PIP Insurers Have a Duty to Pre-authorize Treatment

Imagine the following scenario occurs. A patient needs treatment as a result of an auto accident. The medical provider cannot provide the treatment without payment or a promise of payment. What is a patient to do? The patient may have to figure out how to pay for the treatment themselves and seek to recover the money from the insurance company. In many cases, the patient may have to go without the required medical treatment despite having paid insurance premiums to cover such treatment.

Often, medical providers take assignments of benefits. An assignment of benefits assigns the right to recover insurance payments from a PIP insurer for treatment of a patient who is covered under a PIP policy and receives treatment as a result of an automobile accident. However, many times the treatment is so costly to the medical provider that they cannot risk non-payment. It is not likely a medical provider will perform a knee surgery or back surgery without payment or a promise to pay. If there is dental damage to a patient, it is not likely a dentist will risk non-payment for dental treatment which often includes specially made crowns, fitted personally for each patient’s particular needs.
Florida Statute 627.736(10)(b)(3) clearly signifies the legislature’s intent to allow an insured to sue for such benefits, even where the treatment has not been performed. That section allows a PIP demand for an insurer’s withdrawal of payment for treatment not yet rendered. While that section specifically references an a withdrawal of payment where there is a cut-off based on an independent medical examination (IME), an insurer cannot usurp this technicality simply by arbitrarily denying benefits without conducting an IME.

Preauthorize Surgery

Furthermore, the Courts have weighed in on this very issue. In State Farm Mutual Automobile Insurance Company v. Gueimunde, 823 So.2d 141 (3rd DCA 2002), the Third District Court of Appeal considered an insured’s request for pre-authorization of a knee surgery. The insured’s treating physician diagnosed torn menisci in the insured’s knee and recommended surgery. State Farm refused to authorize the surgery. The insured sued and State Farm argued the lawsuit was premature because the surgery had not yet been performed. Incidentally, the reason the surgery had not been performed is because of State Farm’s refusal to pay for the surgery. The Court held that suit was not premature and that an insurer has a duty to preauthorize surgery in a situation in which the injury is within the medical payments portion of the insurance policy.
The Court’s ruling in Gueimunde is consistent with the purpose of no-fault insurance, which is to “provide swift and virtually automatic payment so that the injured insured may get on with his life without undue financial interruption.” Ivey v. Allstate, 774 So.2d 679 (Fla. 2000).