Automobile insurers liable for reimbursing providers of medical products to accident victims are not restricted to the methodologies identified in the Motor Vehicle Financial Responsibility Law (MVFRL) and Department of Insurance regulations, the Pennsylvania Supreme Court held in Freedom Med. Supply, Inc. v. State Farm Fire and Cas. Co., __ A.3d __ (No. 8 EAP 2015, filed Feb. 16, 2016). This matter came before the Court on certification from the U.S. Court of Appeals for the Third Circuit.
Under the MVFRL, a provider of medical products to automobile accident victims is entitled to reimbursement from automobile insurers, and where there is no federally-determined Medicare fee for a product, reimbursement is limited to “80% of the provider’s usual and customary charge.” A Department regulation states that “
Writing for the unanimous Court, Justice Todd observed that the regulation is ambiguous because both interpretations are reasonable. In resolving the ambiguity, the Court noted that the MVFRL and the No-Fault Act that preceded it have consistently implicated two major policy goals: “providing coverage for injured persons and providing it at a reasonable cost to the purchaser.” Limiting an insurer’s methods of calculating a provider’s usual and customary charge to the two methods identified in Section 69.43(c) would frustrate that goal, the Court reasoned, because providers of medical products and services not contained on a Medicare fee schedule or in carrier data could inflate their charges. Making Section 69.43(c) mandatory would also be inconsistent with 31 Pa. Code §69.3, the Court noted, which defines “usual and customary charge” as the “charge most often made” by similar providers. Permitting insurers to utilize the provider’s bill or carrier data as relevant, but not controlling, is more likely to achieve that goal, the Court explained. Finally, the Court pointed out that insurers must comply with other requirements in the MVFRL and regulations, reducing the likelihood of “insurance industry chicanery and market uncertainty.”