In Michigan’s Personal Injury Protection (PIP) system, insurers have increasingly adopted tactics to delay or avoid rightful reimbursement for essential services. One of these tactics includes requiring an injured party’s health insurance to first issue a denial before the PIP insurer will consider payment. However, this demand often disregards the reality that certain services—such as T2033 Residential Rehabilitation and S5125 Attendant Care—are not covered by health insurance, whether it be Medicare, Medicaid, or private insurers. This maneuver by PIP insurers not only ignores established reimbursement structures but also creates a strong basis for litigation when providers are forced to engage in an exercise of futility.
Legal and Regulatory Framework: The Michigan No-Fault Act (MCL 500.3107) outlines that PIP benefits must cover all reasonable and necessary medical expenses arising from an auto accident. This includes services that assist the injured party with activities of daily living and rehabilitative needs, such as residential rehabilitation (T2033) and attendant care (S5125). The statute does not condition payment on whether another insurer has first denied the claim, particularly when the services in question fall outside the scope of coverage for health insurance policies.
Additionally, Michigan courts have consistently held that PIP insurers must pay for services that are reasonable, necessary, and related to the accident. In Shanafelt v. Allstate Insurance Co., 217 Mich App 625 (1996), the Michigan Court of Appeals reaffirmed that insurers cannot arbitrarily deny claims without evidence that the services are unnecessary or unrelated to the accident. Insisting on a denial from an insurer that does not cover the service in question is an artificial barrier meant to delay or deny payment.
Clinical and Practical Considerations: Residential rehabilitation (T2033) and attendant care (S5125) are critical for individuals with catastrophic injuries who require ongoing support beyond conventional medical treatment. Residential rehabilitation services provide structured care that supports cognitive and physical recovery in a controlled environment, whereas attendant care ensures individuals receive the daily personal assistance they need to maintain health and safety. Medicare, Medicaid, and private health insurers do not reimburse these services in the context of auto-related injuries because they are classified as long-term or custodial care rather than acute medical treatment.
Expecting a provider to seek a denial for services that health insurance policies do not cover forces the provider into an absurd process that ultimately serves no purpose other than delaying rightful payment. Such practices undermine the intent of Michigan’s no-fault system, which was designed to ensure timely and comprehensive care for accident victims without unnecessary administrative roadblocks.
Litigation Implications: Providers who encounter these tactics have a strong basis for legal challenge. Insurers who refuse to pay based on an unfounded requirement for a health insurance denial violate the spirit and intent of Michigan’s no-fault laws. Legal precedent supports the argument that such denials are arbitrary and capricious, as they introduce a condition that does not exist within the statutory framework.
A well-documented challenge to these denial requests should include:
- Citations to Michigan’s No-Fault Act (MCL 500.3107), which establishes that PIP insurers are the primary payers for accident-related care.
- Case law such as Shanafelt v. Allstate, which affirms that insurers cannot impose artificial obstacles to payment.
- Expert testimony from medical professionals confirming that residential rehabilitation and attendant care are essential and non-reimbursable under traditional health insurance plans.
By presenting these elements in legal proceedings, providers stand a strong chance of prevailing against baseless denials and holding insurers accountable for their statutory obligations.
Article Summary and Conclusion:
The Michigan PIP system was designed to provide immediate and necessary medical benefits to injured parties without unnecessary delays. When insurers demand that a provider obtain a denial from health insurers for services that are categorically non-reimbursable, they are engaging in bad faith tactics designed to avoid payment. Legal precedent, clinical necessity, and the no-fault statute itself support providers in challenging these delays, ensuring that injured individuals receive the care they need without undue interference. Winning litigation on this basis reaffirms the principle that insurers cannot manufacture obstacles that ignore reality and burden providers with unwarranted administrative hurdles.
Disclaimer:
The contents of this article are intended for informational purposes only and discuss issues related to service reimbursement and service-related matters that could be relevant in legal proceedings. However, this article does not constitute legal advice, nor does it provide a legal strategy for any specific case. Readers should consult with a qualified attorney for legal guidance regarding their particular circumstances. Electronic Medical Services assumes no responsibility for any actions taken based on the information presented herein.
Another Blog Post by Direct Care Training & Resource Center, Inc. Photos used are designed to complement the written content. They do not imply a relationship with or endorsement by any individual nor entity and may belong to their respective copyright holders.
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