Transcript PIP Coverage and Disputes

PIP Coverage and Disputes
September 23, 2011
Oregon State Bar CLE
Thomas D’Amore
D’Amore Law Group, P.C.
4230 Galewood Street, Suite 200
Lake Oswego, OR 97035
503-222-6333
[email protected]
Billy Sime
Parks Bauer Sime Winkler & Fernety
570 Liberty Street SE, Suite 200
Salem, OR 97301
503-371-3502
[email protected]
1
Who is Covered?
• ORS 742.520(1) – Personal Injury Protection
• Private passenger motor vehicles
– Insured, members of insured’s family living in
same household, children living in insured’s
household
– Passengers occupying insured vehicle
– Pedestrians hit by insured vehicle
• PIP is a no-fault benefit
2
What is Covered?
• ORS 742.520(2)(a) – Applicability of PIP benefits
• Applies to injury or death resulting from the “use,
occupancy, or maintenance of any motor vehicle”
• Cases interpreting
– Individual ejected from a car and struck by another
car – Mackie v. Unigard Insurance Co., 90 Or App 500
(1988)
– Individual forced from car and then shot – Carrigan v.
State Farm Mutual Auto. Ins. Co., 326 Or 97 (1997)
3
What is Covered? (Contin.)
• ORS 742.524(1) – Contents of PIP Benefits
– Medical Payments - $15,000 per person, up to one
year
– Wage Loss – 70% of income, up to $3,000/month
• How to calculate wage loss if self-employed
• Possibility of stacking
– Essential Services – up to $30/day
– Funeral Expenses – up to $5,000
– Child Care – up to $25/day
4
Interpreting PIP Benefits/Limitations
• Limits on medical charges (ORS 742.525) – WC
schedule
• Exclusions – ORS 742.530 – intentional selfinjury, racing or speed contests, or willful
concealment or misrepresentation
• Nature of benefits
– Primary for anyone in insured vehicle
– Secondary for insured injured in another vehicle
– Health insurance after PIP exhausted
5
Interpreting PIP Benefits/Limitations
(Contin.)
• Pedestrians and Bicyclists - Priority
– Individual PIP policy
– PIP policy of family members in household
– Health insurance
– Motor vehicle policy of vehicle that struck
individual
• Workers’ Compensation – primary if injured
on the job
– PIP is secondary
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Stacking
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PIP Stacking
• Multiple PIP policies may be available
– Example: A person is a passenger in another
person’s vehicle
• Vehicle’s PIP coverage is primary
• PIP coverage under the passenger’s own policy is
secondary
• If the damages exceed the limits of PIP coverage under
the first policy, the policies stack
• Stacking of PIP medical coverage
• Stacking of PIP wage loss coverage
8
Stacking coverage
No stacking of PIP benefits when the insured
owns multiple vehicles insured under one or
more policies issued by the same company.
See ORS 742.520 (2)(a)(A)
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Burden of Proof
• Medical expenses
– Presumed reasonable and necessary unless insurer
gives notice of denial of the charges to the provider
not more than 60 calendar days after the insurer
receives notices of the claim for services from the
provider. ORS 742.524(1)(a).
• During first 50 calendar days after insurer
receives notice of claim, provider shall, within 10
business days, answer in writing questions from
insurer regarding the claim. Id.
– 60 day period tolled if provider does not supply
written answers to insurer within 10 days. Id.
10
Burden of Proof
• What is notice of the “claim for services”?
• What is notice of “denial of the charges”?
• If the insurer fails to give timely notice of
denial of charges, insurer has the burden of
proving that the expenses were not
reasonable and necessary.
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Duties of Insurer
• Public policy – guarantee prompt medical
attention
• Compliance with PIP and related statutes
• Compliance with Unfair Claims Settlement
Practices Act – ORS 746.230
–
–
–
–
–
Reasonable Investigation
Avoid Delay
Prompt Notice of Denial
Reasonable Settlement
Duty of Good Faith & Fair Dealing
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Bad Faith Insurance Practices
• Bad faith or extra-contractual damages
– Insurer does not comply with statutory or common
law requirements
• McKenzie v. Pacific Health & Life Ins. Co., 118 Or
App 377, rev allowed, 317 Or 271 (1993)
• Eggiman v. Mid-Century Ins. Co., 134 Or App 381
(1995) – good faith requirement extends to PIP
• Anderson v. Farmers Ins., 188 Or App 179 (2003)
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Bad Faith Insurance Practices
• Strawn v. Farmers Ins. Co. of Oregon, 350
Or 336 (2011) – insurance fraud and
punitive damages
• Ivanov v. Farmers Ins. Co. of Oregon, 344
Or 421 (2008) – reasonable investigation
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Duties of Insured
• Production of supporting documentation
(medical and wage loss)
• Recorded Statement
• Examination Under Oath
• Medical Examination
15
Attorney Fees – ORS 742.061
(PIP and UM/UIM)
• Attorney fees are permitted if “in writing, not
later than six months from the date proof of loss
is filed with the insurer:
•
(a) The insurer has accepted coverage and the
only issue is the amount of benefits due the
insured; and
•
(b) The insurer has consented to submit the
case to binding arbitration.”
• Plaintiff’s recovery must exceed the amount of
any tender made by defendant
16
Proof of Loss
• “Any event or submission that would permit
an insurer to estimate its obligations.” Scott v.
State Farm Mutual Ins. Co., 345 Or 146, 155
(2008) (citing Dockins v. State Farm Ins. Co.,
329 Or 20 (1999)).
• Phone call was sufficient. Parks v. Farmers Ins.
Co. of Oregon, 347 Or 374 (2009)
17
Attorney Fees
• Coverage Dispute
– Grisby v. Progressive Preferred Ins. Co., 343 Or
175, modified and adhered to on reconsideration,
343 Or 394 (2007); see also Badrick v. Farmers Ins.
Co. of Or., 238 Or App 320 (2010)
– Any denial of PIP benefits is a denial of coverage?
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Attorney Fees (Contin.)
• Example – Benefits v. Coverage:
– $50 physical therapy visit
– $40 reasonable and necessary v. $0 reasonable
and necessary
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Attorney Fees and ORCP 54E
• ORCP 54E—Cutoff?
– Example - $10,000 demand; $8,000 ORCP 54E
offer; jury verdict of $5,000 (Plaintiff gets all fees if
entitled under ORS 742.061)
• Attorney fees must be awarded in full under
ORS 742.061 even if an insurer makes an
ORCP 54E offer before trial and it is not
exceeded - Wilson v. Tri-County Metropolitan
Transportation District of Oregon, 234 Or App
615 (2010)
20
PIP Medical Exams
• Ground Rules (“conditions”) for Examination Set
in Advance
–
–
–
–
Attendance by Representative or Attorney
Audio/video recording
Licensed Oregon physician
Limitation on “body parts” examined
• Medical Examinations Not Provided for in PIP
Statutes
– 3rd Party Claims
– Workers’ Compensation
– UM/UIM Claims
21
Arbitration v. Trial
• Arbitration – governed by local court rules
• Factors to consider:
– Binding, attorney fees, costs, amount in
controversy
• Consider including with third-party claim
and/or UM/UIM claim
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Formal Institution of Arbitration
Bonds v. Farmers Ins. Co. of Oregon,
349 Or 152 (2010)
• Insured or insurer must “expressly
communicate to the other party that the
initiating party is beginning the process of
arbitrating a dispute” – Bonds v. Farmers Ins.
Co. of Oregon, 349 Or at 154
• Letter from insurer consenting – Not Sufficient
23
PIP Issues in the Trial of a Bodily
Injury Case
• Determine what is at issue – medical
expenses, wage loss, coverage issues
• Selection of venue
• Including a PIP claim in a Third Party Case
– Possibility it will be severed
– Venue
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Preventing PIP from Sinking Third
Party or UIM Claim
•
•
•
•
Medical examination
Ensuring ongoing medical treatment
Return to work too soon
Pleading and proving medical expenses and
wage loss paid by PIP in the Third Party Case
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Additional PIP Issues in the Trial of
a Bodily Injury Case (Contin.)
• Discovery of PIP file
• Deposition of PIP adjuster
• Recovering medical expenses in excess of
workers’ compensation schedule
– White v. Jubitz, 347 Or 212 (2009)
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PIP Reimbursement and
Subrogation
•
•
•
•
Interinsurer Arbitration – ORS 742.534
Lien – ORS 742.536
Subrogation – ORS 742.538
Limitations on reimbursement – ORS 742.544
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Interinsurer Reimbursement
ORS 742.534
The liability insurer shall reimburse the PIP insurer if
the following conditions are met:
1. The liability and the PIP insurer are both authorized
motor vehicle liability insurers.
2. The PIP insurer has requested PIP reimbursement
from the liability insurer.
3. The PIP insurer has not given notice that it elects
recovery by lien under ORS 742.536.
4. The PIP insurer is entitled to reimbursement under
ORS 742.534 by the terms of its policy.
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Interinsurer Reimbursement
ORS 742.534 (1)
“Reimbursement under this subsection,
together with the amount paid to injured
persons by the liability insurer, shall not
exceed the limits of the policy issued by the
insurer.”
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InterInsurer Reimbursement
ORS 742.534
•
•
•
•
Where two vehicles are separately insured by the same
insurer the insurer that pays PIP benefits under one policy
is entitled to PIP reimbursement from the other policy.
State Farm v. Sommerholder, 65 Or App 449 (1983).
In calculating PIP reimbursement, the amount of benefits
by the PIP insurer shall be reduced by the percentage of
negligence of the injured party. ORS 742.534 (2).
The PIP insurer’s right to reimbursement shall not exceed
the amount of damages legally recoverable by the injured
party. Id.
Disputes between the insurers are resolved by arbitration.
30
Lien under ORS 742.536
The PIP insurer has a lien against injured party’s cause of
action if the following conditions are met:
1.
2.
3.
4.
5.
The PIP insurer is an authorized motor vehicle liability insurer;
The PIP insurer has not been a party to an intercompany
reimbursement proceeding under ORS 742.534
The PIP insurer is entitled by the terms of its policy to a lien
under ORS 742.536.
The PIP insurer has given written notice to the injured party
that the PIP insurer has elected to PIP recovery by lien.
If the injured party has filed a legal action, the PIP insurer has
filed a return receipt with the court that it served the claimant
and the defendant with notice that has elected to recover its
PIP by lien.
31
Lien under ORS 742.536
• If the PIP lien is perfected, it attaches to all the
money the injured party actually collects by
settlement or judgment from the at fault
party, the liability insurer, or both
• Not reduced by injured party’s comparative
fault
• Reduced by PIP insurer’s pro rata share of the
costs and attorney fees
32
Lien under ORS 742.536
• If the injured party makes a claim or files a legal
action for bodily injuries, the injured party must
give notice of such claim or legal action to the PIP
insurer by personal service or by registered or
certified mail. ORS 742.536 (1).
• Service of a copy of the summons and complaint
shall be sufficient notice to the insurer. A return
of service must be filed with the court. Id.
• A “claim” is a “written demand made or delivered
for a specific amount of damages.” ORS 742.536
(4).
33
Lien under ORS 742.536
• If the injured provides the PIP insurer with a
notice of claim or legal action as required, and
the PIP insurer fails to make an election to
recover its PIP benefits by lien within 30 days,
then the PIP insurer has lost its lien rights.
34
Subrogation under ORS 742.538
A PIP insurer has the right to recover PIP
payments by subrogation if the following
conditions are met:
1. The intercompany benefit under ORS 742.534 is
not available;
2. The PIP insurer has not elected recovery by lien
as provided in ORS 742.536;
3. The PIP insurer is entitled by the terms of its
policies to subrogation under ORS 742.538.
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Subrogation under ORS 742.538
• The PIP insurer does not need to be an
authorized motor vehicle insurer to be entitled to
subrogation
• The PIP insurer is entitled to proceeds of any
settlement or judgment to the extent of PIP
benefits paid, less the PIP insurer share of the
costs and attorneys fees incurred in collection
• The PIP insurer can sue the at fault driver in its
own name or it can sue in the name of the
injured party. The injured party must cooperate
36
Health Insurers
• An authorized health insurer which pays
benefits to a person injured in a motor vehicle
accident has the same statutory rights of
recovery as a PIP insurer
37
Limitations on PIP recovery
ORS 742.544
• No reimbursement available if “total amount
of benefits” paid exceeds the economic
damages as defined in ORS 18.560
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PIP Reimbursement
Calculation Table
Benefits Paid
Economic Damages
Underinsured
Motorist Benefits
Medical
Liability Insurance
Received
Lost Income
Burial
Future Earnings
Domestic Services
PIP Benefits
Received
Loss to Estate
Reputation
Loss/Use
Any Other
Payments Received
Repairs
Total
Total
Other
“Excess” (benefits minus economic damages)
PIP Reimbursement (lesser/PIP or “excess”)
© 1994 Joel DeVore
39
PIP Offset from Liability Limits Under
the Same Policy
• Liability insurer may reduce liability limits by the
amount of the PIP payments if the policy contains
language allowing such a reduction. Edwards v.
Bonneville Automobile Insurance Company, 299 Or 119
(1985).
• No reduction from liability limits if the policy does not
specifically allow such a reduction. Staiger v. Burkhart,
299 Or 49 (1985).
• The limitation on PIP reimbursement under ORS
742.544 applies in this context. North Pacific vs.
Hamilton, 153 Or App 332 (1998) affirmed in part and
reversed in part in other grounds 332 Or 20 (2001).
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Questions??
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