Wednesday, June 5, 2013

Maryland Automobile Insurance and Personal Injury Protection

A question I frequently hear is whether an automobile insurance company in Maryland can raise rates or cancel the policy when a claim is made for personal injury protection benefits. The Maryland Gen. assembly makes it clear in the statute below that the answer is "no".

In case you don't know, PIP in Maryland covers your medical expenses, lost wages and or funeral expenses up to a statutory minimum of $2500. PIP is required to be sold along with the automobile liability policy unless the insured specifically rejects coverage. Even though I am not fond of insurance I always tell my clients to have PIP. It is fairly cheap and very quick and you can usually raise your limits above $2500. Personally I raised it to my maximum of $10,000. I ride a bicycle and the PIP can cover income that I lose up to $10,000 if the car strikes me while I am on my bicycle.

MD Code Ins. 19-507 Personal injury protection coverage -- When benefits payable; coordination of policies; surcharge; subrogation (Maryland Code (2011 Edition))

(a) When benefits payable. -- The benefits described in Sec. 19-505 of this subtitle shall be payable without regard to:

(1) the fault or nonfault of the named insured or the recipient of benefits in causing or contributing to the motor vehicle accident; and

(2) any collateral source of medical, hospital, or wage continuation benefits.

(b) Coordination of policies. --

(1) Subject to paragraph (2) of this subsection, if the insured has both coverage for the benefits described in Sec. 19-505 of this subtitle and a collateral source of medical, hospital, or wage continuation benefits, the insurer or insurers may coordinate the policies to provide for nonduplication of benefits, subject to appropriate reductions in premiums for one or both of the policies approved by the Commissioner.

(2) The named insured may:

(i) elect to coordinate the policies by indicating in writing which policy is to be the primary policy; or

(ii) reject the coordination of policies and nonduplication of benefits.

(c) Surcharge prohibited. -- An insurer that issues a policy that contains the coverage described in Sec. 19-505 of this subtitle may not impose a surcharge or retier the policy for a claim or payment made under that coverage and, at the time the policy is issued, shall notify the policyholder in writing that a surcharge may not be imposed and the policy may not be retiered for a claim or payment made under that coverage.
(d) Subrogation. -- An insurer that provides the benefits described in Sec. 19-505 of this subtitle does not have a right of subrogation and does not have a claim against any other person or insurer to recover any benefits paid because of the alleged fault of the other person in causing or contributing to a motor vehicle accident.

If you have questions about your insurance coverage call me.

Sunday, June 2, 2013

Personal Injury Claims and ERISA Subrogation

Recently the United States Supreme Court held that an employer as an administrator of a self funded  ERISA (Employee Retirement Income Security Act of 1974) plan for its employees could recover the insurance benefits it provided to that employee.

In this particular case, US Airways Versus McCutchen, the plaintiff was involved in a car accident.  He incurred medical expenses of approximately $66,000.  His attorney settled the case for $110,000 (not that it is relevant but I am assuming that the defendant in the car accident had limited insurance coverage).  I am also assuming that the attorney took the usual 40% of the settlement.  If my assumptions are correct the plaintiff was left with exactly $66,000.  He was also left with significant pain and suffering as a result of the accident.

His employer which administered the health insurance plan had a contract between employer and the employee.  That contract provided that the employer was entitled to reimbursement for medical expenses it paid out if a third-party was responsible for the injuries to the employee and the employee collected from that third-party.  The employer sued him for reimbursement of the medical expenses.

The case wound its way up through the federal court system until it ultimately reached the Supreme Court of the United States.  The Supreme Court held for the insurance company/employer.  It held that the terms of an ERISA plan govern in actions brought under that specific portion of the federal law, § 502(a)(3). The Court based its decision, in part, on the idea that subrogation and reimbursement provisions of self-funded ERISA plans are seeking to enforce rights that are based on the contract itself.  Relying on a previous decision, the Court found that proper enforcement of this type of “equitable lien by agreement” is accomplished by holding the parties to their mutual promises as reflected in the plan contract. Accordingly, the Court rejected the application of general principles of equity (e.g., unjust enrichment) where a health plan’s terms contradict those rules.

What this means for those injured (who have self-funded insurance plans ) through the fault of others and their attorneys is that they should look at rights of reimbursement by the insurance company at the outset of the case.  In the instant case, it seems like the attorney made out, the insurance company made out and the badly injured plaintiff not only was left with permanent injuries but an outstanding bill.

If you or someone you know has been injured you need to be aware of the situation and certainly hire an attorney who can deal effectively not only with the tortfeasor but also with the health insurance company.