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Insurance Dispute Timing

Posted Tuesday, June 12, 2018 by Pivotal Law Group

How Long Do I Have To Dispute An Insurance Claim?*

If your insurer denies your claim or takes some action with which you disagree, how long do you have to dispute the insurer’s decision? For example, if your health insurer refuses to authorize surgery, or refuses to cover prescription drugs; your homeowner’s insurer refuses to pay the full bill for repairing your home after a fire; or your car insurer refuses to pay for damage you sustained in a crash?Most people are probably generally aware their legal claims may be subject to specific deadlines. But confirming the specific deadline applicable to a particular insurance dispute, and the action needed to comply with the deadline, can be tricky.

The first and most important question is whether the insurance is employer-sponsored. If so, it is likely subject to a federal law called the Employee Retirement Income Security Act (“ERISA”). ERISA imposes important deadlines insureds must meet in order to preserve their right to dispute the insurer’s adverse decisions regarding payment or benefits. First, insureds have a limited period of time after receiving the insurer’s notice of an adverse benefit determination (e.g., the insurer’s letter refusing to cover treatment) in which to appeal the insurer’s decision internally. This period is often relatively short (e.g., 60, 90 or 180 days) and the specific period depends on the terms of the employee benefit plan. Second, if the insurer refuses to reconsider its denial after the internal appeal, insureds have a similarly short deadline in which to file a lawsuit disputing the insurer’s decision. Again, this deadline is often short and depends on the specific language of the employee benefit plan.

The rules differ for non-employer insurance. Insurance that is not procured through an employer is not subject to ERISA. There is no internal appeal process. Instead, insureds typically have a specific period of time from learning of a dispute (e.g., the insurer’s failure to pay benefits) in which to file a lawsuit against the insurer. The specific period of time depends on the specific claims the insured can assert, which depends on the details of the insurer’s conduct. For example, insureds typically have four years in which to sue an insurer for violations of Washington’s Consumer Protection Act. Other legal claims typically have different deadlines in which to file suit.

This is complicated by the fact most insurance policies contain a provision requiring the insured to bring suit within a shorter time, regardless of the particular claim asserted. This policy-specific limitations period is often quite short (e.g., six months) so it is critical for insureds to carefully review their policy contracts. Often, these policy-specific deadlines can be circumvented – they may apply only if the insurer can prove their investigation of the claim was harmed by the delay, and, even if so, they may not bar all claims the insured has against the insurer. The upshot is virtually all insurance-related legal disputes are subject to deadlines by which insureds must assert specific claims or risk losing their legal rights. The specifics depend on the details. Often, even if a deadline has passed, insureds may still have legal recourse. Thus, it is critical for insureds to be mindful of any applicable deadlines regarding insurance claims and disputes, and seek advice from an attorney to confirm any applicable deadlines.

Pivotal Law Group attorney McKean Evans has obtained favorable coverage decisions for insureds and ERISA plan participants in disputes regarding coverage denials. If you have concerns regarding applicable insurance claims deadlines, contact McKean at (206) 805-1493 or mevans@pivotallawgroup.com for a free consultation.

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Washington Supreme Court Strikes Down “Maximum Medical Improvement” Limits in Auto Policy Coverage

Posted Tuesday, June 12, 2018 by Pivotal Law Group

On June 7, 2018, the Washington Supreme Court, in Durant v. State Farm, ruled insurers may not limit payments to policyholders under auto insurance Personal Injury Protection (“PIP”) to only treatment needed for the insured to reach “maximum medical improvement” (“MMI”).

PIP coverage is required to be offered in Washington auto insurance policies. In exchange for additional premiums, PIP coverage requires the insurer to pay for the insured’s medical expenses related to physical injuries covered under the policy. In the Durant case, State Farm’s PIP coverage contained an additional sentence: “Medical services must also be essential in achieving maximum medical improvement for the injury you sustained in the accident.”

After State Farm refused to pay medical bills State Farm claimed were not essential to MMI, Durant hired a lawyer and filed a lawsuit challenging State Farm’s limitation on PIP coverage payments for only medical bills essential to achieving MMI. Durant claimed the MMI limitation violated Washington’s insurance regulation governing PIP coverage, WAC 284-30-395(1), which limits the reasons insurers may use to deny PIP coverage.

The Supreme Court agreed with Durant. The court applied the plain language of WAC 285-30-395(1), which provides three bases on which an insurer may deny PIP claims:

“the medical and hospital services: (a) Are not reasonable;(b) Are not necessary;(c) Are not related to the accident; or (d) Are not incurred within three years of the automobile accident. These are the only grounds for denial, limitation or termination of medical and hospital services permitted…”

The court determined the final sentence was dispositive: insurers may deny PIP coverage only for the four reasons identified in the regulation. Since “essential to maximum medical improvement” is not identified in the regulation, it is an invalid basis on which to deny PIP coverage.

State Farm argued the MMI limitation was part of the permissible limitation to medical services that are “reasonable” or “necessary.” But the court noted State Farm’s policy limited PIP coverage to medical bills that were “reasonable,” “necessary,” and essential to MMI. Thus, the court concluded the MMI limitation improperly exceeded the scope of the “reasonable and necessary” requirement. The court also noted Washington’s Insurance Commissioner previously warned insurers adding criteria to PIP benefit payments violates WAC 285-30-395(1).

The court confirmed WAC 285-30-395(1) and related statues “reflect Washington’s strong public policy in favor of the full compensation of medical benefits for victims of road accidents.” State Farm’s limitation unlawfully “denies Durant his PIP medical benefits necessary to return him to his pre-injury state.”

The Durant ruling clarifies an important aspect of Washington insurance law and confirms insureds’ right to coverage for medical treatment for injuries sustained in auto collisions.

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Washington Court of Appeals Emphasizes Insurers May Not Categorically Ignore Their Insureds’ Treating Physicians

Posted Tuesday, May 22, 2018 by Pivotal Law Group

Shannon Leahy found herself in a common situation when dealing with her auto insurer following a car crash. Her insurer agreed she was not at fault, but refused to pay her claim, arguing her medical treatment was unrelated to the crash. Ms. Leahy’s doctors agreed her treatment was related to the crash, but State Farm ignored Ms. Leahy’s doctors in favor of the opinions of State Farm’s “independent” medical expert who (unsurprisingly) opined Ms. Leahy’s treatment was unrelated. Can they do that?

In Ms. Leahy’s case, the answer was “no.” On May 21, 2018, the Washington Court of Appeals clarified that insurers may not ignore the opinions of their insureds’ physicians when making coverage determinations in Leahy v. State Farm Mutual Automobile Insurance Company, No. 76272-9-I.

Ms. Leahy was injured when her vehicle was struck from behind. The other driver was at fault, but had insufficient insurance to cover Ms. Leahy’s injuries. Accordingly, Ms. Leahy made a claim with her auto insurance carrier State Farm, with whom she had coverage for Personal Injury Protection (“PIP”) and Underinsured Motorist coverage (“UIM”).

Ms. Leahy was still receiving treatment from her injuries about two years after the crash. State Farm asked her to undergo a medical exam with a third party doctor chosen by State Farm to determine whether her ongoing treatment was medically necessary. State Farm’s third party doctor, Dr. Lecovin, determined Leahy’s treatments were excessive. Thereafter, State Farm determined it would no longer cover Ms. Leahy’s treatment under her PIP coverage.

State Farm also disputed whether Ms. Leahy’ UM policy covered her injuries. State Farm’s adjuster concluded Ms. Leahy’s injuries were not caused by the collision. Ms. Leahy claimed the crash aggravated her pre-existing medical condition and thus that the aggravated injury was covered.

The dispute went to trial, at which the jury found in favor of Leahy. State Farm paid the policy limits. Ms. Leahy asserted new claims for bad faith premised on State Farm’s handling of her claim. The trial court dismissed Ms. Leahy’s claims and she appealed.

On appeal, the Court of Appeals reinstated Ms. Leahy’s claims. The court determined State Farm arguably violated the law by failing to consider the opinions of Ms. Leahy’s treating physicians that her injuries were aggravated by the crash. Ms. Leahy’s physicians were both board-certified rheumatologists and University of Washington faculty. The court determined there was a reasonable dispute whether State Farm could simply ignore their opinions. At minimum, Ms. Leahy was entitled to have a jury decide whether State Farm’s conduct was reasonable.

The court also determined State Farm’s low offer compared to Ms. Leahy’s recovery at trial could potentially show State Farm acted in bad faith. The court emphasized the proper analysis was what State Farm knew at the time it made the offer, not after trial. Given the evidence showed a legitimate conflict between State Farm’s position that Ms. Leahy’s injuries were mostly unrelated to the crash and the opinions of Ms. Heahy’s treating physicians, the court determined Ms. Leahy was entitled to a trial on this issue.

In sum, the Leahy decision is an important win for Washington policyholders because it emphasizes insurers may not categorically ignore the opinions of the insured’s treating physicians in order to deny coverage.

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Case Law Update: Recreational Use Immunity Act Clarified

Posted Wednesday, May 16, 2018 by Christopher L. Thayer

In Lockner v. Pierce County (No. 94643-4, April 19, 2018), the Washington Supreme Court recently revisited Washington’s Recreational Use Immunity Act and clarified its application. RCW 4.24.210 provides protection for owners of recreational property, specifically:

“Any public or private landowners, hydroelectric project owners, or others in lawful possession and control of any lands … who allow members of the public to use them for the purposes of outdoor recreation … without charging a fee of any kind therefor, shall not be liable for unintentional injuries to such users.”

In Lockner, Ms. Lockner and her niece went for a bicycle ride on the Foothills Trail in Pierce County. While Lockner rode behind her niece, both cyclists approached a riding lawn mower cutting grass and moving in the same direction beside the trail. As Lockner passed the lawn mower, it allegedly expelled a cloud of dust and debris. Lockner shielded her face and swerved clipping her niece’s bike. Lockner fell and severely injured her knee and elbow. The Foothills Trail is a nonmotorized asphalt trail alongside a soft shoulder path for equestrian use. Pierce County’s website for the trail describes it as a “popular commuter route and recreational destination for bicyclists.” In its regional plan, the County envisions that its trail system will become a network for recreation, provide “transportation routes,” and connect the County to other regional destinations.

Lockner filed suit seeking recovery for injuries against the County alleging negligence. The trial court dismissed her lawsuit, based on the recreational immunity statute (RCW 4.24.210). On appeal, the question was whether or not, for the recreational immunity statute to apply, did the trail have to be used “solely” for recreational purposes? Lockner argued because the trail was open for uses other than recreation (i.e., commuting), the statutory immunity did not apply.

The Supreme Court noted to qualify for immunity under RCW 4.24.210, the landowner must establish the land at issue was (1) open to members of the public (2) for recreational purposes and (3) no fee was charged. The Court held the language of the statute is clear and unambiguous. The provision mentions only outdoor recreation and it does not say that land must be open for “only” recreational purposes.

The Supreme Court held:

“We did not construe RCW 4.24.210 as requiring exclusive recreational use to confer immunity; indeed, as explained above, the plain language of the statute does not support such a reading. In light of this plain language, immunity is not extinguished when land is used for other public or private activities in addition to recreation.”

RCW 4.24.210 was enacted to encourage landowners (including cities, counties and the state) to open up their property for recreational use, without having to be concerned about potential liability in the event someone were injured. In a region where outdoor activities from cycling, to hiking, climbing and kayaking, play such a huge role, this statute makes it easier for such landowners to open the land up to the public. The Lockner decision makes it clear the Washington Supreme Court intends to construe this statute broadly. This could have broad implications for those who commute by bicycle, to the extent their commute is on trails, which are also used for recreation. Absent the statutory immunity, a governmental agency would be liable if the pathway were unsafe or dangerous as designed or maintained.

If you have questions about the recreational use immunity statute and its application, please contact managing member, Chris Thayer at (206) 805-1494 or CThayer@PivotalLawGroup.com.

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How Will Insurance Cover Self-Driving Cars?

Posted Wednesday, May 9, 2018 by Pivotal Law Group

Self-driving vehicles are already on roads in several cities and are predicted to become normal in the next few decades. How will your insurance cover you if you’re the operator of a self-driving car? If someone else’s self-driving car injures you or damages your property, will the owner have coverage for your loss?

First, it may be a moot point because self-driving cars could reduce accidents to the point where the cost of insurance coverage becomes nominal or coverage becomes totally unnecessary. Preventable human error – texting, adjusting the radio, hasty lane changes, etc. – is estimated to cause 94% of all motor vehicle collisions. One industry forecast projected widespread adoption of autonomous vehicles would reduce premiums by 80% and lead to a $25 billion loss for insurers by 2035 as reduced accidents reduce the need for coverage.

On the other hand, while autonomous cars may reduce the need for liability and collision insurance, they may require new forms of insurance such as cyber security coverage. Even existing conventional cars can be hacked, and self-driving cars are likely to grow more and more vulnerable to electronic intrusion. Imagine if your car were susceptible to the same malware, ransomware or other abuse as your computer or phone. It may ultimately be necessary to procure cyber security coverage for your autonomous vehicle.

One possible answer is manufacturers may simply assume all liability associated with their autonomous vehicles. Google, Volvo, and Mercedes-Benz already assume liability any time one of their vehicle’s self-driving system is at fault for a collision. Tesla has its own insurance program for owners of Tesla self-driving vehicles.

Another suggestion is future drivers may not need insurance because they may not own their cars. Self-driving vehicles may lead to widespread reliance on car sharing services. Unlike Lyft or Uber which rely on human operators, self-driving ride-share vehicles could operate around the clock at a much lower cost, making it practical for urban drivers to rely entirely on ride-sharing for daily transportation. Future autonomous vehicle ride-sharing fleets would likely self-insure, as Google’s subsidiary Waymo intends to do when it launches its self-driving ride-share service in the coming months.

Whatever the result, self-driving cars will ultimately present some form of risk, and manufactures, drivers, municipalities and insurers will have to decide how to allocate that risk among themselves.

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