Car wreck victim loses most of his claims over rejected reimbursement against Progressive

By Nicholas Malfitano | May 22, 2015

PHILADELPHIA – A Doylestown man’s lawsuit against Progressive Insurance Company has had its claims mostly dismissed, per an edict issued by a federal judge on May 13.

Thomas G. Gibson filed suit against Progressive in the Bucks County Court of Common Pleas on Feb. 5, litigation which was promptly removed to U.S. District Court for the Eastern District of Pennsylvania.

In his suit, Gibson alleged Progressive was liable for breach of contract, bad faith and violations of Pennsylvania state law, specifically the Unfair Trade Practices and Consumer Protection Law (UTPCPL).

According to the lawsuit, Gibson was issued a motor vehicle insurance policy by Progressive in November 2010. This policy afforded $100,000 in primary coverage and $1,000,000 in excess coverage.

Gibson was involved in a crash the following month, and attempted to obtain coverage through Progressive in order to pay for the medical care he required to treat the injuries he suffered in the accident.

Progressive contracted with a third-party company named MES Solutions to perform a “peer records review” of Gibson’s treatment and medical care.

In August, Dr. Lisa M. Nocera reviewed Gibson’s records on behalf of MES Solutions and determined that “all treatment, injections and compound medications [received by Gibson] on Jan. 17, 2014, and beyond are considered unreasonable and unnecessary for injuries reportedly sustained in the Dec. 30, 2010 motor vehicle accident.”

As a result, Progressive then informed several of Gibson’s medical care providers that, based upon the peer review, it was denying payment for treatment on or after Jan. 17, 2014 and seeking reimbursement of money it paid for treatment provided on April 4, 2014.

Progressive also notified another provider that it was denying coverage for a neurosurgical procedure performed on Dec. 17, 2014 because it was “unrelated to the accident.”

Gibson claimed Progressive breached its contractual agreement with him by denying to compensate costs related to his medical care and further violated the Pennsylvania Motor Vehicle Financial Responsibility Law (PMVFRL).

Gibson further asserted Progressive acted in bad faith by “(1) using MES Solutions to perform the peer review when it has a financial interest in providing Progressive with a ‘biased peer review report;’ (2) failing to conduct a reasonable investigation; (3) not denying coverage in a reasonable amount of time; (4) not acting in good faith; (5) failing to act in accordance with the policy; and (6) failing to provide a reasonable explanation of benefits.”

Finally, Gibson claimed Progressive violated the UTPCPL by “failing to promptly offer indemnification and objectively and fairly evaluate his claims.”

U.S. Magistrate Judge Timothy R. Rice, in an eight-page ruling, dismissed all of Gibson’s claims except for one bad faith claim.

Rice began by explaining the remedies available to an insured person who has successfully proven a provider has acted in bad faith.

“If a court finds that an insurer acts in bad faith the court may: (1) Award interest in an amount equal to the prime rate plus 3 percent; (2) award punitive damages; and (3) assess court costs and attorney fees against the insurer,” Rice said.

Rice then connected this to the remedies available under the PMVFRL.

“An insurer may contract with a PRO ‘established for the purpose of evaluating treatment and health care services’ to determine whether such treatment or services conform to professional standards and are medically necessary. The insurer, insured, or medical provider may seek reconsideration of the PRO’s initial determination within 30 days of the PRO’s initial determination,” Rice continued.

“If the PRO determines that a medical provider has provided unnecessary medical treatment, the insurer is not responsible for payment of those services and can seek reimbursement for any payments provided. Alternatively, if the PRO finds that the treatment was medically necessary, the insurer must pay the provider any outstanding amount plus interest at 12 percent per year, costs, and attorney’s fees.”

With Progressive arguing a conflict between those two policies, Rice ruled the remedies under the PMVFRL would apply in this case because it specifically relates to motor vehicle liability insurance.

“[Gibson] alleges that Progressive retained MES Solutions in bad faith because MES Solutions has a financial interest in providing biased reports to Progressive, and MES Solutions has provided negative reports to Progressive and others to maintain a “steady source of business,” said Rice, who explained because that claim does not fall within the scope of Section 1797 of the PMVFRL, it alleges a proper basis for a statutory bad faith. Rice retained this charge against Progressive.

Gibson’s other claims of Progressive acting in bad faith by denying first-party insurance coverage were dismissed by Rice.

As to Gibson’s claims of UTPCPL violations, Rice opined those must be based on “misfeasance or negligent conduct,” not “on a failure to perform a contractual obligation, such as the failure to pay a claim or a failure to investigate pursuant to the contract.”

“Gibson alleges only that Progressive breached its contract by denying coverage. Similarly, the allegations in his UTPCPL claim relate solely to Progressive’s refusal to provide coverage or failure to act in some way, rather than misfeasance or improper performance,” Rice wrote.

“Although Gibson also incorporates the other allegations in his complaint, including his claim that Progressive used a biased PRO, and this claim could be viewed as a type of misfeasance, this claim cannot be brought under the UTPCPL because it relates to Progressive’s handling of Gibson’s claim, rather than Progressive’s solicitation of the policy.”

Therefore, Rice dismissed Gibson’s claim made under the UTPCPL.

Gibson had demanded judgment against Progressive for “payment of medical, therapeutic, surgical and pharmacological bills and attorneys’ fees as well as judgment against defendant in an amount in excess of $50,000 together with attorneys' fees in connection with his bad faith and Unfair Trade Practices and Consumer Protection Law claims.”

The plaintiff was represented by Neal E. Newman, in Holland.

The defendant was represented by William K. Conkin of Marshall Dennehey Warner Coleman & Goggin, in Philadelphia.

U.S. Eastern District Court of Pennsylvania case 2:15-cv-01038

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