Car insurance companies will find themselves benefiting from a recent Florida appeals court ruling that protects them from prosecution. The decision states that when a plaintiff is not entitled to Personal Injury Protection (PIP) coverage after an auto accident, that person is barred from recovering damages simply because the insurer failed to properly detail its reasons for denial.
The decision bars many lawsuits that have become popular with plaintiff attorneys. These lawsuits have sought to recover bad-faith damages in PIP insurance claims that would not have been covered anyway. Under this ruling, a person may not sue their car insurance company solely because the company failed to give an Explanation of Benefits (EOB) on a PIP insurance claim when it is clear there would have been no payment owed. The appeals decision reverses a lower court ruling in favor of the plaintiff for $19,530 in legal fees for a PIP claim in which the bills fell below the PIP deductible.
The case stems from an accident in which an auto injury victim received medical care in February 2004 from A1st Choice Healthcare Systems (A1st). The plaintiff in the case was the healthcare provider, which sued United Automobile Insurance Company (United Auto) for payment. United Auto erred in its response to the A1st bill by failing to include a peer review referenced in its EOB form and by filing the EOB form well after the A1st bill was submitted. A1st sought damages for nonpayment of benefits, plus damages for the late EOB filing. A1st was forced to drop the charge for unpaid benefits when it was shown that the bill amount was below the insured’s deductible.
The judge appears to be sending a message to A1st with his award for the late EOB filing. He awarded the company $1. The appeals court ruled that the lower court should not have allowed attorney fees, since a cause of action is only allowed under the law when there are PIP benefits available. Because there were no benefits to be paid, the attorney fees should have been barred. According to an article on Propery-Casualty.com, Judge Frank A. Sheperd wrote, “It is clear there is neither a requirement nor a deadline for a personal injury protection insurer to respond to a request for payment.” Because a response is only required from the insurance company at the time of denial or payment, the insurance company’s only error was failing to include the peer review referenced in the EOB.
It is expected that this ruling will reduce frivolous lawsuits and force medical billers to give the insurance company reasonable notice before taking legal action for nonpayment of a bill.
