Shelter Mutual Conditioning of Auto Insurance Benefits Class Action

On what bases can insurance companies delay payment of claims? In this class action, the complaint alleges that Shelter Mutual Insurance Company refused to pay personal injury protection (PIP) or other medical benefits to insureds until the insureds provided information showing whether they are entitled to Medicare or Medicaid or not.

The class for this action is residents of Arkansas who, between November 13, 2014 through the date this case is resolved, (a) bought insurance from Shelter Mutual, (b) made a claim for medical payment or PIP benefits, (c) were required to provide proof of Medicaid or Medicare entitlement, and (d) had payment of their benefits delayed beyond the time limit in Arkansas law.

Shelter Mutual describes itself as a multi-line national property and casualty insurance company that operates across the US. Plaintiff Sayed Ali was insured with Shelter Mutual under an automobile insurance policy that included medical payment or PIP coverage.

Ali was injured in an auto accident on January 12, 2019. His treatements cost more than $5,000. In September, he sent Shelter Mutual a demand for payment of his Med Pay benefits. However, Shelter Mutual did not pay. The complaint says that Shelter Mutual “has refused to issue payment until [Ali] provided information related to his entitlement to Medicare and Medicaid in violation of their policy and Arkansas law.”

According to the complaint, “Shelter is required to pay all reasonable and necessary expenses for medical, hospital, nursing, dental, surgical, and ambulance incurred within 24 months of a motor vehicle accident in which the insured was injured.” The complaint alleges that Shelter Mutual’s actions violate the purpose of the law: “The legislative intent behind the enactment of this no-fault motor vehicle legislation was to make an insured whole on relatively minor automobile injury damage claims without regard to fault or liability and without his being required to engage in expensive and extended litigation.”

What does the law say? It doesn’t seem to involve itself with Medicare or Medicaid benefits, at least as far as the quotations in the complaint show. The complaint quotes the law as saying, “Benefits for any period are overdue if not paid within thirty (30) days after the insurer received reasonable proof of the amount of all benefits accruing during that period.” Also, “[i]f reasonable proof is not supplied as to all benefits accrued, the portion supported by reasonable proof is overdue if not paid within thirty (30) days after the proof is received by the insurer.”

The law goes on to say that if benefits are not paid when they are due, the insured may bring suit to obtain them; and if insureds who must bring suit to recover their payments, “the insurer shall, in addition to the benefits received, be required to pay the reasonable attorney’s fees incurred by the other party, plus twelve percent (12%) penalty, plus interest thereon from the date these sums became overdue.”

The complaint claims breach of contract and asks for a declaratory judgment that Shelter’s refusal to pay violates Arkansas law, an order prohibiting Shelter from conditioning payment on insureds providing proof of entitlement (or lack thereof) to Medicare or Medicaid, and monetary awards.

Article Type: Lawsuit
Topic: Insurance
Tags: Auto Insurance, Insurance, Nonpayment of Benefits