Are you receiving treatment following an accident that is "medically necessary?" If not, your insurance company can deny coverage.

I.  Introduction.

First, here are some basics.  If someone is injured in an accident involving a motor vehicle in Pennsylvania, the Motor Vehicle Financial Responsibility Law (or, "MVFRL") establishes the manner in which the individual must seek reimbursement for medical bills.  The MVFRL states that if you are a "named insured" on an automobile insurance policy, you must look first to that policy to cover your expenses.  This kind of coverage is known as "first party" insurance. 

The next place you might look to recover medical bills is any policy under which you are an insured (as opposed to a "named insured").  A "named insured" is someone who is actually named on the policy.  An "insured," by contrast, is a spouse, child, or other relative living in the same house as the "named insured."  

If you are not a named insured or an insured, but you were occupying an insured vehicle at the time of an accident, you can recover under the insurance policy for that vehicle.  Cyclists are not considered to be occupying a vehicle for purposes of recovering "first party" benefits.  

Finally, if you are not a named insured, an insured, or were not the occupant of a motor vehicle (e.g., a pedestrian or cyclist), then you can seek to recover from the policy of any vehicle involved in the accident (not including parked or unoccupied vehicles).    

All of these sources of benefits come before you may seek to recover from a negligent driver who injured you.  The insurance coverage of another responsible person is called "third party" insurance coverage (I'm still not sure who the "second party" is).

II.  Medical Treatment Must be Reasonable and Necessary.       

The MVFRL was designed to reduce the costs associated with automobile accidents.  As such, section 1797 of the MVFRL limits the amount that medical providers (e.g., physicians, chiropractors, and physical/occupational therapists) may charge for treatment, accommodations, products, or services rendered to patients injured in automobile accidents where the injury is covered by an automobile insurance policy.  The MFVRL also requires providers to seek reimbursement of their bills from an insurer and prevents providers from seeking any payment from the patient with regard to the difference between the provider’s ordinary charges and those paid by an insurance company.  So, as long as you have coverage, your provider must submit your medical bills to your insurance carrier.    

In furtherance of reducing costs associated with motor vehicle accidents, the MVFRL permits an insurance company to contest its obligation to pay for ongoing medical treatment by submitting a patient’s treatment to a peer review organization, or “PRO.”  If, upon a timely challenge, a PRO determines that treatment is unreasonable or unnecessary, the provider may not collect (or must return with interest) any related payments.  That means that your expenses for ongoing (or, even, past) medical treatment will no longer be covered by insurance!  In that case, you will be responsible for the payment of any additional treatment charges.    

An injured person (or their provider) can challenge a PRO determination that treatment was unreasonable or unnecessary by: (1) requesting reconsideration of the PRO; or (2) by filing an appeal to the court.  If a court finds that the treatment provided was reasonable or necessary, the insurer must pay to the provider any outstanding fees for treatment, plus 12% annual interest.  If the insurer’s conduct is found to be wanton (i.e., totally unreasonable), the insurer can be subject to a payment of treble (or, triple) damages.  Likewise, if the insurer is found to have acted with no reasonable foundation in refusing to pay benefits, they may be subjected to an award of attorneys fees for the time expended to recover the medical bills.  

If an insurer denies payment for medical or rehabilitation treatment without first seeking a peer review through a PRO, and if a court finds that the treatment rendered was reasonable or necessary, then the insurer must pay to the provider all outstanding amounts, plus interest at 12%, as well as the costs of the challenge and all attorney fees. 

Attorneys’ fees and costs are hotly contested in these types of cases and are typically only recoverable in the event that an insurance company fails to challenge the treatment through a PRO (i.e., acts wantonly).  If an insurance company timely challenges treatment before a proper PRO, attorneys’ fees and costs will generally be “off the table,” even if the treatment is ultimately found to have been reasonable or necessary.  If a court finds that the treatment was unreasonable or unnecessary, then the provider may not recover for those services and must return any unreturned payments, with interest.    

III.  Clarification from the Supreme Court on an Award of Attorney's Fees.

Some courts have awarded attorneys fees to providers where an insurance company improperly uses the PRO process.  In one case, the court awarded attorney’s fees and costs to a provider because the insurance company did not submit the charges to a PRO in a timely manner (i.e., within 90 days of receipt of the bills for treatment).  Also, the court in that case found that an independent medical examination (or, an “IME”) was not the equivalent of a PRO.  Rather, because the purpose of an IME is to determine whether or not treatment is causally related to an accident and/or whether a patient has reached maximum medical improvement, an IME does not necessarily address the issue of whether or not a provider’s treatment was reasonable or necessary.  Thus, where the insurance company relied upon an IME to refuse payment of the provider’s medical bills, the court held that the insurer did not properly avail itself of the PRO process.  Therefore, the court awarded attorney’s fees and costs to the provider after it also found that the provider’s treatments were reasonable and necessary.       

In another case, a trial court awarded attorney’s fees and costs because it found that the insurance company – who did utilize the PRO process – did not follow certain accepted peer review processes.  In other words, the court found that the insurance company’s PRO was “invalid.”  On December 31, 2014, the Pennsylvania Supreme Court granted the insurance company’s appeal of the trial court’s decision.  On appeal, the Supreme Court will examine, among other things, whether or not the lower court improperly awarded attorneys fees even though the insurer utilized the peer review process. 

IV.  Conclusion.

If you are injured in an accident involving a motor vehicle in Pittsburgh or Western Pennsylvania, your medical expenses may be covered from a variety of "first-party" sources.  If you do receive "first-party" insurance coverage, the insurance company can challenge whether your treatment is reasonable or necessary.  If they do - and if they obtain a PRO report stating that your treatment is no longer reasonable or necessary - then you may need to fight back in order continue receiving benefits.  An experienced insurance attorney can help you (or, your provider) resolve these issues.         

Thanks for reading and, as always, keep the rubber side down.

Matthew F. Dolfi

Dolfi Law PC

1100 Washington Avenue, Suite 206
Carnegie, Pennsylvania 15106

412-227-9724