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PIP Overview - Kentucky Car Accidents

posted Feb 29, 2016, 8:29 AM by Jason Abeln

PIP OVERVIEW - KENTUCKY CAR ACCIDENTS

By David W. Zahniser

 

February 29, 2016

 

History

 

Enacted in 1975, Kentucky's Motor Vehicle Reparations Act, sometimes referred to as the No-Fault Law, has two components:  personal injury protection (PIP) coverage, and limitations on an individual’s right to sue and be sued (tort rights).

 

Personal Injury Protection (PIP) Coverage


Kentucky requires basic PIP coverage on all motor vehicles except motorcycles. Basic PIP is to be paid by the insurer of the vehicle in which the injured person is riding at the time of an accident, or the vehicle which strikes a pedestrian, regardless of who was at fault in the accident. Basic PIP provides up to $10,000.00 per person per accident for medical expenses, lost wages, and similar “out of pocket” costs due to an injury.  Higher benefits and deductibles are optional.

 

Limitations on an individual’s rights to sue and be sued (tort rights)


All people who register, operate, maintain, or use a motor vehicle in Kentucky are deemed to have accepted limitations on their rights to sue and be sued (tort rights). This means injured people cannot recover medical expenses, wage loss, other expenses, or pain and suffering from the at-fault party unless their injuries exceed certain thresholds.  The thresholds are $1,000.00 in medical expenses, a broken bone, permanent disfigurement, permanent injury, or death.

 

Rejection of the limitation on one’s tort rights


Each individual may reject the limitations on tort rights. The rejection must be in writing on a specific form and must be filed with the Department of Insurance before it is effective. The rejection will remain in effect until the department is notified in writing of any change.

 

If all members of a household reject the limitations on their rights to sue and be sued, guest PIP coverage must be included on their insurance policy to provide basic PIP benefits to guest passengers and pedestrians. Liability premiums may be higher due to no-fault rejection, since others will have the same right to sue the rejector for injuries which do not reach the thresholds.

 

If a no-fault rejection form is on file, that individual is not entitled to receive basic PIP benefits. Individuals who have rejected can “buy-back” the basic PIP coverage. Anyone can purchase Added Reparation Benefits (ARB) which cover buyers over and above the $10,000.00 in basic PIP benefits.  

 

 Motorcycles


Basic PIP coverage is optional for motorcycles. Unless basic PIP coverage is purchased for the motorcycle, neither the operator nor the passenger of the motorcycle is entitled to collect basic PIP benefits from any source. If a motorcycle owner elects not to purchase basic PIP coverage, the owner is still considered to have accepted the limitations on his rights to sue and be sued for damages unless a no-fault rejection form is filed. If a no-fault rejection form is not filed, the owner will be unable to recover the first $10,000.00 of a motorcycle injury claim from the at-fault party.

 

Verification of No-Fault Rejection


The Department of Insurance can respond to written requests for verification of an individual's no-fault rejection status. 

 

Kentucky Assigned Claims Plan


If there is no insurance for the vehicle which would ordinarily owe PIP, an injured person can recover basic PIP from the injured persons’ own policy or a policy issued to a member of that person’s household. If there is no other policy available, a claim for basis PIP should be made to the Kentucky Assigned Claims Plan.  A vehicle owner who does not have insurance is not entitled to collect basic PIP benefits from any source while operating that vehicle.

 

Kentucky Insurance Arbitration Association


All insurers, self-insureds, or obligated governments providing basic or added reparation benefits are members of and can utilize the Kentucky Insurance Arbitration Association to resolve subrogation disputes.

 

Frequently Asked Questions

1.         What is “reasonable basis” regarding the denial of PIP benefits, particularly in light of the statutory presumption that all bills submitted are presumed to be reasonable and necessary?

The assertion of a legitimate and bona fide defense with respect to the insurance carrier’s denial of PIP benefits constitutes a reasonable basis for delay.  In Shelter Mut. Ins. v. Askew, 701 S.W.2d 139  (Ky. App. 1985), the Kentucky Court of Appeals addressed the issue of competing opinions between the insured and insurance carrier concerning what constitutes a reasonable expense for medical treatment following an accident.  After being injured in an accident, the insured submitted an application for PIP benefits.  The insurance carrier paid all of the insured’s medical bills expect for a dentist’s bill.  The insurance carrier did not pay the dentist’s bill because it questioned whether all the work completed by the dentist was related to the accident.  Further, it questioned whether the amount charged was reasonable.

The court ruled the dentist’s charges were reasonable and that the work done and proposed to be done was related to the injuries the insured suffered in the accident.  The court acknowledged the testimony offered by the insurance carrier’s expert dentist suggesting that he would have provided the insured with more conservative, different, and less expensive treatment than what the insured’s dentist provided.  The court ruled that the insurer did not meet its burden that a reasonable foundation existed for not paying.  The fact that less expensive, more conservative treatment may have been available did not mean that the treatment provided was not warranted.

The court also suggested if there is a question regarding the medical treatment and bills incurred by an insured as a result of an accident, the insurance carrier may request an independent medical examination (IME).  KRS § 304.39-270 provides:

(1)        If the mental or physical condition of a person is material to a claim for past or future basic or added reparation benefits, the reparation obligor may petition the circuit court for an order directing the person to submit to a mental or physical examination by a physician.  Upon notice to the person to be examined and all persons having an interest, the court may make the order for good cause shown.  The order shall specify the time, place, manner, conditions, scope of the examination, and the physician by whom it is to be made.  (2) If requested by the person examined, the reparation obligor causing a mental or physical examination to be made shall deliver to the person examined a copy of a detailed written report of the examining physician setting out his findings including results of all tests made, diagnoses, and conclusions, and reports of earlier examinations of the same condition.  By requesting and obtaining a report of the examination ordered or by taking the deposition of the physician, the person examined waives and privilege he may have, in relation to the claim for basic or added reparation benefits, regarding the testimony of every other person who has examined or may thereafter examine him respecting the same condition.  This subsection does not preclude discovery of a report of an examining physician, taking a deposition of the physician, or other discovery procedures in accordance with any rule of court or other provision of law.  This subsection applies to examinations made by agreement of the person examined and the reparation obligor, unless the agreement provides otherwise.  (3) If any person refuses to comply with an order entered under this section the court may make any just order as to the refusal, but may not find a person in contempt for failure to submit to a mental or physical examination.

2.         Who is considered an insured for the purposes of receiving PIP benefits and the priority of coverage?

“Basic reparation insured” means:

(a)        A person identified by name as an insured in a contract of basic reparation insurance complying with this subtitle; and (b) While residing in the same household with a named insured, the following persons not identified by name as an insured in any other contract of basic reparation insurance complying with this subtitle:  a spouse or other relative of a named insured; and a minor in the custody of a named insured or of a relative residing in the same household the named insured if he usually makes his home I the same family unit, even though he temporarily lives elsewhere.  KRS §304.39-020(3)(a)&(b).

            Kentucky’s no-fault statute also recognizes that more than one insurance carrier may be liable for PIP benefits payable to an injured person.  KRS § 304.39-050 fixes priorities among multiple insurance carriers.

(1)        The basic reparation insurance applicable to bodily injury to which this subtitle applies is the security covering the vehicle occupied by the injured person at the time of the accident or, if the injured person is a pedestrian, the security covering the vehicle which struck such pedestrian.  If the reparation obligor providing such insurance fails to make payment for loss within thirty (30) days after receipt of reasonable proof of the fact and the amount of loss sustained, the injured person shall be entitled to payment under any contract of basic reparation insurance under which he is a basic reparation insured and the insurer making such payments shall be entitled to full reimbursement from the reparation obligor providing the security covering the vehicle. A pedestrian, as used herein, means any person who is not making “use of a motor vehicle” at the time his injury occurs.  (2) If there is no security covering the vehicle, any contract of basic reparation insurance under which the injured person is basic reparation insured shall apply.  (3) No person shall recover basic reparation benefits from more than one (1) reparation obligor as a result of the same accident, except as provided in KRS § 304.39-140(4), nor in excess of ten thousand dollars ($10,000) as the result of the same accident.

3.         What benefits are available under PIP?

“Basic reparation benefits” mean benefits providing reimbursement for net loss suffered through injury arising out of the operation, maintenance, or use of a motor vehicle, subject, where applicable, to the limits, deductibles, exclusions, disqualifications, and other conditions provided in this subtitle.  The maximum amount of basic reparation benefits payable for all economic loss resulting from injury to any one (1) person as the result of one (1) accident shall be ten thousand dollars ($10,000), regardless of the number of persons entitled to such benefits or the number of providers of security obligated to pay such benefits.  Basic reparation benefits consist of one (1) or more of the elements defined as “loss”.  KRS § 304.39-020920.

            The elements defined as “loss” constituting basic reparation benefits are set forth in KRS § 304.39-020(5), which provides:

“Loss” means accrued economic loss consisting only of medical expense, work loss, replacement service, loss, and, if injury causes death, survivor’s economic loss and survivor’s replacement services loss.  Noneconomic detriment is not loss.  However, economic loss is loss although caused by pain and suffering or physical impairment.  (a) “Medical expense” means reasonable charges incurred for reasonably needed products, services, and accommodations, including those for medical care, physical rehabilitation, rehabilitative occupational training, licensed ambulance services, and other remedial treatment and care.  “Medical expense” may include non-medical remedial treatment rendered in accordance with a recognized religious method of healing.  The term includes a recognized religious method of healing. The term includes a total charge not in excess of one thousand dollars ($1,000) per person for expenses in any way related to funeral, cremation, and burial.  It does not include that portion of a charge for a room in a hospital, clinic, convalescent or nursing home, or any  other institution engaged in providing nursing care and related services, in excess of a reasonable and customary charge for semi-private accommodations, unless intensive care is medically required.  Medical expense shall include all healing arts professions licensed by the Commonwealth of Kentucky.  There shall be a presumption that any medical bill submitted is reasonable.  (b)  “Work loss” means loss of income from work the injured person would probably have performed if he had not been injured, and expenses reasonably incurred by him in obtaining services in lieu of those he would have performed for income, reduced by any income from substitute work actually performed by him.  (c)  “Replacement services loss” means expenses reasonably incurred in obtaining ordinary and necessary services in lieu of those the injured person would have performed, not for income but for the benefit of himself or his family, if he had not been injured.  (d)  “Survivor’s economic loss” means loss after decedent’s death of contributions of things of economic value to his survivors, not including services they would have received from the decedent if he had not suffered the fatal injury, less expenses of the survivors avoided by reason of decedent’s death. (e)  “Survivor’s replacement service loss” means expenses reasonably incurred by survivors after decedent’s death in obtaining ordinary and necessary services in lieu of those the decedent would have performed for their benefit if he had not suffered the fatal injury, less expenses of the survivors avoided by reason of the decedent’s death and not subtracted in calculating survivor’s economic loss.

4.         How much time is given to respond to a claim, and what is to be done if further documentation is needed?

KRS § 304.39-210(1) provides, in part, as follows:

Benefits are overdue if not paid within thirty (30) days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, unless the reparation obligor elects to accumulate claims for periods not exceeding thirty-one (31) days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, and pays them within fifteen (15) days after [**4] the period of accumulation.  If reasonable proof is supplied as to only part of the claim, and the part totals one hundred dollars ($100) or more, the part is overdue if not paid within the time provided by this section.  Medical expense benefits may be paid by the reparation obligor directly to persons supplying products, services, or accommodations to the claimant.

            In situations where the insurance carrier needs further information before processing the PIP claim, the Kentucky Court of Appeals has stated that, “KRS 304.39-210 clearly places the burden on the reparations obligee to furnish the obligor with reasonable proof of loss.  A mere offer to furnish this proof if requested does not shift that burden.”  Automobile Club Ins. Co. v. Lainhart, 609 S.W.2d 692, 695 (Ky. App. 1980).

            If new or additional information is needed, be sure to ask for it within the time limits within the time limits, explain why you need it, and document your file.

5.         What is the statute of limitations for PIP claims?

KRS § 304.39-230 provides:

(1)        If no basic or added reparation benefits have been paid for loss arising otherwise than from death, an action therefor may be commenced not later than two (2) years after the injured person suffers the loss and either knows, or in the exercise of reasonable diligence should know, that the loss was caused by the accident, or not later than four (4) years after the accident, whichever is earlier.  If basic or added reparation benefits have been paid for loss arising otherwise than from death, an action for further benefits, other than survivor’s benefits, by either the same or another claimant, may be commenced not later than two (2) years after the last payment of benefits.  (2) If no basic or added reparation benefits have been paid to the decedent or his survivors, an action for survivor’s benefits have been paid to any survivor, an action for further survivor’s benefits by either the same or another claimant may be commenced not later than two (2) years after the last payment of benefits.  If basic or added reparation benefits have been paid for loss suffered by an injured person before his death resulting from the injury, an action for survivor’s benefits may be commenced not later than one (1) year after the death or four (4) years after the last payment of benefits, whichever is earlier.  KRS § 304.39-230(1) & (2).

6.         What are the penalties for late or non-payment of PIP claims?

The issue here turns on whether there was a reasonable foundation for the delay.  The penalties are set by statute:

Overdue payments bear interest at the rate of twelve percent (12%) per annum, except that if delay was without reasonable foundation the rate of interest shall be eighteen percent (18%) per annum.  KRS § 304.39-210(2).

Kentucky law provides that attorney’s fees may also be awarded.

(1)        If overdue benefits are recovered in an action against the reparation obligor or paid by the reparation obligor after receipt of notice of the attorney’s representation, a reasonable attorney’s fee for advising and representing a claimant on a claim or in an action for basic or added reparation benefits may be awarded by the court if the denial or delay was without reasonable foundation.  No part of the fee for representing the claimant in connection with these benefits is a charge against benefits otherwise due the claimant.  (2)  In any action brought against the insured by the reparation obligor, the court may award the insured’s attorney a reasonable attorney’s fee for defending the action.  KRS § 304.39.220.

            Under current Kentucky law, a plaintiff cannot sue for bad faith for delay or failure to pay PIP.  Foster v. KY Farm Bureau Mut. Ins. Co., 189 S.W. 3d 553 (Ky. 2006).

  

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Jason Abeln,
Feb 29, 2016, 8:29 AM
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