Author: Richard H. Adler

The Insurance Commissioner's office for the state of Washington adopted new regulations, WAC 284-30-395, on June 4, 1997, effective July 5, 1997. These new rules are in response to numerous complaints by insureds (your patients) against their automobile insurers for prematurely terminating, limiting, or denying medical benefits paid pursuant to their Personal Injury Protection (PIP) insurance policies. The purpose of this article is to provide you with the exact language of the new regulations along with a section-by-section analysis. This language of the rules will be in italics with an explanation that follows.

WAC 284-30-395 Standards for prompt, fair and equitable settlements applicable to automobile personal injury protection insurance. The commissioner finds that some insurers limit, terminate, or deny coverage for personal injury protection insurance without adequate disclosure to insureds of their bases for such actions. To eliminate unfair acts or practices in accord with RCW 48.30.010, the following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance specifically applicable to automobile personal injury protection insurance. The following standards apply to an insurer's consultation with health care professionals when reviewing the reasonableness or necessity of treatment of the insured claiming benefits under his or her automobile personal injury protection benefits in an automobile insurance policy, as those terms are defined in RCW 48.22.005(1), (7), and (8), and as prescribed at RCW 48.22.085 through 48.22.100. This section applies only where the insurer relies on the medical opinion of health care professionals to deny, limit, or terminate medical and hospital benefit claims. When used in this section, the term "medical or health care professional" does not include an insurer's claim representatives, adjusters, or managers or any health care professional in the direct employ of the insurer.
(1) Within a reasonable time after receipt of actual notice of an insured's intent to file a personal injury protection medical and hospital benefits claim, and in every case prior to denying , limiting, or terminating an insured's medical and hospital benefits, an insurer shall provide an insured with a written explanation of the coverage provided by the policy, including a notice that the insurer may deny, limit, or terminate benefits if the insurer determines that the medical and hospital services:

(a) Are not reasonable;

(b) Are not necessary;

(c) Are not related to the accident; or

(d) Are not incurred within three years of the automobile accident.

These are the only grounds for denial, limitation, or termination of medical and hospital services permitted pursuant to RCW 48.22.005(7), 48.22.095, or 48.22.100.

ANALYSIS OF SECTION (1). Section (1) requires the PIP insurer to notify its insured of benefits provided by the PIP policy and, in the same breath, to advise that insured that the insurance company reserves all rights to limit, deny, or terminate PIP medical benefits without question. It was the intent of the Insurance Commissioner's office to require insurers to disclose at the initial point of a claim being made that they may deny, limit, or terminate health care benefits. However, the bases for cutting off PIP benefits are narrowed to four specific categories. The insurer can only deny, limit, or terminate benefits if the health care services

• Are not reasonable;


• Are not necessary;


• Are not related to the accident ("causation" challenge because of a preexisting condition or subsequent injury); or


• Are not incurred within three years of the automobile accident. PIP policies require three years of coverage from the date of the accident.

WAC 284-30-395(2) Within a reasonable time after an insurer concludes that it intends to deny, limit, or terminate an insured's medical and hospital benefits, the insurer shall provide an insured with a written explanation that described the reasons for its action and copies of pertinent documents, if any, upon request of the insured. The insurer shall include the true and actual reason for its action as provided to the insurer by the medical or health care professional with whom the insurer consulted in clear and simple language so that the insured will not need to resort to additional research to understand the reason for the action. A simple statement, for example, that the services are "not reasonable or necessary" is insufficient.

ANALYSIS OF SECTION (2). Section (1) requires that the insurer disclose, at the time of first notification of a possible claim, its right to deny, limit, or terminate PIP benefits. Section (2) requires the insurer to provide the insured with an informative statement at the time it intends to limit, deny, or terminate a PIP claim. In other words, the insurer is required to provide the insured with an informative statement at the time it intends to limit, deny, or terminate a PIP claim. Section (2) states that the insurer can no longer simply claim that the medical services are "not reasonable" or "not necessary" or "not related" to the MVA. This eliminates the all-too-often experience of the adjuster offering his or her "diagnosis" as to the reasonableness or necessity of care. The insurer will need to rely on a doctor's report to support its conclusions that treatment is no longer reasonable, necessary, or related to the accident. Moreover, use of terms such as "palliative care" as a basis for denying care will no longer satisfy the requirements of the law under Section (2).

WAC 284-30-395(3)(a) Health care professionals with whom the insurer will consult regarding its decision to deny, limit, or terminate an insured's medical and hospital benefits shall be currently licensed, certified, or registered to practice in the same health field or specifically as the health care professional that treated the insured.

(b) If the insured is being treated by more than one health care professional, the review shall be completed by a professional licensed, certified, or registered to practice in the same health field or specialty as the principal prescribing or diagnosing provider, unless otherwise agreed to by the insured and the insurer. This does not prohibit the insurer from providing additional reviews of other categories of professionals.

ANALYSIS OF SECTION (3). Section (3) generated the most comment and heated discussion during the rulemaking process. Washington's prior rules allowed the PIP insurer to schedule an insurance medical examination (IME) with "any doctor of its choosing." Often, this would mean that if a patient was treating with a chiropractor, the insurer could hire an orthopedic doctor to render an opinion on the efficacy, reasonableness or necessity of chiropractic care. Now, when an insured is required by the insurer to attend an IME, the PIP carrier will need to select a health care professional that is "currently licensed, certified, or registered to practice in the same health field or specialty as the health care professional that treated the insured." The intent of the new rule is to safeguard and protect the insured's choice of health care provider. Chiropractors will now review chiropractic care, neurologists will review neurological assessment, orthopedic doctors will review orthopedic care, etc.

During the course of the rulemaking process, it was brought to the Commissioner's attention that frequently more than one health care professional is involved in the treatment of a patient with injuries. In that situation, the health care professional selected by the insurer to conduct the IME will be in the same "health field or specialty as the principal prescribing or diagnosing provider." This means that if someone is treating with a family physician and is referred to physical therapy for a period of treatment, and then referred on to a neurologist for assessment, then the IME would be done by a family practice doctor who is serving as the principal doctor. If a chiropractor is the primary doctor who has made referrals to a neurologist for neurological assessment and an orthopedist for a surgical consult, the IME would have to be conducted by a chiropractor since the chiropractor is the principle provider.

WAC 284-30-395(4) To assist in any examination by the commissioner or the commissioner's delegatee, the insurer shall maintain in the insured's claim file sufficient information to verify the credentials of the health care professional with whom it consulted.

ANALYSIS OF SECTION (4). PIP insurers will now be required to keep a copy of every health care consultant's résumé verifying the credentials of the health care professional. An insured has the right to request a copy of the IME doctor's curriculum vitae to ensure possession of the proper credentials to conduct the IME. Practically speaking, at the time an IME is scheduled, the insurer will require from the consulting physician or the consulting agency that the physician provide not just a copy of written report but a copy of the examiner's current credentials.

WAC 284-30-395(5) An insurer shall not refuse to pay expenses related to a covered property damage loss arising out of an automobile accident solely because an insured failed to attend, or chose not to participate in, an independent medical examination requested under the insured's personal injury protection coverage.

ANALYSIS OF SECTION (5). Section (5) came in response to complaints by insureds that delays in the resolution of property damage claims (governed by other regulations that require the insurer to deal with this issue within 30 days of the reported loss) were caused by insurers bullying insureds into attending IME examinations before their vehicles were repaired. Rights and duties of insurers and insureds are clearly stated as a separate issue. An insured who does not attend an IME still has the right to have his or her vehicle repaired under the terms of his or her policy.

WAC 284-30-395(6) If an automobile liability insurance policy includes an arbitration provision, it shall conform to the following standards:

(a) The arbitration shall commence within a reasonable period of time after it is requested by an insured.
(b) The arbitration shall take place in the county in which the insured resides or the county where the insured resided at the time of the accident, unless the parties agree to another location.
(c) Relaxed rules of evidence shall apply, unless other rules of evidence are agreed to by the parties.
(d) The arbitration shall be conducted pursuant to arbitration rules similar to those of the American Arbitration Association, the Center for Public Resources, the Judicial Arbitration and Mediation Service, Washington Arbitration and Mediation Service, chapter 7.04 RCW, or any other rules of arbitration agreed to by the parties.

ANALYSIS OF SECTION (6). Many automobile insurance policies have remedies for disagreements regarding PIP benefits. Section (6) is intended to make sure that those polices have similar provisions for arbitrating disputes. If there is a disagreement about the appropriateness of denying, limiting, or terminating PIP benefits, either the insurer or insured can request arbitration to resolve differences. The arbitration must be conducted within a reasonable time after it is requested, in the county in which the insured resides. To expedite this process, the formal rules of evidence are relaxed so that the hearing can be accomplished by the use of reports and records without live testimony of the doctors.

CONCLUSION

Some argue that these regulations did not go far enough to cure the abuses of insurance practices by insurers. Insurers, however, argue that the regulations go too far in limiting their rights and increasing their costs in monitoring PIP claims. A careful analysis and comparison of the initial proposed regulations and the actual rules indicate that the Insurance Commissioner's office went to great lengths to balance the interests of the insured and the insurer. The much-needed relief for insureds (your patients) came through in Section (3) requiring essentially like-kind examinations for the treatment that is questioned. It is the proverbial "apples reviewing apples" and no longer "apples reviewing oranges." This regulation will go a long way toward achieving the appearance and actual fairness regarding issues which have affected insureds and their providers over many, many years.

Very truly yours,
Adler Giersch, P.S.

Richard H. Adler
Attorney at Law