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8684 CONGRESSIONAL RECORD - SENATE March 30, 1976

Eleventh. Fees for claimant's attor- victim requests otherwise or unless a We have taken the case of the above pa-
ney.-The 1974 bill required restoration State no-fault plan in accordance with tient(s) on a contingent basis, pending de-
obligors to pay a reasonable attorneys fee national standards provides otherwise; termination as to whether or not the cost of
reasonable medical care of the patient will
whenever a claimant retains an attorney the obligation of the restoration obligor exceed the $500 minimum threshold limit.
if the restoration obligor thereafter pays and that of the victim/survivor are The $500 threshold minimum, arbitrarily
disputed no-fault benefits to the victim placed on the same basis. put on the right to sue by the New York
or if a lawsuit is commenced for such Sixteenth. Technical, stylistic, and State Legislature, applies to a combined ex-
benefits, unless the court finds that the conforming changes have also been pense of hospital care, x-rays, reasonable
claim or any significant part of the claim made. charges for services of the general practi-
is "fraudulent or so excessive as to have As the debate on this measure prog- tioner, orthopedic surgeon, neurologist, or
no reasonable foundation." The provision any other specialists the general practitioner
resses. I hope my colleagues will care- or other doctors treating the patient, deem
has been severely criticized because it fully review the arguments pro and con reasonable and necessary under the circum-
would require insurance companies to on this bill. If they do, I am confident stances for the cure of the injuries of the
pay claimants' attorneys' fees in cases in that the Senate will pass this measure by patient . . . it also includes dental bills re-
which the courts decide against the an overwhelming margin. lated to the accident.
claimants on the merits of their claims. LAWYERS AND NO-FAULT: NEW YORK AS Since the patient(s) would not be able to
The section has been modified in the A CASE STUDY recover for pain and suffering beyond the
1975 bill to require the payment of at- actual out-of-pocket expenses of his medical
Mr. President, in the last few years, care, unless the medical care exceeds $500,
torneys' fees only when a claimant re- as Congress and the various States have may we strongly ask you to constantly con-
covers, but the court is authorized to debated the no-fault issue, the trial bar sider and remain aware of the fact that the
award such fees in other cases in its dis- in this country has been extremely vocal medical care given will be promptly paid by
cretion in the interests of justice. The in its opposition to any kind of auto- the insurance carrier upon the presentation
amount of the fee awarded is to include mobile insurance reform which limits a of your bills. Would you also send the pa-
an amount for the "risk" to attorneys person's right to sue but guarantees his tient(s) for x-rays, hospital care, diagnostic
that courts will not award fees in some right to recover. When the legislation tests for treatment, orthopedic, neurological
cases where claimants lose. or other specialist consultations to aide in
was first being considered in Congress, treating the patient(s). These other medical
Twelfth. Implementing compulsory the trial bar said that reform should costs will also be promptly paid, should the
insurance.-There was never any inten- proceed on a State-by-State basis. Then severity and seriousness of the injuries war-
tion to have S. 354 set any national at the State level the trial bar did rant your utilization of all or some of the
standards with respect to the manner in everything they could to prevent the pas- other medical care and consultants, etc.
which or the method by which a State sage of no-fault or weaken the lawsuit You will be aiding the patient(s) in not
may choose to implement and admin- restrictions in State laws to such an ex- only giving them the best and complete
ister the requirement of compulsory available medical care the insurance policy
tent that the plans were almost doomed can buy but you will also be aiding the pa-
motor vehicle insurance. Nevertheless, to failure. tients in assuring them that they will have
the 1974 bill did include a provision Now the trial bar is arguing against their day in court when they can sue for
(section 104(d) (Obligations upon Ter- the passage of a national no-fault bill pain and suffering resulting from medical
mination of Security)) which could have on the basis that no-fault has failed at injuries.
been interpreted to restrict a State in the State level. The trial bar is point- As a courtesy to you and your patient(s)
this regard. This subsection was not in- ing to several newspaper articles that ap- we will process your claim for medical bills,
cluded in the 1975 bill. peared 3 or 4 months ago which said that as they become due, without charge, should
Thirteenth. Inflation adjustment.- we accept the patient(s) liability case if the
no-fault in the State of New York and total medical bills for the patient(s) exceed
The 1974 bill provided for benefit level in the State of Florida was less than $500.00.
adjustments for the effect of inflation ideal. We have prepared an Authorization for
with respect to limits on work loss bene- Those of us who have been working on Payment, Under No-Fault Auto Insurance
fits. Since inflation can affect other cate- automobile insurance reform for a num- form and enclose a copy for your records.
gories of loss as well as work loss, the ber of years are not surprised that States Please note that we have acknowledged your
provision has been expanded to cover all like New York and Florida are having lien and will send for the amount due to you
no-fault benefits and placed in the sec- problems with their no-fault insurance as your bills are submitted or preferably
tion on miscellaneous provisions. near the end of treatment. We will remit the
system. But until recently I had no idea balance owing to you as soon as received, all
Fourteenth. Overlap between no-fault of how responsible the legal profession without charge to you.
motor vehicle insurance and workmen's in this country might be for the failure Again, please don't hesitate to refer the
compensation insurance.-The 1975 bill of no-fault in New York and in Florida. patient for further work-up or care on con-
adds a new provision (section 103(16) The following letter illustrates how sultations, if necessary. We will collect the
(C)) to prevent overlap between: first, the trial bar has attempted to circum- insurance monies for this additional care for
State no-fault plans for injuries arising vent State no-fault plans and goes a long the doctors and hospitals, etc., all without
out of the maintenance or use of a motor way toward explaining why no-fault at charge if the combined medical care exceeds
vehicle; and second, State workmen's $500 and we pursue the legal action further.
the State level, weak to begin with, has
compensation laws for injuries arising We hope that the information contained
been made much weaker. To my mind in this letter is enlightening and will guide
out of and in the course of employment. the disregard for the intent of the law you in treating auto liability claims under
An employee injured in the course of his evidenced in the following correspond- the new "No-Fault" law. In effect, it is a
or her employment in a motor vehicle ac- ence borders on the unethical: guaranteed medical payment plan for the
cident would continue to be compensated DEAR DOCTOR: We are the attorneys for the medical profession built into every auto lia-
under the applicable State workmen's above patient(s) who came under your care bility policy. Other than payment of med-
compensation law rather than under the for injuries sustained in an auto accident ical bills, the patient generally receives no
applicable no-fault plan. after the new "No-Fault" Auto Insurance benefit under the new law unless and until
Fifteenth. Direct payment to sup- law became effective February 1, 1974. his combined cost of medical care exceeds
pliers.-The 1974 bill provided that res- Under the "No-Fault" law, a patient is $500.00.
toration obligors could make direct pay- entitled to medical and dental care benefits Of course, we, as attorneys, can only bene-
up to a $50,000 limit for each accident. This fit the patient when and if his individual
ment to suppliers and providers of allow- is in effect a mandatory medical payments case exceeds $500.00 when we will accept the
able expense products, services, or ac- benefit to the patient now written into every case. You can now readily see why we will
commodations or they could reimburse auto insurance policy involving an auto acci- collect your medical bills for you if we accept
the victims for these expenses. In order dent. The medical bills would be paid the case. Since we expect to make a fee from
to expedite the receipt of payment by promptly ... so the insurance industry told the patient's claim when successful in his
hospitals, emergency medical services the public! auto liability claim, as a courtesy to him and
providers, doctors, and rehabilitation In exchange for this full medical benefit, to you, we will process his claim for medical
clinics, and for the convenience of per.- the new No-Fault law took away a person's bills as we have done in the past.
right to sue in substantially all auto acci- Realizing that there may be confusion in
sons covered by no-fault insurance, the dent cases unless the patient's total bill for the interpretation of the new law, please
1975 bill provides for direct payment to hospital and medical care combined, exceeded call us from time to time if you have any
such suppliers and providers unless the $500. questions. We would be glad to explain it
March 30, 1976 CONGRESSIONAL RECORD - SENATE 8685
to you over the phone, or in person, at your never saw the car. He knew nothing about tributing by their practices to greatly in-
convenience. the rental agreement. creased insurance premiums in Dade County
Awaiting your preliminary report on the In the same case, the attorney presented and to a further erosion in the public's
injuries sustained, we are, to the insurance company a $700 bill and one confidence in the Bar. They are known in
Sincerely yours, and a half page report of a physician who their professions, but neither the Bar and
PoPs & ESTRIN, P.C.., claimed to have treated and examined the its ultimate governing body, the Supreme
BY PAUL R. POP, MELVYN J. ESTRIN. client. The client did not know the doctor Court of Florida, nor the Medical Boards
and had never met or spoken with the doc- have taken effective action to oust these
At my direction, the attorneys who tor. This is an extreme case. The more typical people from the practice of law or medicine.
appear on the letter were contacted by practice is described as follows: To eliminate or at least make inroads on
phone and asked whether the letter was The runner for a lawyer will contact a per- this practice, we recommend the following:
authentic and whether it had been sent. son involved in an auto accident. The person
1. Local attorneys and the Judiciary
Melvyn Estrin acknowledged that the will have little or no injuries. He would not
have otherwise contacted an attorney. The should attempt to control this practice of
letter had been sent, but stated that person contacted will usually be in a low in- their own members by establishment of
"certain corrections" were recently made come group and unsophisticated about legal Rules of Court similar to those adopted by
at the direction of the judicial confer- or business matters. He will, of course, also the Appellate Division of the First Judicial
ence. He would not specify which cor- have to have a little larceny in his heart. Department of the Supreme Court of New
York, copies of which are attached to this
rections were made and would not sup- The runner will advise the prospective
report. This Rule of Court requires every at-
ply any further information. client that he stands to make a few thou-
torney who enters into a contingent fee ar-
Under S. 354 this kind of conduct can- sand dollars if he signed with lawyer "X" and
does what the lawyer tells him to do. rangement with his client to file a written
not take place. We recognize, again and The client signs. The runner sends him to statement of the agreement with the main
again, how the letter said: a doctor who is usually the same doctor the office of the Courts of the City of New York.
We have to get over $500 or you don't get lawyer uses for his other clients. The client The statement must contain the following
anything. Doctor, run the bill up to $500. will oftentimes not otherwise have even seen information:
Send him out for further examinations. Con- a doctor following the accident which is a. Date of agreement.
sult, do whatever you need, but get it over maybe just a minor fender bender. The law- b. Terms of compensation.
$500, because that is the threshold. yer and doctor then tell the client he will c. Name and address of client.
have to enter the hospital and take some d. Date and place of accident or other oc-
The threshold is where the lawyers be- time off from work. Hospitalization isn't nec- currence on which the case is based.
gin to get their cut in the so-called no- essary, but the lawyer needs to show expenses e. Name, address, .occupation and relation-
fault law of the State of New York. in excess of the $1000 threshold limit set by ship of person referring the client.
In contrast, under S. 354 it would be F.S. 637.737. Only if expenses exceed this The attorney is then required to file a clos-
very difficult for a lawyer to convince his limit may the client collect for pain and suf- ing statement with the Courts when the case
fering under Florida's "no fault" insurance is closed without recovery or when he re-
client to do nothing for 90 or 180 days ceives any part of the proceeds of the litiga-
in order to get half of the so-called pain law.
Usually the same hospital is used again tion or settlement as his contingent fee. The
and suffering reward that the trial law- closing statement shall contain the following
and again by the same doctor-lawyer com-
yer might be able to squeeze out of the bination. Traction or muscle relaxants may information:
insurance company. I, for one, would not be prescribed to give some basis for hos- a. Name of Plaintiff and defendant.
lay flat on my back for 90 or 180 days in pitalization. b. Information concerning manner in
order to get $500 or $1,000 for myself After discharge from the hospital, the which litigation was concluded.
client will be told to return to the doctor's c. Date of payment by insurance carrier or
and give $500 or $1,000 to my attorney. defendant and date client received payment.
But apparently a number of people are office regularly. The client will rarely see
the doctor, but a nurse will administer d. Gross amount of recovery.
willing to go to doctors for a day or two e. Name and address of insurance carrier
therapy. The therapy may consist simply of
of expensive treatment in order to get sitting in front of a machine which pur- or person making payment.
that $500 or $1,000 for themselves and portedly administers "deep heat" treatment. f. Net amount paid to client and retained
for their attorney under no-fault laws After two or three months of such therapy by attorney.
that exist in New York, Florida, and else- the patient will be discharged. The doctor g. Manner in which compensation was
where. One State that is not having prob- will submit detailed reports to the lawyer. fixed.
At least one doctor submits the same report h. Itemized statement of all expenses such
lems of this sort-a State that the trial
for all such patients to the lawyer with as doctors' and hospital bills paid for the
bar conspicuously ignores as it talks client out of the amount recovered.
whom he does business, with only the name
about the efficacy of no-fault with my of the patient changed. i. Itemized statement of costs incurred
colleagues in the Senate-is the State of The lawyer submits the bills and reports such as expert witness fees for which pay-
Michigan whose plan is almost identical to the insurance company. The insurance ment is made out of the recovery.
to the minimum Federal standards con- company knows something isn't right but These closing statements are confidential
tained in S. 354. it would cost more in legal fees to litigate and are not available for inspection except
Similar chicanery has been practiced the case than to settle for the few thousand by written order of the Presiding Judge. The
dollars usually paid out in these cases. If attorney must also deliver a copy of this
in Florida, according to a grand jury re-
the insurance company pays $3000 in such closing statement to the client and at the
port from the Circuit Court of the 11th same time pay to the client the amount due
a case, the lawyer will get a $1000 fee for
Judicial District, Dade County, Fla. I about an hour's worth of work. The doctor him from the recovery. Receipt by the client
ask unanimous consent that a copy of will receive $700 or so, the hospital a simi- of this money does not foreclose his right
that report be printed in the RECORD at lar sum and the client the balance. to petition the court to have the court in-
this point. It is difficult to prosecute the cases. The vestigate and determine the question of the
There being no objection, the report lawyer simply says that he doesn't know attorney's compensation.
was ordered to be printed in the RECORD, how the client came to his office and he The Court Rule also provides a schedule
was simply relying on what the doctor told of what it considers to be reasonable fees
as follows:
him was necessary for treatment. The doc- in personal injury and wrongful death ac-
[Circuit Court of llth Judicial Circuit, tor will simply say that the client com- tions but if extraordinary circumstances are
Dade County, Fla.] plained of neck pains and he was doing determined to exist, the Court may approve
INVESTIGATION INTO FALSE CLAIMS OF what he thought was medically necessary. fees in excess of the schedule.
LAWYERS AND DOCTORS The client's story is often contradictory and 2. These Rules should be strengthened by
The Grand Jury has heard testimony con- confused as to whether he suffered any pain requiring a representation under oath by
cerning the practice of a small group of law- or injury and the circumstances under the attorney that the expenses incurred were
yers, physicians, osteopaths, chiropractors which he decided to seek the lawyer's necessary and proper to the best of his knowl-
and hospitals who work together to inflate or advice. edge based upon an investigation he person-
outright falsify personal injury claims. We are told the scheme described above ally made. Any doctor receiving payments
In one case which could not be carried for- is far more prevalent in Dade County than from the lawyer or client should be required
ward because of the death of the principal elsewhere around the state. However, of the to file a statement under oath that the treat-
witness, the person involved in the accident 4500 lawyers in Dade County, only a few en- ment he rendered was necessary and proper
had been contacted by a runner for an attor- gage in such practices. We want to stress and that he knows of his own knowledge that
ney. The injured party never saw the attorney this point because these people involved the services for which he billed were per-
and never went to his office. The attorney in these schemes are not typical of the legal formed and that the amount billed is reason-
presented a bill to the insurance company for or medical profession. There are many fine able compensation for those services. The
a rental automobile his client was supposed lawyers and doctors and they are shocked client should be required to state under oath
to have rented while his own car was being by the practices we describe here. But the in the initial statement that he did in fact
repaired. The client never rented the car and people who create these false claims are con- have symptoms from the accident and who
8686 CONGRESSIONAL RECORD - SENATE March 30, 1976
referred him to the attorney. The making of act a no-fault bill that meets certain preemption the initiative of the States to
a false statement should constitute perjury. minimum standards. enact no-fault plans. There are of course,
3. Procedures for disciplining an attorney Mr. President, the report speaks for
or physician who violates this Rule by mis-
numerous precedents for Federal action
representation or failure to disclose should itself. in the area of insurance-flood insur-
be clearly spelled out. The penalty for inten- I urge my colleagues to step up and be ance, crop insurance, and crime insur-
tional misrepresentation or failure to dis- counted on the no-fault issue and not ance come immediately to mind. S. 354
close should be disbarment or removal from hide behind some nonexistent question of permits far less Federal participation
the medical profession. Federal intrusion into State prerogative. than any of these programs.
4. The Rule should also provide for an auto- There are no such intrusions. And with- S. 354 is not a Federal program for
matic review process by the Judiciary to in- out S. 354 the trial bar of this country
sure that fees paid on a contingent basis insurance. It proposes only minimum
are reasonable.
will continue to engage in the kinds of standards. The plans are administered
5. The Florida Bar must give priority in its abuses represented by the letter that I on the State level, and the States would
budget to the discipline of lawyers who vio- have quoted from above and the grand continue to operate their insurance de-
late ethical standards or any law. Dis- jury report submitted for the RECORD. partments and set rates and approve pol-
cipline should be the principle function of In the course of our discussion on this icies. The States are left substantial flex-
the Bar. legislation, we will be able to talk about ibility in fashioning their own plans. Un-
6. The various Medical Boards must es- many of the features. I do not wish to
tablish the same priorities to insure that un- like other Federal programs, S. 354 does
prolong my remarks at this time. I am not set up a large Federal bureaucracy
ethical and dishonest doctors are not per- glad to yield to my colleague from Alaska
mitted to practice in this State. to administer this program, but would
7. The Judiciary must realize that the who I hope has some things to say about leave control in the hands of State offi-
public expects prompt and effective dis- the bill before us. cials.
cipline of lawyers who have abused the posi- The PRESIDING OFFICER. The While the sponsors never envisaged a
tion of trust they hold as officers of the Court. Senator from Alaska is recognized.
Unless the Supreme Court begins to impose large Federal role, some critics argued
strict penalties on erring attorneys, the pub-
Mr. STEVENS. Mr. President, it is time that the earlier versions of S. 354 might
lic's confidence in the Bar will never be that we face the fact that the State-by- have been applied by the Secretary of
restored. State approach to implementing no-fault Transportation in such a way as to result
8. The Legislature should review the No- auto insurance is a failure. in significant Federal Government reg-
Fault Insurance legislation and increase the Too few States have acted, and there is ulation of automobile insurance.
threshold limit which determines when evidence that the rate of enactment is In 1975, I proposed, and the Commit-
monies may be collected for pain and suf- tapering off.
fering. tee on Commerce accepted, an amend-
Most States which have passed no- ment to transfer the all-important au-
Mr. MOSS. Mr. President, first, I want fault laws have enacted plans that are thority to determine whether a State
to point out that this Michigan legisla- woefully deficient. Most State plans do no-fault law is "in accordance with na-
tion is a genuine no-fault law with not provide unlimited medical benefits on tional standards" from the U.S. Depart-
a strong threshold, a strong restriction a first-party basis, and make extremely ment of Transportation to an independ-
on tort lawsuits for pain and suffering. weak limitations on lawsuits. Many States ent review board. The review board will
But there are exceptions to this restric- also have mandated unfounded rate cuts, be permanently dominated by members
tion. There are cases of real pain and which have produced underwriting losses responsive to State governments. It
suffering. among the insurance companies, and would be composed of five members, four
If his pain and suffering causes his which are partially responsible for recent of whom must be named from lists of
disability, total disability, for 90 days or rate increases. qualified individuals recommended to the
180 days, whichever the final figure, or Many who previously advocated a President by the National Association of
if he is permanently disfigured, or if he State-by-State approach now see the Insurance Commissioners and the Na-
has suffered permanent injury, then, of need for uniform Federal action. Pru- tional Governors Conference. The fifth
course, he has the right to sue for pain dential Insurance Co., a respected and member is the Secretary of Transpor-
and suffering. His tort rights are pre- solid member of the insurance commu- tation.
served. In cases of death they are fully nity and a long-time opponent of the bill,
preserved. has announced that it now supports S. Neither the Department of Transpor-
In return for giving up the right to 354 and hopes that the days of a State- tation nor any other department or
sue for pain and suffering where discom- by-State approach are over. In a letter agency of the Federal Government has
fort was minimal, the accident victim to the Commerce Committee, the presi- any authority to expand upon the na-
is paid immediately for all of his medi- dent of that company said: tional standards set forth in the legisla-
cal expenses, all of his rehabilitation ex- Up to now we have favored a state by state
tion itself. Only the review board is
penses, all of his costs of maintaining his approach to no-fault just because of the need authorized to issue regulations and the
house, and supplement for his loss of to get experience on how the requirement for review board can do so only as to the
wages. All that is paid to him in return this very new kind of coverage might vary procedure by which it determines
for surrendering the right to sue in less locally. However, too many. of the largest whether or not a State law meets or ex-
states have not passed such laws. Where no- ceeds national standards.
severe cases. fault laws have been passed, they have bene-
The fault system has failed totally. Be- fits, tort exemptions, and administrative re- On the question of providing room for
cause of that failure we have been seek- quirements differing in ways that seem arbi- States to establish plans responsive to
ing another way to provide the medical trary rather than reflecting various state local needs and conditions, it is impor-
care that automobile accident victims conditions. In some states the so-called "no- tant to note that there are many areas
need. fault" laws have included no tort exemption in which State flexibility is neither nec-
This is the bill we talked about before. at all. In many others the threshold for essary nor appropriate. There are no
This is the bill about which former Presi- liability suit has been very easy to cross, unique conditions in the States regarding
especially with the continuing inflation in
dent Nixon said, "The time has come for medical costs. The result has been confusion injuries suffered as a result of automo-
no-fault." Many have spoken in favor of among the public, high administrative ex- bile accidents that justify having a fault
the concept of no-fault. Some have ar- penses for insurers, and not as much im- system in one State and a no-fault sys-
gued to leave the matter to the States. provement in the efficiency of automobile in- tem in another. Even most differences
Yet the States have stalled their action surance as promised by the no-fault concept. among State no-fault plans are not at-
on no-fault. The States have not done We have come to the conclusion that the tributable to any real differences in the
it nor are they likely to do it. country needs the kind of federal guidelines
embodied in S. 354 if the no-fault idea is to States. For example, the tort threshold
I stress again that S. 354 simply sets realize its promise. in Colorado is $500; in more rural North
down the basic standards. The States will Dakota it is $1,000. In the relatively rural
continue to operate and regulate their Again, I was quoting from a letter State of Minnesota, the threshold is
systems exactly as they are doing now from the president of the Prudential In- $2,000 while in more urban States such
if they adopt those standards in their surance Co. as New York and New Jersey, the thresh-
own State laws. It has been argued by some critics that olds are $500 and $200. These differences
It does not derogate from the powers the Federal Government is involved in do not reflect anything different about
of the State insurance commissioner or too many things and that the enactment driving conditions or accident serious-
the State itself unless they refuse to en- of Federal standards will defeat through ness or frequency.
March 30, 1976 CONGRESSIONAL RECORD - SENATE 8687
With regard to the substantive content Thirteenth. Under the national stand- really goes to the victim rather than to
of State plans, S. 354 merely establishes ards, only basic restoration benefits at- those people who process the claims or
a framework. It permits a large degree of tributable to loss sustained within the adjudge fault. We are spending too much
flexibility in those areas in which dif- first 60 days after a motor vehicle acci- money trying to determine who is at
ferences among the States are real. The dent and benefits for allowable expense fault. Every year less and less money is
following is a summary of the decisions are exempt from garnishment, attach- going to those who are actually injured
States may make in fashioning their no- ment, execution, or other claim by credi- by the total motor vehicle system as we
fault plans. tors. A State may decide to exempt per- know it.
First. Each State can decide for itself sonal injury benefits from the reach of I would also like to address the claim
whether to include motor vehicle prop- creditors, completely or for more than made by many opponents of this bill
erty damage within the no-fault sys- 60 days. that no-fault would destroy the Amer-
tem-in whole, in part, or not at all. The Fourteenth. Each State determines ican legal profession. These claims are
only relevant national standard is one how to meet the national standard with extraordinarily exaggerated.
that requires insurers to in fact offer to respect to the maintenance and operation First, it strains credulity to believe that
sell first-party property damage insur- of an assigned claims plan and assigned all claimants will be promptly and com-
ance. claims bureau. pletely paid the benefits to which they
Second. Each State can decide for it- Fifteenth. The State determines the are entitled. In fact, in cases in which
self the extent to which some categories means by which to "inform purchasers there is a dispute about payment of bene-
of loss must be compensated on a no- of insurance Lbout insurance rates so fits, victims will be more likely to press
fault basis. The States may limit no- that purchasers can compare prices." A their claims in court because their rea-
fault benefits for work loss, subject to a State may also decide how to implement sonable attorneys fees will be paid by the
$15,000 minimum. The State may deter- the requirement set by the bill as to how insurance company, and their judgment
mine what, if any "reasonable exclusions much beyond simple rate disclosure it will be augmented by 18 percent interest
or monthly or total limitations" to place wishes to go in assuring that purchasers per year from the time the payment is
on basic restoration benefits for the ex- of insurance in the State are sufficiently overdue.
penses incurred in obtaining services in well informed to make the best decision
lieu of those he would have performed Second, there are many, many cate-
for themselves in the automobile insur- gories in which the victims retain their
himself but for the injury. The States ance marketplace-for example, infor-
must decide what, if any, reasonable ex- right to sue. For example, a tort suit
mation about claims practices of each can be brought to recover damages that
clusions or limitations to place on death
benefits under a no-fault policy. The only company, percentage of premiums re- are not covered by basic restoration
national standard in this regard is that turned as benefits by each company. benefits on a no-fault basis. Victims can
Sixteenth. A State can decide how to also sue for general damages if they suf-
the minimum amount paid on a no-fault
basis must be "reasonable." assure the accountability of suppliers fer serious and permanent injury or dis-
Third. Each State decides whether and the availability of emergency and figurement, or are disabled for more than
motorists should be required to purchase rehabilitation services for victims. 90 days, or in cases of death.
liability insurance, and if so in what Seventeenth. A State is free to decide Finally, according to a recent article
amounts and upon what terms. whether or not to avail itself of the entitled "No-Fault Effect on Lawyers
Fourth. Each State may include or ex- language specifically authorizing a State Seems Slight," in the New York Times,
clude motorcycles from its no-fault plan. to maintain a fault system under which predictions by lawyers that no-fault
Fifth. A State is free to decide whether a person can be held liable to pay a fine would cause massive dislocations in the
or not to permit insurers to offer optional for driving practices that do not meet legal profession have not proved true.
deductibles from basic restoration bene- the standard of driving care. The fine This bill has survived years and years
fits. cannot be paid or reimbursed by an in- of exceeding close scrutiny and study.
Sixth. The State may restrict the right surer or other restoration obligor. We on the Commerce Committee have
to sue for damages on the basis of fault Eighteenth. Each State determines the revised and revised it to meet various
beyond the national standard. content of its program to coordinate no- objections that have been made to it.
Seventh. A State determines whether fault insurance and other sources of The major changes that have been
insurers should be required to sell first- benefits to victims. made, some of which I suggested and
party benefits coverage for "non eco- Nineteenth. Each State may decide others which have come from other
nomic detriment to a victim" for those whether to grant a right of reimburse- members of the committee, have been
who desire it. A State must decide what, ment between restoration obligors based with regard to giving the States more au-
if any, other added restoration benefits upon fault in multiple-vehicle accidents thority to implement their plans but still
coverages should be made available by involving at least one vehicle other than have some uniformity brought about by
insurers, for example, excess work loss a passenger motor vehicle. national standards.
coverage, benefits for the loss of the use Those are just examples of some of the I am satisfied that by the time we
of one's motor vehicle, areas left open to the discretion of the finish with this legislation, this will be
Eighth. A State may narrow or elim- States under a national standards sys- the best no-fault bill that the Members
inate the ability of insurers to settle tem that would not be left open under of the Senate will have an opportunity to
claims. a total Federal no-fault insurance con- vote for.
Ninth. States may set higher interest cept. I am hopeful that the Senate will pass
penalties companies must' pay on over- It is high time that those who oppose this bill and send it to the House for ac-
due payment. this bill realize that the alternative to a tion to assure a new concept and, fur-
national standards concept is in fact a ther, to reassure those who are involved
Tenth. States are free to devise their no-fault Federal system. The willful fail- in automobile accidents that the insur-
own plans to enforce the requirement ure of State legislatures to step in and ance premiums will be devoted primarily
that owner of a motor vehicle continu- act in this area can only lead to a re- to healing their injuries and helping to
ously provide security, such as insurance, newed demand for a total Federal no- rehabilitate them rather than squander-
for his motor vehicle. fault system. I hope my colleagues will ing those benefits on a system that we
Eleventh. Each State decides whether recognize that. This may be one of the inherited from the common law of
to establish its own State fund to pro- last opportunities the Senate will have England.
vide coverage to individuals "who cannot to set national standards which will as- I am certain that that will be one of
conveniently obtain insurance through sure the viability of the State insurance the subjects to be discussed by my good
ordinary methods" at reasonable rates. systems as we have known them in the friend from Alaska.
Twelfth. Each State decides whether past, as we change from a fault concept I might state to my friend from Utah
to restrict, beyond the provisions of the to a no-fault concept. I do not think that I do have an amendment to offer
national standards, an insurer's right to anyone disagrees that that is the direc- that will provide assurances that the
cancel, to fail to renew, or to otherwise tion this country must go if we are to benefits for medical care and rehabilita-
terminate insurance providing security assure that the fair portion of the pre- tion under this bill will not be abused.
for the payment of basic restoration miums paid by those seeking to insure I would be happy to send that amend-
benefits. themselves against loss from accidents ment to the desk and have it consider-
8688 CONGRESSIONAL RECORD - SENATE March 30, 1976
ed now or at any time. Since the Senator patients and a different, higher fee the onset for national standards for no-
is managing the bill for the majority, I schedule for patients covered by no- fault. Moreover, because S. 354 is a bill
would like to have his comments as to fault insurance, cannot be tolerated. which mandates "standards"rather than
when it would be in order. Not all abuse takes the form of "programs," the States must have flex-
Mr. MOSS. Well, if the Senator from deliberate and outright fraud. Estimates ibility and wide leeway to develop and
Alaska will withhold it for now, I think show that Federal medicare and medi- control their own machinery to make the
we should have several of these intro- caid expenditures will increase from system fit their particular situations.
ductory statements that are to be made $21.7 billion in fiscal year 1975 to $30.4 To meet that need, I am offering an
first. I would welcome the amendment billion in fiscal year 1977, an increase amendment to modify the accountability
as soon as we have completed that pro- of almost 40 percent in 2 years due provision of the bill-section 109(c). The
cess, whether it be later this afternoon almost entirely to price and utilization current provision requires each no-fault
or when we take up tomorrow. I would increases rather than growth in the State to have "a program" for evaluat-
hope that by the time the Senator's number of persons who participate in ing and assuring the quality of services
amendment comes on, we will have better and benefit from the programs. The provided for victims and the accounta-
attendance on the floor. I have read it semiprivate room rate, which had been bility of suppliers and providers for the
and understand it, and I think it is a good increasing at about 6 percent a year, costs of those services. The amendment
amendment, but I would like him to have 13 and 20 percent following the intro- replaces the "program" with the require-
the opportunity to present it to enough duction of these two Federal programs. ment that each no-fault State establish
Senators so that we are sure we have ob- This phenomenon can be thought of as "a governmental mechanism, which shall
jective action on it. overutilization. be empowered to set prospective guide-
So, if the Senator will withhold his Overutilization is intensified by the lines" for matters covered in the exist-
amendment for now, I will assure him current malpractice crisis. Fearing law- ing provision. The provision is further
we will get to it as early as possible. suits, physicians repeat diagnostic and amended to include all allowable expense
Mr. STEVENS. If my friend from Utah laboratory tests and keep patients hos- and to empower the "mechanism" in each
has no objection, I would like to send this pitalized beyond the time when they State to establish guidelines as to what
amendment to the desk and put the could receive the medically necessary constitutes, for example, a "reasonably
statement in the RECORD, SO that those level of care from an ambulatory care
who are not present can review it, their needed" service for victims with partic-
facility at less expense. Overutilization, ular injuries.
staffs can reviews it and tomorrow we both as a money-generating device and The amendment reinforces a structure
can discuss in detail what the concept is as a byproduct of physician caution.
and why it is neecssary. which has already taken into account the
must be faced. possibility of "cost overruns" by defining
I ask unanimous consent that the If overutilization and its accompany-
amendment be printed in the RECORD fol- three categories: First, medical treat-
ing costs are not controlled, then prem- ment and care; second, emergency medi-
lowing remarks that I make for the REC- iums will have to rise, so that enough
ORD at this time. cal services; and third, medical and vo-
money will be available to compensate cational rehabilitation services, and
The PRESIDING OFFICER. Without all injured victims. If a phenomenon
objection, it is so ordered. coupling those items with the definition
similar to the explosion of inflation of allowable expense. Within the con-
AMENDMENT NO. 1546
which affected the health care industry text of S. 354, allowable expense means
Mr. STEVENS. Mr. President, I am after the introduction of medicare and "reasonable charges incurred for, or the
pleased to submit an amendment to medicaid occurs with national stand- reasonable value of-when no charges
S. 354 which provides assurances that ards for no-fault, then the insurance are incurred-reasonably needed and
the benefits for medical care and reha- companies will be forced to respond by used products, services, and accommo-
bilitation will not be abused. one or more of the following: dations"-section 103(3). The "reason-
The purpose of S. 354, national stand- First. Restricting reimbursement to able value when no charges are incurred"
ards for no-fault automobile insurance, providers. This means penalizing injured is included to make sure that prepaid
is to compensate all victims of auto- persons. Physicians or hospitals will not services, such as health maintenance or-
mobile accidents more efficiently than accept certain cases because of low reim- ganizations, are covered. The success or
does the existing tort liability system. bursement rates. The elderly have had failure of the administration of S. 354
It is essential to S. 354 that all accident to face this eventuality where physicians may hinge on who judges what consti-
victims receive all necessary emergency will not open their practices to medicare tutes "reasonable charges," "reasonable
medical care, medical services, and patients. value," and "reasonably needed."
rehabilitation of high quality, and that Second. The insurance companies re- The intent of the amendment is to
those services be paid for promptly sisting payment of claims. Even though assure that by specifying the establish-
and completely. insurance companies will have to pay ment of a governmental mechanism, the
I am concerned lest this purpose be 18 percent on overdue benefits and will reasonableness of those costs will be de-
compromised by abuse of the medical have to pay attorney's fees for the claim- termined by an impartial mechanism
and rehabilitation provisions. National ant, they may do so as a means of putting exterior to the individuals or institu-
standards for no-fault must provide pressure on the health professions. This tional entities which directly benefit
the States with the wherewithal to situation already exists under the tort from providing the service-that is, the
prevent the system from condoning system, and in fact was among the prob- hospital, the doctor, the ambulance
abuse or permitting payment for services lems that no-fault was designed to cor- driver-and also the insurance company
which are not necessary for recovery. rect. To support "adjusters" for health which must pay out benefits. Those in-
I offer these amendments to S. 354 benefits would defeat the purpose of no- terests may participate, but the public
because I am concerned that abuses pres- fault; it would also increase operating should be confident that special in-
sent in medicare and medicaid could expenses to the point that premium rates terests do not dominate the process of
occur under national standards for no- would become unnecessarily high as they determining "reasonableness."
fault without the addition of proper are under the existing system. On one hand, the amendment intends
safeguards. We need look only as far Third. Petitioning for rate increases. to discourage unnecessary services or
as the newspapers to see such abuses in None of these options satisfy the basic overutilization; on the other hand, the
medicare and medicaid with fraud in- requirement of S. 354 to guarantee bene- amendment intends to encourage the use
vestigations and resulting indictments fits to victims without "blaming" them of ambulatory services or home care
across the country. Experience in New for the results of the accident. While pre- where medically appropriate. The "gov-
Jersey, whose State no-fault law pro- venting abuse and overutilization is im- ernmental mechanism" should take both
vides for unlimited medical benefits with portant, this must be accomplished with- these negative and positive approaches
no controls on abuse, demonstrates that out destroying the assumption of good and any others which serve the ultimate
the same may occur under national faith between the insurer and the victim goal of providing just that level of care
standards unless S. 354 provides a prac- or tampering with the doctor/patient re- necessary to the recovery, administered
ticable accountability standard with lationship. The scandal and rancor which by a person trained to that level of care.
realistic and adequate guidelines. Prac- have flowed from attempted reforms It has been generally recognized that
tices reported in New Jersey, which in- after-the-fact in other areas dictates when providers are reimbursed accord-
clude use of on. fee schedule for regular that preventative measures be taken at ing to their costs on a retrospective basis