PIP arbitration only becomes necessary when an insurer refuses to pay out on a claim made after an auto accident or car wreck, which happens all too often.
This is unfortunate because the whole idea of personal injury protection is to facilitate rapid payment of urgent medical costs to anyone involved in a motor accident, and their passengers, and without having to establish fault.
And in these situations a medical provider may get caught up in the middle of a PIP claim.
Why does this happen?
When an accident victim is making a claim for medical expenses under their Personal Injury Protection policy they have two choices:
- Manage the financial aspect of the claim themselves, ensuring that their healthcare provider is paid in a timely manner
- Hand over the financial aspect of their medical care, via a PIP claim, to their healthcare provider or physician
The reason most accident victims choose option #2 is to ensure that payment from the insurer goes directly to the healthcare provider or medical facility without their involvement.
They don’t want to worry about a process they don’t understand, and they usually do not have time to deal with the finer points of insurance claims while they are recovering from serious injuries.
Obviously other lifestyle expenses, paid as part of the personal injury protection claim, would be paid directly to claimant.
In situations where a medical provider is “managing” the claim for medical expenses this is done under something called “assignment of benefits”.
They then rely on the insurer to make the necessary payments for any medical expenses in a timely manner.
What tends to happen is that the insurer will find some procedural issue with the PIP claim, or their own physician might disagree with the types of care provided to the victim(s) of the accident.
They do this because it’s in the best interests of any insurance company to not pay out on claims i.e. that’s how they make money.
So, the insurer then challenges the claim made by the medical provider. This then leaves the physician or healthcare facility carrying the burden of those expenses because the insurance company has unjustly withheld payment, or delayed it for an unreasonable amount of time. In most of these cases an unreasonable amount of time is more than 60 days since the claim was issued.
This leaves the healthcare provider in the unenviable position of having to prove, through the arbitration process, that all treatments provided to the patient(s) involved in the auto accident were both reasonable and a medical necessity. Oddly enough many insurance companies will claim that medical procedures such as MRIs count as being “unnecessary”.
Failure to pursue arbitration and payment would mean that the insurance company never has to pay claimed medical expenses up to the maximum limit of the policy, which could result in a net loss of several thousand dollars per patient for the healthcare provider.
No medical professional wants to have to pursue arbitration to receive payment, but they’re left without any choice in the matter.
The good news is that although this can be a long-winded process, as long as the relevant documentation can be supplied to the insurer, there’s no reason for the arbitration not to go in favor of the medical provider.
Sadly, these arbitrations have become all too common for healthcare professionals throughout the United States, especially in the 13 states where having Personal Injury Protection is mandatory.