Personal Injury Protection (PIP) Litigation

A class action suit is brewing in Minnesota which has the potential for major implications in the way major case investigations are litigated and negotiated. In Taqueria El Primo LLC et al. v. Illinois Farmers Ins. Co. et al., Civil No. 19-3071, the United States District Court for the District of Minnesota has certified a class action against Illinois Farms Insurance. The plaintiffs allege that so called “no-bill” or billing moratorium agreements between Farmers and certain medical providers are in violation of the Minnesota Deceptive Trade Practices Act, the Minnesota Consumer Fraud Act and the terms of the policy of insurance. the plaintiffs further allege that the billing limitations impacted have the potential to affect the ability of insureds to use PIP benefits under their policies to seek treatment with health care providers of their choice.

Following SIU investigations revealing what Farmers believed to be fraudulent billing practices on the part of certain health care providers treating its insureds, Farmers entered into confidential settlement agreements with those health care providers in the state of Minnesota in which the providers agreed, in exchange for a settlement of Farmers’ claims, to not bill Farmers for treatment to its insureds. There were various such agreements with differing terms and conditions. The agreements, again with some exceptions, were also confidential per the terms and the settlements. Often, the confidentiality of the agreements was requested by the health care providers.

The plaintiffs filed suit, alleging those non-disclosed agreements constituted unfair and illegal practices on the part of Farmers, resulting in the class members not receiving the value guaranteed by the policies of insurance purchased as they would not be able to use their No-Fault Benefits with any health care provider covered by such agreements. The plaintiffs are seeking monetary damages and injunctive relief voiding any such existing agreements. 

Farmers contends that the agreements were at all times legally permissible and has denied any and all violations of Minnesota law. Farmers argued that there was no proof at all from any class representative that medical treatment was sought and denied as a result of any no-bill agreement and that such agreements touched so small a percentage of available providers in the State there was no likelihood of any actual damage to any class member. 

The court ultimately approved the class action for monetary and injunctive relief on the Minnesota Consumer Fraud Act (MCFA) claim only. Regarding the breach of contract claim, the court agreed there had been no actual breach applicable to the class since there would need to be individualized evidence of a claim denied based on the at-issue agreements for the members of the Class. The Uniform Deceptive Trade Practices Act claim was similarly dismissed as there could be no theory of damages applicable to the class as a whole. 

Regarding the MCFA claim, the court allowed the same to go forward. The MCFA prohibits the “act, use or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby…” Minn. Stat. § 325F.69, subd. 1. In short, the court found that the MCFA claim could proceed since it is not necessary to show any individual consumer’s reliance on the purported wrongful conduct. All that is required is a causal nexus between the conduct and the damages of the plaintiffs established through direct or circumstantial evidence. The court found the case raises several common questions applicable to all class members: 

• Whether the billing limitations violate the No-Fault Act;
• Whether the billing limitations violated the policies; 
• Whether Farmers would have been able to sell the policies with the limitations at all;
• Whether Farmers would have been able to sell the policies only if it disclosed the limitations’ and 
• Whether under Minnesota law it is inherently material and harmful to all purchasers as a matter of law, irrespective of individual consumer differences, if a company was only able to sell a product by fraudulently omitting a fact that if disclosed the company would have been barred from selling.

The court likewise found that resolution of those questions posed several common questions of law which predominated over any differences between the class members. Finally, the court found that, if the plaintiffs’ theories were correct, damages could be measured on a class-wide basis, thus meeting the final elements necessary for class certification. 

The court did not engage in any discussion of the merits of the claims, but the very fact that the classes were certified and the legality of the no-bill agreements will now be litigated is a substantial development for the insurance community and SIU specifically. The failure to disclose the no-bill agreements to current and prospective insureds seems to have been the sticking point with the court. However, as previously noted, that confidentiality was bargained for by, in most cases, the health providers and their attorneys.

No-bill agreements have been an important tool utilized by insures and SIU to effectively prevent further fraudulent billing by bad actor health care providers taking advantage of No-Fault benefits across the country. Such agreements arguably work to the benefit of insureds by preventing improper treatment and billing and keeping fraudulent actors at bay, resulting in reduced premiums. However, this current legal landscape puts those agreements directly at risk and should be followed closely. 

Matt is a shareholder in the firm’s Fraud/Special Investigation Practice Group where he focuses primarily on large loss fraud and medical provider fraud. His practice in the area of fraud investigation involves the assessment and evaluation of both medical provider fraud and fraudulent claims on the part of his clients’ insureds. 

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^{SIU Spotlight, Issue 1, Vol. 1, July 2024 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}