A Cautionary Tale about Personal Injury Protection, Health Insurance...and Lawsuits

Medical providers who treat individuals for injuries sustained in motor vehicle accidents (MVAs) are frequently tasked with identifying the proper insurance carrier that is responsible for payment. The cost of treatment for individuals who have been injured in an MVA could be covered under an automobile insurance policy or under a health insurance policy, such as Aetna, United Healthcare, or Blue Cross. Individuals could also have coverage under Medicare and/or Medicaid. Of course, some individuals might not have any health insurance at all. When there is one or more source of coverage (a payor) available, the medical provider needs to determine which payor has the primary responsibility for covering the costs of medical care resulting from the MVA.  Claims should be submitted to the primary payor first. 

Determining which payor is primary and which payor is secondary is a process called "Coordination of Benefits." For example, medical providers who participate with Horizon Blue Cross are "required to make diligent efforts to identify and collect information concerning other health care plans and coverages at the time of service."  Horizon's policies go on to say, "Where Horizon is, or appears to be, secondary to another plan or coverage, [the provider] must first seek payment from such other plan or coverage." Regulations and statutes may also be instructive in identifying the primary payor. In New Jersey, for example, automobile insurance policyholders have the option of selecting their health insurance as the primary source of coverage for medical expenses related to an MVA.  When a New Jersey insured makes this election, health insurance is the primary payor. In Maryland, the primary payor is the insurer of the vehicle in which the injured person was occupying at the time of the accident. When an individual who is injured in an MVA has Medicare and a no-fault insurance policy, Medicare regulations indicate that the no-fault payor has the primary responsibility for coverage of that individual's injuries. That is, the no-fault insurance is the primary payor and Medicare is the secondary payor.  

Personal injury protection (PIP) benefits are required in states that have a no-fault system of automobile insurance.  Each state generally operates under either a no-fault insurance coverage system or an at-fault insurance coverage system for automobile insurance policies. In an at-fault state, liability for the cost of the MVA falls upon the policy of the driver who caused the accident.  The PIP benefits of a no-fault insurance policy cover the medical expenses of the driver and passengers within the driver's vehicle, regardless of who caused the accident. In addition to covering medical expenses, PIP benefits may also include coverage for funeral expenses and lost wages.  PIP benefits are constrained by the financial coverage thresholds that are set forth in the insured's automobile insurance policy. 

PIP benefits can quickly be exhausted. The minimum PIP benefit in Maryland is $2,500.00.  In Delaware, the minimum mandated PIP benefit is $15,000.00.  A trip to the emergency room and diagnostic tests such as MRIs can quickly consume the limits of a policy's PIP benefit. Because PIP benefits can also be used for lost wages, minimum PIP thresholds can exhaust before a medical provider ever submits a claim to the automobile insurance carrier. Medical providers frequently discover that a patient's PIP benefits have been exhausted after medical treatment has already been rendered. The injured patient may have PIP benefits available when the claim is submitted, but by the time the claim is adjudicated, the PIP benefits might already be exhausted. Once PIP benefits exhaust, the no-fault insurance carrier is not obligated to pay for any additional injury-related claims. It is not uncommon for individuals who sustain injuries in MVAs to receive care from multiple medical providers, such as radiologists, physical therapists, and orthopedic surgeons. When multiple medical providers submit claims for care against the limited pool of money available under the PIP benefit threshold, it is inevitable that some claims will not get paid due to the exhaustion of those benefits.  

Upon the exhaustion of PIP benefits, medical providers will need to submit their claims to an alternate source of payment. The injured person's health insurance is one alternate source for payment. Not everyone has health insurance for when PIP benefits exhaust. The proceeds from a lawsuit could be another source of payment. When health insurance is used and the injured person also has a lawsuit for personal injuries, the issue of subrogation may arise. Subrogation is a process by which a payor seeks to recoup payments that it made for medical treatment when another party is liable for the claims that the payor paid. The Medicare Secondary Payor Act gives Medicare a right to subrogation.  Similarly, when Medicaid has paid for claims for which another party is liable, federal law requires subrogation.  Private health insurance plans also subrogate claims involving MVAs. For example, if Blue Cross previously issued a payment to a medical provider for the treatment of its insured's MVA injuries and the insured subsequently receives a settlement for his/her personal injuries, Blue Cross may seek to recoup its repayments from the insured. This retroactive effort by the payor to recoup payments that it already made is referred to a "Pay and Pursue" approach. Under this approach, the payor pays the claims and then later seeks repayment (i.e., pursues) from the appropriate third-party that has liability for the claims. The subrogation process is not always retroactive. The second approach to subrogation is prospective one, where the payor seeks to avoid making payments in the first place to avoid having to later recoup them. This approach is referred to as a "Pursue and Pay" approach. With this approach, the payor stops paying claims when it becomes aware that another party may have liability for the payment of the claims.  Aetna, for example, states that its Coordination of Benefits policy is to "pursue then pay."  Aetna "investigates the availability of other primary benefits before issuing benefits. A prospective approach to subrogation delays payment to medical providers who have submitted claims to that payor for MVA injuries sustained by the payor's insureds. 

But what happens to the claims that are denied because the patient's PIP benefits have exhausted? Can they be submitted to the patient's health insurance carrier? Maybe. Medical providers risk payment denial if they do not follow the health insurance carrier's formalities under the patient's health plan. As a condition of payment, one formality that some payors require is a pre-authorization of medical services.  For example, Horizon Blue Cross and Anthem Blue Cross require physical therapy (PT) and occupational therapy (OT) services to be pre-approved prior to a patient receiving those services.  United Healthcare also requires pre-authorization for physical therapy in some markets.  United Healthcare's policy states, "If you don't obtain a prior authorization online before performing a PT, OT or ST procedure, your claim for that service will be denied and the patient cannot be billed for the service."  If the provider has to fall back on United Healthcare to submit a claim after learning that the PIP benefits exhausted, the medical provider might be out of luck if the service was already rendered. A medical provider might choose to obtain pre-authorization in advance of PIP benefit exhaustion so that if the automobile insurer denies the claim due to PIP benefit exhaustion, the claims could then be billed to the health insurer with the proper pre-approvals. Obtaining pre-authorization that might or might not be needed is an added burden.  If the PIP benefits cover the claim, then it will not be necessary to bill the patient's health insurance carrier.  There are limits on how far in advance a medical provider can obtain pre-authorization for services. Anthem Blue Cross indicates that an authorization cannot be obtained more than 30 days prior to the service date.  Beyond preauthorization requirements, most, if not all, payors have timely filing requirements. Medicare requires that claims be submitted within 12 months from the date that service is rendered.  United Healthcare suggests that claims be submitted within 90 days, stating, "You should submit a request for payment of Benefits within 90 days after the date of service. If you don't provide this information to us within one year of the date of service, Benefits for that health service will be denied or reduced, as determined by us.  If claims are not submitted to the payor within its applicable timely filing period, the claim will be denied.  

Not billing health insurers for MVA claims has advantages.  Instead of submitting claims to the health insurance carrier, some medical providers prefer to wait and receive payment from the proceeds of the injured party's personal injury settlement. By not billing health insurance, medical providers are able to seek payment at their "usual and customary" rate and avoid contractual discounts that participating provider agreements carry. By not submitting claims to the health insurer, medical providers can avoid the administrative burdens which are imposed by those plans. Traditionally, when patients use their health insurance, they have to dig into their pockets for copayments, coinsurances, and deductibles. Medical providers frequently have difficulty collecting from patients when they use their health insurance for injuries suffered in an MVA. Many patients do not want to pay out of their own pocket for these costs when their injuries were caused by another party. Patients also receive advantages as well when medical providers bypass health insurance. Patients benefit from a continuity of care, as their treatment does not need to be interrupted while authorizations are pending. Studies have shown that prior authorization requirements often result in patients experiencing delays in access to necessary care.  

When PIP benefits exhaust, a medical provider's failure to submit MVA claims to the patient's health insurance carrier can result in a lawsuit.  Numerous lawsuits have been filed by patients against hospitals for refusing to submit MVA claims to health insurers.  Medical providers' refusal to submit MVA claims to health insurance plans has created controversy.  In 2020, the Wall Street Journal published an article titled, "Who Wins in a Personal-Injury Lawsuit? It Can Be the Doctor," about a "little-known but growing practice" of medical providers receiving payment through liens linked to litigation.  Patient advocates have weighed in, complaining that medical liens, in some instances, siphon off large portions of patients' financial recovery for their injuries. It has been argued that the payments received by medical providers is typically more than they would collect under their participating provider contracts with health insurance plans.  Plaintiffs' lawyers, too, have chimed in, vilifying medical providers and facilities by claiming that they refuse to bill the health insurance of persons injured in MVAs because they want to receive a higher payments through settlements, to the detriment of the injured persons.  But is a medical provider required to bill an injured person's health insurance? Some courts do not think so. Many decisions have been decided in favor of the provider. States with statutory lien laws allow medical providers to bypass a patient's health insurance when treating MVA injuries. Whether a provider is required to bill a patient's health insurance ultimately depends on the facts and circumstances.

Those facts and circumstances might include the information exchange that happens at the medical provider's front desk, which is important. When arriving for an appointment or during the intake process, patients are routinely asked "How did your injury occur?" or, more directly, "Was your injury the result of a motor vehicle accident?"  Box 10 of the CMS 1500 form expressly requires the provider to indicate whether the patient's condition was related to employment, an auto accident, or other accident. Many medical practices are participating providers with the health insurance plans that MVA patients have. As a matter of practice, many front desks routinely collect patients' health insurance information in addition to the automobile insurance information for MVA patients. By collecting a patient's health insurance information in addition to automobile insurance information, the medical provider is impliedly or sometimes explicitly representing that health insurance will be utilized in connection with the MVA claims. That implied or explicit representation, if not true, can lead to trouble, in the form of a lawsuit.  Obtaining patients' health insurance information for MVA patients and not submitting claims to the health insurer recently led to a class action lawsuit against a physical therapy provider. That physical therapy provider routinely treated patients who sustained injuries from MVAs.  In the class action lawsuit, which is still pending, the plaintiffs were injured in an MVA and presented their automobile insurance and their health insurance information at their initial therapy appointment. After the plaintiffs' PIP benefits were exhausted, it was alleged that the physical therapy provider did not submit any claims to the plaintiffs' health insurance carrier.  Instead, it was alleged that the therapy provider sought full payment for the unpaid charges from the settlement proceeds from plaintiffs' personal injury lawsuit after PIP benefits exhausted. The plaintiffs made numerous allegations, which might not only describe the practices of the defendant-physical therapy provider but might also reflect the current billing practices of many other medical providers.  

For example, in the class action lawsuit, the plaintiffs alleged the following:


In essence, the lawsuit claims that when a patient arrives at defendant's physical therapy location for treatment, upon learning that the patient's injuries are the result of an MVA injury, the defendant-physical therapy provider collects the patient's health insurance information, but then does not submit claims to the patient's health insurance carrier for payment. The plaintiffs claim that the defendant-physical therapy provider represents to its patients that it will fulfill its contract to submit claims to the patient's health insurance, but instead engages in improper billing practices to increase the defendant's reimbursement by avoiding the contractual discounts associated with participating provider contracts.

Providers should be careful about the representations that they make to patients based on the information that they collect from a patient who has sustained injuries from an MVA.  The front desk and the billing department need to be in sync with regard to how MVA claims will be handled when PIP benefits are available and after they exhaust. When individuals use their health insurance in connection with the treatment of their injuries sustained in an MVA, the terms and conditions of their health insurance apply to them, not just to the provider. Payment of copayments, coinsurances, and deductibles are not (and should not be) contingent of the outcome of a lawsuit. With regard to how MVA claims will be paid, clear expectations should be established at the time of the patient's initial visit. By setting these expectations, it might help avoid a lawsuit.


Franklin J. Rooks Jr. Esq. is a partner of The Law Firm of Morgan Rooks P.C. In addition to being an attorney, Franklin J. Rooks Jr. is also a licensed physical therapist. Mr. Rooks concentrates his legal practice on employment matters, representing employees.  He has a particular interest in disability discrimination relating to the Americans with Disabilities Act, and its state law counterparts.

By The Law Firm of Morgan Rooks P.C. https://www.morganrooks.com/