No-Fault Law's Fate a Source of Hospital Anxiety; Hospitals Fear the Costs of Providing Free Care to the Uninsured; Insurers Celebrate the Law's October Sunset

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Byline: URVAKSH KARKARIA

The prospect of an auto insurance law fading into history is triggering financial heartache among Florida hospitals.

The hospitals rely on mandatory medical coverage provided by auto insurers to help pay for care provided to accident victims, especially those without health insurance.

The Florida No-Fault law, scheduled to expire in October, requires drivers to purchase Personal Injury Protection, which pays up to a maximum of $10,000, regardless of fault, for injuries caused in an automobile crash. The law's future is being debated in the current legislative session and is the focus of intense lobbying by hospitals, auto insurance companies and others.

The auto insurance industry wants to get rid of PIP, saying it forces drivers to buy extra health insurance coverage they don't need. They also point to claims fraud under the PIP system.

At the other end of the table sit hospitals that want to see PIP live on, because without it they could end up providing free medical care to auto accident victims without health insurance. Florida hospitals received more than $350 million in PIP money last year, according to conservative estimates from the Florida Hospital Association.

Health insurance companies also want PIP coverage to stick around, because without it they would face increased exposure to medical claims and likely have to jack up already-rocketing premiums.

Hospitals can't afford to subtract $400 million to $500 million of uncompensated care from their bottom line. They already provide free care to the waves of uninsured streaming into their ERs, said Steven Smith, director of state legislative relations at Blue Cross and Blue Shield of Florida.

"Accidents happen, people get injured," Smith said, "What happens in auto accidents ought to be paid for by auto carriers."

AUTO INSURERS LASH OUT AT NO-FAULT LAW

Auto insurance carriers promise Floridians lower premiums if the No-Fault law ends as scheduled.

State Farm's Florida auto insurance customers, for instance, will save an average of $360 annually per two-car household once the law ends.

"Our customers are getting ripped off [by PIP]," State Farm spokesman Chris Neal said. "They are paying a lot of money for a coverage that many of them don't need, and many of them don't want, and they get no benefit from it."

Neal asked why, for instance, a 65-year-old retired couple on Medicare must buy an additional $10,000 in medical coverage from State Farm when any auto accident-related injuries they suffer would already be covered by their government health insurance.

"Responsible people take care of themselves and are covered in case of an accident," Neal said. "So you want to punish all the responsible people for the few people that aren't responsible? It makes absolutely no sense and it's real poor public policy."

Critics of the PIP system also say it is plagued with fraud and allows hospitals and other medical providers to overbill auto insurance carriers.

Medical providers don't have to charge auto carriers negotiated fees for services rendered, like they do with public and private health insurers. The No-Fault law also does not limit the number of treatments a service provider can perform on an auto accident victim and charge the carrier for, said George Grawe, Allstate Floridian's general counsel.

"There's nothing in the statute that tells your [auto] insurance company what is a reasonable charge, and what is a reasonable course of treatment," Grawe said. "All of the bad guys know that any time there's an automobile accident, if you can coax the people who are involved in the accident to go to certain providers, they know that those providers are going to be able to charge whatever the heck they want to charge for the treatments that are associated with it, [and collect the $10,000]. …