WINNING THE NO-FAULT MEDICAL LOSS CASE
Michael L. Burman
Kentuckians claiming medical loss benefits under the Kentucky Motor Vehicle Reparations Act of 1975 (MVRA) increasingly experience claim rejection by no-fault carriers relying on an “independent medical review.” No-fault carriers assert that an “independent medical review,” or IMR, is allowed under the MVRA because: (1) the MVRA does not place any restrictions on evidence to rebut reasonableness or necessity or causation of medical loss claims, (2) bad faith is not in play because the exclusive remedy under the MVRA cannot exceed attorney’s fees and interest, (3) an IMR is not expressly prohibited by the MVRA, and (4) the IMR provides a “reasonable foundation” to reject a medical loss claim and deny payment on that claim.
For years, the MVRA consistently provided a framework for the prompt payment of no-fault claims. But no-fault carriers took notice in 2006, when the Supreme Court of Kentucky ruled in Foster v. Kentucky Farm Bureau Mutual Insurance Co., 189 S. W.3d 553 (Ky. 2006), that remedies available under the Unfair Claims Settlement Practices Act (UCSPA) were not available in litigation involving the rejection of no-fault benefits. Foster did not involve an IMR, but certain no-fault carriers argue that Foster overturned the holding in Curry v. Fireman’s Fund Ins. Co, 784 S.W.2d 176 (Ky. 1989) and that common law bad faith damages are no longer available in the no-fault context. These no-fault carriers also argue that Foster overturned Stevens v. Motorist Mutual Ins. Co., 759 SW2d 819 (Ky. 1988) and that Consumer Protection Act (CPA) damages are no longer viable in this context. Under Foster, a jury determines whether there was a reasonable foundation to reject an overdue claim. With damages under the UCSPA and CPA unavailable, litigation “economics” favors the no-fault carrier with more resources for trial by jury. Where the jury finds a “reasonable foundation” to reject an overdue medical loss claim, the remedy cannot exceed the original claim plus 12% interest with no fee award to the successful claimant’s attorney and no other damages to the claimant. Where the jury finds the claim is overdue “without a reasonable foundation,” the no-fault carrier pays the original claim, plus 18% interest, and a reasonable fee to the claimant’s attorney, but no other damages to the claimant. Thus, the case hinges on whether the claim is overdue “without a reasonable foundation.” The claimant’s attorney needs a winning strategic framework to enforce the MVRA because the claimant’s attorney cannot afford to lose, and the claimant cannot afford illusory no-fault coverage.
In the typical case, the no-fault adjuster, GEICO for example, expresses “concern” over some aspect of the medical loss claim. The GEICO adjuster will tie an “inconsistency” in the medical records to some unfavorable aspect of the claim regarding amount, necessity or causation. For example, perhaps the ER records show your client mentioned shoulder pain but no neck pain. Two weeks later, your client sees a general practitioner who records shoulder pain and neck pain from an MVA. Or, the adjuster finds “it is difficult to relate” your client’s “soft tissue” subjective complaints to a “minor” property damage collision. Or, the treating doctor ordered a MRI but did not specifically relate the order to the MVA injury, or the MRI shows pre-existing degenerative changes which the GEICO adjuster disassociates from the MVA injury. Whatever the “inconsistency,” GEICO’s adjuster places the claim “under review” and notifies the claimant and the treating doctor. At this point, GEICO’s adjuster can outline concerns to the treating doctor and demand a report. The MVRA encourages this approach. But GEICO has another approach. GEICO has established arrangements with a few vendors who “retain” doctors willing to perform medical examinations or review medical records for set fees. Integrity is one of these vendors. GEICO faxes your client’s medical records to Integrity with a request for physical examination of your client. Integrity chooses the doctor for the physical examination. However, a unilateral physical examination of your client is not sanctioned by the MVRA. If the unilateral physical examination request goes unfulfilled, GEICO “converts” the IME request to an IMR request.
The IMR is authored by a licensed doctor whose practice is highly dependent on IMR fees. This doctor evaluates your client solely on a “paper review” of the medical records provided by GEICO. GEICO can “cherry pick” which records are reviewed. Your client undergoes no physical examination. This doctor never consults with the treating doctor. In short order, the IMR Report is returned to GEICO. The IMR Report finds your client “has returned to his/her prior condition” and that “further treatment is no longer necessary” beyond a date set in the IMR Report. GEICO’s adjuster forwards this report to your client under cover letter. The letter – commonly called a “rejection letter” – advises your client that GEICO “will be unable to consider treatment” beyond the date set in the IMR report. GEICO’s adjuster, who is part of a profit-sharing plan and receives minimal medical training, has just circumvented the prompt payment social policy espoused by the MVRA, contradicted the treating doctor, obstructed the presumption of statutory reasonableness for a valid claim, and destroyed the comprehensive remedial nature of the MVRA through a doctor who has never examined the patient.
Winning starts with case selection. Can you convincingly prove to a jury that physical impact from the motor vehicle collision caused injury to your client? Will the treating doctors stand up and testify the medical services were reasonable, necessary and causally related? Are your client’s medical records reasonably consistent? Is there a pre-existing active component too uneconomical to litigate? To offset case expenses, are viable liability or UIM claims present? Will your client hold up through trial when the only reward is non-monetary, i.e. making GEICO pay the medical bill? Does your client feel strongly that insurance companies should pay what is rightfully due so other claimants are treated fairly?
Pre-suit, ensure a valid claim by providing proper proof of loss documentation to GEICO. The Kentucky Department of Insurance no-fault form, the police report, the names of the providers, along with a limited authorization for medical records and bills constitutes proper documentation of loss.
Upon establishing a valid claim, the burden shifts to GEICO to investigate and promptly pay the claim. Within that burden, is GEICO’s duty to search out and ascertain whether there is reasonable proof that a medical loss under the MVRA has occurred. Should GEICO reject the claim, GEICO has the burden of proving rejection is built on a “reasonable foundation.” So, what did GEICO know and when did they know it? Under the MVRA, GEICO has thirty (30) days to investigate a claim. GEICO can ask for more time to investigate. Did GEICO consider all the available evidence? Under KRS 304. 39-280, a medical provider “shall furnish a written report” and may charge for same. Did GEICO make a reasonable effort to secure any report from the treating physician, or did GEICO jump to conclusions without performing the duty to search out and ascertain? GEICO’s adjuster handles hundreds of claims. Work up a simple timeline to identify gaps in GEICO’s investigation. You will find them.
Put GEICO on notice that you represent the claimant. Have a fee agreement with your client specifically for an attorney fee award under the MVRA at whatever hourly rate is consistent with the standards set forth in Supreme Court Rule 3.130(1.5). Maintain quality time records.
Study the “rejection letter” and the IMR Report. Does the IMR Report make generalizations that “most people” heal after 6 weeks? Change the lexicon from IMR doctor to “GEICO’s doctor.” Box the no-fault adjuster into specifying, in writing, every “reason that founded” rejection of your client’s claim.  Force the adjuster to articulate each reason that founded rejection of the claim. This will constitute dramatic evidence at trial and exclude other evidence that might be unfavorable to your client which the adjuster did not articulate in rejecting the claim. Demand to see the medical authorization that accompanied the submission of your client’s medical records to GEICO’s doctor for a “paper review.” Does it allow such a review? Send a preservation letter to the no-fault adjuster demanding that all files, including electronic files, along with the “activity log,” be preserved free from tampering. Demand the qualifications of “GEICO’s doctor” and the method by which GEICO determined the doctor was “independent.” Ask whether “GEICO’s doctor” has a track record favoring GEICO in other claims. Gather certified medical records and the certified HICF/HCFA/CMS billing forms from the treating doctor matching the billing date to the billing address at GEICO. Demand the PIP Summary showing the date medical loss claims were received and the date paid or overdue. Send notice to “GEICO’s doctor” requesting preservation of all records and notes. Do the same thing with Integrity. Secure a simple, basic report from the treating doctor asserting the disputed treatment is reasonable in amount, necessary and causally related to the MVA. Send it to GEICO asking for a re-evaluation of the rejected claim. Consider offering GEICO cooperation with a true independent medical examination conducted under the Court’s direction. Lay down evidence that GEICO built an “unreasonable” foundation to reject. Make a final demand upon GEICO to honor the claim and pay your fees to date, or you will file suit to litigate the matter until all claims are honored and all attorney’s fees are settled or decided by the Court.
BUILD AN UNREASONABLE FOUNDATION INTO YOUR LAWSUIT
In your lawsuit, incorporate your factual investigation into the elements showing rejection and denial without reasonable foundation. Allege with specificity, the insurance contract, the proof of loss documentation, the claim amount, the date received by GEICO, the overdue date, the date rejected, and the specific reasons provided by GEICO to reject the claim and deny payment, and the date those reasons were provided. Look carefully at GEICO’s answer to the complaint.
Discover the claim file and the “activity log” right away. Request any digital file be reduced to portable document format. GEICO must, by law, maintain the entire claim file in such a way as to permit reconstruction of the file. The “activity log” records day-to-day handling and investigation of the claim. Go through the activity log line by line. In a recent case, the activity log revealed that the adjuster talked to “Sonja” at a local physical therapy provider, and that Sonja stated the patient was “released from care.” Investigation revealed no employee by the name of “Sonja” at that location, and no medical records to support a “release from care.”
Discover all the reports “GEICO’s doctor” provided GEICO in other claims. In a recent case, “GEICO’s doctor” provided 76 reports in other GEICO claims. Of the 76 reports, this doctor found 4 claimants needed more treatment, had an impairment or had a torn meniscus. In the 72 remaining reports, “GEICO’s doctor” made the same “word for word” finding in those claims as in the subject claim, i.e., a return to his/her pre-wreck condition and no further treatment necessary. Thus, 93% of the time, “GEICO’s doctor” found against further treatment.
Discover the entire insurance policy. Determine if GEICO asserts a term or condition under the policy allowing GEICO to send your client’s medical records for an IMR. Do you have a privacy issue you can interject?
Secure admissions regarding factual items not admitted in the answer to the complaint. Secure admissions regarding the specific reasons for rejecting the claim. If the admissions differ from those given in the rejection letter, or that you confirmed pre-suit, then the jury wonders if GEICO is just “trying to get out of paying.” Browse the KJA Document Bank for discovery exemplars.
PRETRIAL PRACTICE AND TRIAL
Armed with the specific reasons for claim rejection, the activity log and the claim file, GEICO is now confined to an evidentiary box. Defense testimony beyond the time of claim rejection is immaterial to the “without reasonable foundation” trial issue. Such evidence is “outside the box.” To illustrate, if your client had a pre-existing condition that was asymptomatic prior to the wreck, GEICO cannot dredge that up to argue causation unless GEICO considered the condition when rejecting the claim. In a recent case involving a medical loss claim for $6,300, GEICO spent $8,000 on an expert who concluded the collision impacted claimant “no greater than picking up a sack of potatoes.” The Trial Court ruled this expert’s testimony inadmissible to the “reasonable foundation” issue at trial, because this expert’s opinion was not considered by GEICO at the time of claim rejection.
The claimant’s case boils down to this: “a reasonable foundation is built on an honest and objective investigation by GEICO.” Without a reasonable investigation, there is no reasonable foundation to reject an otherwise valid claim. If GEICO does not conduct an honest and objective investigation, mandatory no-fault medical coverage is worthless. At trial, consider a simple opening statement with video clips and direct visual evidence that lays out the claim, and each reason GEICO gave for rejection. End your opening by quickly mapping GEICO’s unreasonable investigation. Expect the defense to present a sophisticated PowerPoint presentation designed to “smear” your client and “muddy up” some aspect of the medical loss claim. Your Jury is composed of people who pay for no-fault insurance every month. The treating doctors who testify in your case are likely to be well-respected in your community. A persuasive opening using trial software that allows presentation of documents and video clips of GEICO’s adjuster and GEICO’s doctor will place GEICO on defense to explain how to “get out of paying” this claim.
For decades, lawyers took for granted payment of medical loss claims by no-fault carriers. Your trial judge may not be versed in this area of the law because past cases were so few and far between. Practitioners, even highly specialized and experienced tort lawyers, may find this area of law somewhat “new.” The KJA provides support. The KJA Listserv, an invaluable tool, puts experienced lawyers just an email away. Join the Listserv by calling 1-800-701-4728 or join through the KJA website.  Forms and research are stored in the PIP Folder on the KJA website under the Document Bank.
 Review by the author of responses from no-fault carriers to the Department of Insurance obtained through an Open Records Request for PIP Complaints.
 Under the MVRA, each medical bill must be: (a) “reasonable” in amount, (b) “reasonably needed,” and (c) the result of “injury” from the “use” of a motor vehicle. KRS 304.39-020.
 Foster v. Kentucky Farm Bureau Mutual Ins. Co., 189 S.W.3d 553, 557 (Ky. 2006)
 Obamacare is changing Kentucky health care, and in time, No-Fault Coverage could be supplanted by Obamacare, but for now, No-Fault Coverage is important social policy mitigating losses caused by motor vehicle injuries in Kentucky.
 KRS 304.12-230 et. seq.
 KRS 304.39-210 and KRS 304.39-220.
 KRS 304.39-210(2), KRS 304.39-220(1) and Foster v. Kentucky Farm Bureau Mutual Ins. Co., 189 S.W.3d 553, 557 (Ky. 2006)
 The Kentucky Justice Association maintains a Document Bank to provide tested forms and research https://www.kentuckyjusticeassociation.org/index.cfm?pg=KJADocumentBank/PIP. See particularly “Key Words and Rules of Law” compendium of PIP case law, statutes and regulations.
 GEICO tactics and strategy are used here to provide examples.
 KRS 304.39-280(1)(c).
 Miller v. U.S. Fidelity & Guar. Co., 909 S.W.2d 339, 343 (Ky.App. 1995).
 See RONIESHA ADAMS, F/K/A RONIESHA SANDERS, RONIESHA ADAMS, AS MOTHER AND GUARDIAN OF B.A., A MINOR CHILD v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, RENDERED: JUNE 12, 2015; TO BE PUBLISHED Commonwealth of Kentucky, Court of Appeals NO. 2013-CA-002152-MR.
 KRS 304.39-020(5)(a). GEICO fails to appreciate how Kentucky law treats a “proof of loss” for PIP benefits. GEICO incorrectly asserts the presumption of statutory reasonableness pursuant to Section 020(5)(a) is limited, applying only to the amount of the medical bill. In support, GEICO cites to Bolin v. Grider and Buckler v. Mathis, 353 S. W. 3d 625, 630 (Ky. App. 2011). These cases clearly hold that once the medical bill is introduced into evidence at trial, along-side evidence of an MVA injury, the presumption of statutory reasonableness in Section 020(5)(a) attaches, and the Defendant must go forward with impeaching proof because the medical bill itself carries sufficient probative force in that evidentiary context. Bolin at 451 and State Auto Mut. Ins. Co. v. Outlaw, 575 S.W.2d 489 (Ky.App. 1979).
 The MVRA is comprehensive legislation. Foster v. Kentucky Farm Bureau Mutual Ins. Co., 189 S.W.3d 553, 557 (Ky. 2006). It must be read as a whole, and applied to effectuate its primary purpose of prompt payment. Progressive Max Ins. v. National Car Rental Sys. 329 S.W.3d 320, 322 (Ky. 2011). The MVRA is remedial legislation and it must be broadly construed to effectuate its purpose. MVRA enacted “[t]o correct the inadequacies of the [previous] reparation system.” Crenshaw v. Weinberg, 805 S.W.2d 129, 131 (Ky. 1991).
 State Auto Mut. Ins. Co. v. Outlaw, 575 S.W.2d 489, 493 (Ky.App. 1979).
 State Auto Mut. Ins. Co. v. Outlaw, 575 S.W.2d 489, 493 (Ky.App. 1979).
 Kentucky Farm Bur. Mut. Ins. Co. v. Roberts, 603 S.W.2d 499 (Ky.App. 1980).
 Kentucky Farm Bur. Mut. Ins. Co. v. Roberts, 603 S.W.2d 499 (Ky.App. 1980).
 Shelter Mut. Ins. Co. v. Askew, 701 S.W.2d 139, 141 (Ky.App. 1985).
 KRS 304.39-040 allows thirty (30) days to investigate but more time can be requested. See 806 KAR 12:095(2)(a).
 806 KAR 12:095 Section 6(b)2.
 Notice of your representation starts the time sheet on your attorney fee award. KRS 304.39-220(1).
 KRS 304.39-210(5).
 The activity log may be your strongest evidence at trial. It is a chronological listing of all contact with the file and with other adjusters/supervisors.
 KRS 304.39-270.
 806 KAR 12:095 Section 3 – Each insurer must maintain claim data that are accessible and retrievable for examination, including claim number, line of coverage, date of loss, date of payment, date of denial or date closed without payment. Files must be maintained to permit reconstruction of the insurer’s activities relative to each claim. Each relevant document within the claim shall be noted with the date received, the date processed or date mailed. Computer files shall be accessible from a computer terminal and capable of duplication to legible hard copy.
 Exhibit View is trial software worth reviewing. http://exhibitview.net/
 In the Document Bank, you will find a Key Words and Rules of Law compendium for MVRA medical loss claims that will be a helpful start for research and issue development.