Monday July 15, 2013
Rain Stopped Tallahassee’s Fireworks Display, but not the Fireworks within the Insurance Industry
We hope each of you had an enjoyable 4th of July holiday and celebrated the birth of our nation with gratitude for the many blessings that come from living in a great country and being able to spend wonderful times with friends and family. Another of those blessings is the ability of a people, a state, to be self-directed and make well thought out decisions on what’s best for them. An outstanding example of tremendous decision making took place on June 11, 2013, when State Farm insurance agent Mike Hill was voted into office to become a member of the House of Representatives in a special election held after the passing of Rep. Clay Ford. Hill has been pegged in some circles as a future leader and possible speaker. More info on Mike Hill’s election HERE. On the federal level, a signal of more self-direction for Florida came with the federal government’s announcement on July 2 that it will delay implementation of certain portions of federal health care reform (PPACA). Senate President Don Gaetz said the next day in an email to Senate members that the announcement sent a refreshing message that the Administration now appears more amenable to discussions concerning flexibility regarding federal health care reform. He also informed Senators of two recent letters he sent to Florida’s Congressional Delegation and DHHS Secretary Kathleen Sebelius about the need for true federal and state partnerships in bringing about health care reform as well as more flexibility in connection with Medicaid expansion. Gaetz also noted that, depending on the response to his letters, the Senate may again take up deliberations on Medicaid expansion as early as this fall when committees are scheduled to begin meeting. In light of the above, we are pleased to lead this Summertime Spotlight Series newsletter with our second and final installment of important information for Florida businesses about federal health care reform.
FL Health Choices CEO and Guest Author Rose Naff Returns to the Spotlight
In her second appearance in the “Summertime Spotlight”, Florida Health Choices CEO and guest author Rose Naff presents the final segment of her exclusive two part series on providing Florida businesses with important information regarding federal health care reform. But first, we are excited to share that Florida Health Choices (FHC) recently launched a new web-based system which serves as a health insurance “compass” for small business owners. While some businesses across the state are finding it difficult to make decisions in the changing health care landscape, Florida Health Choices has stepped up to provide assistance by making available the “Pathfinder Compass.” The Pathfinder Compass walks users through a series of questions that help determine eligibility and available options for small business owners shopping for health insurance. Although presently focused on businesses, FHC plans to expand the compass in the future to help individuals navigate the complexities of the insurance market. The new digital tool is designed to assist small business owners who may be “lost” while searching for health care plans for their employees and need guidance concerning the best options for their business. The “Pathfinder Compass” is one more way that Florida Health Choices is helping Floridians prepare for federal health care reform. As highlighted in her first installment, Ms. Naff says the opportunity for information gathering and decision-making is now, before the first open enrollment period begins October 1, 2013, when the federal government kicks off an insurance exchange for businesses and individuals in Florida. Please visit www.myfloridachoices.org in order to try out the “Pathfinder Compass” or obtain additional information. What follows is Ms. Naff’s final installment regarding health care reform.
Is Florida ready for health care reform?
In the last issue, we focused on Small Business Tax Credits and the small businesses that may qualify for them. With the recent announcement by the federal government that penalties will not be assessed against large employers in 2014, we are going to shift our attention to future health insurance rates.
Part Two: Health Insurance Rates
During the 2013 session of the Florida Legislature, an industry group reported on health care reform’s estimated impact on health insurance rates in Florida. The estimated rate impact was established by actuaries and based on individual and small group plans offered in Florida today. It was reported that six contributors will have the greatest impact on health insurance premiums and they were:
* Medical cost trends
* Guarantee Issue
* Age Rating Restrictions
* Essential Health Benefits
* Actuarial Valuation
* Taxes and Fees
Each contributor was assigned an actuarial value that would increase or decrease premiums and a net impact calculated. There are positive and negative rate impacts which vary but, in general, the young and healthy are expected to incur higher premium increases than older individuals. The increases will likely be most evident in the individual insurance market but small employers are likely to see increases as well. Ultimately, the industry report predicted a 21-year old male with individual health care coverage can expect premiums to rise as much as 83%, while a 60-year old male with the same coverage can expect to see premiums increase by 59%. This report also pegged the estimated small group rate increase at 59% in 2014. Again, these are just early actuarial estimates but the insurance industry will begin submitting new rates this summer for plans and benefits that comply with health care reform and will be effective January 1, 2014 and beyond. By September of this year, the true impact should become evident. It is not too early to begin preparing for health care changes on the horizon.
Our author, Rose Naff, currently serves as CEO of Florida Health Choices, Inc. and is building Florida’s first Health Insurance Marketplace. When launched later this year, the Marketplace will serve Florida’s small businesses that do not qualify for government subsidies. Go to www.myfloridachoices.org to learn more or to tryout the on-line calculator for small business.
Major Legal Landscape Shift for Examinations under Oath
A number of recent major court decisions may have signaled the end of insurers’ ability to require Examinations under Oath (EUO). In the past, several of Florida’s district courts of appeal (DCA) clearly established case law by concluding that the failure of an insured to appear for an EUO prior to filing suit to recover an unpaid claim was a material breach of contract, requiring forfeiture of coverage. However, on June 27 the Florida Supreme Court ruled in a PIP case that GEICO could not require an insured to submit to an EUO as a requirement for receiving PIP benefits. In the Court’s 5-2 ruling it found that requiring an EUO was “unreasonable and unnecessary” and contravened the purpose of the PIP law which the Court said is to swiftly provide benefits. In another case, the Supreme Court recently agreed to hear an appeal filed by the Florida Insurance Guaranty Association (FIGA) where the Fifth District Court of Appeal reversed a trial court’s order stating that due to an insured’s failure to submit to an EUO, they gave up their rights under the contract honing in on the fact that there was no prejudice to FIGA. The case is the Florida Insurance Guaranty Association v. Whistler’s Park, Inc. and it’s an important case to watch because it concerns a commercial insured property damage claim whereas the more recent EUO appellate cases involve PIP claims. The case also involves the rights of Florida’s Property & Casualty Guarantee Association that some believe were clearly prejudiced by a claimant’s failure to appear for a EUO. Many believe the 5th DCA’s decision in Whistler’s Park was based on their recent opinion in the PIP case, State Farm v. Curran where the DCA reversed well established Florida case law which said that an EUO was a condition required for coverage under a policy. In the Curran case, the DCA concluded that the insured breached the insurance contract by failing to attend two scheduled compulsory medical examinations [“CME”] and by filing suit before complying with the CME provision in the contract, but that the breach did not defeat coverage because the insurer was not prejudiced by the breach. The DCA’s opinion in the Curran case is also on appeal to the Supreme Court and the high court heard oral argument on October 2, 2012. In all likelihood the Supreme Court will issue an opinion first in the Curran case and then issue a conforming opinion in Whistler’s Park. We will keep you apprised of important developments in these critical cases.
Compliance Reminder: Countersignature in Property & Casualty Remains a Requirement
Over the past few years the Department of Financial Services has continued to receive questions from members of the industry regarding whether the Insurance Code currently requires agent countersignature on property and casualty policies. These questions have been prompted by memory of a lawsuit against the state in 2003 in which many believe the federal court found Florida’s countersignature requirement in violation of the U.S. Constitution. The 2003 federal suit was brought by the Council of Agents & Brokers wherein the Council took issue with Florida’s countersignature statute as well as, among other things, the strict residency requirement in order to obtain a Florida surplus lines agent license. At the time the suit was initiated, only a bona fide resident of the state could qualify for a surplus lines agent license and the licensing statutes made no allowance for the issuance of a non-resident surplus lines agent license. Also at that point in time, the Insurance Code only allowed a Florida resident property and casualty agent to countersign policies. That meant that insurers and Florida licensed non-resident general lines agents had to make certain that at the time of issuance, policies were countersigned by a licensed resident agent. In November 2003 the United States Federal Court in Tallahassee issued an order finding various provisions of the Code pertaining to countersignature and non-resident licensure to be unconstitutional. As a result, during the 2004 legislative session the insurance code was amended and while current law (see s. 624.425) continues to require agent countersignature on property and casualty policies and general surety bonds, the statute simply allows countersignature by any Florida licensed (resident or non-resident) agent who is properly appointed to represent the insurer issuing the policy. As noted earlier, there are a few (currently five) exceptions to Florida’s countersignature law and we recommend that you review s. 624.426 if you wish to learn more about the limited exceptions. During the same session noted above, the surplus lines law was also amended to provide for the establishment of a non-resident surplus lines agent license. The eligibility requirements to obtain this license were made identical to those for obtaining the resident surplus lines license. Please email us if you have questions as we would be glad to help with answers.
Eye on The Legislature-House Speaker Weatherford Makes Announcement
This past Monday House of Representatives Speaker Will Weatherford notified the entire House membership by letter of upcoming changes in committee membership he will initiate next month. In his letter, however, the Speaker telegraphed to members not to expect a major overhaul of current committee assignments. The Speaker’s letter states in part, “While it is not my intention to make significant changes to committee membership and structure, the rules allow for midterm adjustments. I will send a memo in early August informing you of committee changes. Caps on the size of each committee, the partisan balance of committees, and the meeting block times will most likely remain the same for all committees and subcommittees.” As we referenced above, all eyes are waiting to see what committee assignments Speaker Weatherford will make for newly elected northwest Florida legislator Rep. Mike Hill. Congratulations Mike!
DFS’s Workers Comp Division Provides Drug Repackaging FAQs
According to DFS’s Division of Workers’ Compensation, it has received a significant number of inquiries about the implementation of this past session’s SB 662 which contained amendments to ss. 440.13(12), Florida Statutes, concerning reimbursement rates for repackaged prescription medications dispensed inside physicians’ offices. In order answer questions about the law changes that were effective July 1, the Division has created and posted a set of Frequently Asked Questions (FAQs). The division is also considering whether revisions to administrative rules will be necessary and may hold a rule workshop in the near future. Should a workshop be set, we will notify you of the date, time and location. Please click on FAQs for more information.
Federal Healthcare Navigators Must Register With DFS
The following was provided by DFS in its most recent Insurance Insights publication. The 2013 Florida Legislature passed legislation, signed by the Governor on May 31,2013, regarding the registering and regulation of the “navigator” position created by federal health care reform. Beginning August 1, 2013, the law requires individuals acting as a “navigator” under Patient Protection and Affordable Care Act (PPACA) to be registered with the Department. To be registered as a navigator, an individual must certify completion of federally-required training, submit fingerprints for a criminal background check, and pay a $50 application fee.
A navigator will be prohibited from:
•Soliciting, negotiating, or selling health insurance;
•Recommending the purchase of a particular health plan or represent that one health plan is preferable over any other;
•Recommending or assisting with the cancellation of insurance coverage purchased outside the Exchange;
•Receiving compensation or anything of value from an insurer, health plan, business, or consumer in connection with performing activities as a navigator, other than from the Exchange or an entity or individual who has received a navigator grant under the PPACA.
If a licensed agent acts in the capacity of a navigator, they would be prohibited from receiving compensation or anything of value from an insurer, health plan, business, or consumer in connection with performing activities as a navigator.
For more information about navigators visit DFS’s web site at: www.MyFloridaCFO.com/Division/Agents/Industry/News/Navigators.htm
Law Changes (SB 1792) To Improve Med Mal Legal Climate Already Under Attack in State and Federal Courts
SB 1792 sponsored by the Senate Judiciary Committee and signed in to law on June 5 by Governor Rick Scott is under legal challenge in state and federal courts from Pensacola to Miami. Attorneys in Pensacola and Fort Lauderdale have filed state court challenges while other attorneys in Tallahassee, Palm Beach Gardens and Coral Gables have filed actions in federal court. The lawsuits take issue with the constitutionality of “ex parte communications” made possible by SB 1792. The court actions assert that the new law violates the Florida Constitution that supposedly guarantees the right to privacy. The cases also attempt to establish that the new law is in violation of the federal Health Insurance Portability and Accountability Act (HIPAA). In medical negligence cases, ex parte communications are exclusive conversations between defense attorneys for a prior treating physician who is being sued and a patient’s current treating doctor without the patient’s attorney or the patient themselves being present. Those taking issue with the new law believe that when a patient’s representative is not present, protected and highly confidential medical information may be disclosed, even if the information has no bearing on the pending suit or would be unduly embarrassing to the patient. Opponents also raise concerns that by allowing ex parte communications to occur, medical malpractice insurers privy to sensitive information gained during such communications might use the information to dissuade a physician from testifying in a negligence case or the patient from filing an action to begin with. They say that such communications could also lead to patients intentionally withholding important information from their current treating physician that could lead to ineffective treatments being recommended. When SB 1792 was passed by the Legislature the general view by leaders in the medical community was that it would create a much more fair legal system where the rights of patients and health care providers were both protected. Business leaders commented that the bill would create a much more stable, business-friendly legal climate and make the state more attractive in which to do business. With these legal challenges pending the fate of the new law is certainly unknown, however, we will watch closely and keeps you updated on important developments.
Policy & Claims Working Group to Hold Workshops Later This Week
On Wednesday and Thursday of this week the Consumer Advocate (ICA) along with members of the Homeowners’ Policy & Claims Bill of Rights Working Group will hold two all-day workshops in Tallahassee to review and discuss a number of claims-related issues which were previously raised during consumer forums held around the state. The following list of issues will be addressed by the working group:
•Adjusting & Investigating the Claim – Examinations under Oath
•Post-Claim Underwriting & Material Misrepresentation on the Application
•Solicitation of Consumers within 48 – 72 Hours of a Loss and Policyholders’ Requirement to Mitigate Damages
•Assignment of Claims and Unauthorized Adjusting of Claims
•Insurers’ Right to Repair – Safeguards and Warranties for Consumers
•Non-Renewal of Policies – Post-Claim but Prior to Repairs
•Mortgage Company Withholding of Funds for Repairs for Loans in Arrears and Guarantee 100% Replacement Cost
•Mediation and Appraisal
•Other Issues Identified by the Working Group
The workshops will be held in the Florida House of Representatives, Committee Room 404, House Office Building on Wednesday, July 17 from 10 a.m. to 5:00 p.m., and Thursday, July 18 from 9:00 a.m. to 5:00 p.m. The workshops will also be televised on the Florida Channel WFSU at http://thefloridachannel.org/ . In addition, there will be two follow-up conference calls, one on Tuesday, July 30 and Monday, August 12. We will be keeping close tabs on the working group’s activities for you and will let you know about any important developments. Of particular interest will be the working group’s final report to be issued later where it will make recommendations for possible legislation or administrative rules. Stay tuned.
Road Tested, Frank, and Focused
Many of you travel daily to visit your policyholders in your role as agents, claims adjusters, insurance company vendors, and we all know we learn more when we are in the field, listening. One of our firm’s hallmarks is to come to see you, to share in your experiences and challenges and to, if nothing else, provide encouragement as you do all you can to keep your promises to your policyholders. This past week, we had the pleasure of hosting a roundtable discussion with a talented group of claims professionals with Insurance Fraud Division Director Dan Anderson. Dan, former New York DEA leader, passionately encouraged those in the room to constantly work to outsmart those who are finding ways to dupe the insurance claims handling system – those that file inflated claims or threaten lawsuits or those who force policyholders to sign documents that have unintended consequences for the claimant and the insurance company. During that meeting, an email popped into my blackberry with a link to http://getfreeroofs.com/ and immediately, Director Anderson has asked for further investigation. While the “bad actors” are out there, we can continue our pursuits but we need your help in doing that. Please continue to send us the websites, solicitation material and stories that keep us focused on what is really happening, day to day.
We are all in this together! My best and thanks for all you do! Lisa
