How does a $780.00 PIP claim turn into a $25,000 judgment?
In the fog of litigation an advocate can sometimes lose sight of the real issues at hand. Overzealous insurance defense lawyers and hard ball insurance company tactics recently turned a simple PIP claim into a multi-year battle. The result should deter them from such tactics in the future.
A local chiropractor treated a patient who had been injured in a car accident. The PIP insurance company paid the first $2,000 of benefits, and the chiropractor then submitted additional bills to the patient’s health insurance. The health insurer declined to pay for hot and cold pack treatments, using a billing code indicating that the payment was included in the allowance of another service. The chiropractor then submitted the bills and health insurance EOBs to the PIP insurer for payment of 26 units of that service at $30.00 each for a total of $780.00.
The PIP insurer denied payment stating that the health insurer covered the service. However, the chiropractor still remained unpaid for the hot and cold pack treatments which were clearly not paid by the health insurer. The chiropractor hired a lawyer and filed a small claims PIP suit.
The PIP insurer removed the matter from the small claims court, up to the district court and then promptly, lost at trial. The insurance company then appealed their loss to a higher court.
According to the appellate court the PIP insurer undertook a “contentious litigation strategy on a matter that the plaintiff had commenced as a small claim” which caused the plaintiff’s counsel to devote a significant amount of time to prosecute. The Appellate Division said further: “where the defendant and its counsel litigated this matter with little sense of proportion, they must now reap what they have sown.”
In June 2016, The Appellate Division affirmed an award over $24,000 in fees on a claim that could have resolved for $780.00 had rational minds prevailed.
The insurance company and its attorneys lost sight of the purpose of the statute and engaged in a wasteful, time consuming and very expensive course of litigation. This is the very antithesis of the PIP statute, and PIP insurers ought to think twice before engaging in such defensive measures.