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SIU Spotlight

Evaluating “Reasonable and Necessary” PIP Charges Under Delaware Law

May 15, 2026

by Eric Scott Thompson

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:

  1. 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.
  2. Net amount of lost earnings. Lost earnings shall include net lost earnings of a self-employed person.
  3. 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.
  4. Extra expenses for personal services which would have been performed by the injured person had they not been injured.
  5. “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).  

Firm Highlights

Thought Leadership

Two Tracks, No Preclusion: Ohio Supreme Court Preserves Separate Damages Claims After Chapter 2506 Appeals

The Supreme Court of Ohio has clarified that an administrative appeal under Ohio Revised Code Chapter 2506 does not bar a separate action for damages and declaratory relief that could not have been pursued in the administrative appeal. The Ohio Supreme Court considered Sheetz, Inc. v. Centerville (2026-Ohio-3531) as a result of a certified question from the Southern District of Ohio. The question was whether Sheetz, the gas station/convenience store brand, was barred from seeking damages in a separate action since damages were not sought in their administrative appeal. Ultimately, the Ohio Supreme Court ruled that res judicata does not bar a separate action for damages after ruling on an administrative appeal because R.C. Chapter 2506 is limited to judicial review and cannot grant affirmative relief. The case arose after Centerville’s city council rejected a site plan proposed by Sheetz, Inc. that had received unanimous approval from the City’s planning commission. Sheetz filed an administrative appeal pursuant to R.C. 2506 in the Montgomery County Court of Common Pleas, and two months later filed a complaint for damages and declaratory relief under 42 USC § 1983 as a takings action with the city, city council, and other objectors as improper takings and a violation of due process, as well as interference with business and contractual relationship. The city and city council removed the § 1983 action for damages to federal court. Montgomery County Court of Common Pleas reversed the city council’s denial, and allowed the Sheetz project to move forward. Upon that ruling, the federal court issued a show-cause order questioning whether the § 1983 action was barred by the doctrine of res judicata via claim preclusion (which includes all theories of recovery).  Sheetz argued that Ohio courts of common pleas do not have authority to award damages or declaratory relief as party of the R.C. Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. Further, the Court held that Grava’s conclusion that a final judgment precludes additional litigation for different relief is inapplicable under this fact pattern because it was meant only to apply to those matters in which the plaintiff brings the exact same case twice, but for new relief. The Court found Grava was inapplicable because Sheetz could have requested damages or declaratory relief in the R.C. 2506 appeal. Therefore, Grava would be nothing more than dicta if it even did apply. Going further, the Ohio Supreme Court disavowed Sixth Circuit precedent which, in reliance on Grava and other district court decisions, permitted an owner to seeking relief under 42 U.S.C. § 1983 alongside an administrative appeal. See Moore v Hiram Twp., 988 F.3d 353 (6th Cir.2021). The Ohio Supreme Court found that the Sixth Circuit had disregarded a critical decision in Community Concerned Citizens, Inc. v. Union Twp. Bd. of Zoning Appeals, 1993-Ohio-115, which clearly held that a R.C. Ch. 2506 appeal cannot be combined with a complaint seeking other claims for relief. Id. at ¶ 11. To that end, the Ohio Supreme Court has determined that the decisions Moore relied on (outside of Grava) are no longer good law, and that Moore was wrongly decided. The decision draws a clear procedural boundary: Chapter 2506 provides judicial review of an administrative decision, not a forum for independent claims seeking affirmative relief. Although Grava may place claims arising from a single transaction within the potential scope of claim preclusion, those claims are not barred unless the complete claim-preclusion test is satisfied. Because Sheetz could not have pursued damages or declaratory relief in its Chapter 2506 appeal, the separate action was not precluded. The remaining question for practitioners looking to apply or defend against this exception is when does the statute of limitations begin to run on damages and declaratory relief claims related to an administrative decision on appeal? A takings action in federal court has a 2-year statute of limitations, or as a state claim, 4 years (like the other tortious claims raised therein). Correlating this case with others, an administrative appeal will not likely toll the statute of limitations on claims based on a final decision by a municipal authority. Therefore, practitioners should look for these cases to be brought simultaneously.

Thought Leadership

Pennsylvania Supreme Court to Review Whether Legal Malpractice Claims May Be Recast as Breach of Contract Claims

The Pennsylvania Supreme Court recently granted allowance of appeal to consider whether a plaintiff may pursue a breach of contract claim against an attorney based on allegations that the attorney failed to provide competent legal services. The issue is significant in professional liability litigation because it concerns whether a plaintiff may avoid the statute of limitations applicable to professional negligence claims by characterizing the alleged misconduct as a breach of contract. Antoine Poteat retained attorneys Gary Asteak and Nino V. Tinari to represent him in a criminal matter. After his conviction was subsequently overturned through a Post Conviction Relief Act proceeding, Poteat filed suit against his former attorneys alleging that they breached their retainer agreements by failing to provide competent legal services. The attorneys argued that the claims sounded in professional negligence, rather than breach of contract, and were therefore time-barred. The trial court dismissed Poteat’s complaint, but the Superior Court, sitting en banc, reversed. The Superior Court held that the gist-of-the-action doctrine did not bar Poteat’s breach of contract claim because the alleged failure to provide competent legal services could constitute a breach of the parties’ agreement. The Court further held that a legal-services agreement contains an implied duty requiring an attorney to provide competent legal services, even where the agreement does not contain an express provision requiring such services. The Pennsylvania Supreme Court granted review in July 2026 and will consider whether the Superior Court’s decision conflicts with Pennsylvania precedent distinguishing contract and tort claims, including Bruno v. Erie Insurance Co. The Supreme Court will also address whether a plaintiff may maintain a breach of contract claim based on an implied duty to provide competent legal services without identifying a specific contractual provision that was breached. The Supreme Court’s decision could have significant implications for professional liability litigation in Pennsylvania, particularly where plaintiffs seek to characterize claims arising from alleged professional negligence as contractual claims.

Thought Leadership

The Search-Incident-to-Arrest Doctrine Does Not License Strip Searches

In Beatty v. Gardner, No. 25-2860 (3d Cir. Sept. 16, 2026), Kyle Beatty sued police officers Clinton Gardner and Calvin Irvin under 42 U.S.C. § 1983 after they stopped, arrested, and searched him three times during a drug investigation in Williamsport, Pennsylvania. The officers initially smelled marijuana coming from the car in which Beatty was sitting and observed marijuana residue, giving them probable cause to arrest him. Beatty consented to the first pat-down, and the second search was conducted incident to his lawful arrest; neither search uncovered weapons or contraband. The officers then transported Beatty to the police station solely to strip-search him, but the strip search also revealed nothing. The District Court granted the officers summary judgment, concluding that the initial stop, arrest, and first two searches were reasonable and that qualified immunity protected the officers from liability for the strip search. The Third Circuit affirmed, but held that the strip search itself violated the Fourth Amendment. The court concluded that the search-incident-to-arrest doctrine does not automatically permit officers to strip-search an arrestee outside the jail or prison setting. Because strip searches are highly intrusive and the traditional justifications for searches incident to arrest (officer safety and preservation of evidence) did not justify the search of Beatty, the officers generally needed either the arrestee’s consent, exigent circumstances, or a warrant supported by probable cause to believe that a search beneath the clothing would reveal weapons, contraband, or evidence. Here, the officers had none of those justifications. Nevertheless, the court held that qualified immunity barred damages liability because, at the time of the search, the right against a warrantless strip search of an arrestee outside the institutional setting was not clearly established by Supreme Court or Third Circuit precedent. The court likewise upheld qualified immunity on Beatty’s First Amendment retaliation claim and affirmed summary judgment for the officers.