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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

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. 

Thought Leadership

U.S. Supreme Court Decides Key Issue Regarding Interstate Freight Broker Liability

Freight brokers are intermediaries.  They connect shippers of goods with trucking companies that transport those goods.  Freight brokers match a load of freight with a trucking company and oversee the logistics of the transportation. For a number of years there has been a division among the Federal Circuits regarding the potential liability of freight brokers when the trucking companies that they retain for interstate loads are involved in accidents.  At the center of this division was the Federal Aviation Administration Authorization Act of 1994 (FAAAA).  Some Federal Circuit Courts have held that state law negligent hiring claims against freight brokers were preempted by the FAAAA .  Other Federal Circuits Courts have held that even if preemption applied, the “safety exception” in the FAAAA saved state law negligent hiring claims from federal preemption.  On May 14, 2026, the U.S. Supreme Court addressed the conflict in Montgomery v. Caribe Transport II, LLC, et al, No24-1238. In that case freight broker C.H. Robinson selected Caribe Transport to haul an interstate load. The commercial truck driver employed by Caribe Transport allegedly caused an accident and the plaintiff, Montgomery, was seriously injured. Montgomery brought an action against the driver, Caribe Transport and C.H. Robinson. The allegation against C.H. Robinson was that it negligently retained Caribe Transport when it knew, or should have known, that it was an unsafe company. The Seventh Circuit Court of Appeals held that Montgomery’s claims against C.H. Robinson were preempted by the FAAAA. The plaintiff appealed to the U.S. Supreme Court.  The U.S. Supreme Court’s decision focused primarily on the safety exception in the FAAAA.  That provision provides that the FAAAA preemption “…shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” C.H. Robinson argued, as freight brokers historically have, that their function was not “with respect to motor vehicles” because they do not own trucks or employ drivers. They are merely intermediaries, connecting entities who need freight moved with entities who can do that job. Therefore, C.H. Robinson argued that preemption applied, not the safety exception. The U.S. Supreme Court did not accept that argument. The Court focused on the meaning of the phrase “with respect to” in the safety exception. The Court held that it means “referring to”, “concerning” or “regarding”. Therefore, writing for a unanimous Court, Justice Barrett concluded that “[r]equiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore “concerns” motor vehicles—most obviously, the trucks that will transport the goods. So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception, which saves it from preemption.” Justice Kavanaugh, in his concurring opinion, noted the effect this ruling may have on freight brokers and their insurers throughout the country: Importantly, the Court's decision today should not be read to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents. As even plaintiff's counsel stressed, brokers should be able to successfully defend against state tort suits if the brokers have acted reasonably and arranged transportation with reputable trucking companies. Tr. of Oral Arg. 27-29. In plaintiff's counsel's words, the brokers "just have to hire carriers that actually have a reasonable policy," and "the broker is not going to have a problem if it's asking the hard questions of the carrier." Id., at 42, 45. In addition, the proximate-cause requirement in typical state tort law should help protect brokers from excessive liability. Id., at 25. That said, the brokers rightly caution against naivete. In the real world, as the brokers forcefully respond, state tort law can be unpredictable, and the costs to brokers of litigation and insurance may be significant even when brokers prevail in lawsuits. Moreover, the costs of litigation and insurance, as well as the costs of brokers' conducting more substantial inquiries into trucking companies, will cascade through the economy and be paid in part by American consumers in the form of higher prices. The concerns expressed by the brokers are legitimate and weighty. The key point here is that freight brokers can no longer claim they are protected from negligent retention claims by the FAAAA (in cases involving interstate transportation). The challenge will be to determine what is considered ”reasonable efforts” used by brokers when retaining transportation companies. 

Thought Leadership

PA Middle District Dismisses Claims Against School District and its Superintendent, Principal, Special Education Director, and Classroom Teacher

A five-year-old special education student was enrolled in the Wyoming Valley West School District and attended the State Street Elementary School during the 2024-2025 school year. The student refused to clean up classroom toys at dismissal. When his teacher allegedly grabbed him by the wrist to walk him back to his seat, the student dropped to the floor and began crying. The teacher then allegedly grabbed the student by the ankle and dragged him across the floor. Following an investigation, criminal charges were not advanced by the county DA, and the school permitted the teacher to return to the classroom. The student’s parents sued, lodging thirteen legal counts under both state and federal law, which sought monetary damages from the teacher, the school district, the superintendent, the principal, and the director of special education. The plaintiff’s 42 USC 1983 claims were dismissed as to the school district for failure to allege a policy or custom violation, and the failure to alleged deliberate indifference in the failure-to-train context. As to the superintendent, building principal, and special education director, the Section 1983 claims were also dismissed for failure to allege personal involvement on the part of the individuals. Regarding an equal protection claim asserted against all defendants, the motion to dismiss was also granted for a failure to advance a plausible equal protection claim, holding that “plaintiffs' single-act allegations do not include a factual basis to even infer that the act was motivated by discriminatory animus rather than some other non-discriminatory impulse.” The court further dismissed the plaintiff’s negligence-based claims including negligence against the teacher and district administrators, NIED, and vicarious liability under the Political Subdivision Tort Claims Act (PSTCA). The federal claims under the IDEA, Section 504, and the ADA were also dismissed in various respects. The IDEA claim was dismissed against all defendants with prejudice for failure to exhaust administrative remedies. The Section 504 claims against the individual defendants were also dismissed with prejudice, as districts, not individuals, are the recipients of federal funds under Section 504. However, the Section 504 and ADA claims were dismissed without prejudice as to defendant Wyoming Valley West, and the plaintiff was permitted leave to amend.