Pennsylvania Supreme Court grants allocatur in first party auto case of Doctor’s Choice (LaSelva) v. Travelers Personal Insurance Company

Post Date
04/13/15

 On December 31, 2014, the Pennsylvania Supreme Court granted allocatur in the case of Doctor’s Choice Physical Medicine & Rehabilitation Center, P.C.(LaSelva) v. Travelers Personal Ins. Co. No. 512 MAL 2014, agreeing to visit the circumstances under which attorneys’ fees will be awarded under 75 Pa. C.S.§ 1797(b)(6). The appeal is currently docketed under No. 146 MAP 2014.

This appeal is from the Pennsylvania Superior Court’s decision on May 2, 2014, holding that the Appellee-Provider is permitted to recover attorneys’ fees where the peer review organization ("PRO") utilized by the insurance carrier failed to comply with certain Insurance Department Regulations. More specifically, the Supreme Court framed the issues to be reviewed on appeal as follows:

(1) Whether the Superior Court improperly interpreted § 1797 of the MVFRL, the Supreme Court case of Herd Chiropractic v. State Farm, and its own case of Levine v. Travelers, to allow attorneys’ fees even when an insurer has utilized the peer review process?

(2) Whether the Superior Court improperly interpreted and misapplied §1797(b)(4) by holding that the insurer must oversee the statutory compliance of peer review organizations with 31 Pa. Code § 69.53(e)?

Background

This case involves a PRO for chiropractic care on a claim for first party benefits. The insured sustained injuries in a motor vehicle accident, and at the time she had automobile insurance with Travelers, including $100,000 in first party medical benefits. Following the accident, the insured treated with a chiropractor at Doctor’s Choice from April 13, 2005 until October 16, 2005. Before treatment ended, Travelers requested a peer review. The PRO responsible for the peer review was IMX Medical Management Services. According to the peer review report, treatment after June 9, 2005 was not reasonable or necessary. Travelers subsequently denied coverage for treatment following June 9, 2005.

Doctor’s Choice filed suit against Travelers seeking payment of the treatment, interest, and statutory attorneys’ fees. After a bench trial in Dauphin County, the trial court held that the treatment was reasonable and necessary, as it helped lessen the insured’s pain. The trial court then awarded payment of the bills, plus 12% interest and attorneys’ fees. During the pendency of Travelers’ post-trial motion, the Pennsylvania Supreme Court decided Herd Chiropractic v. State Farm Mutual, 64 A.3d 1058. In light of the Herd holding, the trial court modified its initial Order, vacating the award for attorneys’ fees. Doctor’s Choice appealed to the Superior Court.

On appeal, Doctor’s Choice acknowledged that attorneys’ fees are not appropriate under 1797(b)(6) where an insurance company denies care based upon a PRO. However,

Doctor’s Choice argued that this applies only to situations where there is a valid peer review. Doctor’s Choice argued that the PRO utilized by Travelers failed to comply with certain Insurance Department Regulations and, thus, was an invalid peer review. Specifically, the PRO failed to use "national or regional norms" or other "written criteria" based upon typical patterns of practice in the PRO’s geographic area of operation, in conducting the peer review. See 31 Pa. Code §69.53(e). Travelers argued that the plain language of § 1797(b) is controlling, as recognized in Herd, which does not allow an award of attorneys’ fees simply because a court finds the PRO invalid and, thus, such an award would violate the MVFRL. Moreover, Travelers argued that it should not be penalized for the PRO’s failure to comply with the Insurance Regulations.

The Superior Court reversed the trial court’s decision to vacate the award for attorneys’ fees, construing the language – "challenged before a PRO" – of § 1797(b)(4) to mean a completed, compliant and valid peer review determination, not merely an attempt to invoke that process.

Questions about this advisory, or how it may affect the handling of your first party case, can be directed to Ernest F. Koschineg and/or Jessica M. Heinz, at (610) 567-0700 or Ekoschineg@c-wlaw.com / Jheinz@c-wlaw.com

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