SCOTUS Decides We All Need PIP Coverage

I have always been a big proponent of PIP (Personal Injury Protection).  It provides “no-fault” (automatic) benefits if you (or your passengers) are injured in a car crash while in your own car, in someone else’s car, while riding a bike or crossing the street as a pedestrian. It pays for medical expenses, a percentage of lost earnings as well as help around the house if you need it.  In Washington, PIP is usually sold in $10,000, $25,000 and $35,000 worth of coverage. For the amount and type of coverage you are getting, it’s a pretty good insurance product.


If you use your PIP insurance to pay accident related expenses and you make a claim against the person who was at fault, your PIP carrier it entitled to be reimbursed for the money it paid towards your medical bills.  At worst however, you may have to reimburse your insurer about 65% of what it paid out by application of the Mahler case.  And depending on the extent of your injuries and the amount of insurance coverage the other person had on their car, you may not have to reimburse your PIP insurer any money, according to the Thiringer case.  These two legal principles are important to my clients because it allows them to net more money when their claim is resolved. 


Some of my clients don’t carry PIP insurance so they must use their health insurance to pay their accident related medical expenses.  The health plan’s terms and conditions concerning annual deductibles, co-pays, annual limitations on physical therapy and pre-approval may hamper or limit the client’s ability to get the care my clients need.  These problems do not exist if you have PIP coverage.


Last April the Supreme Court of the United States (SCOTUS) issued a decision which further alters the reimbursement obligation of my clients. The name of the case is U.S. Airways v McCutcheon and it is yet another reason to get PIP insurance, especially if you work for an employer who provides health insurance subject to ERISA – the federal employee benefits protection laws.  


Whereas PIP insurers are forced to accept a discount on their reimbursement claims, McCutcheon allows the health plan to take back every penny back it paid towards your accident related medical care…even if that means you get nothing for your injuries, nothing for your time loss and nothing for your pain and disability. The Supreme Court decision has also authorized health plans to insert language requiring the injured employee to file suit to recover the money the plan paid even if the employee doesn’t want to make a claim or if is not feasible to do so in light of the health plan’s ability to “take” all or most of the proceeds of any recovery.  In short, the employee can become a collection agent for his or her health plan.  


Attached to this article is a redacted copy of a reimbursement agreement my client was forced to sign.  Note that:


a)    The injured employee must sign the agreement if s/he want her/his medical bills paid;

b)    The injured employee must bring suit against the responsible party and

c)    The employee assigns all rights to any settlement to the extent the plan paid for medical treatment.


Depending on the injuries and the amount of insurance coverage, the injured employee may receive nothing despite experiencing serious injury.


This case has created nightmares for some of my clients. The best way to avoid the negative consequences of McCutcheon is to make sure you have adequate PIP insurance.