Massachusetts Insurance Coverage After an Accident: PIP, MedPay and Health Insurance

Car accidents can have a devastating effect on people's lives. And, if it were not for the existence of insurance, the cost of medical bills and any long-term care or rehabilitation for injuries suffered in an auto accident would leave almost all injured drivers and passengers financially ruined.

So it's good that insurance is available. However, understanding whether automobile insurance, health insurance or a combination of both covers your bills can be complicated.

In a July 2011 decision by the Supreme Judicial Court of Massachusetts, the Court clarified what compensation an injured plaintiff with health insurance and optional medical payment (MedPay) coverage was entitled to after a Massachusetts car accident.

What Is MedPay?

Medical payment (MedPay) is optional insurance coverage that pays for "reasonable expenses for necessary medical and funeral services incurred as a result of an accident." Those expenses cover the insured as well as anyone occupying his or her vehicle at the time of the car accident.

Insurance companies are required to offer at least $5,000 of MedPay, but people who buy insurance are not required to purchase it. MedPay covers health costs after personal injury protection (PIP) coverage has been exhausted. Thus, if an accident victim's medical bills are $10,000 and he or she has $8,000 in personal injury protection and $5,000 in MedPay, MedPay will cover only the final $2,000.

The Interplay of Health Insurance and MedPay

All Massachusetts automobile insurance policies include personal injury protection (PIP) benefits. After an accident, PIP must, by law, cover the first $2,000 in medical expenses, and will usually cover up to a total of $8,000 if the injured either does not have private health insurance coverage or has a private ERISA-covered health insurance plan, or has his or her claim denied for non-covered services by the health insurance company.

In the July 2011 Supreme Court decision, the court was asked to determine whether a car accident victim could seek medical payments coverage benefits when she had already recovered the benefits through her health insurance. The plaintiff suffered serious injuries that led to more than $100,000 in medical expenses. She had MedPay coverage of $25,000 and health insurance coverage through Blue Cross Blue Shield. Her car insurance company, Liberty Mutual, paid $2,000 in PIP benefits but refused to pay MedPay benefits.

The insurance policy involved was a standard policy that said, "we will not pay [MedPay] for any expenses that are payable, or would have been payable except for a deductible, under the PIP coverage." The policy also stated that the insurance company would pay $2,000 of medical expenses if the injured party has "a policy of health, sickness or disability insurance." However, that portion of the policy only addressed PIP insurance. The Court held that nothing in the policy linked MedPay and health coverage except that "PIP is secondary to health insurance and MedPay is available only where PIP benefits are exhausted or unavailable."

Liberty Mutual used a 2008 bulletin to support its argument. That bulletin read, "if the health insurance carrier denies coverage, the motor vehicle insurer can determine whether PIP or MedPay applies based upon the reason for the denial." However, the Court held that the bulletin does not advise insurers in cases where the insured receives a complete recovery through health insurance.

The Court therefore concluded that the plaintiff could bring a lawsuit to recover compensation under MedPay and remanded the case for further proceedings.

What the Ruling Means

What does this mean for someone injured in a car accident who has both health insurance and medical pay? He or she may be able to recover compensation for medical bills through both MedPay and health insurance. However, the interplay of different types of insurance coverage after an injury accident is extremely complicated. A knowledgeable Massachusetts personal injury attorney can help you sort out your different insurance coverages and claims following a car accident.