The dismissal of a class action against insurance giant Geico has been affirmed by the U.S. Court of Appeals. Litigants had filed the action to seek compensation from Geico under an auto insurance policy for medical care allegedly related to injuries suffered in a motor vehicle accident.
The plaintiffs in the lawsuit, initially filed in 2006, had alleged that the automated claims handling system used by Geico to process claims related to car insurance policies delayed or denied full payment of benefits. The Court of Appeals, though, concluded that there was insufficient evidence to show that the injuries the plaintiff sought treatment for were the result of the motor vehicle accident.
The principal plaintiff, Sharon Anderson, suffered injuries in a car accident in 2004 and subsequently complained of neck and back pain. She received some treatment initially, but Geico reduced the reimbursement, based on an internal policy known as the “geographic reduction rule.” This rule limits reasonable charges for any medical treatment to the 80th percentile of charges assessed by similar providers in the same region. Using this rule, Geico knocked $31 of the reimbursement.
About a year later, Anderson returned to her physician, alleging that the pain in her neck and back had worsened. Her doctor prescribed 12 physical therapy sessions. When she submitted the bill for reimbursement to Geico, the company allowed only $1,000 in reimbursements, applying what it call the “passive modality” rule. This rule gives greater scrutiny to certain types of treatment—physical therapy, ultrasound and rehab included—that are submitted for reimbursement more than eight weeks after an accident.
During discovery, though, Geico learned that Anderson had experienced lower back pain and neck discomfort prior to the accident. In fact, her own doctor testified that the pain Anderson experienced could be the result of the pre-existing condition.
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