Fortunately, Attorney Robert Claraval was there to stand up to State Farm. In Herd Chiropractic v. State Farm, plaintiff challenged State Farm’s decision and persuaded the Court of Common Pleas of Dauphin County that State Farm was wrong to have denied it’s insured the medical benefits that were owed under the policy. Plaintiff proved a “significant financial relationship” between State Farm and the supposedly neutral “Peer Review Organization” that State Farm used to help it refuse to pay the benefits it owed under its policy. Further, the Court recognized that the Pennsylvania Supreme Court has determined that “the detachment and neutrality required of a fact finder is conspicuously absent in the contractual relationship between a [peer review organization] and an insurer.” The Dauphin County Court concluded that the treatment questioned by State Farm was reasonable and necessary and ordered State Farm to pay the bills.
But State Farm wasn’t done fighting. It had cost over $27,000 for Attorney Claraval to take State Farm to court and win. And even though State Farm had lost and even though the Pennsylvania Motor Vehicle Financial Responsibility Law requires that insurance companies pay attorney fees in successful challenges like this one, State Farm refused to pay the fees it clearly owed. So, Atty. Claraval went to Court again seeking payment of fees and the Court of Common Pleas of Dauphin County rightly awarded those fees.
The opinion in Herd Chiropractic v. State Farm isn’t really very controversial. There are some technical issues it neatly addresses like whether or not the attorney fee provision of the MVFRL applies even when the insurance company has used a PRO and there has been no request for reconsideration. But the truth is that the law is straightforward. If an insurance company wrongly refuses to pay medical benefits, for whatever reason, the insurance company is required to reimburse the cost of the attorney fees necessary to challenge their wrongful decision.
The significance of Herd Chiropractic v. State Farm lies more in what it illustrates about the adversarial posture that insurance companies sometimes take even with their own insureds and the critical importance of plaintiff lawyers who keep them in line, including:
1. Insurance companies sometimes force their insureds or health care providers to pay thousands and thousands of dollars in litigation costs just to obtain medical benefits totaling a fraction of that amount;
2. Insurance companies sometimes fight about even well-established principles like the requirement that insurance companies reimburse attorney fees in cases like this one; and
3. Insurance companies would get away with this conduct if it were not for plaintiff lawyers willing to fight them and laws that allow for the recovery of fees in successful cases.
Congratulations to Atty. Claraval on a well deserved win.