Progressive developments in personal injury protection law
Can you refuse an IME (insurance medical examination) and still get PIP benefits?
PROGRESSIVE DEVELOPMENTS IN PERSONAL INJURY PROTECTION LAW Top of Page
Until now, insurance companies have felt free to deny PIP claims without fear of retribution. Thanks to the good work of Pendleton attorney Gene Hallman, the Oregon Court of Appeals has held in Anderson v. Farmers Insurance Company of Oregon, 188 Or App 179, 71 P3d 144 (2003) that insurance companies who fall short of their duties in personal injury protection claims can be held accountable for the damage they cause.
Frank Anderson had three automobile insurance policies with Farmers Insurance. The PIP portions of each policy provided for medical coverage of $25,000. A policy provision expressly prohibited stacking of PIP policies.
"If any applicable insurance other than this policy is issued to you or a family member by us or any other member company of the Farmers Insurance Group of Companies, the total amount payable among all such policies shall not exceed the limits provided by the single policy with the highest limits of liability."
Farmers eventually acknowledged that it would be required to extend PIP benefits on each policy. The Court of Appeals explained that Oregon law requires all automobile insurance policies to extend PIP coverage. Hence, there is no room in the law for a policy to exclude PIP coverage. But Farmers asserted that only the first policy would have medical benefits of $25,000 and that the other two policies extended benefits of only the statutory minimum medical PIP benefits of $10,000. Here is the court's recap of that issue:
"Because the policies are for equal amounts, the clause would have the effect of completely denying PIP coverage on the two excess policies, when Oregon law requires some coverage. ORS 742.520 and 742.524 require every motor vehicle insurance policy to provide $10,000 in PIP coverage for each insured for 'all reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and prosthetic services incurred within one year after the date of the person's injury.' Thus, Farmers concedes that, despite the anti-stacking clause in its policies, it was required to provide the minimum statutory PIP coverage in each policy; it calculates the amount due plaintiff as $25,000 under the primary policy and $10,000 under each excess policy, for a total PIP benefit of $45,000." 188 Or App at 181-182.
Farmers paid benefits for awhile, but then it was learned that Anderson required knee surgery. Anderson claimed the right to a total of $75,000 medical coverage under the three policies, and asked Farmers to preauthorize the surgery so that he would not be left with unpaid medical bills, but Farmers refused. Farmers had paid $32,000 up to that time and asserted that it was not accountable for more than $13,000 in additional medical expenses because of the purported $45,000 coverage limit. The surgery costs were over $33,000, and Anderson could not afford to pay the balance out of his own pocket, so he could not afford to go through with the surgery. The one year period for PIP medical benefits lapsed, and Farmers argued that Anderson had no further rights under his three PIP policies.
Anderson filed suit against Farmers for economic and noneconomic damages. The trial court held that Farmers violated the PIP policy by repudiating Anderson's right to recover medical benefits up to $75,000 ($25,000 per policy). The jury awarded Anderson $26,000 in economic and $200,000 in noneconomic damages.
The main focus of the opinion of the Court of Appeals was that PIP policies "stack." Oregon law assesses priorities as to which policy pays first and which policies come afterwards, but there is no provision in Oregon law for an insurance company to insulate itself from responsibility under a PIP policy. "No statute permits an insurer to limit its PIP liability to the upper limits on one policy." 188 Or App at 185. Three $25,000 policies give access to $75,000 in medical benefits.
The other important feature of Anderson is that insurance companies who violate their policies are liable for the damage caused by their denials. Prior to Anderson, insurance companies could intimidate PIP claimants into forgoing needed medical care until the coverage period expired, and then walk away from the claim with no accountability for the harm they cause. From now on, however, insurers can be held accountable. It is purely a matter of breaching a contract. There is no need to show "bad faith" on the part of the insurance company. Farmers ended up having to pay Anderson $226,000 in damages as a result of Farmers' attempt to reduce Anderson's PIP coverage. This case will make insurance companies think twice before denying PIP claims in the future.
Can you refuse an IME (insurance medical examination) and still get PIP benefits? Top of Page
In PIP claims, insurance companies often attempt to compel the insured person to attend an "insurance medical examination" (IME). All too often we see PIP insurers set up an examination with a doctor who is predisposed to come to the aid of the company by concluding that the insured person does not need any more medical care. This has often been a catch-22. If the insured person attends the examination, the company's selected doctor will conclude that no further benefits are necessary, and the PIP claim will be cut off. If the insured person does not attend the examination, the company will declare a forfeiture, and the PIP benefits will be cut off. It has become commonplace for insurance companies to use this "heads I win tails you lose" technique.
There are some very well qualified personal injury attorneys who advise their clients in all cases never to attend a PIP IME because it will clutter the record with a disingenuous medical report disputing the client's claim. One thing is certain: a courtroom could be flooded with lawyers and past claimants who could testify to the lack of objectivity, even entering into the realm of dishonesty, in so many IMEs.
Federated Services Insurance Company v. Granados, 133 Or App 5, 889 P.2d 1312 (1995) can be extremely helpful in cases where an insurance company denies PIP benefits for failure to attend an IME.
Evadio Granados and his wife were injured in a motor vehicle collision. Mr. Granados settled his claim against the negligent driver and then made a claim against his insurance company, Federated, for underinsured motorist (UIM) benefits. Federated argued that there Granados forfeited his UIM coverage because he did not get Federated's consent before settling the liability claim. The Court of Appeals ruled in favor of Granados and held that he could pursue his UIM claim even though he had not complied with the policy requirement that he get Federated's consent before settling his liability claim.
The court distinguished between "exclusion" of coverage and "forfeiture" of coverage. "Exclusion" relates to the scope of coverage in the first place. "Forfeiture" exists if coverage that is otherwise valid is nullified by an act of the insured. The court held that two elements must be satisfied in order for an insurance company to invoke a forfeiture of a policy. First, the insurance company must show that it was prejudiced by the violation of the policy. Second, if prejudice can be shown, the insurance company must prove that the insured acted unreasonably in violating the terms of the policy. If both elements are not proven, there is no forfeiture and the insurance company has to pay benefits.
"The first inquiry is whether the insurer was prejudiced by the claimant's conduct. If so, the second inquiry is whether the claimant nevertheless acted reasonably in breaching the consent-to-settle provision." 133 Or App at 9.
Terminating PIP benefits for failure to attend an IME is a declaration of "forfeiture." It could be argued that the insurance company is not truly "prejudiced" by the failure of an insured person to attend an IME by a doctor with a long history of favoring insurance companies. But it can certainly be argued that the insured person was reasonable in fearing that the scheduled IME was nothing more than a ploy by the carrier to terminate PIP benefits one way or the other. And, the burden of proof is on the insurance company to show that the insured was not acting reasonably.
Under the rule announced in Federated Services Insurance Company v. Granados, a PIP insurer should be hesitant to declare a forfeiture of PIP benefits for failure to attend an IME. When the insurance company wants to schedule an IME, the attorney should insist that the company disclose the name of the doctor and the reasons for and parameters of the examination. The claimant's attorney should insist that the doctor not be someone with a tendency to favor insurance companies. Tell the adjuster in advance that your client will not attend an IME by a doctor who has a reputation of being less than objective and that you will fight the claim all the way if the company attempts to terminate PIP benefits. Tell the adjuster about the rule in Federated Services Insurance Company v. Granados. It's good law.