Failure to Timely Send PIP Denials Entitles Claimant to Presumption
From the desk of Josh Hayward: Under Oregon’s PIP statutes, an insurer must send written denials to the insured within 60 days of receiving a claim for medical expenses. Failure to do so results in a presumption that the medical expenses were reasonable and necessary. But does an insured’s refusal to attend a medical examination toll that deadline? Read on to find out.
Claims Pointer: In this case arising out of a car accident, the Oregon Court of Appeals held that an insurer must send written denials to the insured within 60 days regardless of whether the insured is cooperating with its investigation. The case is a reminder that in order to avoid a presumption that the medical expenses are reasonable and necessary, the insurer must timely send written denials, even if the insured refuses to cooperate with the investigation.
McBride v. State Farm Mut. Ins. Co., 282 Or App 675 (December 7, 2016)
Erin McBride (“McBride”) was rear-ended in November 2011. Following the accident, she submitted and was reimbursed for medical expenses through June 2012 under her PIP coverage with State Farm Mutual Insurance Company (“State Farm”). In July 2012, a State Farm claims representative called McBride to arrange a medical examination in accordance with the policy to assess the medical expenses that she submitted in June. The exam was scheduled for August 2012, but McBride failed to attend. (She later testified that she did not know why she did not show up for the exam, but she had made the decision not to attend). State Farm attempted to reschedule the exam with McBride’s attorney, but they received no response, and McBride never participated in State Farm’s requested medical exam.
Due to McBride’s failure to cooperate with the medical exam, State Farm refused to pay the medical bills pending from June 2012 and after. Notably, State Farm did not send a timely written denial of McBride’s PIP claims to her within 60 days of receipt of the claims as required by ORS 742.528. State Farm did send written denials of the PIP claims after the 60-day deadline expired, however, stating that it would consider McBride’s claims anew after it received results from a medical exam.
McBride filed a lawsuit against State Farm asserting two claims for relief that sought damages for State Farm’s failure to pay the PIP benefits. State Farm filed for summary judgment, arguing that it was relieved of the obligation to pay McBride’s PIP benefits under its policy because McBride never attended the required medical exam. State Farm argued that McBride’s participation in the medical exam was a “condition precedent” to its obligation to pay reasonable and necessary medical expenses. In other words, State Farm did not have an obligation to pay unless McBride participated in the exam.
McBride filed a cross motion for partial summary judgment, arguing that State Farm’s failure to give timely written notice to McBride denying the claims meant that the claims were not only presumed reasonable and necessary, but that that presumption was conclusive and could not be rebutted. McBride’s attorney also indicated at the summary judgment hearing that his client would still be willing to participate in a medical exam, and McBride argued that her conduct in missing the examination was reasonable and that State Farm would not be prejudiced by any belated medical exam, even if the exam took place two years after the initial accident and injury. At the same time, McBride claimed she could also argue to the jury that a medical exam two years after the accident was stale and irrelevant in deciding whether the medical expenses were reasonable and necessary. The trial court granted State Farm’s motion and denied McBride’s motion. McBride appealed.
The Court of Appeals first took up McBride’s contention that she was entitled to a conclusive presumption that the medical expenses were reasonable and necessary. Under Oregon law, PIP benefits include reasonable and necessary medical expenses incurred within two years of the date of the person’s injury up to a statutory cap of $15,000. Those medical expenses are presumed reasonable and necessary unless the medical provider receives notice of denial for the charges within 60 calendar days. The court determined that despite McBride’s failure to cooperate, State Farm still had an obligation under the PIP statutes to issue a timely denial within 60 days of the receipt of McBride’s PIP claims. After all, the court reasoned, nothing prevented State Farm from issuing PIP denials based on information it had already obtained and its inability to further investigate, and State Farm did in fact issue those very denials after the 60-day period had run. Thus, because State Farm failed to deny McBride’s PIP medical claims within 60 days, McBride was entitled to a presumption that the claimed medical expenses were reasonable and necessary. However, based on prior case law, the presumption was not conclusive. Rather, the presumption was rebuttable, and McBride was not entitled to partial summary judgment on that basis.
The court next addressed the issue of whether an insured’s duty to participate in an otherwise valid medical examination required by an insurance policy was a condition precedent to the insured’s right to receive PIP benefits or instead a condition of forfeiture, potentially resulting in the loss of benefits if the insurance company proves it has suffered a prejudice. The court noted that McBride did not act to nullify preexisting coverage. Rather, McBride interfered with State Farm’s analysis of whether it believed coverage for the medical expenses was appropriate in the first instance. McBride’s failure to participate in the medical examination interfered with State Farm’s contractual right to examine McBride to determine whether her medical expenses were reasonable and necessary. Thus, the court concluded that McBride’s participation in the medical exam was a condition precedent to State Farm’s obligation to pay McBride’s reasonable and necessary medical expenses. Accordingly, the trial court properly denied summary judgment for McBride and granted summary judgment for State Farm.
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.