Being a Good Neighbor to State Farm

In both Oregon and Washington, as in many states, auto insurance policies include a provision for personal injury protection (PIP), which covers medical expenses resulting from an accident regardless of fault, up to a moderate limit. In most cases, PIP claims are not controversial. A recent case from Oregon, McBride v. State Farm Mutual Automobile Ins. Co., 282 Or App 675 (2016), <http://www.publications.ojd.state.or.us/docs/A159232.pdf>, however, illustrates the importance of cooperation by the insured in resolving disputes.

Ms. McBride was injured in an accident and submitted a claim for PIP coverage. State Farm paid for seven months of medical treatment, but then questioned whether continued treatment was reasonable and necessary, the grounds for coverage. It requested Ms. McBride to attend a medical examination, which the policy allowed it to do. Ms. McBride did not attend the exam, and her lawyer failed to respond to subsequent requests to reschedule the exam. State Farm eventually denied payments after the seventh month of treatment, but sent the denial more than the state-mandated 60 days after it received invoices for that treatment. Under state law, this meant that it should be presumed that the treatment was reasonable and necessary. Ms. McBride sued for failure to pay for her claims.

The Court of Appeals ruled for State Farm. The court’s reasoning had two parts. First, it ruled that, notwithstanding Ms. McBride’s failure to attend the exam, State Farm was still bound by the 60-day limit to deny the invoices. As a result, it was presumed that the treatment was covered – but all that meant was that State Farm had to prove it wasn’t instead of Ms. McBride probing that it was.

The court analyzed whether Ms. McBride’s failure to cooperate excused State Farm completely from paying, or whether it had to prove that it was adversely harmed. The court concluded that because the purpose of the medical exams under the policy was to allow State Farm to decide whether the treatment was the result of the accident and reasonable and necessary, it affected whether State Farm had to pay in the first place. This meant that the disputed treatment was not yet covered when Ms. McBride failed to show for the exam, and State Farm could refuse to pay without showing that it was harmed.

If you are in an accident, and you have an Oregon insurance policy, you may find that the insurer will eventually ask for an independent medical examination to confirm that your treatment is covered. It may now be in your best interest to attend that appointment. You could end up being denied further coverage with no recourse. On the other hand, most of the time, these exams result in a report that treatment is no longer necessary. That, however, can be disputed if your doctor disagrees. It’s probably a good idea to talk to a lawyer at that point for advice.

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