Personal injury protection coverage (PIP) benefits victims of car accidents in Maryland and Pennsylvania. In the first state, it's not required but is optional. In the last state, it is required. If you have PIP insurance, you may think you are covered financially when you are in an accident and are injured – whether or not you caused or contributed to the accident. You may, however, want to think again.
A recent complaint filed in a federal court in Kentucky alleges that State Farm – an auto insurance company with a huge slice of the auto insurance market in Maryland, Pennsylvania, and elsewhere – has been applying unlawful tactics to deny or reduce benefits for its policyholders. Understanding auto insurance tactics to deny or reduce claims is important if you want to challenge them in order to obtain what is rightfully yours.
What does the recent lawsuit in Kentucky allege about State Farm's denial of PIP benefits?
In Hack et al v. State Farm Fire & Casualty Insurance Company, the complaint filed on February 21, 2020, alleges that State Farm Fire and Casualty Company violated the Kentucky Motor Vehicle Reparations Act (MVRA) by using a utilization process to deny or reduce claims.
The scheme used by State Farm Fire, a subsidiary owned by State Farm Mutual, went something like this:
- a policyholder is injured in an accident and required medical care;
- the policyholder filed a claim with its State Farm Fire insurer;
- State Farm used a third-party vendor for its utilization process – which is another way of saying "paper review" process;
- the third-party vendor would return a finding that the medical bills were excessive or unrelated;
- State Farm would deny or reduce PIP medical benefits to insured claimants.
According to the MVRA, medical bills are to be presumed reasonable unless there are reasonable grounds that they are not. Further, claims cannot be denied solely on the basis of a finding from a utilization process.
The complaint, a possible class-action lawsuit, alleges that:
Upon information and belief, State Farm Fire's parent company, State Farm Mutual, has denied more than $6 million dollars in owed PIP benefits to Kentucky insureds due to the findings of approximately ONE THOUSAND AND SIX HUNDRED utilization reviews.
State Farm Fire and State Farm Mutual used the same claims handlers and same general claims handling processes to adjust Kentucky PIP claims throughout the period associated with the approximately 1600 State Farm Mutual utilization reviews. (Complaint, p. 6).
The Complaint alleges that State Farm knew what it was doing – in other words, these denials and reduced payouts were intentional.
Why does this case matter to anyone else outside of Kentucky?
This type of tactic is not new to the industry and merely goes to show what an insurance company will do to save profits for itself while you struggle to pay for your medical bills. This tactic also attests to why having an experienced car accident personal injury attorney by your side – whether you are in Maryland, Pennsylvania, or elsewhere – and advocating for your rights is important. You cannot trust your auto insurer to do what's right, but with the right attorney, you can trust your rights will be upheld.