PIP insurer only required to reimburse for reasonable and necessary medical expenses. PIP insurer’s bill review rules did not constitute breach of contract or bad faith.

In consideration of the plaintiff’s medical bills submitted after an auto accident, GEICO, the plaintiff’s PIP carrier, applied a geographic reduction rule which defined a reasonable charge as one that did not exceed the 80^th percentile of charges compared to similar providers in the area during the same time frame. GEICO also applied a passive modality rule to flag certain codes found on medical bills incurred more than eight weeks post-accident. The plaintiff sued GEICO in Delaware Superior Court, and the case was then removed to the U.S. District Court for the District of Delaware. The Third Circuit affirmed the District Court’s decision granting summary judgment in favor of GEICO, holding there was no evidence in the record to support the plaintiff’s claim that the bills were reasonable and necessary. In addition, GEICO did not breach the parties’ contract or act in bad faith by employing its bill review rules. The court could not reform the contract because the plaintiff did not show that, at the time of contracting, “one of the fruits of the contract was review of her claim without those rules.”

_{Case Law Alerts, 2^nd Quarter, April 2017}

_{Case Law Alerts is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2017 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}