[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).
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