I
107TH CONGRESS
1ST SESSION
H. R. 1704
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 HOUSE OF REPRESENTATIVES
MAY 3, 2001
Mr. ARMEY (for himself, Mr. MORAN of Virginia, and Mr. COX) introduced
the following bill; which was referred to the Committee on Financial Services
A BILL
To enable drivers to choose a more affordable form of auto
insurance that also provides for more adequate and time-
ly compensation for accident victims, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives 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 2001’’.
(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.—The Congress finds the following:
(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 35 States poorly compensates the most needy in-
dividuals, 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 twice as much for plaintiff and
defense lawyers combined as 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 dol-
lars of fraudulent or otherwise unnecessary
auto insurance claims annually;
(B) generates billions of dollars in unnec-
essary health care costs for private, Federal,
and State health care programs;
(C) raises auto insurance premiums for all
drivers, including drivers operating business ve-
hicles; 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 lit-
tle incentive to purchase safer automobiles.
(6) All of the no-fault insurance reform laws
that exist in 13 States provide more timely and equi-
table 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 control-
ling insurance premiums, in large part because oppo-
nents of such reform have weakened the laws by cre-
ating 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 suit for noneconomic
damages by other drivers.
(9) Personal injury protection, by reducing the
need for auto liability lawsuits and the incentives for
fraudulent 
and 
otherwise 
questionable 
claims,
could—
(A) save drivers billions of dollars annu-
ally; and
(B) enable them to receive more adequate
and timely compensation when they are seri-
ously injured.
(10) Personal injury protection would benefit
society by—
(A) increasing respect for the law by elimi-
nating the incentives of the adversarial present
system for fraudulent claims and unnecessarily
contentious behavior by both claimants and de-
fendants;
(B) saving precious health care resources;
(C) making it more affordable for low-in-
come 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 re-
ductions in taxes or expanded city programs by
reducing the amount of frivolous and unneces-
sary lawsuits against cities;
(F) encouraging drivers to own safer auto-
mobiles by giving insurers the opportunity to
reduce premiums for the owners of safe auto-
mobiles; 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 sys-
tem, or
(B) the personal injury protection system
described in paragraph (9),
would enable drivers to reduce the cost of auto in-
surance, increase the amount of average compensa-
tion in the event of a serious accident, and enhance
individual freedom.
(12) The Federal Government should encourage
consumer choice, but not exercise regulatory author-
ity over the business of auto insurance, including
rates and insurer solvency, as that authority is ap-
propriately exercised by the States.
(13) During the period beginning January 1,
1957, and ending December 31, 1996—
(A) the Federal Government spent more
than $400 billion to facilitate highway construc-
tion in the United States; and
(B) hundreds of thousands of individuals
have been killed in motor vehicle accidents on
highways constructed with those funds.
(14) The auto insurers who operate in inter-
state commerce pay greater than 70 percent of the
compensation paid to accident victims.
(15) Through programs such as medicare, med-
icaid, and social security, the Federal Government
pays a significant amount of the costs for compen-
sating motor vehicle accident victims.
(16) It is necessary and proper for the Con-
gress, 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 sys-
tem and the inadequate no-fault insurance reforms.
(b) PURPOSES.—The purposes of this Act are as fol-
lows:
(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 substan-
tially similar insurance premiums and com-
pensation 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 substan-
tially less need to pursue lawsuits and provides
the opportunity for—
(i) substantial reductions in auto in-
surance 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, mainte-
nance, or use of a motor vehicle.
(2) ADD-ON
LAW.—The term ‘‘add-on law’’
means a State law that provides that persons in-
jured 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 ‘‘collat-
eral source’’ means a person, other than a tortfeasor
or a motor vehicle insurer, that has a legal obliga-
tion to pay compensation for economic loss to a per-
son who is injured in an accident.
(4) COMMON
CARRIER.—The term ‘‘common
carrier’’ means a motorized vehicle of any kind, li-
censed 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 ‘‘elec-
tronic signature’’ means any letters, characters, or
symbols executed or adopted by a party with an in-
tent 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 (in-
cluding a law requiring compulsory coverage) penal-
izing motorists for failing to carry defined limits of
tort liability insurance covering motor vehicle acci-
dents.
(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 per-
sonal 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 car-
rier’’ means—
(A) a person who—
(i) transports by motor vehicle goods
for another person or entity for compensa-
tion; 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 vehi-
cle’’ 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 in-
sured’’ means a person designated by name in a per-
sonal 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 acci-
dents 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, in-
cluding claims for noneconomic loss, are limited
to a defined extent.
(15) NONECONOMIC
LOSS.—The term ‘‘non-
economic 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, main-
tenance, or use of a motor vehicle’’ means any activ-
ity involving or related to the transportation by a
motor vehicle.
(B) Such term includes occupying or being en-
gaged 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 trans-
portation.
(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 eco-
nomic loss based on fault; and
(ii) other tort claims exempted from
such a waiver under this Act;
(C) coverage against claims for uncompen-
sated 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 re-
spect to which the recovery of those losses is
not covered under this Act.
(20) 
PERSONAL
INJURY
PROTECTION
IN-
SURED.—The term ‘‘personal injury protection in-
sured’’ means a person covered by the form of insur-
ance described in section 5.
(21) 
PERSONAL
INJURY
PROTECTION
IN-
SURER.—The term ‘‘personal injury protection in-
surer’’ means an insurer who is engaged in the busi-
ness of providing personal injury protection.
(22) PERSONAL
INJURY
PROTECTION
SYS-
TEM.—The term ‘‘personal injury protection sys-
tem’’ means the insurance system described in sec-
tion 5.
(23) 
REPLACEMENT
SERVICES
LOSS.—The
term ‘‘replacement services loss’’ means expenses
reasonably incurred in obtaining ordinary and nec-
essary services from other persons who are not mem-
bers 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 (includ-
ing 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 acci-
dent; 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 North-
ern 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 liabil-
ity’’ 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 insur-
ance 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 pro-
tection 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 sys-
tem 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, ex-
cept 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 mak-
ing the claim.
(B) Such term includes a reasonable attorney’s
fee calculated on the basis of the time actually ex-
pended and the value of the attorney’s efforts as re-
flected in payment to the attorney’s client, other
than any attorney’s fees when the uncompensated
economic loss is attributable only to a deductible for
coverage specified in subparagraph (C)(i).
(C) Subject to section 8(j)(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 insur-
ance;
(iv) Federal, State, or private disability or
sickness programs;
(v) Federal, State, or private health insur-
ance programs;
(vi) employer wage continuation programs;
or
(vii) workers’ compensation or similar oc-
cupational compensation laws.
(32) UNINSURED MOTORIST.—The term ‘‘unin-
sured 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 applica-
ble 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 applica-
ble 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 pro-
hibited by applicable State law, an electronic signa-
ture shall have the same force and effect as a hand-
written signature.
(b) EFFECT OF CHOICE ON RESIDENT RELATIVES
OR DEPENDENTS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), a person who chooses either the personal
injury protection system or the tort maintenance
system also binds the resident relatives or depend-
ents 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 de-
pendent 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 house-
hold.
(2) UNIFORMITY
IN
INSURANCE
IN
EMPLOY-
MENT.—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 cov-
erage 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 de-
scribed 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 sub-
section (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 subpara-
graph (A) or (B) of subsection (a)(1) binds any
operator or occupant of the rented motor vehi-
cle with respect to the operation of that vehicle.
(B) EXCEPTION.—Subparagraph (A) shall
not apply if a customer who rents a motor
vehicle—
(i) specifically elects to obtain cov-
erage within the rental agreement other
than the coverage elected by the person en-
gaged in the business of renting the motor
vehicle; and
(ii) pays a separate charge 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 COM-
MON 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 oper-
ator or occupant of the common carrier.
(D) EFFECT OF ELECTION.—The election
by an employee, operator, or occupant to pur-
chase 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 sub-
section (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 mainte-
nance 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 en-
acting a law that deems a person who fails to elect
a type of insurance under this section to have elect-
ed 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 pro-
gram designed to ensure that consumers are ade-
quately 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 in-
formation 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 in-
surer 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 li-
ability insurance for personal injury under the
relevant State financial responsibility law appli-
cable to private passenger vehicles; or
(B) in a State covered by a no-fault motor
vehicle law, the minimum level of insurance re-
quired 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 re-
quired 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 af-
fected by this Act.
(b) PRIMACY OF PAYMENT.—
(1) IN GENERAL.—
(A) PERSONAL INJURY PROTECTION BENE-
FITS.—
(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 bene-
fits 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 lia-
ble for economic loss only to the extent
that the loss exceeds benefits paid or pay-
able by an insurer under an applicable per-
sonal injury protection insurance policy.
(B) EXCEPTION.—Personal injury protec-
tion 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 nonoccupa-
tional disability insurance; or
(iii) any occupational disability insur-
ance covering professional drivers of motor
vehicles who are independent contractors.
(2) REIMBURSEMENT OF PAYORS.—
(A) IN GENERAL.—A personal injury pro-
tection 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 subpara-
graph.
(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 eco-
nomic loss for injury resulting from a motor vehicle
accident, to the extent that the personal injury pro-
tection 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 24
percent per annum as liquidated damages; 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 ref-
erence to fault shall apply to the payment of benefits
under personal injury protection under this sub-
section.
(d) AUTHORIZATIONS FOR DEDUCTIONS AND EXCLU-
SIONS.—
(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 per-
sonal injury protection insured caused by that
insured’s—
(i) driving under the influence of alco-
hol or illegal drugs; or
(ii) driving while seeking to inten-
tionally 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 in-
surance 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 insur-
ance required under the applicable State finan-
cial 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 main-
tenance insured to the extent of such coverage.
(b) ADDITIONAL PAYMENTS FROM UNINSURED MO-
TORIST COVERAGE AND UNDERINSURED MOTORIST COV-
ERAGE.—A tort maintenance insured who also purchases
an insurance policy that provides uninsured motorist cov-
erage or underinsured motorist coverage may recover
under the terms of that policy for any economic or non-
economic loss arising from an accident involving a per-
sonal 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 main-
tenance insured; and
(2) personal injury protection insured.
SEC. 7. PROTECTION AGAINST INSURANCE FRAUD.
(a) TIMELY SUBMISSION
OF CLAIMS
FOR FIRST
PARTY BENEFITS.—(1) No insurer shall be obligated to
pay first party benefits to a personal injury protection in-
sured for any economic loss that occurred more than 60
days prior to the submission of a claim for such loss.
(2) 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 in-
surer despite good faith efforts to do so.
(b) LOSS OF FIRST PARTY BENEFITS.—No insurer
shall be obligated to pay any first party benefits to a per-
sonal 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 in-
sured with respect to an accident.
(c) LOSS OF ENTITLEMENT TO PURCHASE INSUR-
ANCE.—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 ACCI-
DENTAL INJURY.
(a) ACCIDENTS INVOLVING PERSONS CHOOSING THE
TORT MAINTENANCE SYSTEM.—
(1) IN GENERAL.—A tort maintenance insured
who is involved in an accident with another person
shall be subject to applicable State law for injury,
except that, based on fault, that person may, upon
submission of proof of insurance—
(A) recover from any personal injury pro-
tection insured for uncompensated economic
loss (and not for noneconomic loss); and
(B) be liable to a personal injury protec-
tion insured for uncompensated economic loss
(and not for noneconomic loss).
(2) ALLOCATION OF TORT MAINTENANCE PAY-
MENTS.—In determining the extent of recovery of a
tort maintenance insured from a personal injury
protection insured under subsection (b), the pay-
ments made to the tort maintenance insured from
tort maintenance coverage shall first be allocable to
economic loss, and any remainder may be allocable
to noneconomic loss.
(b) ACCIDENTS INVOLVING PERSONS CHOOSING THE
PERSONAL INJURY PROTECTION SYSTEM.—
(1) RIGHT TO RECOVER ECONOMIC LOSS.—A
personal injury protection insured who is injured in
an accident may recover under the policy of that in-
sured only for economic loss, without regard to fault.
(2) RIGHT TO SUE FOR UNCOMPENSATED ECO-
NOMIC LOSS BASED ON FAULT.—A personal injury
protection insured who is involved in an accident
with a tort maintenance insured, or another personal
injury protection insured, may recover based on fault
from that other insured for uncompensated economic
loss (and not for noneconomic loss).
(c) ALLOCATION OF COMPARATIVE FAULT.—In any
case in which a claim is made under this Act for uncom-
pensated 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.
(d) 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 in-
sured person’s policy for economic loss without
regard to fault; and
(B) may recover from the uninsured mo-
torist (other than under uninsured or under-
insured motorist coverage) for economic loss
and for noneconomic loss based on fault.
(2) LIMITATIONS ON LAWSUITS BY UNINSURED
MOTORISTS.—An uninsured motorist may not re-
cover from a personal injury protection insured for
noneconomic loss.
(e) ACCIDENTS INVOLVING MOTORISTS UNDER THE
INFLUENCE OF ALCOHOL OR ILLEGAL DRUGS OR IN-
FLICTING 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 in-
tentionally 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 in-
tentionally injure another person.
(f) 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).
(g) RIGHTS OF PERSONS OCCUPYING MOTOR VEHI-
CLES
WITH
FEWER
THAN
FOUR
LOAD-BEARING
WHEELS.—Nothing in this Act shall be construed to af-
fect 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 in-
sured specifies otherwise. The preceding sentence applies
without regard to whether the person is otherwise legally
insured for personal injury protection or tort maintenance
coverage.
(h) 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 re-
sulting 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.
(i) PRIORITY OF BENEFITS.—
(1) IN GENERAL.—Except as provided in para-
graph (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 pri-
mary coverage shall be the coverage appli-
cable to the motor vehicle; or
(ii) that was being used in the busi-
ness of transporting individuals or prop-
erty, the primary coverage shall be the cov-
erage 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 de-
scribed in clause (i) or (ii) of subparagraph (A),
if that claimant would otherwise be able to re-
ceive those increased benefits by reason of in-
surance coverage of that claimant that would
otherwise apply, but for the operation of sub-
paragraph (A).
(j) REIMBURSEMENT RIGHTS OF PERSONAL INJURY
PROTECTION INSURERS AND COLLATERAL SOURCES.—
(1) REIMBURSEMENT RIGHTS OF PERSONAL IN-
JURY PROTECTION INSURERS.—
(A) IN GENERAL.—A personal injury pro-
tection 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 in-
fluence 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 an-
other person; or
(iv) any other person who is not af-
fected by the limitations on tort rights and
liabilities under this Act and whose con-
duct was the proximate cause of the acci-
dent.
(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 pay-
ments for a personal injury protection insured
of that insurer with respect to an accident
caused in whole or in part, as determined in ac-
cordance with applicable State law, from a per-
son 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 acci-
dent, a person may not recover or introduce into evi-
dence 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.
(k) 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 cov-
erage of the person from the State in which this Act
does not apply shall be deemed to be the form of in-
surance (whether personal injury protection or tort
maintenance coverage) that most closely reflects the
form of insurance that the person maintains in the
State of residence of the person.
(l) JURISDICTION.—This Act shall not confer juris-
diction on the district courts of the United States under
section 1331 or 1337 of title 28, United States Code.
(m) STATUTES OF LIMITATIONS.—
(1) IN GENERAL.—Subject to paragraph (2),
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.
(2) CLAIMS.—Unless otherwise provided by
State law, a claim for personal injury protection
benefits under this Act shall be filed not later than
two years after the economic loss that is the subject
of the claim is incurred.
(n) LIMITATIONS ON NONRENEWAL, CANCELLATION,
AND PREMIUM INCREASES.—An insurer shall not cancel,
decline to renew, or increase the premium of a person in-
sured 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 vicari-
ously liable.
(o) 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 viola-
tions or fault for an accident caused by that insured or
any resident relative or dependent, or employee of that in-
sured.
(p) IMMUNITY.—
(1) IN GENERAL.—Except as provided in para-
graph (2), no insurer, insurance agent or broker, in-
surance producer representing a motor vehicle in-
surer, automobile residual market plan, or attorney
licensed to practice law within a State, or any em-
ployee 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 sys-
tem 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 mis-
represents the insurance choices available
to a customer or client of that person; or
(ii) willfully and with the intent to de-
fraud, induces the election of one motor ve-
hicle insurance system described in para-
graph (1)(A) over the other motor vehicle
insurance system described in that para-
graph; 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 sys-
tem 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 re-
spect to claims brought by a foreign nation or a cit-
izen 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 dis-
miss 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 establishing a
schedule of payments for medical protocols for treat-
ment of an injury that arises from an accident;
(5) to preclude a State from requiring personal
injury protection insurers to offer first party insur-
ance that establishes a dollar value for noneconomic
loss in objectively verifiable defined classes of cases
involving death or serious and permanent bodily in-
jury;
(6) to preclude a State from enacting a law ap-
plicable 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;
(7) to preclude a State from providing that
forms of insurance other than those listed in section
5(b) shall be subtracted from personal injury protec-
tion insurance benefits otherwise payable for injury;
or
(8) to preclude a State from enacting a law
that—
(A) allows litigation by tort maintenance
insureds against personal injury protection in-
sureds for economic and noneconomic loss; and
(B) assures through a reallocation device
that the advantage of tort claim waivers by per-
sonal injury protection insureds against tort
maintenance insureds is reflected in the pre-
miums of personal injury protection insureds.
(b) PRESERVATION
OF STATE REGULATORY AU-
THORITY.—Nothing in this Act may be construed—
(1) to preclude a State or State official charged
with regulatory authority over the business of insur-
ance 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 in-
surer to offer, or a personal injury protection in-
sured to purchase, any coverage for bodily injury in
addition to the coverage required under this Act, in-
cluding uninsured motorist coverage, underinsured
motorist coverage, or coverage for medical payments;
(2) to prevent insurers and insureds from con-
tracting to limit recovery for the loss of earnings
under personal injury protection by—
(A) limiting such recovery to only 60 per-
cent 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 ac-
cident during which the benefits referred to in
this paragraph are payable to a period of not
less than one year;
(3) to prevent insurers and insureds from
contracting—
(A) to limit recovery for economic loss for
medical and rehabilitation expenses to the aver-
age amount actually paid for a particular
course of treatment; or
(B) to provide medical or rehabilitation
services through designated health care pro-
viders;
(4) to prevent an insurer from contracting with
insureds, as permitted by applicable State law, to
have submitted to arbitration any dispute with re-
spect to payment of personal injury protection or
tort maintenance coverage;
(5) to affect the worker classification of a per-
son, either as an employee or an independent con-
tractor, on the basis of the election of an employer
or motor carrier of an insurance system under sec-
tion 4(a); or
(6) 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 ses-
sion of the State beginning after the date of enact-
ment 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 jurisdic-
tion 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 sub-
section (b)(1)(A); and
(B) that finding is made and any review de-
scribed in subsection (b)(1)(B) is completed not
later than the date specified in subsection (b)(1)(C).
(b) NONAPPLICABILITY BASED
ON STATE FIND-
ING.—
(1) IN
GENERAL.—This Act shall not apply
with respect to a State, if—
(A) the State official charged with jurisdic-
tion over insurance rates for motor vehicles
makes a finding that the statewide average
motor vehicle premiums for bodily injury insur-
ance 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 (with-
out including in the calculation for personal in-
jury protection insureds any costs for unin-
sured, underinsured, or medical payments cov-
erages);
(B) the finding described under subpara-
graph (A) is supported by evidence adduced in
a public hearing and reviewable under the appli-
cable State administrative procedure law; and
(C) the finding described under subpara-
graph (A) is made, and any review of such find-
ing under subparagraph (B) is completed, not
later than 120 days after the date of enactment
of this Act.
(2) COMPARISON
OF
BODILY
INJURY
PRE-
MIUMS.—For purposes of making a comparison
under paragraph (1)(A) of premiums for personal
injury protection with preexisting premiums for bod-
ily 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 sub-
section is not made and reviewed by the date specified in
subsection (b)(1)(C), this Act shall apply to that State be-
ginning 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 imple-
mentation 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 elec-
tion 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 subpara-
graphs (A) through (C) of subsection (a)(1).
Æ