By Cory Bilton
Personal injury lawyers in the DC area often assist clients with filing PIP claims under the client’s auto insurance. No-fault auto insurance claims tend to be merely an administrative task, since there is no need to argue who was at fault in the collision (although there are occasionally some disputes over “reasonableness” of charges). Despite the tame nature of the subject, I’ve come to realize that there are a lot of interesting issues and disagreements over the law in this area. Recently, I’ve come across competing interpretations (one from an anonymous lawyer, the other from a nonlawyer) about priority of coverage between a Maryland health insurer and PIP benefits from an automobile insurer. The anonymous lawyer stated that Maryland Insurance Code § 19-507(b)(2) requires health insurers to get the insured’s consent before making PIP primary. The nonlawyer told me, “Maryland law requires PIP to be primary.” It turns out that neither interpretation seems to be correct.
Prior to 2009, many local lawyers interpreted § 19-507(b) as placing a limitation on both auto insurers and health insurers. In the Maryland Motor Vehicle Insurance treatise (second edition, which was pre-2009), Andrew Janquitto writes, “[Section 19-507(b)] allows a health insurer to coordinate its coverage with a motor vehicle insurer providing PIP if the health insurer and/or the motor vehicle insurer give the insured the choice of coordination and reduce premiums accordingly.” This was essentially the anonymous lawyer’s interpretation of the law. Assuming the insured (your client) was never given the option of accepting or rejecting the coordination of coverage paragraph in the health or auto insurance policy, the law was violated and the policy effectively has no coordination of coverage provisions.
But that interpretation changed in 2009 when the Court of Appeals of Maryland decided MAMSI Life & Health Insurance Co. v. Wu, 983 A.2d 88 (Md. 2009). The central issue in MAMSI was whether § 19-507 restricts the ability of health insurers and HMOs to include policy language that makes its coverage secondary to PIP. The court said no, it doesn’t. The MAMSI majority reasoned that § 19-507 falls under the “Motor Vehicle Insurance” section of the Maryland Code, while different sections control health insurance and HMOs. The court also noted that the language of § 19-507 is ambiguous because it uses both “insured” and “named insured” (the latter referring only to automobile liability policies), and thus it was clear to the court that the legislature intended § 19-507 to only apply to automobile insurers.
The Maryland legislature evidently disagreed with the MAMSI decision. In less than a year, it amended a number of statutes by passing HB 1073 and SB 704, effectively reversing the outcome of the MAMSI decision. The bills amended Maryland Health Code § 19-713.1 to prohibit HMOs from including coordination language making PIP primary. Likewise, the bills amended Maryland Insurance Code § 15-104 to prohibit health insurance policies from containing language making PIP primary to health insurance benefits. So benefits from all Maryland health insurance policies and HMO contracts after October 10, 2010 are not permitted to contain policy language requiring an insured to spend or exhaust her PIP before health insurance benefits trigger. But what the legislature did not do, was to explicitly overrule MAMSI. Thus, it appears that the court’s decision that § 19-507 does not restrict health insurers or HMOs is still valid. The rewritten statutes just defeat the effect of MAMSI.
But that’s not quite the end of the story, because some employer-provided health insurance plans are governed by ERISA. Both the MAMSI decision and the changes made by the Maryland Legislature in 2010 only affect health and auto insurance policies governed by Maryland law. Self-funded ERISA plans, however, supersede state law by federal statute. 29 U.S.C. § 1144(a). Therefore, if the health insurance plan is a self-funded ERISA plan (which nearly every ERISA plan seems to be), presumably the policy can still coordinate benefits and require PIP to be primary.
So unfortunately, no single body of law applies to the priority of coverage for all Maryland residents injured in a car accident. Given that the MAMSI decision defeated the common understanding of § 19-507, then the Maryland legislature took action to negate, but not overrule, MAMSI, combined with the fact that none of the preceding analysis applies to self-funded ERISA plans, I guess the general confusion on the issue is understandable. It’s too bad that this confusion exists, because PIP and health insurance both should be the insurance equivalent of “first responders” after a person is injured in an accident. Financial headaches and unpaid medical bills are usually the last thing a client wants to deal with while recovering.
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