Personal Injury Protection

Grand Prairie residents and residents of Arlington, Mansfield, Burleson, Crowley, Benbrook, Fort Worth, Lake Worth, Hulen, and other areas of Tarrant County who have automobile insurance coverage are always given the opportunity to purchase, with their automobile insurance, Personal Injury Protection, otherwise know as PIP.
PIP coverage is required to be offered along with automobile insurance coverage pursuant to the Texas Insurance Code, Section 1952.152. Here is a case dealing with that coverage.
The style of the case is, Texas Farmers Insurance Company v. Carabell Fruge. This is a case decided by the Texas Court of Appeals, Beaumont, in 2000. Here is some background information.
Jackie Ryan had purchased an automobile liability insurance policy from Farmers that provided her with $2,500 in PIP coverage. Fruge was a passenger in Ryan’s vehicle and was injured in a car wreck. After her injury, Fruge’s attorney filed on her behalf a PIP claim with Farmers supported by documents reflecting medical expenses of $3,490. Some of the supporting documents contained some reference to Medicare. At least one document was stamped “Benefits Assigned.” Farmers responded to Fruge’s claim by mailing her six checks totaling $2,500.30. Four of the checks, totaling $1,854.30, named medical providers, Medicare, or both as co-payees with Fruge. All six checks named the law firm representing Fruge as a co-payee. Fruge’s attorney returned all six checks with a letter advising Farmers that “some or all” of the medical bills related to the checks naming co-payees had been paid, complaining that it would take six months to get all of the necessary endorsements, and demanding payment naming Fruge as the sole payee.
As the court stated, this case raises questions related to PIP coverage provided in the Farmers contract of insurance. The issue is whether Farmers breached its contract by placing the names of medical providers and Medicare as co-payees on checks paying PIP benefits to Fruge. This court held that Farmers did breach its contract as it relates to all except naming Medicare as a co-payee.
Fruge’s attorney brought an action pursuant to Section 1952.157 against Farmers to recover $2,500 in benefits, as well as penalty and attorneys fees as provided. The trial court ruled against Farmers and this appeal followed.
This court rejected Farmers assertion that it was obligated to honor assignments to Fruge’s medical providers because according to the terms of the policy the stamped notations “Benefits Assigned” was not an assignment. According to the terms of its policy, Farmers would honor assignments for medical expenses if it received a written assignment signed by the covered person to whom such benefits were payable. As such, Fruge was right to expect that PIP benefits would be made payable to her alone.
But as the court said, naming Medicare as a co-payee is another matter. Federal law provides that any portion of medical costs by Medicare for which private insurance is the primary payer is conditioned upon reimbursement from the insurer. This is per 42 U.S.C. Section 1395y(2)(B)(i). Medicare is a secondary payer for services covered under no-fault insurance per 42 U.S.C. Section 1395y(2)(A)(B)(ii). And “no-fault” insurance includes PIP coverage per 42 C.F.R. Section 411.50(b). This is an instance where federal law preempts state law. State law can be preempted by federal rules as well as federal statutes. To avoid the risk of making the same payment twice, Farmers may have been correct in not making an unconditional payment to Fruge reimbursing her for expense it should have known had already been paid by Medicare.
The court went on to rule that while Farmers is correct in its assertion that federal statutes and rules preempted state law, it cannot, on the fact of the record, claim that it had reason to suspect that Medicare was entitled to the sum represented by the checks that named Medicare as co-payee. Though the record speaks of six checks and Farmers appears to have named Medicare as payee on checks totaling $1,352, the record only showed a Medicare payment of $168.56. Thus it appeared that Farmers wrongfully named Medicare as a co-payee to part of the PIP benefits.
The judgment was ordered to be reformed to reflect this opinion.
Even on something that should be as simple as PIP payments, a person should seek the advise and counsel of an experienced Insurance Law Attorney to insure their rights are not being abused by the insurance company.

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