1 Overview: Maximizing Recovery on Auto Claims and Legal Update A Presentation for the MAHAP General Session Mt. Pleasant, Michigan January 27, 2012 Robert E. Dice, Jr., Esq. Miller & Tischler, P.C Northwestern Highway Suite 200 Southfield, Michigan Copyright All Rights Reserved Call for FREE advice: (248) (313) When should bills be paid by auto insurance? If a motor vehicle is involved in the accident, the injured person is entitled to nofault benefits (also known as first party or PIP (Personal Injury Protection) benefits). 2. What are no-fault benefits? No-fault benefits include claims for medical bills, wage loss, replacement services (assistance with household chores), medical transportation expenses and attendant care (care at the level of a home health aide or nurse). 3. What circumstances give rise to a claim for no-fault benefits? MCL provides that a no-fault insurer is liable for paying benefits for accidental injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle. 4. What medical expenses must the insurer pay? MCL provides that personal protection insurance benefits are available for allowable expenses. Allowable expenses are all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person s care, recovery or rehabilitation. 5. What must a medical provider establish in order to get paid? A) The claimed expense must be incurred (the insurer has no duty to preauthorize treatment). B) The expense must be for the injured person s care, recovery or rehabilitation. C) The charge must be reasonable. D) The treatment must be reasonably necessary.
2 6. When is payment due? MCL (2) provides that no-fault benefits are due 30 days after the insurer receives reasonable proof of the fact and of the amount of loss sustained. 7. How do I know which auto insurance company has to pay the bills? If a patient is injured in a car accident and has car insurance, you make a claim with that car insurance. But what about situations where it is not so simple? The Michigan Nofault Act (MCLA et. seq.) sets forth the rules for determining which insurance company pays under different circumstances. These rules are detailed on the following pages entitled No-fault PIP Priorities. No-Fault (PIP) Priorities: A Systematic Analysis First, you must determine whether or not benefits are available under the No-Fault Act. Ask the following questions: 1. Was there an accidental injury that arose out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle? - If the answer is Yes, continue. There is a great body of law in which the courts have analyzed whether injuries arose out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle. Some examples: - Maintenance coverage allowed: Warming oil pan with charcoal Car falling off jack Preparing to tow Washing a car Standing next to car to see why car stalled Burned by steam from radiator - Loading/Unloading coverage generally allowed - Slip and fall coverage generally not allowed unless person is touching the vehicle - Assault while in motor vehicle coverage generally NOT allowed
3 UPDATE PROOF OF CAUSAL CONNECTION SCOTT V. STATE FARM In the case of Scott v. State Farm, 278 Mich App 720 (2008), 483 Mich 1032 (2009), the Michigan Court significantly decreased the level of proof required to claim no-fault (PIP) benefits. Plaintiff Scott suffered a traumatic brain injury and developed severe balance problems after an auto accident. She gained weight because she couldn t exercise and developed high cholesterol as a result. Ms. Scott sought payment for cholesterol lowering drugs from State Farm. State Farm denied the claim, taking the position that the need for cholesterol medication was not caused by the accident. The appellate courts ultimately ruled that dismissal of Ms. Scott s claim was improper, saying that a Plaintiff is not required to establish direct or proximate causation. In fact, the court stated in its opinion that almost any causal connection will do. MOTORCYCLES ARE NOT MOTOR VEHICLES UNDER THE MICHIGAN NO- FAULT ACT A motorcycle is not defined as a motor vehicle under the No-fault law. If patient was injured in a single motorcycle accident (e.g. a motorcyclist hits a tree, deer, or other motorcycle), no PIP benefits are available. However, if a motor vehicle hits a motorcycle or a motor vehicle cuts a motorcyclist off causing him to lose control and suffer injuries, a motor vehicle was involved and no-fault benefits are available. 2. Do any of the exclusions listed below apply? (a) Uninsured owner/operator - If the patient is an owner and driver of an uninsured vehicle that was involved, he or she is not entitled to PIP. (b) Stolen Vehicle - A patient that stole the accident vehicle is not entitled to PIP. (c) Intentional Act - A patient that intentionally crashes his car cannot claim PIP benefits. If the circumstances pass the tests above and none of the exclusions apply, you determine the responsible insurance company by first determining whether the patient is an Occupant of a privately owned vehicle, a Non-Occupant or a Motorcyclist according to the Michigan No-Fault law. The priority scheme for determining which auto insurance company is responsible for PIP benefits is different for an occupant, non-occupant and motorcyclist. The charts that follow explain the process for determining which company is responsible.
4 OCCUPANTS 1. Named Insured: If the patient has a motor vehicle with insurance, that insurance company pays. If not, proceed to next level. 2. Spouse or Resident Relative: Does the patient live with a spouse or relative that has an insured motor vehicle? If so, that company pays. If not, proceed to next level. 3. Insurance Company of the Owner of the vehicle they were in: The insurance on the motor vehicle occupied pays. If none, proceed to next level. 4. Insurance Company of the Driver of the vehicle they were in: If the driver borrowed a friend s uninsured motor vehicle, the driver may have an insured motor vehicle. If so, the driver s insurance company pays. If not, proceed to next level. 5. Assigned Claims Facility: Some automobile insurance companies that do business in Michigan participate in the assigned claims plan. If there is no insurance at any of the levels described above and there are no exclusions that would bar coverage, the assigned claims facility will assign the claim to an insurance company for the payment of benefits. The state of Michigan reimburses the handling insurance company.
5 NON-OCCUPANTS (This includes pedestrians, joggers, bicyclists, snowmobilers, moped riders, tractor drivers, but not motorcyclists) 1. Named Insured: If the patient has a motor vehicle with insurance that company pays. If not, proceed to the next level. 2. Spouse or Resident Relative: Does the patient live with a spouse or relative that has an insured motor vehicle? If so, that company pays. If not, proceed to the next level. 3. Insurance Company of the Owner of the vehicle involved: If none, proceed to the next level. 4. Insurance Company of the Driver of the vehicle involved: If the driver borrowed a friend s uninsured motor vehicle, the driver may have an insured motor vehicle. If so, the driver s insurance company pays. If not, proceed to the next level. 5. Assigned Claims Facility: Some automobile insurance companies that do business in Michigan participate in the assigned claims plan. If there is no insurance at any of the levels described above and there are no exclusions that would bar coverage, the assigned claims facility will assign the claim to an insurance company for the payment of benefits. The state of Michigan reimburses the handling insurance company.
6 MOTORCYCLE PRIORITIES (Operators and passengers) 1. Insurance Company of the Owner of the Motor Vehicle involved. If none, proceed to the next level. 2. Insurance Company of the Operator of the Motor Vehicle (not motorcycle) involved. If none, proceed to the next level. 3. Insurance Company of the Motor Vehicle (not motorcycle) of the operator of the motorcycle. If none, proceed to the next level. 4. Insurance Company of the Motor Vehicle (not motorcycle) of the Owner or person on the registration of the motorcycle. If none, proceed to the next level. 5. Spouse or Resident Relative: Does the patient live with a spouse or relative that has an insured motor vehicle? If so, that company pays. If not, proceed to the next level. 6. Assigned Claims Facility: Some automobile insurance companies that do business in Michigan participate in the assigned claims plan. If there is no insurance at any of the levels described above and there are no exclusions that would bar coverage, the assigned claims facility will assign the claim to an insurance company for the payment of benefits. The state of Michigan reimburses the handling insurance company.
7 THE ASSIGNED CLAIMS FACILITY The State of Michigan established the Assigned Claims Plan in 1973 to provide financial help to people injured by uninsured motorists. The Assigned Claims Plan is administered by the Michigan Department of State under authority of the No-Fault Insurance Law. If there is no available insurance, a dispute between insurance companies as to who should pay or the insurance company responsible for the claim is unable to pay (because of bankruptcy), the patient must make a claim to the Assigned Claims Facility. The Assigned Claims Facility will then assign the claim to an insurance company for handling. How do I file a Claim with the Assigned Claims Facility? You must fill out an Application for Bodily Injury Benefits (NF-21). You may obtain one at at any Secretary of State branch office or by contacting: Assigned Claims Facility Michigan Department of State Lansing, MI (517) Practical recommendations for making claims through the Assigned Claims facility include: - If you are unable to determine the applicable insurance company, ALWAYS file an assigned claim. Assigned Claims personnel will start its own investigation into whether there is any auto insurance applicable to the loss. If they find it, they will let you know and you can claim through that company. If they can t find any, they are responsible for assigning the claim to a participating insurance company. - Do your investigation early and make an assigned claim as soon as possible to avoid problems with the one year statute of limitations. - You do not have to make the claim in the patient s name. You can make the claim in the name of the medical provider. - Although it is preferable, you do not have to submit a copy of the police report as proof of the auto accident. If you don t have time to get a police report or can t locate one, submit the EMS run sheet or even hospital records that document the accident.
8 SPECIAL PRIORITY SITUATIONS: Vehicles for Hire: If patient is in a vehicle for hire (limousine, ambulance) the hired vehicle s insurance company pays. If the hired vehicle has no insurance, you then follow the priority scheme for occupants of motor vehicles. For taxi cabs, school buses and certain other types of buses, the priority scheme is the same as that for occupants of motor vehicles. MCL (2). Company Car: If patient is injured and he has a car given to him or her to use by his or her employer, the only time that the insurance policy on that car pays is if the employee, his spouse or resident relative was actually in that vehicle at the time of injury. Otherwise, follow the priority scheme for occupants of motor vehicles. MCL (3). WHAT IF THE PATIENT IS NOT A RESIDENT OF MICHIGAN? Out of state Resident in Michigan Accident: An insurer that sells auto insurance in Michigan must file a certification pursuant to MCL If a resident of another state is involved in an accident in Michigan and his insurance company has filed the MCL certification, the out of state resident is entitled to Michigan No-Fault benefits. Note: A $500, limit will likely apply to such claims. MCL (4). MEDICAL PROVIDER CLAIMS How can a provider get involved in the No-Fault insurance claim? Often a patient is involved in a motor vehicle accident, yet the medical provider has difficulty submitting its claim and getting it paid by the automobile insurance. And now that there is effectively one year to get paid or file suit on a bill, fast action is even more crucial. Problems arise when: 1. The patient dies, disappears or does not cooperate. 2. You have little or no information as to what insurance company should cover the bill. 3. The auto insurance company delays payment or refuses to pay. 4. The patient has an attorney that you don t want to represent you. 5. The bill is unpaid and the one year anniversary of the treatment is near. How can a doctor, hospital or other provider bring a claim? There are four potential methods: 1. Through the patient with his cooperation. 2. Assignment: The patient assigns his legal rights to the medical provider. 3. Intervention: A medical provider can intervene in a pending lawsuit with its own lawyer. Michigan Court Rule provides for intervention, but it is up to the
9 judge s discretion. Can save a claim if you are beyond one year from the date of service. 4. Direct action: Since 2002, Michigan law allows a provider to bring a lawsuit directly against the auto insurance carrier. (Warning: medical providers are subject to the same one-year statute of limitations that applies to the patient). Because of the short statute of limitations on no-fault claims, usually a medical provider is involved in a lawsuit brought by the patient that includes a claim for medical expenses or as a Plaintiff in a direct action. Note a no-fault action can almost always be filed in any District or Circuit Court in Michigan regardless of the location of the medical provider. Venue is proper in any county where the auto insurance company does business. Advantages of a direct action: - Most auto adjusters would rather pay a medical provider than a patient/claimant. They tend to become jaded and suspicious of claimants but this is usually not the case with medical provider claims. - The adjuster is more likely to resolve a medical provider claim because these claims essentially become a battle between two witnesses: (1) an insurance hired gun that has performed a onetime examination and (2) a treating physician with a track record with the patient. - The adjuster knows that you will be able to produce a physician witness in support of the claim. (Note: it is often important that the physician have an accurate history in order to be persuasive). - You choose your own attorney and the terms of your payment to the attorney. The No-Fault Statute of Limitations: Warning Extreme Caution Required! Under the Michigan No-fault Act, A claimant must give notice of a no-fault claim to the appropriate insurance company within 1 year of the date of the accident AND must submit reasonable proof of the fact and amount of loss for each expense claimed within 1 year of the date that the expense was incurred. Therefore, a medical provider has 1 year from the date of treatment to submit its bill to the appropriate auto insurance company. Until 2005, Michigan law stated that the 1 year limitation was tolled until the insurance company formally denied benefits. From a practical standpoint, the period for submission of medical bills was often extended well beyond the 1 year limitation. However, in Devillers v. Auto Club, 473 Mich 562 (2005) the Court overturned this
10 tolling provision. Now, a medical provider must file suit if its bill is not paid within one year of the date of service to avoid losing the right to payment by operation of the statute of limitations. The Michigan appellate courts have enforced this 1 year limitations even where they have acknowledged the unfairness of enforcing it. In the case of Henry Ford Health Systems v. Titan Insurance Company, released May 24, 2007, the Court found that Henry Ford Health System s $136, bill for treatment rendered to Sandra Leach after an automobile accident was barred because Henry Ford did not file suit within one year of the treatment. What makes this case even more troubling is that the insurance company submitted the bill to a review company, approved the charges and advised Henry Ford. They then sent a letter to a different Henry Ford office denying the claim for other reasons. Henry Ford did not file suit within one year and the Court dismissed their case. In other words, the insurance company sandbagged Henry Ford and got away with it. Based on the Henry Ford case, it is my recommendation that medical providers track EVERY case involving auto insurance so that suit can be filed if payment is not received within one year of the date of treatment. As the Henry Ford case makes clear, it doesn t matter whether the failure to pay results from the action or inaction of the insurance company if you don t file suit within one year, your claim is barred. Practical recommendations for dealing with the short statute of limitations include: - developing a diary system for regular, frequent contacts with the insurance adjuster - written contacts are best (even if a form letter) because if it is necessary to file a lawsuit, the inaction of the insurance company can be used against it to obtain interest and attorney fees - don t wait until the absolute last minute file suit within 30 days of the one year anniversary of the date of first treatment - don t accept promises from an insurance adjuster to extend the time to file suit beyond one year as such promises may not be enforceable 2010 Update UM Regents v. Titan Insurance Company In the 2006 case of Cameron v. ACIA, the Michigan Supreme Court ruled that automobile insurance companies could refuse to pay medical expenses for children and mentally incompetent adults simply because legal action to enforce payment of those expenses had not been filed within one year. In the recent UM Regents decision (released ), the Michigan Supreme Court recognized a fundamental concept of
11 fairness and justice that had been completely disregarded by the Cameron case in 2006 that children and mentally incompetent persons do not have the same ability to enforce their legal rights as do able-bodied adults. That is why, for over 30 years, the Michigan appellate courts protected this class of vulnerable claimants from oppressive legal time limitations that could destroy their rights. The UM Regents case has restored these protections for children and mentally incompetent persons. Practical considerations if auto insurance denies your bill saying that more than one year has passed since the date of service, make sure the patient is not a minor or mentally incompetent. They are entitled to payment of their medical expenses even if more than one year has passed since the date of service. Medical Bill Audits Insurers have the right to review medical bills to determine if the charges are reasonable (under MCL ) and customary (under MCL ). In the seminal case of AOPP v. ACIA 472 Mich 91 (2005), the Court stated that insurers not only have the right to perform medical audits but have an obligation to audit bills to determine if they are reasonable and customary. The good news: no-fault insurers may not use fee schedules from other systems such as workers compensation as measures of reasonableness. The bad news: the Court approved the use of the 80 th percentile test but did not say that it was an appropriate measure in all cases. The Court stated that the appropriate measure of whether a bill is reasonable and customary must be made on a case by case basis. Practical recommendations for dealing with bill review companies include: - Read and analyze the review documents carefully as the reviews are mass produced and often contain errors and improper coding assumptions - Follow the appeal process if you have a reason to challenge the review - If you haven t resolved the issue and the one year anniversary of the date of service is approaching, file a lawsuit against the insurer
12 An Attorney Collects Your Bill You Never Hired Him Do You Owe Him a Fee? You get a call from an attorney saying that he has forced an insurance company to pay your patient s bill. He wants you to compromise your bill and pay him a fee for collecting it. Can he do this? No - if the bills were paid voluntarily (that is, the bills were not in dispute). No - if he has never notified you (the medical provider) prior to collecting on its bills (however, per the Miller case discussed below, very little notice is required). Yes - if the attorney notified the medical provider, allowed it to decline his services and he has performed substantial work to justify a fee. If the provider ignores the notice, the attorney may still be entitled to a fee if he performed substantial work. (Michigan Rule of Professional Conduct 1.5) UPDATE MILLER V. CITIZENS INSURANCE and DMC The recent case of Miller v. Citizens Insurance and DMC, Mich App (2010) COA No demonstrates how a medical provider that sits on its rights can end up paying a large attorney fee to an attorney that it never hired. Here s the timeline: Ryan Miller seriously injured in a car accident Citizens denied Ryan Miller s application for benefits Ryan Miller s attorney files suit against Citizens Miller s attorney settles the case against Citizens DMC s Motion to intervene denied After the denial of benefits by Citizens, the patient s attorney filed suit and ultimately settled the case. The settlement included an agreement to pay the patient s accidentrelated medical bills. The patient s attorney then sought payment of a one-third attorney fee pursuant to his fee agreement with the patient. DMC appealed as an interested party asking the Court to rule that it didn t have to pay the patient s attorney fee because (1) it did not receive appropriate notice of the attorney s representation, (2) the attorney did not provide any notice to DMC that it was pursuing the DMC bill and (3) the attorney did not provide the DMC with an opportunity to retain its own counsel. The Court ruled against DMC because (1) DMC did know of the attorney s involvement as of December 2007, (2) DMC did not advise the patient s attorney not to pursue payment of its bill from Citizens (3) DMC did not send a letter to Citizens advising that
13 the patient s attorney did not represent DMC, and (4) DMC did not advise Citizens that the payment should go directly to DMC and not to the patient s attorney. On the billed charges of $150,660.51, the Court ordered payment of $102, to DMC and $48, to the patient s attorney. Practical recommendations for dealing with patient attorneys include: - Don t ignore a letter from a patient s attorney offering to collect your bill. If you do, it can be interpreted as tacit approval and you may be required to pay the attorney. (In the Miller case, the attorney s name on a Medicaid claim form and a medical record request was enough for the Court to find that DMC had notice of his involvement). - If you do not want the patient s attorney to represent your interests, notify the attorney and the insurance company in writing immediately. - If you do work out a deal with the patient s attorney to collect your bill, work out the fee arrangement in advance and get it in writing. Be careful as to what you are agreeing to accept (agree to accept a certain percentage of your outstanding charges NOT a percentage of the recovery on the case. - If you use your own attorney and pursue a direct action in your own name, contact your lawyer immediately so that you don t miss the one year deadline. - It usually makes sense to hire your own attorney as he/she will put your interests first and be less likely to compromise your bill. - If over a year has passed and you haven t filed suit, you are too late. However, you may still intervene in the patient s suit, if he has filed one. If you are too late to intervene, negotiate the best deal possible with the attorney. Demand that he document the substantial work that he performed in collecting you bill. PROPOSED LEGISLATION ALERT Many troubling proposed changes to the Michigan No-Fault Act have surfaced recently. The most distressing proposal for medical providers is House Bill 4936 introduced September 13, 2011 by Rep. Peter Lund of Shelby Township. The bill would make numerous amendments to the No-Fault Auto Insurance statute within the Insurance Code. The key provisions include the following:
14 o No-fault policies would no longer automatically cover unlimited lifetime medical and rehabilitation benefits. Instead, drivers could choose personal injury protection (PIP) coverage with (1) a maximum of $500,000; (2) a maximum of $1 million; or (3) a maximum of $5 million. The default amount would be $500,000. o Individuals injured on a motorcycle involved in an accident with a motor vehicle could claim PIP benefits only up to a maximum of $250,000. o Limits charges for auto accident-related medical expenses to the amounts NOT MORE THAN the amounts set forth in the Workers Compensation fee schedule. Currently, a medical provider is entitled to reasonable and customary charges for medical services. o For claims made with the Assigned Claims facility where no insurer is identified claimant is limited to $250,000. o PIP benefits are limited to the $250,000 limit for accidents occurring in the state if the injured person is a nonresident of the state and the injured person's benefits are payable under a policy delivered outside of the state. o Specific limits would be placed in statute on attendant care or nursing services provided in an injured person's home, including limits on hourly payment for the provision of basic services and skilled services. o Insurance companies are not required to reduce premiums. There will be minimal premium reductions if this bill is passed certainly not enough to achieve the goal of enticing many people who are currently uninsured to purchase automobile insurance. For further details, go to Uninsured Motorist Coverage RECOMMENDED COVERAGE FOR YOUR PERSONAL AUTO INSURANCE POLICY If the negligent driver that caused the accident did not have insurance, you may still be entitled to compensation for third party benefits (pain and suffering, excess wage loss, etc.) if there is special insurance coverage on your vehicle, a vehicle in your household or the vehicle that you were in. The special coverage is called Uninsured Motorist Coverage (UM Coverage).
15 UM Coverage also applies if you are involved in a hit-and-run accident. If you can not identify the owner or driver of the other vehicle you may file a claim with your UM Carrier depending on the circumstances. Uninsured Motorist Coverage is inexpensive (a policy for $50,000 worth of coverage can be purchased for less than $20 per year). You should check your policy and make sure that it provides for Uninsured Motorist Coverage. You should have at least $100, of Uninsured Motorist Coverage. Underinsured Motorist Coverage Another important type of insurance coverage is called Underinsured Motorist Coverage. If a negligent driver/owner causes an accident and has a small insurance policy that does not compensate you for the full extent of your injuries, then you may obtain additional money from your own insurance company. Example: If you fracture your leg and have surgery but you will limp for the rest of your life, your injury arguably could be worth $100, in pain and suffering damages. If the negligent driver/owner only has a $20, bodily injury liability policy and you purchased $100, of Underinsured Motorist Coverage, you potentially may recover the $20, of the negligent driver/owners insurance company and up to an additional $80, from your insurance company, for a total recovery of $100,