Articles Posted in Supreme Court of Pennsylvania

by
Anthony Burke was a child diagnosed with an autism-spectrum disorder. Throughout the first six months of 2010, Anthony and his family were covered by a group health insurance policy (the “Policy”) with Appellant, Independence Blue Cross (“Insurer”), maintained through Anthony’s father, John Burke’s employer. Initially, Anthony received “applied behavioral analysis” (ABA) treatment at home. In August 2009, before an Autism Coverage Law became effective relative to the Burkes’ coverage, the family requested benefits, under the Policy, for ABA services to be provided at the parochial elementary school attended by Anthony. Insurer denied coverage on account of an express place-of-services exclusion in the Policy delineating that services would not be covered if the care was provided in certain locations, including schools. In a motion for judgment on the pleadings, Mr. Burke argued that the place-of-services exclusion in the Policy was nullified, as it pertained to in-school services, by the Autism Coverage Law. The Pennsylvania Supreme Court found that the Pennsylvania Legislature intended to permit only general exclusions that would not substantially undermine the mandatory coverage requirement: “we simply do not believe that the Legislature intended to permit insurers to exclude coverage in the sensory-laden educational environment where children spend large portions of their days, or to require families to litigate the issue of medical necessity discretely in individual cases to secure such location-specific coverage for the treatment.” The Supreme Court affirmed judgment in favor of the Burkes, and that the Policy’s place-of-services exclusion was ineffective under the Autism Recovery Law. View "Burke v. Independence Blue Cross" on Justia Law

by
In this discretionary appeal, and in a matter of first impression, the Pennsylvania Supreme Court considered the elements of a bad faith insurance claim brought pursuant to Pennsylvania’s bad faith statute, 42 Pa.C.S. section 8371. In 1992, while working for the United States Postal Service (“USPS”) Appellee LeAnn Rancosky purchased a cancer insurance policy as a supplement to her primary employer-based health insurance. The cancer policy was issued by Appellant Conseco Health Insurance Company (“Conseco”). To pay for the policy, Rancosky’s employer automatically deducted bi-weekly payments of $22.00 from her paycheck. The policy contained a waiver-of premium provision, which excused premium payments in the event Rancosky became disabled due to cancer. In 2003, Rancosky was diagnosed with ovarian cancer and underwent surgery and chemotherapy. Though, Rancosky did not return to her job with USPS following her hospital admission, she remained on her employer’s payroll for several months because she had accrued unused vacation and sick days. Consequently, Conseco continued to receive payroll deducted premiums from Rancosky until June 24, 2003, when Rancosky went on disability retirement. Premium payments were made in arrears; the final premium payment extended coverage under her policy to May 24, 2003. Unbeknownst to Rancosky, her physician statement inaccurately specified her date of disability as beginning on April 21, 2003, rather than on February 4, 2003. 5 Believing that the premiums had been waived and that no further premiums were due on the policy because of her disability from cancer, Rancosky’s final premium payment came from her June 24, 2003, payroll-deducted premium. Over the next two years, as Rancosky experienced several recurrences of her cancer, she continued to submit claims to Conseco. Conseco eventually started denying Rancosky’s claims for further benefits based upon her failure to pay premiums. The Supreme Court adopted the two-part test articulated in Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) in order for a plaintiff to recover in a bad faith action; proof of an insurance company’s motive of self-interest or ill-will is not a prerequisite to prevailing in a bad faith claim under Section 8371, as was argued by Appellant. The Court affirmed the superior court, which partially vacated the trial court’s judgment and remanded for further proceedings on Appellee’s bad faith claim. View "Rancosky v. Washington National Ins. Co." on Justia Law

by
No fiduciary duty arises in a consumer transaction for the purchase of a whole life insurance policy based upon the advice of a financial advisor where the consumer purchasing the policy does not cede decision -making control over the purchase to the financial advisor. In 1995, Bryan Holland, a financial advisor for IDS Life Insurance Corporation, made an unsolicited telephone contact, a "cold call," to Eugene and Ruth Yenchi. At a subsequent meeting and for a fee of $350, Holland presented the Yenchis with a financial management proposal containing a notice that it had been prepared by "your American Express financial advisor" (Holland) and that "[alt your request, your American Express financial advisor can recommend products distributed by American Express Financial Advisors and its affiliates as investment alternatives for existing securities." The Proposal offered the Yenchis a number of general recommendations, including that they monitor monthly expenses, consolidate their debt, consider various savings plans, consolidate current life insurance policies into one policy, review long-term care coverage, keep accurate records for tax purposes (medical expenses and charitable contributions), transfer 401(k) funds into mutual funds, and continue estate planning with an attorney and their financial advisor. The Yenchis implemented some of these recommendations. In 2000, the Yenchis had their portfolio independently reviewed. Through this process, they were advised that Holland’s recommendations would be financially devastating to the Yenchis. In April 2001, the Yenchis sued Holland and his company, American Express Financial Services Corporation, American Express Financial Advisors Corporation, and IDS Life Insurance Company. The Yenchis' asserted claims of negligence/willful disregard, fraudulent misrepresentation, violation of the Uniform Trade Practices and Consumer Protection Law ("UTPCPL"), bad faith, negligent supervision, and breach of fiduciary duty. Of relevance here, with respect to the breach of fiduciary duty claim, the trial court held that no fiduciary relationship was established between the Yenchis and Holland because the Yenchis continued to make their own investment decisions. The Pennsylvania Supreme Court concluded that, consistent with its jurisprudence, no fiduciary duty arose in such a situation. Consequently, the Court reversed the Superior Court's decision to the contrary. View "Yenchi v. Ameriprise Financial" on Justia Law

by
Pertinent to this appeal, the Motor Vehicle Financial Responsibility Law (“MVFRL”) required insurers to offer insureds Underinsured Motorist coverage. Subsection 1731(c.1) of the MVFRL stated that any UIM coverage rejection form that does not “specifically comply” with Section 1731 of the MVFRL was void and that, if an insurer failed to produce a valid UIM coverage rejection form, then UIM coverage shall be equal to the policy’s bodily injury liability limits. The Pennsylvania Supreme Court granted allowance of appeal in this matter to determine whether an insurer’s UIM coverage rejection form “specifically compl[ied]” with Section 1731 of the MVFRL if the insurer’s form was not a verbatim reproduction of the statutory rejection form found in Subsection 1731(c) of the MVFRL but, rather, differed from the statutory form in an inconsequential manner. The Court held that a UIM coverage rejection form specifically complies with Section 1731 of the MVFRL even if the form contains de minimis deviations from the statutory form. Because the Superior Court reached the proper result in this case, the Supreme Court affirmed that court’s judgment. View "Ford v. American States Ins." on Justia Law

by
From 2010 to 2012, Appellant Freedom Medical Supply, Inc. (“Freedom”), provided electrical muscle stimulators (“EMSs”) and portable whirlpools to automobile accident victims covered by Appellee State Farm Fire and Casualty Company and/or State Farm Mutual Automobile Insurance Company (collectively, “State Farm”). Notably, although Freedom purchased these items for relatively little cost, it applied significant markups. As found by the United States District Court for the Eastern District of Pennsylvania herein, Freedom purchased the EMSs for approximately $20 to $30 each, yet charged approximately $1,525 to $1,600 each, and purchased the whirlpools for approximately $40 each, yet charged approximately $525 each. Because neither the EMSs nor portable whirlpools have a federally-determined Medicare fee, Freedom sought reimbursement from State Farm for 80% of the foregoing charges. State Farm denied Freedom's claims, and the district court ultimately agreed with State Farm when Freedom filed suit. Freedom appealed to the United States Court of Appeals for the Third Circuit, which, noting that no Pennsylvania court or agency has addressed the question, sought to certify to the Pennsylvania Supreme Court. The question presented was: "[m]ay an insurer use methods not specifically identified in [the Motor Vehicle Financial Responsibility Law (MVFRL)] to calculate the 'usual and customary' charge for devices and services not listed on the Medicare Fee Schedule for purposes of determining the amount to be paid to providers of those devices and services?" In answer to the question submitted, the Supreme Court held that Section 69.43(c) of the MVFRL permitted, but did not require, that reimbursements be calculated predicated on the provider’s bill for services or the data collected by the carrier. View "Freedom Medical Supply v. State Farm" on Justia Law

by
This appeal centered on the availability of attorneys’ fee awards against insurance companies that have invoked the peer-review provisions of the Motor Vehicle Financial Responsibility Law (MVFRL). In 2004, Angela LaSelva sustained injuries in a motor vehicle accident. She was treated by a licensed chiropractor, David Novatnak, D.C., who practiced with appellee Doctor’s Choice Physical Medicine and Rehabilitation Center, P.C. (“Provider”). Provider submitted invoices for the services directly to LaSelva’s first-party benefits insurance carrier, Appellant Travelers Personal Insurance Company (“Insurer”), as required per the Motor Vehicle Financial Responsibility Law. Insurer later requested peer review through IMX Medical Management Services (“IMX”), a peer review organization (“PRO”). IMX, in turn, enlisted Mark Cavallo, D.C., to conduct the peer review. Dr. Cavallo issued a report deeming certain of the treatments provided by Dr. Novatnak to have been unnecessary. Based on this report, Insurer denied reimbursement for the treatment aspects deemed as excessive. Provider opposed this withholding and commenced a civil action against Insurer. Among other things, the complaint alleged that all treatments undertaken through Provider were reasonable and necessary and that the review conducted by IMX did not comport with the mandates of Section 1797 of the MVFRL. Furthermore, Provider asserted that IMX failed to comply with requirements of the Pennsylvania Code directing PROs to apply national or regional norms in their determinations or, where such norms do not exist, to establish written criteria to be used in conducting reviews. As relevant here, the complaint included a specific demand for attorneys’ fees. After a bench trial, the common pleas court entered a verdict in the Provider’s favor, encompassing an award of attorneys’ fees of approximately $39,000. On appeal, the Superior Court reversed the decision to strike the fee award. The Supreme Court reversed the Superior Court: "the Superior Court’s cryptic pronouncement of 'absurdity' [regarding fee-shifting] that lacks foundation. . . . This Court remains cognizant of the shortcomings of the peer-review regime. We have no reasonable means, however, of assessing the degree to which these may be offset by the benefits of cost containment and potentially lower insurance premiums available to the public at large. Rather, the Legislature is invested with the implements to conduct investigations, hearings, and open deliberations to address such salient policy matters. In such landscape, we decline to deviate from conventional statutory interpretation to advance directed policy aims." View "Doctor's Choice v. Traveler's Personal Ins." on Justia Law