• Personal Injury Protection (PIP) insurance is intended to protect victims of motor vehicle collisions by covering medical expenses, lost wages, household services and funeral costs under an automobile insurance policy.  It applies to any occupant of a vehicle, pedestrian, or cyclist involved in a motor vehicle collision, regardless of fault.

    PIP insurance is so crucial that Washington State law requires insurance carriers to offer PIP insurance to everyone purchasing auto insurance, and requires that that any policyholders wishing to opt out of coverage sign a waiver specifically agreeing to deny themselves these important benefits in the event of a collision.   So long as the policyholder did not opt out of coverage, every vehicle occupant, pedestrian or cyclist involved in a motor vehicle collision will have coverage, at a minimum, of up to $10,000.00 in medical expenses, $200.00 per week in wage loss benefits, and up to

    $10,000.00 for household services.    The law permits an automobile insurer to deny coverage for PIP benefits, but only if the claims are not “reasonable, necessary, or related” to the subject collision, or if they occurred outside of the 3 year-period after the collision.[1]

    Despite the very clear parameters set out by the legislature, PIP insurers have been diluting PIP coverage for years, and many have unfairly denied medical bills for reasons other than the care not being “reasonable, necessary or related,” as required by statute.  One example that insurers frequently use to deny PIP medical expenses and cut the insured off from care is the vague excuse that the patient reached “maximum medical improvement (MMI),” which is a different insurance term of art than “reasonable, necessary or related” treatment.   Such frustrating insurance game-playing with contract language and end-runs around the legal standard have led many patients and providers alike to ask, “Why even pay for PIP insurance if my own insurance company is going to deny my treatment when I need it the most?”  The result of such unfair denials by PIP insurers had led many patients to simply stop getting the care they need, and has led many providers to stop taking on victims of auto collisions because it is so difficult to get PIP to pay.

    The Washington State Supreme Court heard these concerns, and on June 7, 2018, issued a clear and unequivocal opinion that stands with the law, consumers, and patients seeking care for injuries following a motor vehicle crash. In a class action lawsuit against State Farm Insurance Company, Durant v. State Farm, the Supreme Court heard an argument by a group of injured individuals who were denied PIP benefits for medical care required after motor vehicle collisions, which State Farm repeatedly denied because the medical services were not considered “essential in achieving maximum medical improvement for the injury (MMI) sustained in the accident.”   In response to bills submitted under a PIP policy, State Farm would send form letters to the providers, asking them to state whether the patient had achieved MMI, or when that patient would reach MMI.  State Farm would then deny coverage if a provider found that the patient was as good as she or he was going to get, even if the injuries had not resolved and the patient still required treatment.  In other instances, State Farm would hire a records reviewer or physician to examine the patient or records to make their own assertions concerning MMI.  The class of plaintiffs, made up of State Farm insureds who were each unfairly denied PIP benefits, filed suit against State Farm, contending that the insurance company was unlawfully denying PIP benefits in violation of Washington Administrative Code (WAC) 284-30-395 when it denied claims based on the MMI standard.

    This provision of the WAC provides:

    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.

    State Farm tried to defend its position by arguing that MMI language really means that the treatment is no longer “necessary” per the statute.  The Supreme Court saw through State Farm’s charade defense and commented that State Farm was using the MMI standard as the primary and determining factor in limiting its responsibility it would otherwise have to pay medical claims under the regulation, which the regulation simply does not permit.  The Court added that the MMI standard was “clearly more restrictive than what would ordinarily be considered reasonable and necessary medical care.”

    In support of the plaintiffs, the Office of Insurance Commissioner filed an “amicus brief” (also called a friend of the Court brief) and added that denials by insurers that the care is simply “palliative and not curative” should also not be a basis to deny bills:

    Nowhere does the statute exclude palliative care, or care to maintain a stable condition, rather than to improve a person’s condition.  Rather, the Legislature chose the phrase ‘all reasonable and necessary’ as the parameters for determining care that must be covered.

    See Durant v. State Farm, No. 94771-6, at p. 11.  The Supreme Court agreed, and held that “excluding payment for palliative care from the reasonable and necessary medical expenses that are required to be paid under PIP coverage violates the public policy reflected in the statutory and regulatory scheme underling PIP coverage, which is to fully compensate insureds for their actual damages from automobile accidents.”

    This recent decision sends a clear message to State Farm Insurance and all other auto insurers in the state of Washington, e.g., Allstate, Travelers, PEMCO, Mutual of Enumclaw, USAA, Nationwide, etc that insurers can only deny treatment bills under PIP if they are not “reasonable, necessary or related” to the collision.  Maximum Medical Improvement (MMI) or “palliative only” arguments will no longer support a denial.

    If you have any questions about this recent decision, or would like to discuss the standard for PIP claims, please contact our offices.


    [1] The statutory time period for medical claims is three years, but the household services and wage loss benefits are only available for up to 12 months post collision under most policies.


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