A Tallahassee judge’s ruling that a change in the state’s car insurance law is arguably unconstitutional has thrown a giant question mark into when lawsuits under the new law will reach a courtroom.
"Is the no-fault law still a good idea?" Leon Circuit Judge Terry Lewis asked in granting a temporary injunction March 18 against legislative changes to personal injury protection, or PIP, policies.
Lewis said provisions requiring an injured person to seek medical attention within 14 days of an accident, requiring the certification of an "emergency medical condition" and barring treatment by massage therapists and acupuncturists severely limited what that person can recover in damages.
What that means for lawyers with clients hurt in vehicle accidents since Jan. 1 when the law took effect remains to be seen.
The state filed its notice of appeal March 21, putting a stay on Lewis’ injunction until the First District Court of Appeal can review it. But Clearwater attorney Luke Lirot, who filed the complaint for chiropractors, massage therapists and acupuncturists, still was overjoyed.
"He gave the right ruling for the right reason," Lirot said. "I think it puts the death sentence on these ridiculous limits that were put in during the last legislative session."
Governor Rick Scott, who made PIP reform a hallmark of his 2012 session goals, promised a fight.
"Our personal injury protection legislation was designed to stop the high costs passed on to Florida families by car insurance companies because of excessive lawsuits, waste and fraud," Scott said in a statement. "Our reforms are working to lower insurance costs for Florida families, and we will continue to fight special interest groups to keep them in place."
Even without Lewis’ ruling, PIP lawsuits had not been accumulating at courthouses because the change only took effect at the start of the year, Fort Lauderdale insurance defense attorney Ryan Burns said.
To qualify someone would have to make a claim on an accident that occurred after Jan. 1, wait 30 days to be paid, be given less than what was expected, then wait another 30 days following a demand letter.
"There just simply has not been enough time. It’s just too early," said Burns, an associate with Marshall Dennehey Warner Coleman & Goggin.
What’s more, the time limits will not kick in unless the insurance policy is purchased or renewed in 2013, said PIP plaintiffs lawyer Nicholas Zacharewski, who created a PowerPoint presentation on the law’s changes for the Florida Justice Association. "Really a lot of the denials aren’t going to come until April or May or even June" as policies are renewed, he said.
Zacharewski, an associate at Ellis, Ged & Bodden in Boca Raton, faulted the Legislature’s 14-day outer limit for seek medical help as raising costs instead of lowering them. "That forces people to go to the doctor," he said.
He also said challenges to new laws wind slowly through the court system, noting the Florida Supreme Court just heard oral arguments March 7 in Geico v. Virtual Imaging, which disputes PIP fee schedule changes established in 2008.
"That’s the first time the Supreme Court’s looked at it, and we’re five years into it already," Zacharewski said.
At issue in Geico is when new maximum payments to PIP health care providers take effect. The Legislature in 2008 set a cap at 200 percent of Medicare payments. Insurers say all policies contain a clause making them subject to changes in state law. Providers say the changes cannot take effect until they are incorporated in the policy language on issuance or renewal.
Richard Parrillo Sr., chief executive of Miami Gardens-based United Automobile Insurance Co., chafes at the provider lawsuits.
"Some of the clinics or doctors who are suing us over the 200 percent of Medicare are accepting the regular Medicare benefits from other people for the very same procedures," he said.
He also took offense when Florida Senate President Don Gaetz was quoted in February as being "disappointed" in PIP insurance rates and saying, "I want to know where the savings are."
In a March 11 letter to Gaetz, Parrillo said insurers had been issuing and renewing policies under the new law for only two months.
"Based on the industry’s history in the courts, we do not have high expectations that the 2012 amendments will provide an immediate cost savings," he wrote. "If they provide any benefit at all, it will not be felt for many years after the issues have been filtered through and vetted by the courts."
The legislative package asked insurers to lower rates by at least 10 percent. Parrillo’s company, which insures mostly high-risk clients who do not qualify for anyone’s lowest rates, said it needed to raise its PIP premiums 18.3 percent.
"That’s because we’ve been getting clobbered with PIP every year. We have never made money on PIP in Florida," Parrillo said in an interview. "We have to have a rate where we can make money. It hasn’t happened yet."
LEGAL FEE LIMIT
Echoing the insurance industry as a whole, Parrillo said the real way to fix the PIP system would be to limit legal fees. The industry sought such limits last year but didn’t get them in the new law. Parrillo said one company, not his, lost a case over a $1,300 claim and was ordered by a judge to pay $196,000 in legal fees.
"Unless something is done to fix the courts, PIP will continue to serve as a retirement fund for fly-by-night clinics and the lowest level of plaintiff attorneys," Gaetz wrote.
The Senate president is not the only one awaiting lower PIP rates.
"I haven’t heard anyone say this was a great idea because my PIP premium has been reduced dramatically," said Marlene Reiss, an insurer-feared appellate lawyer in Miami.
She agreed it is early to gauge the effects of the PIP changes and said her position last year — that the legislative package was "entirely unconstitutional" — has not changed. "If nothing else, the statute has engendered all sorts of new litigation," she said.
More than one of those complaints will ultimately reach her desk, she predicted.
"Things are percolating up, and we’re basically waiting for the right cases to take up," Reiss said.
Likewise, PIP plaintiffs attorney Russel Lazega of Florida Advocates in Dania Beach said consumers are the ones left holding the bag.
"We were promised a 10 percent [reduction in 2013] and then a 25 percent reduction [in 2014] … as a result of this new law. And somehow rates have continued to climb," Lazega said.
He identified two changes in PIP insurance already showing up after only two months.
"A year later, hospitals and consumers are finding out insurance companies are only giving them $2,500 in coverage for emergency rooms. It’s definitely a problem," he said.
Lazega said he is already seeing insurance companies refuse to pay, saying they’re investigating whether a condition is truly an emergency. He said an emergency room might order a CT scan, which costs $4,000 to $6,000, and it comes back negative.
"The insurance company says, ‘See, it’s not an emergency,’ " Lazega said.
The governor, in his push for change last year, mustered statistics showing the number of PIP claims opened or recorded in Florida increased 28 percent, payment on claims increased 66 percent and PIP litigation increased 387 percent from 2006 to 2010. The state average $12,000 in provider charges per claim compared to a national average of $8,000, Scott said.
Florida also led the nation in staged crashes and questionable claims, he said, with Tampa and Miami leading the state.
Lirot said the law’s restrictions benefit only insurance companies and were buried in the 72-page law.
"Every consumer that had for years thought they were buying $10,000 worth of insurance now found it had been reduced by 75 percent," he said.
He filed the state court complaint in September, dismissed it and filed a similar suit in Tampa federal court to argue the licenses that acupuncturists and massage therapists get are property protected by the Constitution. U.S. District Judge Richard Lazzara denied a motion for injunctive relief, and Lirot and co-counsel Adam Levine of the Florida Legal Advocacy Group in Clearwater filed a new complaint in Tallahassee.
Lirot, whose practice in large part focuses on constitutional issues, said he has represented more adult entertainment establishments than PIP litigants.
"The Constitution applies to exotic dancers as well as licensed massage therapists as well as chiropractors," Lirot said. "It’s good to see it work."
Lazega said "no" may be the answer to Lewis’ question on whether PIP is a good idea and predicted a "big push" toward eliminating the PIP system as Colorado and Georgia have done.
"I think that may be coming," he said. "In the meantime it’s wait and see for the rest of us."
Fellow plaintiffs attorney Zacharewski agreed.
"Now everybody gets to scramble to see how that’s going to impact us," Zacharewski said. "I think the advice to the people [who have auto accidents] is contact your insurance company, speak to them about it and put it in writing."