On April 7, 2007 a passenger was injured in an automobile accident. Pilgrim was the PIP carrier. Bryan Hartunian provided orthopedic treatments to the insured. Pilgrim paid some of the bills from the treatment but withheld payment of $990 on the ground that the charges exceeded an amount that was reasonable in comparison to other medical providers in the same geographic area. However, it did not notify Hartunian within ten days of its intention not to pay.
After twelve months of demanding payment, Hartunian sued Pilgrim in the Massachusetts District Court. In addition to the unpaid portion of his bill he sought damages under Mass. Gen. Laws ch. 93A. Pilgrim then issued payment of $990 and filed a motion for summary judgment on all counts of the complaint. The motion was denied with respect to the 93A count. Pilgrim was found liable for breach of 93A after a bench and subsequently appealed.
In Hartunian v. Pilgrim Ins. Co., __ N.E.3d __, 2014 WL 6607866 (Mass. App. Ct.), Pilgrim argued that its refusal to make payment was not an unfair business practice because it disputed the obligation to pay in good faith. The court held that that argument ignored the fact that an insurer must, by statute, make PIP payments within ten days or notify the submitting physician or claimant of its intention not to pay.
Pilgrim also argued that it did not act in bad when it had an independent medical exam conducted by a physical therapist (apparently a common thing now) rather than a practitioner licensed in the same medical specialty as Hartunian. While not dismissing out of hand the use in all circumstances of a physical therapist for an IME, the court held that whether such use is in good faith raises a factual issue.
Similarly, the court held that review of the bills by a billing program is not automatically a bad faith act by an insurer but that "its use as a substitute for a practitioner's review of billing statements and underlying services provides an additional basis for an inference of Pilgrim's lack of good faith."