Oregon Case Law Update: No Safe Harbor Protection in Dispute over Reasonable and Necessary Medical Services
From the desk of Josh Hayward: Under ORS 742.061(1), a first party plaintiff is entitled to attorney fees if their recovery at trial exceeds the amount tendered by the insurer. However, in PIP and UM/UIM disputes an insurer can protect themselves from the risk of attorney fees if they send a “safe harbor” letter that accepts coverage and agrees to binding arbitration on a limited set of issues. But where the insurer denies PIP benefits on the basis that medical services are not reasonable and necessary, will a safe harbor letter that accepts coverage and purports to limit the dispute to the amount of benefits due entitle the insurer to the safe harbor protection? Read on to find out.
Claims Pointer: In this case arising out of a dispute over Personal Injury Protection (“PIP”) benefits, the first party plaintiff brought suit after the insurer denied PIP benefits on the basis that additional medical services were not reasonable and necessary. The Oregon Court of Appeals held that while the insurer can protect themselves from attorney fee exposure by limiting the dispute to the amount of benefits due, a dispute as to whether medical services are reasonable and necessary is not a dispute about the amount of benefits due. This case provides an important clarification on the benefit of the safe harbor letter in the context of PIP benefits.
Berger v. State Farm, 290 Or App 485 (2018)
Plaintiff Douglas Berger (“Plaintiff”) purchased an insurance policy from State Farm Mutual Automobile Insurance Company (“State Farm”). The insurance policy contained PIP and uninsured motorist (“UM”) coverage, as required by Oregon’s statute. Plaintiff was later injured in an accident involving a hit-and-run vehicle. Plaintiff notified State Farm of the accident and his injuries. The next day, State Farm sent Plaintiff a safe harbor...