Personal Injury Protection (PIP) Benefits

Personal Injury Protection (PIP) is a coverage which is required by Texas law to be offered when a person purchases automobile coverage.  One of the questions regarding this coverage is, why is it paid.  This issue was partially addressed in the 2020, Texas Supreme Court opinion styled, Farmers Texas County Mutual Insurance Company v. Rodney Beasley.

In this case the Court had to decide whether a plaintiff had standing to file a lawsuit against his PIP insurer after the insurer paid the incurred medical expenses pursuant to the PIP policy, but the amount paid was the negotiated rate between the plaintiff’s health care provider and the insurer — not the medical providers’ list rate.  This Court concluded that plaintiff could not show harm and thus, the case should be dismissed.

Here, Beasley was injured in a car accident.  Beasley sought medical treatment and incurred expenses with a list rate of $2,662.54.  Beasley’s health insurer, Blue Cross Blue Shield (BCBS) has a negotiated rate with the medical providers and paid $1,068.90, and no attempt was made against Beasley by the medical providers to recover any further monies.

Beasley next sought to recover the list rate from Farmers by way of his PIP coverage.  Farmers paid Beasley the $1,068.90.  Beasley demanded the full $2,662.54 from Farmers, who refused and this lawsuit resulted.  Beasley’s claim against Farmers was for breach of contract and various Insurance Code violations.

In discussing the case, the Court stated Texas law: Standing is a threshold requirement to maintaining a lawsuit.  To establish standing in Texas, a plaintiff must allege “a concrete injury . . . and a real controversy between the parties that will be resolved by the court.”  Specifically, the plaintiff must allege a threatened or actual injury—it may not be hypothetical.

In determining whether a plaintiff has alleged a concrete injury sufficient to meet the standing requirement, courts look to the plaintiff’s pleadings.  Because the standing determination is made by looking to the plaintiff’s pleadings, the mere fact that a plaintiff may ultimately not prevail on the merits of the lawsuit does not deprive the plaintiff of standing.

A defendant may challenge a plaintiff’s standing by filing a Plea to the Jurisdiction.  In ruling on a defendant’s plea to the jurisdiction, courts should decide the plea “without delving into the merits of the case.”  But a court “is not required to look solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised.”  Indeed, “if a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues raised.”  When undisputed evidence supports the plea to the jurisdiction and “implicates the merits of the case, we take as true all evidence favorable to the nonmovant, . . . and we indulge every reasonable inference and resolve any doubts in the nonmovant’s favor.”  If, after examining the pleadings and any undisputed standing evidence, the court concludes that standing does not exist, the case must be dismissed.

The only meaningful difference and prior case law on this issue is that prior case law was sought injunctive relief and declaratory relief.  However, the ultimate relief in prior case law and this case is the same: seeking to have the PIP insurer to pay the list rate for medical providers, not the negotiated rate.  In other words, both believed that their PIP policies entitled them to recover the providers’ list rates or some other amount higher than the negotiated rates.  Beasley, like prior case law, does not claim that he is responsible for any unreimbursed, out-of-pocket medical expenses.  Nor does Beasley assert that any of his medical providers withheld treatment as a result of the adjusted bills on which Farmers based its reimbursement.  The Court said, We can discern no principled basis for reaching a conclusion inconsistent with prior case law. Accordingly, like prior case law, we conclude that Beasley failed to allege an actual or threatened injury.

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