Sunday, August 21, 2011

Punitive Damages Now Available to Counter Frivolous Peer Review Denial

Chiropractors, physical therapists, occupational therapists and their patients, the injured, are often confronted with bills for treatment being rejected by insurance carriers.  The determination being that the treatment and related bills were not reasonable, necessary and related to the accident.  This is beyond frustrating for everyone involved on the treating end.  The patient now finds out that a helpful treatment is suddenly not covered by his insurer.  The healthcare provider is stuck with the dilemma of whether to write off the bill, attempt to collect it from their patient or contest the insurance company. 

Fortunately a recent decision from a Pennsylvania Federal Court from our own Western District rendered a decision that will help the people injured in car accidents to recover punitive damages when their insurance company declines payment of medical expenses incurred as a result of an accident. 

In Miller v. Allstate Fire & Casualty Insurance Company, Jason Miller was injured as a result of a car crash. He treated with his chiropractor for his injuries. Miller was insured with Allstate. Allstate sent his chiropractic bills/treatment to a Peer Review Organization (PRO) for a decision on whether the treatments were reasonable, necessary and related to the accident.  If not, Allstate would not pay the bills. Shockingly (read: sarcasm) the PRO found the bills not to be reasonable, necessary or related. Resultantly, Allstate refused to pay the bills. Miller sued Allstate, arguing that the bills were related to the accident, and that Allstate was responsible for their payment. Miller also claimed that Allstate acted in bad faith in the handling of his claim, and sought punitive damages.  

Allstate sought to dismiss the claim for bad faith, arguing that Pennsylvania law did not permit a claim for bad faith damages in a lawsuit concerning the non-payment of medical bills arising from a car accident.

Miller countered that, in addition to the damages outlined in 75 Pa.C.S.A. §1791(b)(6) which Allstate claimed were Miller's only source of damages, he was also entitled to punitive damages, as Allstate had acted in bad faith in refusing to pay for medical expenses which were directly related to the accident. Miller alleged that Allstate had "abused the peer review process", to Allstate's benefit.

The court agreed with Miller, holding that the allegations of bad faith were based upon an abuse of the peer review process and mishandling of the claim.  The Court held this was separate and distinct from Miller’s claim that he was entitled to payment of his medical bills. The court stated that because the claim of abuse of the peer review process fell outside of the scope of the protections afforded to an insured by the MVFRL, Miller was also entitled to bring a claim for bad faith and punitive damages. 

This is a great decision for those injured in car accidents as well as many of the providers that treat their injuries.  People injured in car accidents have had their rights expanded by this decision. Now, when an insurer questionably denies to cover certain treatment, the patient can contest it with the power of punitive damages behind them.  If the patient is unaware of this case, healthcare providers like chiropractors, who may get stuck with no payment for services can explain this new development to help their cause and the patient's.

For more on Punitive Damages, read my past article on Punitive Damages here.

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