Recently, in Hartunian v. Pilgrim Ins. Co., 86 Mass. App. Ct. 670 (2014), the Appeals Court of Massachusetts held that an insurer’s delay in paying benefits could be treated as an unfair business practice. In Hartunian, the plaintiff alleged that the defendant, Pilgrim Insurance Company (“Pilgrim”) unfairly delayed payment for orthopedic treatment rendered by him to the claimant under Pilgrim’s policy.
On April 4, 2007, a passenger was injured in an automobile accident. The automobile she was riding in was covered by an automobile insurance policy issued by Pilgrim. Approximately ninety days after the accident, Pilgrim received a personal injury protection (PIP) benefits application. Ninety days after that, Pilgrim received treatment records from plaintiff, Byron Hartunian, M.D., P.C. for five separate treatment dates. Pilgrim paid Hartunian a total of $1,010, which was $990 less than what Hartunian’s bills totaled. Pilgrim did not notify Hartunian or his patient of its intention not to pay the $990 within ten days of receiving Hartunian’s bills. Under M.G.L. c. 90, § 34M, fourth par., an insurance company is obligated to make payment of PIP benefits within ten days or, alternatively, notify the submitting physician or claimant of its intention not to pay. In support of its nonpayment, Pilgrim stated it had determined the charges exceeded an amount that was reasonable in comparison to other medical providers in the same geographic area.
Hartunian sought full payment for about a year without success. He then filed suit in the District Court seeking the unpaid $990 of his bills in addition to damages and costs under G.L. c. 93A and G.L. c. 176D. Once the suit was filed, Pilgrim issued the $990 to Hartunian’s counsel and filed a motion for summary judgment on all counts of the complaint. Pilgrim’s motion was only allowed as to the breach of contract and declaratory judgment counts. After a bench trial, Pilgrim was found liable to Hartunian for violation of M.G.L. c. 93A and M.G.L. c. 176D. Pilgrim appealed the decision to the Appellate Division, which affirmed the judgment. Pilgrim then appealed the decision to the Appeals Court of Massachusetts.
The Appeals Court affirmed the Appellate Division’s decision. It found that Pilgrim breached its obligation under M.G.L. 90, § 34M. First, Pilgrim failed to have an orthopedist conduct an independent medical examination (“IME”) of the patient. Instead, Pilgrim denied payment to Hartunian based on the examination of a physical therapist. The Appeals Court rejected Pilgrim’s argument citing Boone v. Commerce Ins. Co., 451 Mass. 192 (2008), in which the Supreme Judicial Court found that an insurance company can refuse to pay a medical bill based on an IME conducted by a physician who need not necessarily be licensed the same as the physician submitting the bill. The Court reasoned that in Boone, the reviewer, an orthopedic surgeon, had more training and education than the submitting physician, a chiropractor whereas in Hartunian, a physical therapist receives less training and education than an orthopedist. The Appeals Court concluded that in that circumstance, Pilgrim’s reliance on a different specialty raises a factual question of the insurer’s good faith.
Second, the Appeals Court noted that a PIP claims representative from Pilgrim who did not handle the Hartunian claim testified at the trial that Pilgrim also determined Hartunian’s bills were unreasonable based upon a review of them by a computer program. The Appeals Court found that using a computer program does not excuse Pilgrim’s failure to comply with the requirements of M.G.L. c. 90, § 34M. Quite the opposite, it found its use as a substitute for a practitioner’s review of billing statements and the underlying services provides an additional basis for an inference of Pilgrim’s lack of good faith under c. 93A.
Ultimately, the Appeals Court agreed with the Appellate Division’s finding that Pilgrim forced Hartunian to file suit and its delay in payment did not comply with the requirements of § 34M and was neither reasonable nor in good faith. It further found no error in the trial court’s tripling the award of lost interest resulting from the delay and in awarding attorneys’ fees. The end result: a dispute over $990 resulted in a judgment against Pilgrim for $25,343.