The New Great Equalizer: How a Simple Change in the Law Helps Patients Get Health Care Bills Paid Under Their PIP Coverage Following a Motor Vehicle Collision
March 31, 2014
By Melissa D. Carter, Attorney at Law
I. Historical Background
In 2007, Washington voters approved the Insurance Fair Conduct Act (“IFCA”), effective December 6, 2007. This law holds your patient’s automobile insurance company to a standard of good faith and fair dealing, making it illegal for companies to unreasonably deny your patient’s Personal Injury Protection (“PIP”) insurance claim or to violate laws that govern unfair claims settlement practices. This law also protects individuals who have been denied access to health care by their auto insurer’s unreasonable denial of PIP benefits. IFCA is codified at RCW 48.30.010(7) and RCW 48.30.015.
IFCA applies only to claims that an individual policyholder has against his or her own automobile or homeowner’s insurance company, not against someone else’s insurance company, or to any health insurance companies.
Specific unfair claims settlement practices that insurers are prohibited from doing under IFCA include:
- misrepresenting pertinent facts or insurance policy provisions;
- failing to acknowledge and act reasonably and promptly upon communications regarding claims under the policy;
- failing to adopt and implement reasonable standards for the prompt investigation of claims arising under the policy;
- refusing to pay claims without conducting a reasonable investigation;
- failing to affirm or deny coverage of claims within a reasonable time after fully complete proof of loss documentation has been submitted;
- not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
- compelling a first party claimant to initiate or submit to litigation, arbitration or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such proceedings;
- attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
Prior to IFCA, when an insurer unreasonably denied or delayed payment of PIP medical benefits to a patient injured in a motor vehicle collision, there was no meaningful or effective legal remedy to force the insurer to pay the health care bills already incurred. While it was true that patients could file a lawsuit again their own insurer, a successful outcome only meant that the patient’s bill would be paid but he/she was left to pay their own attorney fees and expenses of the lawsuit, more often a much larger sum than the disputed amount of the bill This was not a practical solution for the patient whose PIP medical bills were held hostage by an unfair auto insurer. IFCA changed that imbalance by allowing the patient to recover medical bills, attorney’s fees, costs of the litigation, and significantly, for the “trebling” of actual damages. This means that the judge, or in some instances a jury, can double or triple the amount of the damages because of the bad conduct of the insurer. Treble damages provide a powerful disincentive for insurers to not pay their insured’s health care expenses related to injuries from a motor vehicle collision.
II. How the Courts Have Followed IFCA Since its Passage
In its five years of existence, Washington state courts have had little opportunities to interpret IFCA. In fact, no state Supreme Court or Appeals Court has specifically ruled on the purpose of IFCA, yet the legislative history makes it clear that the law is meant to deter the unreasonable delay and expense imposed on insureds in obtaining needed health care, wage loss and household services benefits. This, bolstered by the duty of good faith, is a potent combination that can be used to demonstrate reprehensible conduct on the part of the carrier.
IFCA violations are not limited to the denial or delay of PIP benefits under an auto policy; IFCA also applies to the unreasonable denial of uninsured and underinsured motorist (UIM) benefits under an auto policy. In the case of Dees v. Allstate Ins. Co., a federal trial court for the Western District of Washington ruled that a patient/policyholder’s medical bills, lost wages, and pain and suffering damages were recoverable under IFCA if those damages represented unreasonably denied Underinsured Motorist (UIM) benefits under an automobile insurance policy. After PIP exhausts, an individual’s UIM benefits may ultimately cover unpaid medical bills at the conclusion of the claim. IFCA now provides extra safeguards to ensure that the insurance company covers related expenses that an individual incurred as a result of an auto collision.
III. Trends with the Office of Insurance Commissioner
IFCA requires that, before an individual files a lawsuit against an insurance company for unfairly denying or delaying benefits due under the policy, the individual must file written notice to the insurance company with a “20-day Notice” of the IFCA claim with the Office of Insurance Commissioner. RCW 48.30.015(8). In 2007, when the law was first enacted, there were only 121 unfair conduct claims filed by insureds against their insurers with the Office of Insurance Commissioner. In 2008, and through the present, that number has been steadily over 800 claims each year. The vast majority of the claims, approximately 70%, stem from mishandled auto claims, e.g., failure to an insurer to pay for a patient’s reasonable, necessary and related medical bills incurred as a result of a motor vehicle collision. Once an IFCA claim is filed with the Insurance Commissioner’s office, the insurance company will have its attorney step into the case. Oftentimes, they see that the insurer did in fact mishandle the case and will have the bills paid and attempt to negotiate the damages of attorney fees, costs, etc.
The attorneys at Adler Giersch are very familiar with IFCA and have successfully forced many insurers to cover reasonable and necessary medical expenses and attorneys’ fees and costs for filing an IFCA claim, by insisting that insurers comply with this powerful “great equalizer.” If your patient is experiencing difficulties in getting the needed access to health care because of unreasonable delays and denials by his or her insurance company from a motor vehicle collision, simply give us a call.