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PIP - What’s at stake?

Scheduled to expire on October 1, the clock is ticking for Florida’s no-fault auto insurance law, the legislation that requires motorists to have personal injury protection (PIP). While the system is far from perfect, allowing it to sunset will do a great disservice to Florida’s consumers.

Because PIP is the only form of health insurance that many lower income Floridians have, eliminating it as a requirement would place them in serious danger of being without access to health care.

Such a scenario would lead to a spike in emergency room visits as Floridians without insurance, and now without PIP, would have no place else to turn after an auto accident, even if their injuries were minor. Similarly, if sued by a fellow motorist, uninsured drivers would face costly legal expenses that would otherwise be covered by PIP.

Insured motorists would also be negatively affected by the elimination of PIP requirements. Insured drivers would often be required to turn to lengthy and potentially costly litigation to recover damages from accidents involving an uninsured motorist. In such litigation, regardless of which party wins and which loses, payment for medical service is delayed and, often, in the case of the losing party, never paid.

What’s more, to cover costs from accidents caused by uninsured drivers, auto insurance companies would almost undoubtedly raise rates. Similar price shifts would occur in the cost of health care as premiums rise to accommodate provider losses from caring for uninsured motorists.

PIP is damaged, not totaled.

Our state’s no-fault auto insurance law is in need of reform, but the stakes are too high to leave Florida without it while the legislature starts from scratch. Rather than scrapping the requirement, careful analysis and improvements are needed.

That’s why the Consumer Federation of the Southeast has formed a coalition with the Florida Consumer Action Network and other state consumer groups to promote a policy package that would make Florida a model for PIP reform.

A white paper, currently under development by the Coalition Against Insurance Fraud, with which the Consumer Federation of the Southeast works closely, will present policy recommendations with specific attention paid to the issue of insurance fraud. By working with experts from all pertinent parties, a set of common sense reforms that make our state’s auto insurance laws best serve Florida’s motorists will emerge.

Where do we go from here?

Upon a full analysis by the Coalition Against Insurance Fraud, consumer groups will present a policy white paper to House and Senate leadership and strongly urge them to incorporate the recommendations into a comprehensive model auto insurance reform package.

Santa takes sides with consumer groups
in phone rate battle

--Elves deliver lumps of coal to lawmakers who supported the largest phone rate hike in Florida history--

TALLAHASSEE – Better watch out lawmakers! Florida consumer groups including the Consumer Federation of the Southeast and the Florida Consumer Action Network have made a list, checked it twice and determined who was naughty or nice on the phone rate issue. Their message to lawmakers this holiday season: We know who our friends and our foes are and we'll continue to keep the pressure on until this issue is revisited and made right.

"The rate increases are the ultimate in grinch behavior," said FCAN Executive Director Bill Newton. "They're costing consumers upwards of $500,000 a day with no end in sight. That won't help anyone's holiday shopping and it won't help legislators on election day if we have our way."

Slated to receive lumps of coal in their stockings – 120 legislators who voted for the phone rate increases that went into effect on November 1. The 32 lawmakers who voted against the legislation will receive stockings filled with candy and other goodies, encouraging them to continue their good work on behalf of consumers in the New Year.

The over $344 million annual rate hike was approved two years ago by the Public Service Commission after the state's major phone providers successfully pushed through a rewrite of the state's phone regulations. After implementing the initial increases, companies will be free to automatically raise rates up to 20 percent a year every year. Under the new law, the Public Service Commission also will lose authority to regulate the telephone companies' quality of service once the initial increases are imposed.

"We want lawmakers to know that we aren't going to let them off the hook on this one," said Walter Dartland, executive director of the Consumer Federation of the Southeast and state chair of Common Cause Florida. “They'll have another chance to make it right before the election rolls around and we're going to do everything we can to keep the pressure on to make sure they're motivated to turn that coal into a diamond next session by repealing future rate increases and restoring regulatory oversight.”

TALLAHASSEE -- Move over Halloween. The scariest day of the year in Florida is actually November 1, when consumers will be hit with the biggest monster phone increase in state history. That's the message of a coalition of some of Florida's leading consumer advocates.

"We call this 'Nightmare on Phone Street,'" said Walter Dartland, executive director of the Consumer Federation of the Southeast and state chair of Common Cause Florida. "This is a wake up call to Florida consumers that unless we remain vigilant, the sequels could be much worse than the original."

The over $344 million annual rate hike was approved two years ago by the Public Service Commission after the state's major phone providers successfully pushed through a rewrite of the state's phone regulations. AARP, the Office of Public Counsel, and Attorney General Charlie Crist challenged the increase all the way to the Florida Supreme Court, but the rates were ultimately upheld.

It's estimated that the rate hikes will cost Florida consumers up to $500,000 per day. Depending on the provider, individual monthly bills will increase up to $2.25 a month in each the next three to four years, reaching a cumulative total of more than $6.86 a month for Sprint, the company with the largest increase. Even scarier, according the Bentley Lipscomb, state director of AARP Florida, is that the companies will be free to automatically raise rates up to 20 percent a year every year after implementing the $344 million in increases. Worse yet, under the new law the Public Service Commission will lose authority to regulate the telephone companies' quality of service once the initial increases are imposed.

"This is no laughing matter to the millions of seniors in our state who live on fixed incomes," said Lipscomb. "A dollar or two the first year and almost $7 at the end of three years might not seem like much, but to seniors who have already been hit with higher gas, utility and insurance rates due to the hurricanes, it's like standing in five feet of rising water. A little bit more and they'll drown."

Lipscomb said older Floridians on fixed incomes are getting slammed by increasing costs that they are powerless to do anything about. Medicare is going up--Part A and Part B cost an additional $10.30 a month. Prescription costs for the top 195 brand-name drugs most often used by older Floridians have increased 6.6 percent, an additional $4.25 a month. Hurricane-related utility rate increases will add another $1.68 to $3.80 a month. Gasoline rates have gone from $1.62 a gallon to more than $2.70 a gallon, adding another $50 a month. Total it up, and seniors are looking at increases of more than $69 a month.

Tamecka Pierce, state chair of the Association of Community Organizations for Reform Now (ACORN), which represents low and moderate income families, echoes AARP's concerns, saying families who are already struggling to make ends meet don't have additional resources to tap into to pay for rising utility, medical and fuel costs.

"Hurricane Katrina shamed the nation by putting us face to face with the tragic consequences of policy decisions that fail to consider the needs of the poor and downtrodden in our society," said Pierce. "This is just one more example of how out of touch our legislators and regulators are with the realities of the struggles of everyday people."

Phone companies say the increases are needed because the cost of providing service is significantly overshadowed by the amount they can charge for service, something they say discourages competition. Lipscomb calls that argument laughable.

"This isn't about encouraging more competition," said Lipscomb. "This is a blatant move to dramatically increase residential basic local service rates in order to greatly reduce large business customers' long distance rates."

AARP and other consumer groups vowed to work to repeal the provision in the law that allows phone companies to continue to raise rates after the so-called rate-rebalancing is accomplished and that eliminates the PSC's quality of service authority.

Dartland said that in addition to repealing the future rate hikes, the groups will work to reform the Public Service Commission by pushing for stricter ethical standards similar to those required of Florida judges. He says that will protect the public from predatory utility practices that put profits before people.

"It's time to stop corporate interests from hijacking the regulatory process and engineering sweet deals that fail to protect the public interest," said Dartland. "Florida consumers can't continue to let their voices be drowned out by big money politics. We need to become the worst nightmare next November for policymakers who have allowed the process to be co-opted by special interests."

--Saying Verizon’s history shows the company targets the rich neighborhoods at the public’s expense, advocates urge cities and counties to closely scrutinize the company’s plans as its seeks franchise agreements in the Bay area--

TAMPA – A coalition led by America’s top consumer advocate took direct aim Wednesday at telecommunications giant Verizon for “anti-consumer actions” in Florida and elsewhere. The advocates warned that Verizon’s pending plans to win local governments’ approval to provide video service in the region must be weighed against the company’s history of putting its corporate profits ahead of the public interest.

Walter Dartland, executive director of the Consumer Federation of the Southeast, said that while Verizon says its entry into the television services market could offer consumers greater choices and competition, its track record in other states suggests that’s only true – if you happen to live in an affluent area. Companies like Verizon, he said, try to circumvent local and state requirements governing other service providers so they can carve out service areas in the most-wealthy neighborhoods.

“Targeting neighborhoods based on economics is a discriminatory practice that lets companies avoid selling services in lower-income areas. This means only the rich will enjoy the benefits of competition,” said Dartland, who was recently named “Consumer Advocate of the Year” by the Consumer Federation of America. “Verizon has been evasive about its plans to expand to other parts of the community, and given its history, we have every reason to be wary.”

In Manatee, county officials are still waiting for required information about Verizon’s plans to build out, and Sarasota County is having similar trouble getting assurances that the company plans to offer service to all customers. The documents filed contain no specifics about the build-out plan, and no timeline for doing so.

Dartland said Mike Twomey of Florida Utility Watch Inc., who represented consumers in the Verizon rate case before the Public Service Commission, has blasted Verizon for leading the charge for passing the unprecedented $355.5 million annual increase in local phone rates in 2003. According to estimates, Verizon’s “land-line” customers will see their rates increase by $54 to $60 a year per household – and those rates can keep increasing up to 20 percent a year without having to seek any regulatory approval.

“Even as the Florida Supreme Court is reviewing the legality of that blatantly anti-consumer law, Verizon is trying to fly under the radar with similar tactics in our own backyard,” said Dartland. “If we couldn’t trust them with our phone rates, how can we trust them to do the right thing now in an area of service for which they have no track record to speak of?"

Verizon is on record in neighboring counties saying it should be treated differently than other service providers because the market is changing. But consumer advocates say the only way to ensure that everyone enjoys the benefit of emerging technology is to require all providers to play by the same rules just as state law requires.

“Franchise agreements exist for a good reason: To make sure the public interest is served,” said Bill Newton, executive director of the Tampa-based FCAN. “These agreements ensure that services are offered not just to those who can most afford them, but also to those who can least afford them.”

Existing local franchise contracts vary from place to place, Newton said, but most require that companies serve the entire community. The advocates said they believe all competitors should meet the public’s expected social obligation to serve the public interest by making services affordable to seniors and low-income residents and requiring all parties to offer non-discriminatory access.

“In my community, we’ve seen these kinds of business tactics before. We’ve seen it in banking and lending. We’ve seen it in the real-estate development. We have a word for it: Redlining,” said community activist Trenia Byrd Cox. “And redlining means minorities aren’t offered the same products, services and opportunities as other people.”

Verizon’s business plan for Florida mirrors its plans in other states. In New Jersey and Massachusetts, roll-out plans are in overwhelmingly white, well-off suburbs and cities. In California, Verizon is trying to pass a measure that would allow it to offer video service over its fiber-optic network without having to secure a local franchise contract, thereby trampling on local governments’ traditional role in regulating such service. And in Texas, the company launched a failed effort to circumvent local governments by enacting a “statewide” franchise agreement.

“We’re here today to urge city and county officials not to believe promises of lower prices and ‘eventual’ services for all,” said Dartland, noting that if that were really true, Verizon wouldn’t try to sneak in opt-out clauses that let it leave the market if profit goals aren’t met within a certain time period. “Don’t rush into agreements with phone companies that do more to protect profits than public interest.”

The advocates stressed that they believe competition is best for consumers, and they fully support informed efforts to increase competition, especially since consumers have too few choices because of the concentrated ownership of cable companies.

“Bottom line is, Verizon has a history that shows they say one thing and do another,” said Dartland. “Verizon is fighting at every turn to dismantle existing franchise agreements that govern how companies operate. We simply can’t rely on the word of a company that endangered the limited budgets of seniors and low-income residents in order to inflate its own profits.”