A woman was in a car accident in which she was injured. She required medical treatment. The car in which she was a passenger was covered by a standard Massachusetts automobile insurance policy (auto policy) issued by an insurer.
The insurer received a personal injury protection (PIP) benefits application approximately 90 days after the accident. About 90 additional days thereafter the insurer received treatment records and bills from a doctor for five different dates of treatment. The insurer initially paid $515 to the doctor, constituting payment for the first two treatment dates. Thereafter, the insurer paid the doctor an additional $495 for the remaining three treatment dates. Although these two payments were $990 less than the total of the doctor's billings, the insurer did not notify the doctor or his patient of its intention not to pay the $990 within ten days of the submission of the bills. The insurer based its nonpayment on its determination that the charges exceeded an amount that was reasonable in comparison to other medical providers in the same geographic area.
After approximately 12 months of demanding payment to no avail, the doctor commenced suit in the Middlesex County District Court seeking the unpaid $990 portion of his billings, as well as damages and costs pursuant to M.G.L.A. 93A, Regulation of Business Practices for Consumers Protection, and M.G.L.A. 176D, Unfair Methods of Competition and Unfair and Deceptive Acts and Practices in the Business of Insurance.
Faced with suit, the insurer then issued a payment of $990 to the doctor's counsel and filed a motion for summary judgment on all counts of the complaint. The trial court granted the motion on those counts relating to breach of contract and the action to determine legal rights and denied the motion with respect to damages and costs pursuant to M.G.L.A. 93A, Regulation of Business Practices for Consumers Protection, and M.G.L.A. 176D, Unfair Methods of Competition and Unfair and Deceptive Acts and Practices in the Business of Insurance.
The only witness at trial, a PIP claims representative from the insurer who was not the individual who handled the doctor’s claim, testified that the insurer's determination that the doctor's billings were unreasonable was based on an independent medical examination (IME) by a physical therapist and a review of the doctor’s billings by a computer program. Neither the specific results of the review of the doctor’s billings nor any evidence about the program was introduced into evidence.
After a bench trial, the trial court found (1) the insurer forced the doctor to file suit; (2) the delay in payment did not comply with the requirement of M.G.L.A. 90 § 34M to make payment of PIP benefits within ten days or, alternatively, to notify the submitting physician or the claimant of its intention not to pay; and (3) the delay in payment was neither reasonable nor in good faith. The trial court found the insurer liable to the doctor for damages and costs pursuant to M.G.L.A. 93A and M.G.L.A. 176D. Therefore, the trial court tripled the award of lost interest resulting from the delay and awarded attorney's fees, awarding the doctor $25,343.53. The Appellate Division of the Middlesex County District Court affirmed.
The Appeals Court of Massachusetts affirmed. The court held that the insurer’s use of an IME performed on its behalf by a physical therapist did not preclude the trial court's finding of bad faith as a matter of law and the insurer’s use of a computer program to review the doctor’s billing did not excuse the insurer’s failure to comply with the clear requirement to make payment of PIP benefits within ten days or notify the submitting physician or the claimant of its intention not to pay.
The insurer’s use of an IME performed on its behalf by a physical therapist did not preclude the trial court's finding of bad faith as a matter of law. Compliance with statutory IME requirements did not automatically insulate an insurer from a claim of unfair settlement practices under M.G.L.A. 93A. The ability of the reviewing practitioner to assess the need for further treatment was a function of training, experience, and, in many cases, the specific area of medical expertise. Reliance on a different specialty raised a factual question of the insurer's good faith especially where, as here, the reviewer's area of practice as a physical therapist required less training and education than that of the submitting physician, an orthopedist, rather than the reverse.
The insurer’s use of a computer program to review the doctor’s billing did not excuse the insurer’s failure to comply with the clear requirements to make payment of PIP benefits within ten days or, alternatively, to notify the submitting physician or the claimant of its intention not to pay. On the contrary, the use of a computer program as a substitute for a practitioner's review of billing statements and underlying services provided an additional basis for an inference of the insurer's lack of good faith under the unfair trade practices statute.
The Middlesex County Appeals Court of Massachusetts affirmed the trial court’s tripling of the award of lost interest and attorney's fees to the doctor due to the insurer’s unfair trade practices.
See: Byron V. Hartunian, M.D., P.C. v. Pilgrim Ins. Co., 86 Mass.App.Ct. 670, 2014 WL 6607866 (Mass.App.Ct., November 24, 2014) (not designated for publication).
See also Medical Law Perspectives, June 2013 Report: Independent Medical Evaluations: Legal Risks and Responsibilities