It's a whole new ballgame in PIP litigation, thanks to an SJC decision

I have written before, here, about why it is difficult to sue PIP carriers who fail to pay claims.  PIP claims are by their nature small: generally not more than $2000 and never more than $8000.  The PIP statute provides that the insurer must pay the claimant's attorney's fees if a judgment against the carrier enters.  Up until now, an insurer could avoid paying those fees if it forced a claimant to file suit, conduct discovery and go to trial and then, minutes before judgment enters, paid the claim.  Of course if the claimant proved bad faith in the insurer's actions then attorney's fees were available under Mass. Gen. Laws ch. 93A, but bad faith is harder to prove than mere failure to pay a claim when due.  Although some wiggle room was found by various decisions of the Massachusetts Appellate Division (a court that does not set precedent), see here and here, PIP cases in general were simply a bad risk. 

The Supreme Judicial Court of Massachusetts has changed all that.

In Barron Chiropractic & Rehabilitation, P.C. v. Norfolk & Dedham Group, 469 Mass. 800 (2014), the SJC has held that an unpaid party who has brought suit may refuse the insurer's tender of PIP amounts due, proceed with suit, and obtain a judgment for those amounts as well as its costs and attorney's fees. 

The plaintiff, Barron Chiropractic & Rehabilitation, provided chiropractic services to Nicole Jean-Pierre after an auto accident.  Jean-Pierre's PIP carrier was Norfolk & Dedham. 

Jean Pierre's chiropractor at Barron and Norfolk & Dedham disagreed about the length of treatment made necessary by the accident and about the proper price for her treatment.  The disputed amount was $1,544.05. 

Barron sued Norfolk & Dedham in District Court.  Norfolk & Dedham determined that its anticipated litigation costs would substantially exceed the amount of the disputed medical fees.  Six days prior to trial it sent Barron a check for the disputed amount with an attached check stub that stated "full and final settlement."  Barron's counsel returned the check to Norfolk's counsel with a letter stating that its offer of settlement was rejected.

The SJC held that under contract law Barron was not required to accept the tender of settlement for the amount due after the time for payment under the PIP statute had passed.  It also held that it would be unfair and against the purpose of the PIP statute to allow the insurer to escape costs and attorney's fees by paying the PIP amount that was due after forcing the claimant to file suit. 

SJC seeks amicus briefs on attorney's fees for PIP cases

The Supreme Judicial Court of Massachusetts is seeking amicus briefs in the following case:

SJC-11561     
Barron Chiropractic & Rehabilitation vs. Norfolk & Dedham Group

Whether an insurer can be liable for costs and attorney's fees in an action pursuant to G. L. c. 90, � 34M, on a claim that it failed to pay PIP benefits in accordance with the statute, if the insurer, allegedly for business reasons unrelated to the merits of the litigation, tenders payment of the full amount of the disputed benefits after the commencement of the action but before a judgment has entered against it.

Scheduled for March argument.

Another decision finding wiggle room for attorney's fees in PIP case after insurer tenders payment of medical bills

I wrote here about a recent Appellate Division case, Metro West Med. Assocs. v. Amica Mut. Ins. Co., which held that payment of outstanding PIP bills by an insurer does not necessarily prevent the award of attorney's fees under the PIP statute. Another Appellate Division decision has come to the same conclusion.

Howard Physical Therapy provided medical services to Joel DaSilva for injuries he suffered in a motor vehicle accident. Howard submitted to DaSilva's insurer, Premier, a request for PIP reimbursement of medical expenses. Premier paid some of the bills and refused to pay the remainder, asserting that the balance was unreasonable "upon review by an outside company."

Howard took no further action for more than four years, when it filed suit. Two weeks after Howard filed suit, Premier offered to pay the balance plus costs incurred by Howard in filing and serving the complaint. Howard rejected the offer. Premier then sent Howard a check for only the unpaid bill amounts, and moved for summary judgment. The District Court allowed the motion for summary judgment.

In Howard Physical Therapy, Inc. v. Premier Ins. Co., 2010 WL 3855302 (Mass. App. Div.) the Appellate Division reversed the summary judgment decision. It cited Metro West for the proposition that "the mere payment of the balance, in and of itself, would not justify summary judgment for Premier." Rather, the insurer must show that it had "a valid reason not to pay, and that it paid an invalid claim for reasons unrelated to its merits."

The court noted that although Premier had based its original decision, not to pay the full bill, on a review of the bill by "an outside company," there was no indication that the bill was reviewed by a registered or licensed practitioner in the same field as the practitioner submitting the bills, as required by statute. For that reason the Appellate Division reversed the District Court's summary judgment decision.

The court held, however, that Howard could not amend the complaint to add a count for breach of G.L. c. 93A, where Howard had not sent a demand letter prior to suit and Premier made a reasonable offer of settlement within 30 days after suit was filed.

Appellate Division discusses wiggle room for attorney's fees in PIP cases

Although the PIP statute allows attorney's fees in cases against a PIP insurer, such fees may only be awarded if a judgment is recovered from the insurer on the PIP claim. That rule has been generally understood to mean that an insurer can avoid attorney's fees by paying the disputed amount at any time, even after trial has begun. (Of course, attorney's fees can still be awarded on a 93A claim, but a violation of 93A is much harder to prove.)

In Metro West Medical Assocs., Inc. v. Amica Mut. Ins. Co., 2010 WL 3118636 (Mass. App. Div.), the Appellate Division discussed wiggle room for attorney's fees in a PIP claim.

Metro West alleged that it provided medical services to Cuevos, who was entitled to PIP benefits from Amica. Amica paid some of the bills but rejected the additional bills on the grounds that the services were unreasonable and unnecessary. A few weeks later Amica sent a check for the amount it had originally rejected. Metro West's attorney returned the check and demanded payment for attorney's fees under the PIP statute.

The court stated that it would not be inconsistent with prior case law "to require that the insurer on the § 34M [PIP] claim show more on summary judgment than simply that the bills have all been paid. It should also have to show that there is no genuine issue of fact concerning whether it had a valid reason not to pay, and that it paid an invalid claim for reasons unrelated to its merits, for example, to avoid the cost of litigation or to remove a potential liability off its books."

The court held open the possibility that an insured could reject a tender of late payment from an insurer. "In this light, a check for the balance of bills could be viewed as an offer of settlement, which could be rejected, and not a tender of full payment."

The court granted summary judgment to Amica. Amica had submitted an affidavit in which its claim supervisor averred that the disputed bills were not reasonable and necessary and that Amica paid them as a result of a business decision. "That was sufficient, albeit without a lot to spare" to shift the burden to Metro West to show that there would be a genuine issue at trial concerning the necessity of the services and the reasonableness of the bill." Metro West failed to do so.