[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2931 Introduced in Senate (IS)]







108th CONGRESS
  2d Session
                                S. 2931

 To enable drivers to choose a more affordable form of auto insurance 
   that also provides for more adequate and timely compensation for 
               accident victims, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 7, 2004

Mr. Cornyn (for himself, Mr. McConnell, and Mr. McCain) introduced the 
 following bill; which was read twice and referred to the Committee on 
                 Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL


 
 To enable drivers to choose a more affordable form of auto insurance 
   that also provides for more adequate and timely compensation for 
               accident victims, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Auto Choice Reform 
Act of 2004''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Auto choice insurance system.
Sec. 5. Personal injury protection system.
Sec. 6. Tort maintenance system.
Sec. 7. Protection against insurance fraud.
Sec. 8. Source of compensation in cases of accidental injury.
Sec. 9. Preservation of State and private rights.
Sec. 10. Applicability to States.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress makes the following findings:
            (1) Auto insurance premiums are too high, largely because 
        the current auto liability insurance system (referred to in 
        this subsection as the ``present system'')--
                    (A) encourages costly fraudulent claims and 
                unnecessarily contentious behavior by both claimants 
                and defendants; and
                    (B) often requires expensive lawyers on both sides 
                of a dispute to settle claims.
            (2) The adversarial tort system that is in effect in 36 
        States poorly compensates the most needy individuals, in that 
        the system--
                    (A) pays no liability benefits to more than 30 
                percent of all accident victims;
                    (B) takes too long to pay victims when it does pay 
                them;
                    (C)(i) pays victims with minor injuries an average 
                of two to three times the cost of their medical bills 
                and lost wages; but
                    (ii) pays victims with serious injuries an average 
                of less than 50 percent of those bills and lost wages; 
                and
                    (D) pays more for plaintiff and defense lawyers 
                combined than it pays for victims' medical bills and 
                lost wages.
            (3) The chance of winning the lawsuit lottery in the 
        present system--
                    (A) results in the filing of billions of dollars of 
                fraudulent or otherwise unnecessary auto insurance 
                claims annually;
                    (B) generates billions of dollars in unnecessary 
                health care costs for private, Federal, and State 
                health care programs;
                    (C) raises auto insurance premiums for all drivers, 
                including drivers operating business vehicles; and
                    (D) makes auto insurance premiums unaffordable for 
                many low-income individuals.
            (4) The present system harms cities by--
                    (A) encouraging the filing of frivolous and 
                inflated claims that cities pay at the expense of all 
                taxpayers; and
                    (B) contributing to the abandonment of cities by 
                taxpayers who can achieve substantial reductions in 
                their auto insurance premiums by moving to the suburbs.
            (5) The present system provides individuals little 
        incentive to purchase safer automobiles.
            (6) All of the no-fault insurance reform laws that exist in 
        12 States provide more timely and equitable compensation for 
        medical bills and lost wages to more accident victims.
            (7) Some of those no-fault insurance reform laws, however, 
        have not been successful in controlling insurance premiums, in 
        large part because opponents of such reform have weakened the 
        laws by creating loopholes for unnecessary and costly lawsuits.
            (8) The alternative form of insurance, personal injury 
        protection, that may be offered to drivers by reason of this 
        Act, gives drivers the ability to--
                    (A)(i) insure themselves in all accidents for their 
                own medical bills and lost wages; and
                    (ii) sue other drivers on the basis of fault for 
                any economic losses that are not covered by their 
                insurance; and
                    (B) forgo lawsuits against other drivers for 
                noneconomic damages on the basis of fault in return for 
                being free from lawsuits for noneconomic damages by 
                other drivers.
            (9) Personal injury protection, by reducing the need for 
        auto liability lawsuits and the incentives they provide for 
        fraudulent and otherwise questionable claims, could--
                    (A) save drivers billions of dollars annually; and
                    (B) enable them to receive more adequate and timely 
                compensation when they are seriously injured.
            (10) Personal injury protection would benefit society by--
                    (A) increasing respect for the law by eliminating 
                the incentives of the adversarial present system for 
                fraudulent claims and unnecessarily contentious 
                behavior by both claimants and defendants;
                    (B) saving precious health care resources;
                    (C) making it more affordable for low-income 
                individuals to operate an automobile to get to better 
                paying jobs;
                    (D) reducing the incentives for individuals to 
                abandon cities, by providing greater savings for 
                drivers who reside in cities;
                    (E) freeing city taxpayers' dollars for reductions 
                in taxes or expanded city programs by reducing the 
                amount of frivolous and unnecessary lawsuits against 
                cities;
                    (F) encouraging drivers to own safer automobiles by 
                giving insurers the opportunity to reduce premiums for 
                the owners of safe automobiles; and
                    (G) helping to free up court dockets that are 
                currently overburdened with personal injury lawsuits 
                fueled by the incentives for lawsuits under the present 
                system.
            (11) A new auto insurance system that allows drivers to 
        select the form of auto insurance that best meets their needs, 
        by choosing between--
                    (A) a modified version of the present system, or
                    (B) the personal injury protection system described 
                in paragraph (9),
        would enable drivers to reduce the cost of auto insurance, 
        increase the amount of average compensation in the event of a 
        serious accident, and enhance individual freedom.
            (12) The Federal Government should encourage consumer 
        choice, but not exercise regulatory authority over the business 
        of auto insurance, including rates and insurer solvency, as 
        that authority is appropriately exercised by the States.
            (13)(A) During the period beginning July 1, 1956, and 
        ending September 30, 2002, the Federal Government spent more 
        than $887,000,000,000, adjusted for inflation, to facilitate 
        highway construction in the United States.
            (B) During the period beginning January 1, 1967, and ending 
        December 31, 2001, more than 1,200,000 people were killed in 
        motor vehicles accidents on highways constructed with Federal 
        funds.
            (14) The auto insurers who operate in interstate commerce 
        pay more than 73 percent of the compensation paid to accident 
        victims.
            (15) Through programs such as medicare, medicaid, and 
        social security, the Federal Government pays a significant 
        amount of the costs for compensating motor vehicle accident 
        victims.
            (16) It is necessary and proper for the Congress, in the 
        exercise of its authority to establish post roads and regulate 
        commerce under section 8 of article I of the Constitution, to 
        provide drivers throughout the United States with an 
        alternative to address the problems of the adversarial present 
        system and the inadequate no-fault insurance reforms.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To enable consumers of auto insurance to choose between 
        two insurance systems, which are--
                    (A) a tort maintenance system based on applicable 
                State law that provides for substantially similar 
                insurance premiums and compensation for injuries as 
                compared to the auto insurance system in existence in 
                that State on the date of enactment of this Act; and
                    (B) a personal injury protection system that 
                compensates accident victims directly for their medical 
                bills and lost wages with substantially less need to 
                pursue lawsuits and provides the opportunity for--
                            (i) substantial reductions in auto 
                        insurance premiums;
                            (ii) more comprehensive recovery of medical 
                        bills and lost wages in a shorter period of 
                        time; and
                            (iii) the right to sue negligent drivers 
                        for any uncompensated medical bills or lost 
                        wages.
            (2) To preserve the rights of States to regulate the 
        business of auto insurance.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Accident.--The term ``accident'' means an unforeseen or 
        unplanned event that--
                    (A) causes injury; and
                    (B) arises from the operation, maintenance, or use 
                of a motor vehicle.
            (2) Add-on law.--The term ``add-on law'' means a State law 
        that provides that persons injured in motor vehicle accidents--
                    (A) are compensated without regard to fault for 
                economic loss; and
                    (B) have the right to claim without any limitation 
                for noneconomic loss based on fault.
            (3) Collateral source.--The term ``collateral source'' 
        means a person, other than a tortfeasor or a motor vehicle 
        insurer, that has a legal obligation to pay compensation for 
        economic loss to a person who is injured in an accident.
            (4) Common carrier.--The term ``common carrier'' means a 
        motorized vehicle of any kind, licensed for highway use, that 
        is--
                    (A) required to be registered under the provisions 
                of applicable State law relating to motor vehicles; and
                    (B) used in the business of transporting persons.
            (5) Economic loss.--The term ``economic loss'' means 
        objectively verifiable pecuniary loss caused by an accident 
        for--
                    (A) reasonable and necessary medical and 
                rehabilitation expenses;
                    (B) loss of earnings;
                    (C) funeral costs; and
                    (D) replacement services loss.
            (6) Electronic signature.--The term ``electronic 
        signature'' means any letters, characters, or symbols executed 
        or adopted by a party with an intent to authenticate a writing 
        that are--
                    (A) manifested by--
                            (i) electronic means; or
                            (ii) any other similar means; and
                    (B) logically associated with that writing.
            (7) Financial responsibility law.--The term ``financial 
        responsibility law'' means a law (including a law requiring 
        compulsory coverage) penalizing motorists for failing to carry 
        defined limits of tort liability insurance covering motor 
        vehicle accidents.
            (8) First party benefits.--The term ``first party 
        benefits'' means benefits paid or payable by an insurer to an 
        insured of that insurer under a personal injury protection 
        policy or a tort maintenance coverage policy applicable to that 
        insured.
            (9) Injury.--The term ``injury'' means bodily injury, 
        sickness, disease, or death.
            (10) Insurer.--The term ``insurer'' means any person who is 
        engaged in the business of issuing or delivering motor vehicle 
        insurance policies (including an insurance agent, if 
        appropriate) under applicable State law.
            (11) Motor carrier.--The term ``motor carrier'' means--
                    (A) a person who--
                            (i) transports by motor vehicle goods for 
                        another person or entity for compensation; and
                            (ii) is liable for the operation of the 
                        vehicle under part 387 of title 49, Code of 
                        Federal Regulations; or
                    (B) a person who transports such person's goods by 
                a motor vehicle that such person owns or leases.
            (12) Motor vehicle.--The term ``motor vehicle'' means a 
        vehicle with 4 or more wheels licensed for highway use that is 
        required to be registered under the provisions of the 
        applicable State financial responsibility law relating to motor 
        vehicles.
            (13) Named insured.--The term ``named insured'' means a 
        person designated by name in a personal injury protection 
        policy or tort maintenance coverage policy as the insured.
            (14) No-fault motor vehicle law.--The term ``no-fault motor 
        vehicle law'' means a State law that provides that--
                    (A) persons injured in motor vehicle accidents are 
                paid compensation without regard to fault for their 
                economic loss that results from injury; and
                    (B) in return for the payment referred to in 
                subparagraph (A), claims based on fault, including 
                claims for noneconomic loss, are limited to a defined 
                extent.
            (15) Noneconomic loss.--The term ``noneconomic loss'' means 
        subjective, nonmonetary losses recognized under applicable 
        State tort law.
            (16) Occupy.--The term ``occupy'' means, with respect to 
        the operation, maintenance, or use of a motor vehicle, to be in 
or on a motor vehicle or to be engaged in the immediate act of entering 
into or alighting from a motor vehicle.
            (17) Operation, maintenance, or use of a motor vehicle.--
        (A) The term ``operation, maintenance, or use of a motor 
        vehicle'' means any activity involving or related to the 
        transportation by a motor vehicle.
            (B) Such term includes occupying or being engaged in the 
        immediate act of entering into or alighting from a motor 
        vehicle before or after its use for transportation.
            (C) Such term does not include--
                    (i) conduct within the course of a business of 
                manufacturing, sale, repairing, servicing, or otherwise 
                maintaining motor vehicles, unless the conduct occurs 
                outside the scope of the business activity; or
                    (ii) conduct within the course of loading or 
                unloading a motor vehicle, unless the conduct occurs 
                while occupying or being engaged in the immediate act 
                of entering into or alighting from a motor vehicle 
                before or after its use for transportation.
            (18) Person.--The term ``person'' means any individual, 
        corporation, company, association, firm, partnership, society, 
        joint stock company, or any other entity, including any 
        governmental entity.
            (19) Personal injury protection.--The term ``personal 
        injury protection'' means insurance that provides for--
                    (A) benefits to a personal injury protection 
                insured for economic loss without regard to fault for 
                injury resulting from a motor vehicle accident in 
                accordance with this Act;
                    (B) a waiver of tort claims against other drivers, 
                other than--
                            (i) claims for uncompensated economic loss 
                        based on fault; and
                            (ii) other tort claims exempted from such a 
                        waiver under this Act;
                    (C) coverage against claims for uncompensated 
                economic losses based on fault by another party that is 
                entitled to recover those losses under this Act; and
                    (D) coverage against claims for economic or 
                noneconomic losses of a third party with respect to 
                which the recovery of those losses is not covered under 
                this Act.
            (20) Personal injury protection insured.--The term 
        ``personal injury protection insured'' means a person covered 
        by the form of insurance described in section 5.
            (21) Personal injury protection insurer.--The term 
        ``personal injury protection insurer'' means an insurer who is 
        engaged in the business of providing personal injury 
        protection.
            (22) Personal injury protection system.--The term 
        ``personal injury protection system'' means the insurance 
        system described in section 5.
            (23) Replacement services loss.--The term ``replacement 
        services loss'' means expenses reasonably incurred in obtaining 
        ordinary and necessary services from other persons who are not 
        members of the injured person's household, in lieu of the 
        services the injured person would have performed for the 
        benefit of the household.
            (24) Resident relative or dependent.--(A) The term 
        ``resident relative or dependent'' means a person--
                    (i) who is related to the named insured by blood, 
                marriage, adoption, or otherwise (including a dependent 
                receiving financial services or support from such 
                insured); and
                    (ii) who--
                            (I) resides in the same household as the 
                        named insured at the time of the accident; or
                            (II) usually makes a home in the same 
                        family unit as the named insured, even though 
                        that person may temporarily live elsewhere.
            (B) Such term does not include any person who maintains or 
        is required to maintain insurance for a motor vehicle that such 
        person owns.
            (25) State.--The term ``State'' includes the District of 
        Columbia, the Commonwealth of Puerto Rico, Guam, the United 
        States Virgin Islands, American Samoa, the Commonwealth of the 
        Northern Mariana Islands, the Trust Territories of the Pacific 
        Islands, and any other territory or possession of the United 
        States.
            (26) Tort liability.--The term ``tort liability'' means the 
        legal obligation to pay damages for an injury in an accident 
        adjudged to have been caused by a tortfeasor, under applicable 
        State law.
            (27) Tort liability insurance.--The term ``tort liability 
        insurance'' means a contract of insurance under which an 
        insurer agrees to pay, on behalf of an insured, damages that 
        the insured is obligated to pay to a third person because of 
        the liability of the insured to that person.
            (28) Tort maintenance coverage.--The term ``tort 
        maintenance coverage'' means insurance coverage under which a 
        tort maintenance insured, if involved in an accident with a 
        personal injury protection insured, may recover first party 
        benefits for economic and noneconomic losses from the insurer 
        of that insured, based on fault under applicable State law.
            (29) Tort maintenance insured.--The term ``tort maintenance 
        insured'' means a person covered by the form of insurance 
        described in section 6.
            (30) Tort maintenance system.--The term ``tort maintenance 
        system'' means an insurance system described in section 6.
            (31) Uncompensated economic loss.--(A) The term 
        ``uncompensated economic loss'' means any objectively 
        verifiable pecuniary loss payable based on fault under 
        applicable State tort law, except for any such loss that is 
        determined by a court of competent jurisdiction to be, in whole 
        or in part, a product of fraudulent activity by the person 
        making the claim.
            (B) Such term includes a reasonable attorney's fee 
        calculated on the basis of the time actually expended and the 
        value of the attorney's efforts as reflected in payment to the 
        attorney's client. However, such term does not include 
        attorney's fees when the uncompensated economic loss is 
        attributable only to a deductible for coverage specified in 
        subparagraph (C)(i). The amount of a reasonable attorney's fee 
        under this subparagraph shall not exceed the greater of the 
        amount recovered or $1,000.
            (C) Subject to section 8(k)(2), such term does not include 
        amounts paid or payable under--
                    (i) personal injury protection;
                    (ii) tort maintenance coverage;
                    (iii) no-fault or add-on motor vehicle insurance;
                    (iv) Federal, State, or private disability or 
                sickness programs;
                    (v) Federal, State, or private health insurance 
                programs;
                    (vi) employer wage continuation programs; or
                    (vii) workers' compensation or similar occupational 
                compensation laws.
            (32) Uninsured motorist.--The term ``uninsured motorist'' 
        means the owner of a motor vehicle, including the resident 
        relatives or dependents of the owner, who is uninsured under 
        either the personal injury protection system described in 
        section 5 or the tort maintenance system described in section 
        6--
                    (A) at the limits prescribed by the applicable 
                State financial responsibility law; or
                    (B) an amount prescribed under section 5(a)(1).

SEC. 4. AUTO CHOICE INSURANCE SYSTEM.

    (a) Operation of the Right To Choose.--
            (1) In general.--Under this Act, an insurer may offer a 
        choice between--
                    (A) the personal injury protection system described 
                in section 5; and
                    (B) the tort maintenance system described in 
                section 6.
            (2) Election by self-insured persons.--A self-insured 
        person, as determined under an applicable State law, may elect 
        coverage under paragraph (1) by filing a notice with the 
        appropriate State or Federal agency.
            (3) Effect of election by electronic means.--For purposes 
        of making an election of an insurance system under this 
        subsection, unless prohibited by applicable State law, an 
        electronic signature shall have the same force and effect as a 
        handwritten signature.
    (b) Effect of Choice on Resident Relatives or Dependents.--
            (1) In general.--Except as provided in paragraph (2), a 
        person who chooses either the personal injury protection system 
        or the tort maintenance system also binds the resident 
        relatives or dependents of that person.
            (2) Exception.--An adult resident relative or dependent of 
        a person described in paragraph (1) may select the form of 
        insurance that such person does not select if the adult 
        resident relative or dependent makes that selection expressly 
        in writing to the insurer.
            (3) Terms and conditions.--Insurers may specify reasonable 
        terms and conditions governing the commencement, duration, and 
        application of the chosen coverage, depending on the number of 
motor vehicles and owners of such vehicles in a household.
    (c) Uniformity Rules.--
            (1) In general.--Notwithstanding subsection (b)(2) and in 
        order to minimize conflict between the insurance options, an 
        insurer may maintain and apply underwriting rules that 
        encourage uniformity in the provision of insurance benefits 
        within a household.
            (2) Uniformity in insurance in employment.--Except as 
        provided in paragraph (6), an employer that elects an insurance 
        option described in subparagraph (A) or (B) of subsection 
        (a)(1) binds the employees of that employer for purposes of 
        coverage of that employee in the course of employment by that 
        employer.
            (3) Uniformity in insurance for motor carriers.--Except as 
        provided in paragraph (6), a motor carrier that elects an 
        insurance option described in subparagraph (A) or (B) of 
        subsection (a)(1) binds any owner, operator, or occupant of a 
        motor vehicle operated by that motor carrier.
            (4) Uniformity in insurance for common carriers.--Except as 
        provided in paragraph (6), an owner of a common carrier that 
        elects an insurance option described in subparagraph (A) or (B) 
        of subsection (a)(1) binds the owner and any operator or 
        occupant of that common carrier.
            (5) Uniformity in insurance for motor vehicle rentals.--
                    (A) In general.--Except as provided in subparagraph 
                (B), a person who is engaged in the business of renting 
                motor vehicles and who elects an insurance option 
                described in subparagraph (A) or (B) of subsection 
                (a)(1) binds any operator or occupant of the rented 
                motor vehicle with respect to the operation of that 
                vehicle. Whether such insurance under such an option 
                shall be in excess of, or primary to, any insurance 
                elected pursuant to subparagraph (A) or (B) of 
                subsection (a)(1) by a customer who rents a motor 
                vehicle shall be determined pursuant to applicable 
                State law.
                    (B) Exception.--Subparagraph (A) shall not apply if 
                a customer who rents a motor vehicle--
                            (i) specifically elects to obtain coverage 
                        within the rental agreement other than the 
                        coverage elected by the person engaged in the 
                        business of renting the motor vehicle; and
                            (ii) pays a separate charge, if required, 
                        for that optional coverage.
            (6) Right of employees, operators, and certain occupants to 
        purchase additional coverage.--
                    (A) Employees.--An employee under paragraph (2) may 
                elect to purchase separate personal injury protection 
                or tort maintenance coverage in excess of the insurance 
                provided by the employer in the scope of the employment 
                of that employee.
                    (B) Operators and occupants of motor carriers.--An 
                operator or occupant of a motor carrier under paragraph 
                (3) may elect to purchase separate personal injury 
                protection or tort maintenance coverage in excess of 
                the insurance provided to that operator or occupant by 
                the motor carrier as an operator or occupant of that 
                motor carrier.
                    (C) Operators and occupants of common carriers.--An 
                operator or occupant of a common carrier under 
                paragraph (4) may elect to purchase separate personal 
                injury protection or tort maintenance coverage in 
                excess of the insurance provided to that operator or 
                occupant by the owner of the common carrier as an 
                operator or occupant of the common carrier.
                    (D) Effect of election.--The election by an 
                employee, operator, or occupant to purchase insurance 
                coverage under this paragraph shall not affect the 
                liability of an employer, motor carrier, or common 
                carrier.
    (d) Failure To Elect Type of Insurance.--
            (1) In general.--Except as provided in subsection (b)(1), 
        any person who fails to elect a type of insurance under 
        subsection (a)(1) shall be deemed to have elected insurance 
        under the tort maintenance system in effect in the State of 
        that person's residence.
            (2) Rule of construction.--This subsection shall not be 
        construed to prevent a State from enacting a law that deems a 
        person who fails to elect a type of insurance under this 
        section to have elected insurance under the personal injury 
        protection system.
    (e) Consumer Information Program.--
            (1) State program.--The State official charged with 
        jurisdiction over insurance rates for motor vehicles may 
establish and maintain a program designed to ensure that consumers are 
adequately informed concerning--
                    (A) the comparative cost of insurance under the 
                personal injury protection system and the tort 
                maintenance system; and
                    (B) the benefits, rights, and obligations of 
                insurers and insureds under each such system.
            (2) Insurer program.--An insurer that offers a choice of 
        insurance systems under subsection (a)(1) shall provide to each 
        consumer, before that consumer chooses motor vehicle insurance, 
        written consumer information to ensure that consumers are 
        adequately informed about--
                    (A) the comparative cost of insurance under the 
                personal injury protection system and the tort 
                maintenance system; and
                    (B) the benefits, rights, and obligations of 
                insurers and insureds under each system.
            (3) Adequate notice.--If an insurer files consumer 
        information forms under paragraph (2) with the State official 
        charged with jurisdiction over insurance rates for motor 
        vehicles and such forms are not disapproved within a reasonable 
        period of time after that filing, such filing and use of the 
        information in accordance with paragraph (2) shall be presumed 
        to be adequate notice.
    (f) Superseding Provision.--Subject to section 10, this Act 
supersedes a State law to the extent that the State law is otherwise 
inconsistent with the requirements of this Act.

SEC. 5. PERSONAL INJURY PROTECTION SYSTEM.

    (a) Minimum Policy Requirements.--In order to constitute a personal 
injury protection policy covered by this Act, a motor vehicle insurance 
policy issued by an insurer shall, at a minimum--
            (1) for each accident, provide personal injury protection 
        benefits to each personal injury protection insured in amounts 
        equal to--
                    (A) the minimum per-person limits of liability 
                insurance for personal injury under the relevant State 
                financial responsibility law applicable to private 
                passenger vehicles; or
                    (B) in a State covered by a no-fault motor vehicle 
                law, the minimum level of insurance required for no-
                fault benefits;
            (2) contain provisions for a waiver of tort claims against 
        drivers other than the insured, except--
                    (A) claims for uncompensated economic loss based on 
                fault; or
                    (B) other tort claims exempted from such a waiver 
                under this Act;
            (3) contain provisions for third party liability coverage 
        in amounts equal to the minimum limits required under 
        applicable Federal or State financial responsibility law for--
                    (A) property damage; and
                    (B) bodily injury to cover--
                            (i) uncompensated economic losses for 
                        parties who are entitled to recover such losses 
                        under this Act; and
                            (ii) economic and noneconomic losses of 
                        third parties whose recovery is not affected by 
                        this Act.
    (b) Primacy of Payment.--
            (1) In general.--
                    (A) Personal injury protection benefits.--
                            (i) In general.--Except as provided in 
                        subparagraph (B), in any case in which a 
                        personal injury protection insurer and a 
                        collateral source are obligated to pay benefits 
                        for the same economic loss under this Act, the 
                        personal injury protection insurer shall be 
                        liable for the primary payment of benefits to 
                        cover that economic loss.
                            (ii) Liability of collateral sources.--A 
                        collateral source shall be liable for economic 
                        loss only to the extent that the loss exceeds 
                        benefits paid or payable by an insurer under an 
                        applicable personal injury protection insurance 
                        policy.
                    (B) Exception.--Personal injury protection benefits 
                shall be reduced by an amount equal to any benefits 
                provided or required to be provided under--
                            (i) an applicable Federal or State law for 
                        workers' compensation;
                            (ii) any State-required nonoccupational 
                        disability insurance; or
                            (iii) any occupational disability insurance 
                        covering professional drivers of motor vehicles 
                        who are independent contractors.
            (2) Reimbursement of payors.--
                    (A) In general.--A personal injury protection 
                insurer may take appropriate measures to ensure that 
                any person otherwise eligible for personal injury 
                protection benefits who has been paid or is being paid 
for losses payable by personal injury protection from a source other 
than the applicable personal injury protection insurer shall not 
receive multiple payment for those losses.
                    (B) Accrual of rights.--Any right to payment for 
                losses referred to in subparagraph (A) from a personal 
                injury protection insurer accrues only to that payor. 
                Payments by a payor referred to in subparagraph (A) 
                shall not be counted against personal injury limits for 
                personal injury protection until such time as the payor 
                is reimbursed under this subparagraph.
            (3) Protection against duplication.--Upon receipt of 
        reasonable notice, a personal injury protection insurer shall 
        reimburse a collateral source for payments made by that 
        collateral source for economic loss for injury resulting from a 
        motor vehicle accident, to the extent that the personal injury 
        protection insurer is obligated to pay for that economic loss.
    (c) Prompt and Periodic Payment.--
            (1) In general.--A personal injury protection insurer may 
        pay personal injury protection benefits periodically as losses 
        accrue.
            (2) Late payment.--Except as provided in section 7, a 
        personal injury protection insurer that does not pay a claim 
        for personal injury protection benefits during the 30-day 
        period beginning on the date on which that insurer receives a 
        submission of reasonable proof of the loss for which those 
        benefits are payable, shall pay--
                    (A) the loss compounded at a rate of 12 percent per 
                annum as liquidated damages during the first 10 days 
                after such 30-day period, and 24 percent per annum as 
                liquidated damages thereafter; and
                    (B) a reasonable attorney's fee calculated on the 
                basis of the time actually expended or the value of the 
                attorney's efforts as reflected in payment to the 
                attorney's client.
            (3) Administration of personal injury protection 
        benefits.--To the extent consistent with this Act, any 
        applicable provision of a State no-fault motor vehicle law or 
        add-on law governing the administration of payment of benefits 
        without reference to fault shall apply to the payment of 
        benefits under personal injury protection under this 
        subsection.
    (d) Authorizations for Deductions and Exclusions.--
            (1) In general.--A personal injury protection insurer may 
        write personal injury protection--
                    (A)(i) without any deductible; or
                    (ii) subject to a reasonable deductible; and
                    (B) with an exclusion of coverage for first party 
                benefits to cover the losses of the personal injury 
                protection insured caused by that insured's--
                            (i) driving under the influence of alcohol 
                        or illegal drugs; or
                            (ii) driving while seeking to intentionally 
                        injure another person.
            (2) Applicability of deductibles.--The deductibles and 
        exclusions described in paragraph (1) shall apply only to--
                    (A) the person named in the applicable insurance 
                policy; and
                    (B) the resident relatives or dependents of the 
                person described in subparagraph (A).

SEC. 6. TORT MAINTENANCE SYSTEM.

    (a) Minimum Policy Requirements.--
            (1) In general.--The coverage for a person who chooses 
        insurance under section 4(a)(1)(B) shall include--
                    (A) the type of motor vehicle insurance that is 
                otherwise required under applicable State law; and
                    (B) tort maintenance coverage at a level that is at 
                least equivalent to the level of insurance required 
                under the applicable State financial responsibility law 
                for bodily injury liability.
            (2) Responsibility for payment under tort maintenance 
        coverage.--The responsibility for payment for any claim under 
        tort maintenance coverage is assumed by the insurer of the tort 
        maintenance insured to the extent of such coverage.
    (b) Additional Payments From Uninsured Motorist Coverage and 
Underinsured Motorist Coverage.--A tort maintenance insured who also 
purchases an insurance policy that provides uninsured motorist coverage 
or underinsured motorist coverage may recover under the terms of that 
policy for any economic or noneconomic loss arising from an accident 
involving a personal injury protection insured, in any case in which 
the amount of those economic or noneconomic losses exceed the aggregate 
amount recovered or recoverable from the--
            (1) tort maintenance coverage of the tort maintenance 
        insured; and
            (2) personal injury protection insured.

SEC. 7. PROTECTION AGAINST INSURANCE FRAUD.

    (a) Timely Submission of Claims for First Party Benefits.--
            (1) In general.--No insurer shall be obligated to pay first 
        party benefits to a personal injury protection insured for any 
        economic loss that occurred more than 45 days prior to the 
        submission of a claim for such loss.
            (2) Tolling.--The time for submission of a claim shall be 
        tolled during any period during which the insured can show 
        that--
                    (A) the insured was physically unable--
                            (i) to submit proof of the claim; or
                            (ii) to supply the identity of the insurer 
                        to the provider of services; or
                    (B) the insured was unable to identify the insurer 
                despite good faith efforts to do so.
    (b) Loss of First Party Benefits.--
            (1) In general.--No insurer shall be obligated to pay any 
        first party benefits to a personal injury protection insured 
        for any economic loss that a court of competent jurisdiction 
        determines is, in whole or in part, the product of fraudulent 
        activity by the insured with respect to an accident.
            (2) Attorney's fees.--An insurer that prevails in a lawsuit 
        against a personal injury protection insured to recover 
        benefits that were the product of fraudulent activity, as 
        determined by a court of competent jurisdiction, shall be 
        entitled to a reasonable attorney's fee from the insured.
    (c) Loss of Entitlement To Purchase Insurance.--An insurer may 
cancel, decline to renew, or refuse to issue a personal injury 
protection policy to any person who a court of competent jurisdiction 
has determined has engaged in fraudulent activity with respect to an 
accident during the previous three years.

SEC. 8. SOURCE OF COMPENSATION IN CASES OF ACCIDENTAL INJURY.

    (a) Accidents Between Persons Choosing the Tort Maintenance 
System.--A tort maintenance insured who is injured in an accident with 
another tort maintenance insured shall be subject to applicable State 
law for injury.
    (b) Accidents Between Persons Choosing the Personal Injury 
Protection System.--
            (1) Right to recover economic loss without regard to 
        fault.--A personal injury protection insured who is injured in 
        an accident with another personal injury protection insured 
        shall be entitled to recover first party benefits only for 
        economic loss, without regard to fault.
            (2) Right to sue for uncompensated economic loss based on 
        fault.--A personal injury protection insured who is involved in 
        an accident with another personal injury protection insured may 
        recover uncompensated economic loss (and not noneconomic loss) 
        from that other insured, based on fault.
    (c) Accidents Involving Persons Choosing the Tort Maintenance 
System and the Personal Injury Protection System.--
            (1) Persons choosing the tort maintenance system.--
                    (A) In general.--A tort maintenance insured who is 
                involved in an accident with a personal injury 
                protection insured shall be subject to applicable State 
                law for injury, except that, based on fault, that 
                person may--
                            (i) recover first party benefits for 
                        economic and noneconomic losses under the tort 
                        maintenance coverage of that insured;
                            (ii) upon submission of proof of insurance, 
                        recover uncompensated economic loss (and not 
                        noneconomic loss) from the personal injury 
                        protection insured; and
                            (iii) upon submission of proof of 
                        insurance, be liable to a personal injury 
                        protection insured for uncompensated economic 
                        loss (and not for noneconomic loss).
                    (B) Allocation of recovery.--In determining the 
                extent of recovery of a tort maintenance insured from a 
                personal injury protection insured under this 
                subsection, the payments made to the tort maintenance 
                insured from tort maintenance coverage shall first by 
                allocable to economic loss, and any remainder may be 
                allocable to noneconomic loss.
            (2) Persons choosing the personal injury protection 
        system.--A personal injury protection insured who is injured in 
        an accident with a tort maintenance insured--
                    (A) shall be entitled to recover first party 
                benefits for economic loss only, without regard to 
                fault; and
                    (B) may recover uncompensated economic loss (and 
                not noneconomic loss) from that other insured, based on 
                fault.
    (d) Allocation of Comparative Fault.--In any case in which a claim 
is made under this Act for uncompensated economic loss on the basis of 
comparative fault under applicable State law, the recovery of damages 
shall be based on the percentage of fault with respect to the amount of 
uncompensated economic loss.
    (e) Accidents Involving Persons Choosing the Personal Injury 
Protection System and Persons Who Are Unlawfully Uninsured.--
            (1) Rights of personal injury protection insureds.--A 
        personal injury protection insured who is involved in an 
        accident with an uninsured motorist--
                    (A) shall be compensated under the insured person's 
                policy for economic loss without regard to fault; and
                    (B) may recover from the uninsured motorist (other 
                than under uninsured or underinsured motorist coverage) 
                for economic loss and for noneconomic loss based on 
                fault.
            (2) Limitations on lawsuits by uninsured motorists.--An 
        uninsured motorist may not recover from a personal injury 
        protection insured for noneconomic loss.
    (f) Accidents Involving Motorists Under the Influence of Alcohol or 
Illegal Drugs or Inflicting Intentional Injury.--Notwithstanding any 
other provision of this Act, a personal injury protection insured who 
is in an accident may--
            (1) recover all damages based on fault under applicable 
        State law from a person who--
                    (A) at the time of the accident, was driving under 
                the influence of alcohol or illegal drugs (as those 
                terms are defined under applicable State law); or
                    (B) caused an injury while seeking to intentionally 
                injure another person; and
            (2) be liable for all damages based on fault under 
        applicable State law, if such insured--
                    (A) at the time of the accident, was driving under 
                the influence of alcohol or illegal drugs (as those 
                terms are defined under applicable State law); or
                    (B) caused an injury while seeking to intentionally 
                injure another person.
    (g) Rights of Lawfully Uninsured Persons.--Nothing in this Act 
shall be construed to affect the tort rights or obligations of any 
person lawfully uninsured under the terms of an applicable State law 
for insurance under either the personal injury protection system or 
tort maintenance system under section 4(a)(1).
    (h) Rights of Persons Occupying Motor Vehicles With Fewer Than Four 
Load-Bearing Wheels.--Nothing in this Act shall be construed to affect 
the tort rights or obligations of a person who occupies a motor vehicle 
with fewer than 4 load-bearing wheels or an attachment thereto, unless 
an applicable contract for personal injury protection under which that 
person is insured specifies otherwise. The preceding sentence applies 
without regard to whether the person is otherwise legally insured for 
personal injury protection or tort maintenance coverage.
    (i) Forfeiture of Fraudulent Claims.--An owner, operator, or 
occupant of a motor vehicle involved in an accident forfeits the right 
to make a claim against an insured motorist for economic or noneconomic 
loss resulting from injury incurred by that owner, operator, or 
occupant if that owner, operator, or occupant knowingly participated in 
a scheme to obtain insurance payments for any accident that was staged 
with the intent to commit insurance fraud.
    (j) Priority of Benefits.--
            (1) In general.--Except as provided in paragraph (2), a 
        personal injury protection insured or a tort maintenance 
        insured may recover first party benefits only under the 
        coverage of that insured in effect at the time of the accident.
            (2) Exceptions.--
                    (A) In general.--Except as provided in subparagraph 
                (B), with respect to an accident that occurred while an 
                injured individual was occupying a motor vehicle--
                            (i) furnished by an employer, the primary 
                        coverage shall be the coverage applicable to 
                        the motor vehicle; or
                            (ii) that was being used in the business of 
                        transporting individuals or property, the 
                        primary coverage shall be the coverage 
                        applicable to that motor vehicle.
                    (B) Certain claimants.--A claimant may claim first 
                party benefits in an amount greater than the amounts 
                determined under the limits under the primary insurance 
                coverage described in clause (i) or (ii) of 
                subparagraph (A), if that claimant would otherwise be 
                able to receive those increased benefits by reason of 
                insurance coverage of that claimant that 
would otherwise apply, but for the operation of subparagraph (A).
    (k) Reimbursement Rights of Personal Injury Protection Insurers and 
Collateral Sources.--
            (1) Reimbursement rights of personal injury protection 
        insurers.--
                    (A) In general.--A personal injury protection 
                insurer may seek reimbursement under subparagraph (B), 
                from--
                            (i) an uninsured motorist who is liable for 
                        damages caused by the accident;
                            (ii) a motorist who was under the influence 
                        of alcohol or illegal drugs at the time of the 
                        accident and whose conduct was the proximate 
                        cause of the accident;
                            (iii) a person who caused an injury while 
                        seeking to intentionally injure another person; 
                        or
                            (iv) any other person who is not affected 
                        by the limitations on tort rights and 
                        liabilities under this Act and whose conduct 
                        was the proximate cause of the accident.
                    (B) Reimbursement.--A personal injury protection 
                insurer may seek reimbursement under this subparagraph 
                to the extent of the obligations of that insurer, with 
                respect to payments made to a personal injury 
                protection insured of that insurer for an accident 
                caused in whole or in part, as determined in accordance 
                with applicable State law, from a person referred to in 
                subparagraph (A), for the losses that insurer--
                            (i) has paid or reimbursed; or
                            (ii) under applicable law, is obligated to 
                        pay.
            (2) Reimbursement rights of collateral sources.--With 
        respect to an accident, a collateral source may seek 
        reimbursement from an insurer in a civil action based on fault.
            (3) Prohibition on multiple recovery.--In any action to 
        recover losses arising out of an accident, a person may not 
        recover or introduce into evidence in a civil action against 
        another person any amount of a loss that a collateral source or 
        personal injury protection insurer--
                    (A) has paid or reimbursed; or
                    (B) is obligated to pay.
    (l) Choice of Law.--
            (1) Applicable law.--With respect to a claim relating to a 
        motor vehicle accident involving persons from different States, 
        the choice-of-law principles applicable under the law of the 
        State of competent jurisdiction shall apply.
            (2) Applicable coverage in an auto choice state.--With 
        respect to an accident that involves a person from a State in 
        which this Act does not apply and a person from a State in 
        which this Act applies, in any case in which the accident 
        occurs in a State in which this Act applies, the coverage of 
        the person from the State in which this Act does not apply 
        shall be deemed to be the form of insurance system (whether 
        personal injury protection or tort maintenance) that most 
        closely reflects the form of insurance that the person 
        maintains in the State of residence of the person.
    (m) Jurisdiction.--This Act shall not confer jurisdiction on the 
district courts of the United States under section 1331 or 1337 of 
title 28, United States Code.
    (n) Statutes of Limitations.--Nothing in this Act shall supersede 
an applicable State law that imposes a statute of limitations for 
claims related to an injury caused by an accident, except that such 
statute shall be tolled during the period during which any personal 
injury protection or tort maintenance coverage benefits are paid.
    (o) Limitations on Nonrenewal, Cancellation, and Premium 
Increases.--An insurer shall not cancel, decline to renew, or increase 
the premium of a person insured by the insurer solely because that 
insured person or any other injured person made a claim for--
            (1) personal injury protection benefits; or
            (2) tort maintenance coverage benefits in any case in which 
        there is no basis for ascribing fault to the insured or one for 
        whom the insured is vicariously liable.
    (p) Negligent Driver Ratings.--Nothing in this Act shall be 
construed to limit insurers from canceling, failing to renew, or 
increasing premiums for an insured person if there is a basis for 
ascribing moving traffic violations or fault for an accident caused by 
that insured or any resident relative or dependent, or employee of that 
insured.
    (q) Immunity.--
            (1) In general.--Except as provided in paragraph (2), no 
        insurer, insurance agent or broker, insurance producer 
        representing a motor vehicle insurer, automobile residual 
        market plan, or attorney licensed to practice law within a 
        State, or any employee of any such person or entity, shall be 
liable in an action for damages on account of--
                    (A) an election of--
                            (i) the tort maintenance system under 
                        section 4(a)(1)(B); or
                            (ii) the personal injury protection system 
                        under section 4(a)(1)(A); or
                    (B) a failure to make a required election.
            (2) Exception.--Paragraph (1) shall not apply in any case 
        in which--
                    (A) a person described in that paragraph--
                            (i) willfully and intentionally 
                        misrepresents the insurance choices available 
                        to a customer or client of that person; or
                            (ii) willfully and with the intent to 
                        defraud, induces the election of one motor 
                        vehicle insurance system described in paragraph 
                        (1)(A) over the other motor vehicle insurance 
                        system described in that paragraph; and
                    (B) the misrepresentation or inducement under 
                subparagraph (A) was the proximate cause of that 
                customer or client's electing or failing to make an 
                election of an insurance system under subparagraph (A) 
                or (B) of section 4(a)(1).

SEC. 9. PRESERVATION OF STATE AND PRIVATE RIGHTS.

    (a) Rights of States.--Nothing in this Act shall be construed--
            (1) to waive or affect any defense of sovereign immunity 
        asserted by any State under any law or by the United States;
            (2) to preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation;
            (3) to affect the right of any court to transfer venue, to 
        apply the law of a foreign nation, or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum;
            (4) to preclude a State from enacting a law that mandates 
        that claims by personal injury protection insureds for 
        uncompensated economic loss be submitted for nonbinding 
        alternative dispute resolution before any action on such claims 
        may be maintained;
            (5) to preclude a State from enacting a law mandating that 
        personal injury protection insureds make co-payments of 10 
        percent for office visits for medical and rehabilitation 
        expenses;
            (6) to preclude a State from requiring personal injury 
        protection insurers to offer first party insurance that 
        establishes a dollar value for noneconomic loss in objectively 
        verifiable defined classes of cases involving death or serious 
        and permanent bodily injury;
            (7) to preclude a State from enacting a law applicable to 
        all motor vehicle accident cases, including cases covered by 
        this Act, to establish a minimum dollar value for economic 
        losses for defined classes of cases involving death or serious 
        bodily injury;
            (8) to preclude a State from providing that forms of 
        insurance other than those listed in section 5(b) shall be 
        subtracted from personal injury protection insurance benefits 
        otherwise payable for injury; or
            (9) to preclude a State from enacting a law that--
                    (A) allows litigation by tort maintenance insureds 
                against personal injury protection insureds for 
                economic and noneconomic loss; and
                    (B) assures through a reallocation device that the 
                advantage of tort claim waivers by personal injury 
                protection insureds against tort maintenance insureds 
                is reflected in the premiums of personal injury 
                protection insureds.
    (b) Preservation of State Regulatory Authority.--Nothing in this 
Act may be construed--
            (1) to preclude a State or State official charged with 
        regulatory authority over the business of insurance from fully 
        exercising that regulatory authority, including adopting 
        regulations and procedures regarding--
                    (A) rates;
                    (B) policy forms;
                    (C) company solvency;
                    (D) consumer protection;
                    (E) underwriting and marketing practices; and
                    (F) carrying out the requirements of this Act; or
            (2) to allow or provide for Federal regulation of motor 
        vehicle insurance.
    (c) Rights of Private Parties.--Nothing in this Act may be 
construed--
            (1) to require a personal injury protection insurer to 
        offer, or a personal injury protection insured to purchase, any 
        coverage for bodily injury in addition to the coverage required 
under this Act, including uninsured motorist coverage, underinsured 
motorist coverage, or coverage for medical payments;
            (2) to prevent insurers and insureds from contracting to 
        limit recovery for the loss of earnings under personal injury 
        protection by--
                    (A) limiting such recovery to only 60 percent or 
                more of lost wages or income;
                    (B) limiting the amount of such recovery payable 
                per week; or
                    (C) limiting the period of time after an accident 
                during which the benefits referred to in this paragraph 
                are payable to a period of not less than one year;
            (3) to prevent an insurer from contracting with personal 
        injury protection insureds to limit the amounts payable for 
        replacement services loss on a per day or per week basis;
            (4) to prevent insurers from requiring reasonable notice of 
        an accident as a precondition for payment for economic loss;
            (5) to prevent an insurer from contracting with insureds, 
        as permitted by applicable State law, to have submitted to 
        arbitration any dispute with respect to payment of personal 
        injury protection or tort maintenance coverage;
            (6) to affect the worker classification of a person, either 
        as an employee or an independent contractor, on the basis of 
        the election of an employer or motor carrier of an insurance 
        system under section 4(a); or
            (7) to affect the awarding of punitive damages, or damages 
        for bad faith refusal to pay a claim, under any applicable 
        State law.

SEC. 10. APPLICABILITY TO STATES.

    (a) Election of Nonapplicability by States.--Subject to subsections 
(c) through (e), this Act shall apply with respect to a State, unless--
            (1) by not later than the earlier of the date that is one 
        year after the date of enactment of this Act or the expiration 
        of the first regular legislative session of the State beginning 
        after the date of enactment of this Act, the State enacts a 
        statute that--
                    (A) cites the authority of this subsection;
                    (B) declares the election of that State that this 
                Act shall not apply with respect to that State; and
                    (C) contains no other provision; or
            (2)(A) the State official charged with jurisdiction over 
        insurance rates for motor vehicles makes a finding that this 
        Act does not apply by reasons of the applicability of the 
        conditions described in subsection (b)(1)(A); and
            (B) that finding is made and any review described in 
        subsection (b)(1)(B) is completed not later than the date 
        specified in subsection (b)(1)(C).
    (b) Nonapplicability Based on State Finding.--
            (1) In general.--This Act shall not apply with respect to a 
        State, if--
                    (A) the State official charged with jurisdiction 
                over insurance rates for motor vehicles makes a finding 
                that the statewide average motor vehicle premiums for 
                bodily injury insurance in effect immediately before 
                the date of enactment of this Act will not be reduced 
                by an average of at least 30 percent for persons 
                choosing the personal injury protection system, in the 
                amounts required under section 5 (without including in 
                the calculation for personal injury protection insureds 
                any costs for uninsured, underinsured, or medical 
                payments coverages);
                    (B) the finding described under subparagraph (A) is 
                supported by evidence adduced in a public hearing and 
                reviewable under the applicable State administrative 
                procedure law; and
                    (C) the finding described under subparagraph (A) is 
                made, and any review of such finding under subparagraph 
                (B) is completed, not later than 120 days after the 
                date of enactment of this Act.
            (2) Comparison of bodily injury premiums.--For purposes of 
        making a comparison under paragraph (1)(A) of premiums for 
        personal injury protection with preexisting premiums for bodily 
        injury insurance (in effect immediately before the date of 
        enactment of this Act), the preexisting bodily injury insurance 
        premiums shall include premiums for--
                    (A) bodily injury liability, uninsured and 
                underinsured motorists' liability, and medical payments 
                coverage; and
                    (B) if applicable, no-fault benefits under a no-
                fault motor vehicle law or add-on law.
    (c) Implementation Period.--Except as provided in subsection (d), 
if a State fails to enact a law by the applicable date specified in 
paragraph (1) of subsection (a) or if a finding described in paragraph 
(2) of that subsection is not made and reviewed by the date specified 
in subsection (b)(1)(C), this Act shall apply to that State beginning 
on the date that is 270 days after the later of those dates.
    (d) Accelerated Applicability.--
            (1) In general.--Subject to paragraph (2), a State may 
        enact a law that provides for the implementation of the 
        provisions of this Act in that State before an otherwise 
        applicable date determined under subsection (a).
            (2) Applicability.--If a State makes an election under 
        paragraph (1), this Act shall apply to that State beginning on 
        the date that is 270 days after the date of such election.
    (e) Election of Nonapplicability by a State After This Act Becomes 
Applicable With Respect to the State.--After this Act becomes 
applicable with respect to a State under subsection (c) or (d), this 
Act shall cease to apply with respect to that State if the State enacts 
a statute that meets the requirements of subparagraphs (A) through (C) 
of subsection (a)(1).
                                 <all>