Florida Motor Vehicle No-Fault insurance (“Personal Injury Protection” or “PIP”) is a form of medical insurance used for motor vehicle crashes. It is mandatory on vehicles registered in Florida. It covers owners, certain family members and passengers, and pedestrians. The typical policy limit is $10,000 reduced by deductibles ranging from $500 to $2,000.
PIP does not compensate the insured or anyone else for pain and suffering damages. This type of compensation comes from bodily injury (BI) and uninsured/underinsured motorist (UM/UIM) insurance. Florida is one of only a handful of states that does not require drivers to maintain BI insurance. (Besides PIP, the only other type of mandatory vehicle insurance is Property Damage — Liability. It pays for damage to the personal property of others.) Because BI and UM/UIM cost extra, a large percentage of Florida operators do not maintain them.
Neither BI nor UM/UIM cover medical expenses that are “paid or payable” by PIP. This is known as the PIP offset (or setoff). Example of a “paid” scenario and its consequences: $20,000 BI policy limit. $15,000 medical bill, reduced by the Medicare “Allowable” formula to $10,000. Assuming no deductible, PIP pays $8,000, or 80%, leaving a $2,000 balance. Hence, the limit of liability to the at fault driver’s insurance company, the BI carrier, for past medical expenses, is $2,000 instead of $15,000. Accordingly, instead of offering $20,000 to settle the BI case, which approximates its exposure without the offset, the carrier may only offer $5,000 or $6,000. (These numbers are hypotheticals based on a typical case. In some instances, a case with $15,000 in medical charges, even with the PIP offset, can be worth hundreds of thousands of dollars, if not millions, depending on the injuries.)
Following a crash, it is common for PIP carriers to deny coverage. The most popular grounds are insurance application misrepresentation (intentional or not), failure to attend an examination under oath (EUO), and IME cutoff.
Once the PIP carrier asserts a coverage denial, the medical bills then unpaid are not considered “payable” for purposes of the PIP offset. In the example above, if the denial was made before any of the bills were paid by PIP, none of the $15,000 in unpaid medicals would be considered payable.
“It appears that ‘“payable”’ personal injury protection benefits do not include benefits for incurred expenses that have been submitted to, but contested by, the PIP insurer at the time of trial, or in situations where the PIP insurer is insolvent at the time of trial. Compare Rollins, 761 So.2d at 299–300.”
Importantly, the insured is not required to litigate the coverage dispute. Once the PIP carrier asserts the coverage defense, the unpaid medical bills are no longer “payable.” Most BI adjusters need to be educated on this standard. Supervisors and in-house counsel sometimes get involved.
In my experience, in cases where the PIP offset is lost to the BI and UM/UIM carriers, the person injured by the at-fault driver ends up pocketing more money than otherwise. For starters, the psychological effect on carriers make a difference. They are so enamored with the offset, that losing it is a shock to the system. Additionally, being confronted by a lawyer who is on top of the law puts the adjuster on his heals right out of the gate. Moreover, not only does the adjuster respect the lawyer’s knowledge, but the adjuster knows that the lawyer is more likely to file suit since doing so will be more worthwhile what with the near assurance of a larger final judgment (without the offset).
Hardworking lawyers will negotiate a fair compromise of the unpaid bills with the medical providers, impressing on them the need for cooperation to get the case resolved so that everyone gets paid — provider, lawyer, client/patient. Most providers understand and seek to establish goodwill within the personal injury legal community. A selfish provider is unlikely to establish much of a referral practice.
For the past couple of years, there has been a strong movement in the Florida Legislature for mandatory bodily injury (BI) insurance. (UM/UIM has a different dynamic. It is not liability insurance per se, so a person who chooses not to carry it is not viewed as being irresponsible towards others who don’t have a choice.) Unfortunately, the efforts have come up short. With the legislative session having begun on March 5, 2019, they’re back at it again. Let’s hope that the third time is a charm.
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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.
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