hospital Orlando, 245percent at Florida Hospital Waterman, and 1,030 percent at FloridaHospital Flagler.

Patients with private or government health insurance are billedat discounted rates, State Farm said in its suit. Though largehealth plans are able to negotiate lower rates with hospitals basedon their ability to direct their customers to specific facilitiesor systems, “neither automobile insurers nor uninsured individualsare in a position to offer referral inducements” for suchdiscounts. The suit also complains that Florida Hospital hasrefused to reveal how much it charges other insuranceproviders.

State Farm is not the only insurer attacking PIP–at leastindirectly. Progressive Express Insurance last year filed a suit inFlorida Court of Appeals over excessive attorney fees tied to PIP.The appeals court in January ruled that the use of a fee multiplierto calculate $193,750 in attorney fees for a suit over $1,315 inPIP benefits was excessive and reversed a trial court decision.

The insured was injured in an auto accident and underwentchiropractic care for his injuries. After four months of treatment,the insurer stopped paying PIP benefits, leaving the insured with abalance of $1,315 owed to the chiropractor. He hired an attorney,who filed suit to recover the outstanding chiropractic bills, aswell as attorney fees and costs.

The parties settled the dispute, leaving only the amount of theattorney fees and the appropriateness of a fee multiplier forresolution. After the insurer conceded the insured's entitlement toattorney fees, the trial court approved the attorney's request for193.75 hours at $400 an hour, plus a 2.5 multiplier, whichincreased the fee to $1,000 an hour, for a total of $193,750. Theinsurer argued that the use of an attorney fee multiplier was errorand a “manifest injustice.” The court of appeal agreed.

Getting stuck with huge lawyer fees is a big reason whycompanies such as State Farm want to scrap the no-fault system. Thestate's no-fault law, technically the Florida AutomobileReparations Reform Act of 1971, took effect in 1972. When the lawtook effect, Florida joined the majority of states who had goneno-fault. Today, 12 states mandate PIP no-fault coverage, and 38maintain a fault-based system.

Addressing Fraud

Opponents of no-fault say lawmakers have not adequatelyaddressed the system's major drawback: fraud. The legislature hastweaked the law several times, but not enough. The Department ofFinancial Services' Division of Insurance Fraud spends 40 percentof its time on PIP fraud, more than on any other category.

In 2004, Floridians paid the eighth-highest rates in the nation,according to the National Association of Insurance Commissioners,and the group Floridians for Lower Insurance Costs says no-faultadds $250 to a typical premium. But with few Floridians seeminglycomplaining about auto insurance rates — at least to the samedegree as property insurance — it's an open question as to whetherthe legislature has the impetus to act. But a legal deadline, andthe state's doctors, lawyers, hospitals, and health insurers willsurely give it enough reasons get in the battle.