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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

Ohio Supreme Court Holds That a Binding Appraisal Award May Not Be Set Aside Absent Specific Evidence of Manifest Mistake or Fraud

On July 23, 2026, the Ohio Supreme Court issued a rare opinion on the binding effect of an appraisal award in a property insurance policy.  The Court in One Church held: A binding appraisal award will not be set aside unless an error is so palpably wrong that it undermines the intent of the agreement, such as corruption or gross mistake, not a mere error of judgment—To plead a claim of mistake with particularity as required by Civ.R. 9(B), facts alleged in a complaint must constitute the elements of mistake—Allegation that additional, hidden damage was discovered after appraisal award failed to state a claim of mistake that could justify setting aside binding appraisal.  The case arose out of a claim brought by One Church against its insurer, Brotherhood Mutual Insurance Company for roof damage from a storm. Pursuant to the terms of the insurance policy, the parties agreed to submit the matter to appraisal. The two appraisers inspected the building, and both appraisers agreed that the damages were $313,271.98. The insurer paid the agreed appraised amount.  Thereafter, the insured submitted a claim for an additional $206,663.09 in damages. The insured argued that these additional damages were not discovered until after the repairs began, and that they should be permitted to submit an additional claim, even though there had already been a binding appraisal of damages. The insurer refused to pay the additional damages, and the insured sued for breach of contract and bad faith.  In the trial court, the insurer moved to dismiss for failure to state a claim, arguing that the binding appraisal award barred any further claims. The insured took the position that additional hidden damages could not be discovered until after the repairs began, and therefore there was a mutual mistake. The trial court dismissed the case on the insurer’s motion, because there was no “evidence of fraud, misfeasance, or mistake”. The Court of Appeals agreed that appraisal awards are generally binding, but noted that an appraisal award can be set aside for fraud or manifest mistake. The Court of Appeals reversed and remanded the case to the trial court, finding that the insured had pled mistake with sufficient particularity. The insurer appealed to the Ohio Supreme Court. On appeal, the Ohio Supreme Court reversed the Court of Appeals, and reinstated the trial court decision dismissing the case for failure to state a claim upon which relief can be granted. The Supreme Court found that since the insured had already demanded appraisal, and the appraisal award was binding, “something more than error of judgement, such as corruption in the arbitrator, or gross mistake” must be pled with particularity, and proven for the insured to override the appraisal award. Since the complaint did not allege fraud or manifest mistake with sufficient particularity, something more than a mere error of judgment, the complaint was insufficient to state a claim.  The complaint in this case did not challenge the appraisal award. It pled that additional damages were discovered that were not apparent when the appraisal was done. It did not specify “who discovered the damages, how they were discovered, where they were found, why they were previously hidden, or why they rise to the level of a manifest mistake that the “appraiser would have corrected...had it been called to his attention”. Id at ¶22 citing Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970). Cases deciding the effect of appraisal awards are unusual. The Ohio Supreme Court’s decision in One Church relies primarily on 19th century case law for its conclusion. This emphasizes the fact that there is minimal case law deciding the effect of binding appraisal clauses in property insurance policies, and makes this case all the more significant. A lengthy dissent was written by Justice Fisher, who would have affirmed the Court of Appeals decision reversing and remanding the case for a decision on the merits. Of course, the decision works both ways, and an insurer dissatisfied with a binding appraisal award will likewise be without further recourse absent evidence of corruption, fraud, misfeasance, or manifest mistake, which must be pled with particularity. To constitute manifest mistake, “the mistake must be of such character that the arbitrator or appraiser would have corrected it had it been called to his attention.”  Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970).  The majority opinion does not specifically identify what would have been sufficient to plead mistake with particularity, or if the insured could have amended the complaint to overcome the deficiencies. The dissent argues that this was not really a case alleging mistake, but rather a question of contract interpretation. The insured did not challenge the appraisal, but argued that the hidden damage was not part of the appraisal, and the appraisal only covered the known damages.  However, this argument did not carry the day with the majority. 

Thought Leadership

New Jersey Appellate Division Affirms Exclusion of Legal Malpractice Expert as Impermissible Net Opinion

Jack Slimm and Jeremy Zacharias obtained a favorable decision on behalf of their client in a case centering on the admissibility of expert testimony in legal malpractice actions. In Martin v. Loury, the New Jersey Appellate Division affirmed the exclusion of a plaintiff's legal malpractice expert, holding that the expert's opinions on causation and damages were too speculative to support the malpractice claim. The legal malpractice action arose from an underlying employment dispute involving claims for damages stemming from the breach of an employment agreement. The plaintiff alleged that defense counsel committed malpractice during a second trial by failing to recall the plaintiff as a rebuttal witness after the employer's CEO testified. According to the plaintiff's expert, additional rebuttal testimony would have bolstered the plaintiff's damages claims and led to a more favorable result. Both the trial court and the Appellate Division rejected that theory. The courts found that the expert could not explain how the proposed rebuttal testimony would have altered the outcome of the underlying case or resulted in any additional recoverable damages. Notably, the trial judge in the underlying employment matter had already rejected the CEO's testimony as not credible and had accepted the damages analysis advanced by the plaintiff. The court had also determined that the amount of damages was not genuinely disputed. As a result, the expert's opinion that additional rebuttal testimony would have produced a better outcome was unsupported by the record and based on speculation rather than evidence. The Appellate Division agreed that neither the plaintiff nor the expert could identify any actual damages attributable to the alleged malpractice or demonstrate the required element of proximate causation. The court further upheld the trial court's application of New Jersey's net opinion doctrine, finding that the expert failed to provide the necessary "why and wherefore" supporting his conclusion that the attorney's conduct caused a compensable loss. Because the opinions rested on unquantified possibilities rather than demonstrable facts, they were inadmissible. Key Takeaway for Legal Malpractice Defendants For attorneys and firms defending legal malpractice claims, Martin v. Loury underscores the importance of closely scrutinizing an opponent's expert report on the critical elements of proximate causation and damages. The decision demonstrates that a malpractice claim cannot survive where an expert merely speculates that different litigation tactics might have produced a better result. Instead, the plaintiff must present admissible expert testimony grounded in the record that explains how the alleged attorney error probably changed the outcome of the underlying matter and resulted in measurable damages.

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict.