SIU Spotlight
Evaluating “Reasonable and Necessary” PIP Charges Under Delaware Law
May 15, 2026
When it comes to evaluating bills submitted to PIP carriers in Delaware, insureds often ask whether, pursuant to Delaware law, carriers are required to pay only those amounts billed/charged by medical practitioners that are “ordinary and customary.” Delaware law is unique when it comes to consideration of this issue.
Applicable Statute: 21 Del. C. § 2118(a)
Delaware does not have a fee schedule for first party claims submitted for payment under a policy providing personal injury protection benefits. Pursuant to 21 Del. C. § 2118(a)(2)a.:
No owner of a motor vehicle required to be registered in this State, other than a self-insurer pursuant to § 2904 of this title, shall operate or authorize any other person to operate such vehicle unless the owner has insurance on such motor vehicle providing the following minimum insurance coverage:
(2) a. Compensation to injured persons for reasonable and necessary expenses incurred within two years from the date of the accident for:
- Medical, hospital, dental, surgical, medicine, x-ray, ambulance, prosthetic services, professional nursing and funeral services. Compensation for funeral services, including all customary charges and the cost of a burial plot for one person, shall not exceed the sum of $5,000. Compensation may include expenses for any nonmedical remedial care and treatment rendered in accordance with a recognized religious method of healing.
- Net amount of lost earnings. Lost earnings shall include net lost earnings of a self-employed person.
- Where a qualified medical practitioner shall, within two years from the date of an accident, verify in writing that surgical or dental procedures will be necessary and are then medically ascertainable but impractical or impossible to perform during that two-year period, the cost of such dental or surgical procedures, including expenses for related medical treatment, and the net amount of lost earnings lost in connection with such dental or surgical procedures shall be payable. Such lost earnings shall be limited to the period of time that is reasonably necessary to recover from such surgical or dental procedures but not to exceed 90 days. The payment of these costs shall be either at the time they are ascertained or at the time they are actually incurred, at the insurer’s option.
- Extra expenses for personal services which would have been performed by the injured person had they not been injured.
- “Injured person” for the purposes of this section shall include the personal representative of an estate; provided, however, that if a death occurs, the “net amount of lost earnings” shall include only that sum attributable to the period prior to the death of the person so injured.
The Insurance Commissioner, in Auto Bulletin No. 10, Amended October 15, 1998 interpreted 21 Del. C. § 2118(a)(2), as requiring insurers to pay “reasonable and necessary expenses” for PIP coverage. See attached. The commissioner noted that “[s]ome insurers are refusing to pay more than a portion of the medical, hospital, or other professional medical expenses on behalf of their insureds based upon what those carriers believe are “unreasonable” fees billed” and opined “PIP carriers must pay all of an insured’s PIP costs (less any applicable deductible) if those costs are reasonable and pertain to services that are necessarily required for the care of the insured” unless the carrier and provider have previously agreed on a price for a specified service. The commissioner went on to state “[i]f a medical provider has charged [a]n ‘unreasonable fee’ for a necessary treatment, the unreasonableness of that fee does not render the treatment ‘unnecessary.’ That portion of the fee which is not in dispute shall be paid according to relevant law. A dispute over the remaining amount of such a fee should remain a dispute between the carrier and the provider. It is expected that carriers will make good faith efforts to resolve such disputes and not expose the insured party to harassment or legal action. However, if a claim is made or legal action is filed by the provider against the insured party for the amount of the fee in dispute, the carrier must provide a defense for its insured against that claim or legal action.”
Finally, the commissioner proclaimed, “[u]nder the Delaware Unfair Practice Act, Title 18 Delaware Code, Section 2304(16), it is an unfair trade practice to attempt with such frequency as to indicate a general business practice to settle a claim for less than the insurance policy requires. The Department will vigorously enforce the rights of insured to receive the benefits to which they are contractually entitled. It will be considered a violation of 18 Delaware Code, Section 2304 if a carrier asserts that the provisions of this bulletin prohibit balance billing.”
Case law
The issue of unilateral reduction in payment of bills submitted by providers under a PIP policy has been a subject of several court cases in Delaware. In Green v. Geico Gen. Ins. Co., 2018 WL 1956287 (Del. Super.), the plaintiffs sought to obtain class certification challenging Geico’s procedure for evaluating and paying for treatment as being in violation of 21 Del. Sec. 2118. GEICO apparently evaluated utilizing two rules: the Geographic Reduction Rule (GRR) which set an arbitrary cap at the “80th percentile” of other claims submitted to GEICO within a particular geographic region and the Passive Modality Rule (PMR) under which GEICO automatically denied payment for certain “passive modalities” when treatment occurs more than eight weeks from the date of the automobile accident. The plaintiffs argued under the GRR, 20% of bills submitted to GEICO for reimbursement were automatically deemed “unreasonable,” without inquiry into the facts giving rise to the claim or any factors that could impact pricing and the GRR was, in effect, a secret cap on what GEICO will pay. The court denied class certification but also denied GEICO’s motion to dismiss, finding insufficient discovery had occurred for it to render a dispositive ruling.
A similar result had been found by the United States District Court for the District of Delaware in Johnson v. GEICO Casualty Co. 310 F.R.D. 246 (D. Del. 2015), aff'd, 672 Fed. Appx. 150 (3d Cir. 2016). In Johnson, the USDC initially certified a class, however, later in litigation the court reviewed and found that the plaintiffs could not maintain the class based on a damage model which required significant individual inquiries. The Delaware District Court decertified the class because “even assuming that Geico's policies resulted in the classes' claims being systematically denied and reduced, ... individualized inquiries would be required to determine whether each class member's individual claim was actually medically necessary and their expenses reasonable.” Id. at 251. The primary fight in the regarded decertification of the class, which the court agreed with and was affirmed by the 3rd Circuit.
In Wilmington, the Pain & Rehabilitation Center instituted litigation against USAA Gen. Indem. Ins. seeking class certification and declaratory judgment that USAA’s utilization of a computerized bill review system called “Reasonable Fee Methodology,” to determine the reasonableness of medical expenses was in violation of 21 Del. C. § 2118(a). Wilmington Pain & Rehab. Ctr. V. USAA Gen. Indem. Ins. Co., 2017 WL 8788707 (Del. Super.). Again, the sole issues decided by the court was class certification, which it again declined to certify. The court did not address the issue of declaratory judgment.
In 2019, First State Orthopedics sought class certification arguing Liberty Mutual Insurance Company’s policy of paying invoices more than 30 days after they were submitted for payment was in violation of 19 Del. C. § 2362, which mandates “[a]ll medical expenses shall be paid within 30 days after bills and documentation for said expenses are received by the employer or its insurance carrier for payment, unless the carrier or self-insured employer notifies claimant or the claimant's attorney in writing that said expenses are contested or that further verification is required.” First State Orthopedics v. Liberty Mutual Ins. Co., 2020 WL 764149 (Del. Super.). The Court again denied class certification but allowed the merits to proceed.
Conclusion
In sum, this issue has yet to be presented in full to the court and a trial regarding the same has not yet been held before a fact finder in Delaware. Additionally, the Delaware Insurance Commissioner has not instituted litigation seeking a definitive determination regarding whether it is an “unfair trade practice to attempt with such frequency as to indicate a general business practice to settle a claim for less than the insurance policy requires” as is threatened in Auto Bulletin No. 10. Nevertheless, the language of § 2118(a) and the Insurance Commissioners interpretation in Auto Bulletin No. 10 likely support a finding that a systemic practice of doing so violates § 2118(a). The bulletin was designed (and has been amended several times) in an effort to afford the insured the protection of having his/her bills for necessary treatment paid while protecting the carrier from a physician or practice attempting to take advantage of Delaware’s “dollar-for-dollar” PIP payment laws. However, it is delineated within the bulletin that same is not to be construed as authority for the carrier to engage in a repeated practice of not paying the total amount of bills submitted for payment. Therefore, it is expected that a systematic practice of not paying the total amount of bills submitted for payment without analysis on an individual basis as to the relationship of the treatment and corresponding bills to the condition being treated supported by an independent medical examination would lead to litigation that the practice violates the requirements of 21 Del. C. § 2118(a).
