By Charles E. Haddick Jr.
Special to the Legal
The Pennsylvania Superior Court has ruled in Herd Chiropractic Clinic v. State Farm Mutual that an insurer who followed the peer review process to deny payment of medical expenses under the state Motor Vehicle Financial Responsibility Law (MVFRL) was nevertheless required to reimburse the challenging provider for its attorney fees after the court also found the treatment at issue was determined to be reasonable and necessary.
In the unanimous opinion authored by Superior Court Judge Anne E. Lazarus, the court examined the interplay between the peer review statute portion of the MVFRL and case law which holds that an insurer cannot be liable for treble damages or bad faith if it follows the peer review process. Lazarus recognized that protection, but also pointed out that the mechanism for an award of attorney fees to a health care provider challenging a peer review organization decision were embedded into the peer review process itself. She wrote "there is nothing in the language of the statute that specifically precludes attorney fees where a peer review decision is challenged and the court finds the treatment reasonable and necessary."
Insurers should be aware that when they elect to employ a peer review of medical bills, one of the consequences of an appeal by a provider from a PRO decision denying reimbursement may well be that an insurer must pay not only disputed medical charges, but the challenger's cost of the PRO appeal including, as seen in this case, attorney fees. The Herd Chiropractic decision is not, in its purest sense, a bad-faith opinion. It is, however, a warning to insurers that it can deploy the peer review process in good faith and still be liable to pay opposing party's attorney fees arising out of a PRO appeal.
Charles E. Haddick Jr. is a partner with Dickie McCamey & Chilcote. He welcomes feedback from readers, along with any suggestions for topics you would like to see discussed in this space. He can be reached at [email protected].
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