Herd Chiropractic Clinic v. State Farm Mutual Automobile Ins. Co.

The issue before the Supreme Court centered on the award of attorney's fees against an insurance company under the peer-review provisions of the Motor Vehicle Financial Responsibility Law (MVFRL). The MVFRL limits the amount providers may charge for treatment, products or services rendered to patients injured in automobile accidents where the injury is covered by an insurance policy. An individual obtained treatment from Appellee Herd Chiropractic Clinic for injuries sustained in a motor vehicle accident. The insurance company submitted the clinic's invoices to a Peer Review Organization (PRO) pursuant to the MVFRL. The PRO determined that certain treatments were not necessary or reasonable, and the insurance company subsequently refused to pay for such treatment The Clinic then sued for unpaid bills, plus treble damages and attorney's fees under the theory that the MVFRL authorized payment. The Common Pleas court found an award of fees proper and mandatory under the MVFRL. The Superior Court affirmed. The Supreme Court, however, reversed, finding that the MVFRL did not allow for what amounted to "fee shifting" by the lower courts' outcome: "We acknowledge [the Clinic's] concerns with the financial incentives in the peer-review industry and with the fact that litigation costs incurred by providers may discourage legitimate challenges. The fee accruals here – in the amount of $27,000 to vindicate a $1380 claim - present a stark example of the difficulty. . . . Nevertheless, fee shifting raises a host of mixed policy considerations in and of itself, which this Court has found are best left to the General Assembly, in the absence of contractual allocation or some other recognized exception to the general, American rule." View "Herd Chiropractic Clinic v. State Farm Mutual Automobile Ins. Co." on Justia Law