;)
July 20th, 2023
Ms. Cynthia Zimmerman (“Zimmerman”) was injured in a motor vehicle crash in May 2015, and began treating with Turnpaugh Chiropractic Health and Wellness Center, P.C. (“Provider”). Zimmerman was insured by Erie Insurance, who in accordance with Pennsylvania’s Motor Vehicle Financial Responsibility Law (“MVFRL”), ultimately referred her case to peer review to challenge its obligation to pay for continued chiropractic treatment.
By way of background, Section 1797(a) of the MVFRL places billing limitations on medical providers who treat injuries covered by an auto insurance policy and requires providers to bill the insurer directly. 75 Pa.C.S.A. § 1797(a).
According to Section 1716 of the MVFRL, benefits are overdue if not paid within 30 days after the insurer receives reasonable proof of the amount of the benefits. … Overdue benefits shall bear interest at the rate of 12% per annum from the date the benefits become due. In the event the insurer is found to have acted in an unreasonable manner in refusing to pay the benefits when due, the insurer shall pay, in addition to the benefits owed and the interest thereon, a reasonable attorney fee based upon actual time expended. Likewise, section 1798(b) of the MVFRL provides that in the event an insurer is found to have acted with no reasonable foundation in refusing to pay the benefits when due, the insurer shall pay, in addition to the benefits owed and the interest thereon, a reasonable attorney fee based upon actual time expended.
However, section 1797(b) of the MVFRL sets forth a process for insurers to contest their obligation to pay for the insured’s treatment by contracting with “peer review organizations” (“PROs”) for an assessment of whether the treatment is reasonable and necessary. If the PRO determines the treatment is reasonable and necessary, the insurer must pay the provider the outstanding amount with 12% interest per year on any amount withheld. If the PRO finds the treatment is unreasonable or unnecessary, the provider may not collect any related payments and must return any submitted payments with interest.
If the insurer refuses to pay for medical treatment without consulting with a PRO, Section 1797(b)(4) permits the insured or provider to challenge the refusal before a court. Section 1797(b)(6) provides that where an insurer has refused to pay for treatment without consulting a PRO and a court determines that such treatment is medically necessary, the insurer must pay the outstanding amount plus 12% interest as well as the costs of the challenge and all attorneys’ fees.
In this instance, Erie contracted with PRO, Dr. Richard Thomas Adams, D.C., who concluded that chiropractic care beyond August 31, 2017, was neither reasonable nor necessary. Thus, Erie refused to pay for chiropractic treatment beyond August 31, 2017. In 2019, Provider filed a complaint seeking attorney’s fees pursuant to 75 Pa.C.S.A. § 1716 and § 1798 based on its allegation that Erie improperly referred the bills to peer review without reasonable circumstances that would cause a prudent person familiar with the process to implement peer review.
The trial court acknowledged that Provider was not entitled to attorneys’ fees under Section 1797 of the MVFRL pursuant to the Supreme Court’s decision in Herd Chiropractic Clinic, P.C. v. State Farm Mut. Auto. Ins. Co., 64 A.3d 1058, 1066 (Pa. 2013) (finding Section 1797(b)(4) only authorizes attorneys’ fees where the insurer has not invoked the peer review process to challenge its obligation to pay for treatment). However, the trial court determined Provider was entitled to attorneys’ fees under Section 1798, which states that a trial court may award a reasonable attorney fee “[i]n the event an insurer is found to have acted with no reasonable foundation in refusing to pay” first party benefits when due. The trial court relied on 31 Pa.Code § 69.52(a), which provides:
A provider’s bill shall be referred to a PRO only when circumstances or conditions relating to medical and rehabilitative services provided cause a prudent person, familiar with PRO procedures, standards and practices, to believe it necessary that a PRO determine the reasonableness and necessity of care, the appropriateness of the setting where the care is rendered, and the appropriateness of the delivery of the care. An insurer shall notify a provider, in writing, when referring bills for PRO review at the time of the referral.
The trial court found Erie had no reasonable basis to refer Provider’s invoices to peer review solely based on the fact that Ms. Zimmerman’s treatment had continued for two years after her accident. The trial court indicated that Erie should have conducted a full evaluation of Ms. Zimmerman’s treatment progress and documented this analysis in its log notes before deciding to send the case to peer review. The trial court also found Provider was entitled to attorneys’ fees pursuant to Section 1716, which requires insurers to pay benefits within 30 days of receiving reasonable proof of the amount of benefits.
The Superior Court disagreed with the trial court, holding that the insurer did not “refuse to pay” benefits under the MVFRL when it submits a case to peer review. Rather, the insurer employed a PRO to conduct a professional assessment of the challenged treatment to determine whether the care is necessary and reasonable. Based on the PRO’s determination, the insurer may assess whether it has a reasonable foundation to deny payment of benefits.
The decision in Turnpaugh Chiropractic Health & Wellness Cr., P.C. v. Erie Ins. Exch., No. 1448 MDA 2021 (Pa. Super. June 8, 2023) can be accessed here.
