Florida MRI Clinic Sues Insurer for Improper Denial of PIP Benefits

It is customary for insurers to deny claims submitted by no-fault providers, and providers, in turn, commonly challenge these denials. Conversely, it is anomalous for a no-fault provider to initiate a (putative) class action suit in response to an insurer’s payment denials. Yet, in a recently filed action, an aggrieved provider did just that.

Pan Am Diagnostic Services, Inc. (“Pan Am”), an MRI clinic based in Florida, filed a putative class action on February 19th in Florida court against Equity Insurance Co. (“Equity”) for wrongly denying PIP benefits. Pan Am claims that the insurer improperly used payments made to nonmedical providers as a justification for denying payment on valid claims by medical providers.

Under Florida Vehicle No-Fault Law, automobile operators must have insurance that includes at least $10,000 combined medical expense and disability coverage, also known as personal-injury-protection or “PIP.” Insurers must pay 80 percent of medically necessary expenses resulting from an accident.

Payments made to nonmedical providers should not be part of the calculations in determining whether a policyholder’s PIP medical benefits coverage has been exhausted. Such a scheme makes it appear that the policyholder has already depleted their PIP benefits and legitimate claims by medical providers are unjustly denied.

In a 2012 incident cited by Pan Am, Equity paid only one third of a claim submitted for medical services provided to an Equity policyholder. Equity claimed that the policyholder had exhausted his PIP benefits from a prior treatment by another provider. The prior settlement, however, included several nonmedical costs in addition to compensation for medical care. Pan Am alleges that the policyholder’s medical expense limit had not been met and Equity made deceptive settlement payments to falsely imply depletion of the $10,000 coverage.

Such aggregation of prior non-medical costs by insurers can result in acute financial detriment to medical providers whose claims are then improperly denied after they have already provided legitimate medical care. Pan Am is seeking injunctive relief and compensatory damages from Equity.

For more information on this topic, please contact Adrienne Dresevic, Esq., or Carey Kalmowitz, Esq. at (248) 996-8510, or via email at adresevic@thehlp.com or ckalmowitz@thehlp.com.