Titan Insurance sanctioned for failure to pay medical expenses
In Spectrum v. Titan Insurance Company v. Blue Cross Blue Shield, the Court of Appeals upheld the award of fees and costs to the Plaintiff against the Titan Insurance Company, for failing to timely pay auto no fault PIP medical expenses.
Two minor children were seriously injured in a motor vehicle collision, while occupying an uninsured vehicle. Their claims were turned over to Titan pursuant to Michigan's Assigned Claims Plan The latter Plan randomly assigns injured but innocent, uninsured non-drivers to an insurer who has chosen to write insurance in Michigan; the plan shares the risk of uninsured auto injuries among all motor vehicle insureds by a premium added to all policies.
The childrens' medical records and expenses were turned over to Titan by December of 2005, including Explanations of Benefits from BCBS, showing the balance unpaid. When Titan had not made payment by May of 2006, the Plaintiff filed suit. Titan argued that no sanctions were appropriate because it paid the bills in June when it received a copy of the childrens' mothers' health plan from BCBS, showing that Titan had primary responsibility for payment of the bills.
The Court unanimously rejected this approach, noting that Titan's argument would defeat the statutory language and purpose of the no fault act by delaying payment of incurred expenses while insurers battled over priority. Under the act, no fault insurers are legally obligated to pay PIP expenses in a timely manner if the insurer "has a place in the priority chain" and "plaintiff was entitled to payment from someone in that chain". The Defendant would be required to pay sanctions if it delayed payment of "definite but inexact claims".