Unique Massachusetts Law – No Fault Car Insurance

Unique Massachusetts Law challenges those injured in car accidents.

Called “No-Fault”, people injured for the first time after a motor vehicle accident often find their jaws dropping as they face the system.

“No-Fault” insurance law in pure form is not unique.  Twelve U.S. states at this writing – and we update regularly – embrace the no-fault auto insurance scenario.  Under the no-fault law, after an accident, anyone injured in a motor vehicle accident files first, right away, with their own insurance company.

No matter that you stopped completely at a red light and another car came up from behind and slammed into the back of your vehicle point blank.  That’s a 100% fault scenario against the rear-ender.  No matter, under “no-fault” you have no case unless and until you file a claim first with your own insurance company.

The claim for payment of all accident related medical bills falls under what’s called “Personal Injury Protection”. Also called “PIP”, this part of your own car insurance policy pays your medical bills and lost wages.  All Massachusetts auto insurance policies provide eight-thousand dollars ($8,000.00) in coverage for payment of medical bills and/or lost wage reimbursement.

But any guise of simplicity ends there.

Unique Massachusetts Law – Coordination of Auto & Health Insurance

For those who have health insurance, PIP pays only $2,000 towards medical bills.  Even though your car insurance policy clearly states $8,000 under Personal Injury Protection this is how it works. So, medical bills over $2,000 must be submitted to the health insurer. Who then slaps a lien on your ultimate recovery.  We’ve explained this in another blog article.

If you have Mass Health, the Massachusetts version of Medicare, then the $2,000 does not apply and PIP pays up to the $8,000 in medical bills after a car accident.

Stated another way, Personal Injury Protection or PIP provides primary coverage for all car accident medical bills.  Health insurance becomes primary coverage for accident related bills over the first $2,000.

PIP auto coverage bears no responsibility for payment of accident related medical bills that the injured person incurs without a proper referral, if they have health insurance.  A controversial Massachusetts decision held that auto insurance PIP does not pay medical bills rejected by a health insurance company because the treatment was incurred outside the rules of the health plan.

Is it really No-Fault?  Subrogation

People often react negatively when the above law is explained.  “Why should my car insurance company pay when I wasn’t at fault?”  It makes no sense.  But, that’s the way “no-fault” works.

At the same time, don’t feel sorry for your insurance company paying your medical bills.  Not because I like or don’t like insurance companies.  No, they get their money back.  If the injured person, say it’s you, truly was not at fault, then they go through a legal process to claim their money back from the at-fault insurance company. Under the process called subrogation, the company that pays PIP for someone not at fault makes a claim for reimbursement against the insurance company for the person who was at fault.

Take the above scenario, were you were stopped at a red light doing nothing wrong.  You got hit from behind by someone texting or drinking or otherwise doing something negligent.  You run up “X” number of dollars in hospital and doctor’s bills.  On a good day your own insurance company pays the bills.  But they subrogate the claim and get their money back from the negligent driver’s insurance company.

What is a PIP Offset?

Massachusetts auto insurance holds another surprise and that’s called a “PIP Offset”.  Suppose you and your attorney pursue an injury claim against the negligent driver.  You go to trial and receive a jury verdict.  They award damages.

Not so fast.  The court subtracts out what the at-fault insurance company paid your insurance company back in PIP payments. It’s called the ‘PIP offset’.  You walk away with the jury award minus the PIP offset.

Similarly, if that’s not bad enough, suppose you decide to settle the case.  The PIP offset applies to the settlement.  In other words, the insurance company for the at-fault driver will present a settlement offer to your attorney.  At the same time, that insurance company has evaluated how much your claim is worth, then subtracted out the PIP payout, and that’s the settlement offer.

PIP Deductibles

Want to save money on your Massachusetts auto insurance and get a deductible against the PIP?  Or waive PIP entirely.  Bad idea.  You might save a few bucks initially.  But guess what, the PIP offset math still applies to the value of your case.  Whether you settle or go to trial, the insurance companies still have the right to subtract out what they would have paid if you did have full PIP.

In other words the PIP offset, or subtraction from the full value of the injury case, applies whether or not PIP was paid.  So, in some evaluations I’ve seen, an average Massachusetts car owner might save $20.00 or $40.00 on their overall annual car insurance policy by getting PIP deductibles or waivers.  At the same time, if they become the unfortunate victim of a car accident, the loss can be in the thousands.

Final Word – Mass Auto Insurance

Well, that’s not how my car insurance works, you say?  If you live in the Commonwealth, unfortunately, this is the uniform scenario.  Unlike many other states where car insurance varies from company to company or person to person, they’re all the same in the Bay State.  The Massachusetts Insurance Division publishes the Standard Massachusetts Auto Insurance Policy.  And, although subject to relatively minor occasional amendments, the auto policy is a one-size-fits-all for all motorists in Massachusetts.

Taken together, the rule on deductibles and other twists and turns summarized above add up to some extremely unique Massachusetts law.

The author of this article, attorney Andrew D. Myers, practices personal injury law in Massachusetts and New Hampshire with offices in North Andover, MA and Derry, NH.

Sources:

Edmonds v. Phillips,  2012 Mass App. Ct. 174 (2012).

Massachusetts General Laws c. 90 § 34M.

Mejia v. American Casualty Co., 55 Mass App. Ct. 461 (2002).

Standard Massachusetts Auto Insurance Policy.  Click Here.

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