Insurance

What is Personal Injury Protection (PIP)?

by Tom Teodori | January 22nd, 2018

What is Personal Injury Protection (PIP)?

Personal Injury Protection (PIP) is an optional coverage under a Maryland automobile insurance policy. PIP is a no-fault benefit guaranteeing some compensation to motor vehicle accident victims. Larimore v. American Ins. Co., 69 Md. App. 631 (1987). Benefits are payable without regard to the fault or non-fault of the individual in causing or contributing to the accident. Pennsylvania Nat’l Mut. Cas. Ins. Co. v. Gartelman, 288 Md. 151 (1980). The purpose of PIP is to provide to an insured and, under certain circumstances, to person injured while occupying the insured’s vehicle, “medical, hospital, and disability benefits.” Maryland Insurance Code Section 19-505(a). PIP coverage enables accident victims to avoid delays in receiving money for medical bills and lost wages after a crash instead of having to wait months or years for the resolution of the claim against the person or company responsible for the accident.

Many people are concerned that making a PIP claim will raise their insurance cost or will result in the insurance company dropping the policy holder. However, Maryland law protects against that. An insurer is not permitted to increase the cost of the insurance or impose a surcharge after a PIP claim is made and/or paid. §19–507(c)(1) and (2).

The First Requirement – A Motor Vehicle

In order to qualify for PIP benefits, there must be involvement of a motor vehicle. Section 19-501(b)(1) defines “Motor vehicle” as a vehicle, including a trailer, that is operated or designed for operation on a public road by any power other than animal or muscular power. However, an important distinction is made in that a “motor vehicle” does not include a bus (as defined in § 11-105 of the Transportation Article) or a taxicab (as defined in § 11-165 of the Transportation Article). Thus, passengers in buses or taxicabs cannot look to the owner of the bus or taxi company for PIP benefits.  However, if the bus or taxi passenger is covered by their own PIP policy or that of another, they may look to that policy for PIP benefits.

What about Motorcycles? Motorcycles are included under the statute as a motor vehicle. Speakman v. State Farm Mut. Auto Ins. Co., 42 Md. App. 666 (1979). However, insurance companies in Maryland may choose to exclude PIP coverage to motorcycle owners. Additionally, insurance companies may exclude PIP benefits under an automobile policy to individuals using a motorcycle. DeJarnette v. Federal Kemper Ins. Co., 299 Md. 708 (1984).

Section 19-505(c)(2) permits an insurer to exclude lost wage benefits for motorcycles, mopeds and motor scooters.

The Second Requirement – A Motor Vehicle Accident

A “motor vehicle accident” is defined as an “occurrence involving a motor vehicle that results in damage to property or injury to a person.” Section 19-501(c)(1). However, if the crash is caused intentionally by the insured, benefits are not applicable.

Who is eligible for PIP?

In order to qualify for PIP, a named insured (the person or persons identified in the insurance contract declarations) must have purchased PIP coverage. Because PIP is an elective insurance option, the insured pays a higher insurance premium for PIP coverage. If you are eligible for PIP, the insurance company must provide benefits for the following individuals:

  1. The insured
  2. Family members of the insured who live with the insured
  3. Permissive users of the vehicle
  4. Guests and or passengers in the vehicle
  5. Pedestrians

What benefits are available?

The minimum medical and lost wage coverage is for a total of $2,500.00 in benefits. This means that an individual eligible for PIP benefits may receive up to a total of $2,500.00 for medical expenses incurred and wages lost. However, Maryland law allows for purchasing additional PIP coverage in the amounts of $5,000.00, $10,000.00 or $20,000.00. Although the additional limits are available at an increased cost, that cost provides excellent value in the event you are involved in a crash and file for PIP. The extra cost is not very much, so it’s a good idea to purchase PIP beyond the $2,500.00 minimum coverage.

Lost Income

Income means wages, salaries, tips, commissions, professional fees, and other earnings from work or employment. When claiming lost income, the insurance company will require reasonable medical proof of your injury and verification from your employer that you missed time from work. Therefore, its best to secure a disability slip from your treating doctor as well as documentation from your employer of the hours, days, weeks and/or months you missed and your rate of pay. Most PIP applications contain a lost wage form that must be completed by your employer, but even with that supporting documentation, it’s not unusual for an insurance company to contact your employer (someone in payroll) to confirm the lost income. The amount of proof required by the insurance company is frequently dependent upon whether you are an hourly employee, salaried employee or paid commissions and bonuses.

19-505(a)(3)(b)(1) defines income as:

    i. wages, salaries, tips, commissions, professional fees, and other earnings from work or employment;
    ii. earnings from a business or farm owned individually, jointly, or in partnership; and
    iii. to the extent earnings are paid or payable in property or services instead of in cash, the reasonable value of the property or services.

Lost income is paid at 85%, so if you miss two weeks of work totaling $1,000.00, the insurance company owes you $850.00.

Medical Benefits

The PIP insurance company need only pay reasonable and necessary medical expenses arising from a motor vehicle accident that are incurred within three (3) years after the accident. This includes hospital, medical, ambulance, dental, physical therapy, injections, funeral, nursing, surgical, chiropractic and other services. Hunt v. State Farm Mut. Auto. Ins. Co., 72 Md. App. 189 (1987).

An insurance company need only reimburse reasonable and necessary expenses incurred within three years after the motor vehicle accident. When the insurance company denies payment of medical expenses—regardless of the reason—the burden of proof is on the insured or plaintiff. Many insurance companies delay payment citing lack of medical records, lack of proper billing codes and other missing documentation. This has nothing to do with the injured person, but is a dispute between the medical provider and the PIP insurance company. Many insurance companies submit the bills to medical auditing services and then argue that the doctor’s charges are not reasonable and necessary and that the insurance company shouldn’t have to pay the bill in full.

Generally, to prove a medical bill is “reasonable” and that treatment is “necessary,” expert medical testimony is required.  Metropolitan Auto Sales Corp. v. Koneski, 252 Md. 145 (1960). This presents a problem as frequently the cost for a doctor to testify in court as to reasonableness and necessity of care may exceed the cost of the disputed bill. However, if suit is needed, you will likely be able to file suit in small claims court where the technical rules of evidence are relaxed.  Additionally, expert testimony is not necessary where the nexus between the accident and the insured’s injury is clearly apparent and the cause of the injury relates to matters of common experience. See Tully vs. Dasher, 250 Md. 424 (1968).

How do I apply for benefits?

The person injured as a result of a motor vehicle accident must notify the insurance company. Typically, this is done by telephone, and the insurance company then sends a PIP application. The PIP application consists of three forms:

  1. The PIP Application.
  2. Wage Loss Form to be completed by the employer.
  3. Medical Form to be completed by the treating doctor.

19–508(a)(2)(i) of the Maryland Insurance Code requires that you submit your PIP application to the insurance company within 12 months of the motor vehicle accident. The courts have interpreted this strictly. The application MUST be filed with the insurer no more than 12 months after the date of the motor vehicle accident. GEICO v. Harvey, 278 Md. 548 (1976). Maryland law requires the insurance company notify the insured of the last date that an application can be filed, but that doesn’t always happen. As a practical matter, there is no reason to delay filing the Maryland PIP Application Form, and the Wage Loss Form and Medical Form can be submitted separately when they have been completed.

Is it necessary to hire a lawyer to file a PIP application? Normally, no. A lawyer may not be needed if you are just making a PIP claim and are not pursuing legal action against the person causing the crash. However, if you are pursuing a claim against the responsible driver, it is to your benefit to seek legal advice for both the negligence claim and the PIP claim. As for the PIP claim, some law firms charge their clients an additional fee for filing and processing PIP claims. ChasenBoscolo does not. When choosing a law firm, be sure to ask about this additional fee.

How long does the insurance company have to pay?

By law, the insurance company has 30 days to pay “after the insurer receives satisfactory proof of claim.” §19–508(a)(1) Maryland Insurance Code. Unfortunately, what constitutes satisfactory proof of claim allows the insurance company to question medical bills, treatment records and time lost for work and otherwise results in frequent delays in the processing of PIP claims. The penalty for failure to pay on time is only 1.5% interest per month.

As a practical matter, when submitting the Wage Form, it is often beneficial to include your pay stubs from before the motor vehicle accident reflecting your weekly income and your pay stubs from after the accident showing lack of income. You should also advise the person in your employer’s payroll department who completes the form on your behalf that he/she will likely receive a call from the PIP insurer to verify the lost wages.

Exclusions From PIP Coverage

The mere fact that you were injured during a motor vehicle collision does not mean automatic entitlement to PIP coverage. §19-505(c)(1) permits insurance companies to exclude certain individuals from PIP coverage:

    i. an individual, otherwise insured under the policy, who:
    1. intentionally causes the motor vehicle accident resulting in the injury for which benefits are claimed;
    2. is a nonresident of the State and is injured as a pedestrian in a motor vehicle accident that occurs outside of the State;

[So a Virginian resident who is walking in the District of Columbia and is hit by a Maryland driver is NOT entitled to use the Maryland driver’s PIP insurance.]

    1. is injured in a motor vehicle accident while operating or voluntarily riding in a motor vehicle that the individual knows is stolen; or
    2. is injured in a motor vehicle accident while committing a felony or while violating § 21–904 of the Transportation Article; or
    ii. the named insured or a family member of the named insured who resides in the named insured’s household for an injury that occurs while the named insured or family member is occupying an uninsured motor vehicle owned by:
    1. the named insured
    2. an immediate family member of the named insured who resides in the named insured’s household.

19-505(c)(2) explains:

In the case of motorcycles, mopeds, or motor scooters, an insurer may:

    i. exclude the economic loss benefits described in this section; or
    ii. offer the economic loss benefits with deductibles, options, or specific exclusions.

PIP Waivers

PIP coverage is optional in Maryland and therefore, not everyone with Maryland automobile insurance elects to purchase PIP. Most of the time, the decision not to purchase PIP is based upon money. You do save yourself a little money from your premium by waiving the PIP coverage; however, in the event of a collision, it will have been a penny-wise, pound foolish decision. ChasenBoscolo recommends purchasing PIP coverage.

In the event you do waive PIP, it must be a on a form approved by the Maryland Insurance Commissioner’s office, and it must be an affirmative waiver. That means that you must actually sign a document stating that you waive coverage. §19–506. If coverage is not specifically waived, the insurer shall provide coverage. Clay v. GEICO, 356 Md. 257 (1999).

If the policy holder waives PIP coverage, he/she cannot collect PIP from any other insurer. Maryland Auto. Ins. Fund v. Perry, 356 Md. 668 (1999). That means if you waive PIP on your own policy (and are not first named insured under another policy) and you are the passenger in your best friend’s car when it’s involved in a collision, you are not permitted to use your best friend’s PIP coverage. Additionally, the PIP waiver is binding on all listed drivers and family of the insured 16 years of age and older residing in the policy holder’s household.

Stacking of Benefits

The primary PIP policy is the insurance coverage on the vehicle in which a person is injured as a driver or passenger or as a pedestrian. Consider these examples for further explanation:

  1. John has a $5,000.00 PIP policy with his insurance company. However, John owns 2 other cars—also insured by the same insurance company—with $5,000.00 PIP policies. John is involved in a bad crash and sustains $15,000.00 worth of medical bills and lost wages. Can John stack his 3 PIP policies for a total of $15,000.00 worth of benefits?   Under Maryland law, no. John is not able to stack (or add) the policies in that circumstance.
  2. John is a passenger in his girlfriend’s car. His girlfriend has $2,500.00 in PIP coverage. A bad crash results in $15,000.00 in medical bills and lost wages for John. In this instance, John first uses his girlfriend’s PIP policy and exhausts the $2,500 with her insurance company. John can then look to his own insurance company for an additional $2,500.00 in PIP payments, bringing the total for PIP to $5,000.00.
  3. John is a passenger in his girlfriend’s car. This time, she has $10,000.00 in PIP coverage. Even though John only has a $5,000.00 PIP policy for his own car, he is able to use the $10,000.00 limits of his girlfriend’s policy. John cannot stack his policy with hers for a total of $15,000.00 in PIP benefits.
  4. John’s girlfriend is driving her own car, but she failed to timely pay her insurance premium. As a result, her insurance policy lapsed. Therefore, her vehicle was uninsured. John was a passenger in the vehicle and still had $5,000.00 PIP coverage on his personal car. His girlfriend crashed the car and John sustained $15,000.00 in medical bills.   Although her vehicle doesn’t have insurance, John is able to use his PIP policy for $5,000.00 worth of benefits.
  5. John has the insurance coverage noted above ($5,000.00 PIP). This time he is married. However, his wife is an excluded driver because she has been convicted of multiple DUIs. Excluded means that John’s motor vehicle insurance policy specifically excludes his wife from operating his cars. Nonetheless, John’s wife needs to run an errand and is involved in a crash while driving to the store. Under Maryland law, she is not entitled to PIP, as she is an excluded driver of John’s car. However, if she was a passenger in John’s car when it crashed, she would be entitled to PIP benefits.
  6. John has the insurance coverage noted above. John is walking across a street in Maryland when a passing car strikes him. Which PIP applies? The PIP coverage on the car that struck John is primary and if it only had $2,500.00 in coverage, John could look to his own personal PIP policy for up to $5,000.00 in benefits.
  7. John has the insurance coverage noted above. John is a passenger in a taxi. The taxi crashes. Under Maryland law, the taxicab is not required to have PIP insurance and therefore, John will use his personal PIP policy.
  8. John has the insurance coverage noted above. John is the passenger in an Uber or Lyft vehicle. The vehicle crashes. John will use the PIP policy of the Uber or Lyft vehicle since Maryland law treats Uber and Lyft vehicles much differently than taxis. Thus, John would use the first $2,500.00 from the Uber or Lyft vehicle and then look to his own personal policy for additional benefits.

Health Insurance and Workers’ Compensation Benefits and PIP

If a driver or passenger is working at the time of the injury, he may be entitled to PIP and workers’ compensation benefits. However, it is very important to coordinate the timing of filing for both benefits. Since Maryland law permits the PIP insurer to reduce benefits payable to the extent workers’ compensation benefits are actually received, if someone injured in a car crash files for workers’ compensation benefits and those benefits are paid in excess of the PIP coverage, that person would not then be able to seek PIP benefits. As noted where an injured worker receives workers’ compensation benefits in excess of the PIP coverage, he/she is entitled to nothing from the PIP carrier. §19-513(e) and Smelser v. Criterion Ins. Co., 293 Md. 384 (1982).

As a practical matter, the opposite is not true. The PIP carrier is generally not entitled to a credit or to be reimbursed by the workers’ compensation insurance company as long as the PIP is exhausted first. An exception to this rule is if the employer is self-insured. When someone is working and is entitled to file both a workers’ compensation claim and a PIP claim, it’s beneficial to file and exhaust the PIP claim first and timely file the worker’s compensation claim thereafter.

Since PIP pays lost income at 85% whereas workers’ compensation only pays at 66%, there is an advantage to filing and exhausting PIP first. Additionally, when you are out of work and receiving medical care after a motor vehicle collision, you and your doctor will want to be paid. Many medical providers will have you sign forms allowing your doctor to submit forms directly to the PIP carrier. In such circumstances, it’s not unusual for the doctor to be paid and or to exhaust the PIP coverage leaving you no money for your lost income. Therefore, it is critically important to be aware of the timing of your PIP claim and presentation of the supporting documentation to ensure you are timely paid your lost income.

If you have health insurance and available PIP coverage, you will likely make use of both coverages after a collision. Once again, you should use your PIP first for lost income and then your medical bills if not exhausted. Health insurance companies do not get a credit for PIP benefits paid to you or to your medical providers. Some medical providers prefer to be paid by PIP insurance rather than health insurance since PIP frequently pays a higher percentage of the bill.

If you have any questions about PIP or MedPay benefits in your car crash claim, please feel free to give us a call. You may call us toll-free at (800) 322-3380.