Example of Court Annexed Arbitration Opinion: Five

     I heard the above captioned case as duly appointed court annexed arbitrator pursuant to ORS chapter 36.   Plaintiff appeared personally, with her attorney, and defendant Insurance Company appeared by its attorney.

    I treated the hearing as commenced.  Plaintiff was ill and her attorney requested a continuance.  Defendant’s attorney did not object.  I granted a continuance.  After calendar consultation the hearing was reset.  On that date, Plaintiff appeared personally with her attorney and defendant appeared by its attorney.

    Based on the allegations of Plaintiff’s complaint which were admitted in defendant’s answer, it is undisputed that defendant was a corporation authorized to do business in Oregon, presumably an admitted insurer, and that prior to the date of the accident, it issued an insurance policy to the Driver that included personal injury protection coverage as required by ORS 742.520 et seq. [It is clear to me that PIP coverage must be co-extensive with the minimum requirements of the statutes, but that the policy can provide more.  At the hearing, no one argued that the policy provided Plaintiff more rights than the statute.  For that reason, my analysis is based on the relevant statute.]  It is further undisputed that the policy provided insurance coverage for the occupants of the insured vehicle (as was required by statute), and that Plaintiff was a passenger in the vehicle driven by Driver that was involved in a collision at an intersection. [It does not concern me that Plaintiff and Driver were returning from a methadone clinic.  It does not concern me that Plaintiff may have been referred to the chiropractor by Plaintiff’s Attorney’s office.  It does not concern me that the collision was probably The Driver’s fault.]

    Plaintiff claims to have incurred certain medical expenses as a consequence of the collision, which should have been paid under the PIP coverage, alleged in the complaint to total $4,093.55.  Plaintiff also claimed $1,800 for the value of care provided by a relative, but that claim was withdrawn at the hearing. 

    [The claim was withdrawn on the basis that Plaintiff’s Attorney believed it was not supported by law, and I concur in and respect Plaintiff’s Attorney’s view of an attorney’s ethical obligations. 

    ORS 742.524(1)( c) as presently written would preclude recovery of those services as a matter of law, because they were provided by a person related to Plaintiff.  The prohibition in ORS 742.524(1)( c) was added by Oregon Laws 2005, c. 341 § 1 (SB 151), and by section 3 of the statute, the amendments were specifically applicable to motor vehicle insurance policies issued or renewed on or after the effective date of the Act.  The effective date of the Act was clearly after the issuance of the insurance policy in question; therefore, the current version of ORS 742.524(1)( c) does not apply.

    However, I would still have trouble, as a matter of law, with the idea that a relative can recover compensation for “expenses reasonably incurred by the injured person for essential services in lieu of services the person would have performed without income during the period of the person’s disability”.  More importantly, I think my job is to make findings of fact that I believe in, but also similar to the verdict a jury would return. 

    This claim is a dead loser before a jury.  It is a claim is for a number of hours of essentially personal care over the period of ten days between the collision and the first visit with the chiropractor, by a relative.  Assume for the moment that I could find by a preponderance of the evidence that some services were rendered.  There was no prior medical or health care professional authorization for these services.  They were not provided by a person having any professional qualification.  The person providing the care did not lose time from other work.  The person is closely related to Plaintiff.

    I have no qualifications to provide medical care, but I am a caring person within the bounds of my family.  If my brother is in an auto accident and I visit him in the hospital or at home, and assist with his care, even for a week, I do not believe that the law imposes any obligation on me to provide that care or for him to pay me for it, whether it is essential or palliative.  People complain about the burden of intra-familial obligations all the time, but they don’t stop performing them.  If my brother agrees to pay me for that care, that is an act of  generosity on his part.  If I compel payment from him, that is a somewhat mercenary act on my part.

    The situation is no different because the parties are in the plaintiff’s family, rather than mine.  I don’t believe that there is any legal support for the proposition that intra-familial services rendered without medical order by an unlicensed provider are compensable.  If they are not compensable as between the parties, they cannot be an obligation under the policy.  Not all injuries, costs or damage are compensable under liability insurance, whether first party or third party.]

    No witnesses actually testified.  There was a stipulation as to the testimony of one employee of the insurer, which I will address below.

    All of the parties’ exhibits were offered and admitted. [Plaintiff’s Attorney’s office is admonished to number its exhibits, provide an exhibit list, and serve copies of the exhibits on the opponent in the next arbitration it has before me, if any.  Both parties are admonished to comply with the provisions of the rules relating to pre-hearing statements of proof if evidence or proof is expected to be contested.] One of the exhibits was a report of the chiropractor.  Under UTCR 13.170(2)(f), a written statement of a witness is admissible if made in the form of a declaration or affidavit.  No objection was made that the report did not meet this standard, i.e., unsworn.  The  letter states that his care was ‘reasonable and necessary.’  There was no evidence contradicting the doctor’s ‘testimony.’  On the basis of that evidence, I find that the care provided by the doctor was reasonable and necessary, the charges were ‘usual and customary’ which I infer to also mean reasonable, and were for care directly related to the injuries sustained in the collision.

    From the other admitted exhibits it appears that Plaintiff told the EMT that she was falling asleep when the collision occurred.  She complained to the EMT of chest, neck and back pain.  At admission to the hospital she had slurred words and was lethargic.  She said she was sleepy and had taken her methadone.  At arrival “History limited by poor comprehension and cooperation and a language barrier.”  She complained of neck and back pain.

    I observe that the Hospital records appear to show that the Hospital services were rendered in a substantial effort to determine whether Plaintiff suffered a head injury and they were unable to make such a finding, even in their communications with Plaintiff, who was at the time having difficulty communicating.

    I observe that when Plaintiff went to the chiropractor, she reported that she had been unconscious for six hours after the collision, which is inconsistent with the reports of the hospital, and I credit the hospital reports over Plaintiff’s statements to the chiropractor.

    The medical expenses at the hospital were $4,944.70 on the day of admission, mainly because of almost $4,000 of CT scans.  She was released that day.

    The insurer payed the Hospital $2,878.64, but did not pay $2,066.06.  The Hospital has filed a Hospital Lien.

    A week later, Plaintiff began treatment with the chiropractor.  $279.93 of the chiropractor’s bills were not paid by the insurer. $35.60 of bills for reading x-rays were not paid by the insurer.

    All the bills were submitted to Defendant, see the PIP ledger, lines 1, 2, 3, 5 and 6 and 11.

    It was stipulated, as far as I am concerned, for the purposes of the arbitration only, that:

‒    the insurer’s employee handled this claim for the insurer;
‒    she would testify that:

    ‒    when bills come in, they are reviewed by a third party vendor and then paid consistent with a certain percentage of ‘usual and customary’ fee for that provider’s community,
    ‒    exhibit 110 is a document prepared by or at the direction of the defendant and says ‘change, reduction, allowance,’ for each claim,
    ‒    a check is processed consistent with this documents and the check is sent out to the provider, and
    ‒    the document itself is sent out to the provider.

    The various pages of Exhibit 110 show that the payments were made within sixty days of the dates of service.  Each page of Exhibit 110 includes a coding of “01" where there was a reduction in payment and states below: “Reduction explanations: C 01 The charge for the procedure exceeds the amount indicated in the fee schedule. * * * Direct inquiries regarding this review to: [reviewer] [address, telephone, fax and e-mail address provided].” I take it from common experience and the Ivanov case that everyone in the industry knows what the ‘fee schedules’ are.

    While there was no formal stipulation, it was agreed that Plaintiff would not have seen any of Exhibit 110 or anything similar.

    The maximum damages that I can award in this case are, with respect to the Hospital, $2,066.06, with regard to the chiropractor, $279.93, and with respect to . . . , $35.60.  I can only do this if there is proof that the services provided and the amounts charged were “reasonable and necessary” and causally related to the collision. 

    I find that the services rendered by all the providers were causally related to the collision, based on chronology alone, and on the fact that defendant paid part of each claim.  No services were rejected in toto.

    The critical question is: Was evidence presented from which I may find that the Hospital’s and the chiropractor’s services and their cost were reasonable and necessary?  As mentioned below, I so find with respect to the chiropractor.  While I could easily be convinced that the services were reasonable and necessary and their cost was reasonable, that is not enough.  Nor is it enough that I think Plaintiff could get the evidence that would convince to a preponderance, and that defendant would have a hard time rebutting it.  My beliefs and assumptions are not enough.  I need to be presented with proof, or there must be a reason that proof is obviated, i.e., by a presumption.

    Two arguments about presumptions were made: one under the UTCR, and the other under ORS 742.524.  An argument about an implied presumption under ORS 742.528 was made. Arguments about presumptions are also considered, and rejected, in the Ivanov case.


    The argument was made that the UTCR provide that medical bills admitted under UTCR 13.170(2)(f) are presumptively reasonable and necessary.  I could not find that in those rules, or ORS chapter 36 or the Supplemental Local Rules.  The UTCR eliminate requirements about foundations, but not proof.

The PIP statutes

    ORS 742.524(1)(a) provides, in part:

 Contents of personal injury protection benefits; deductibles. (1) Personal injury protection benefits as required by ORS 742.520 shall consist of the following payments for the injury or death of each person:

    (a) All reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and prosthetic services incurred within one year after the date of the person's injury, but not more than $15,000 in the aggregate for all such expenses of the person. Expenses of medical, hospital, dental, surgical, ambulance and prosthetic services shall be presumed to be reasonable and necessary unless the provider is given notice of denial of the charges not more than 60 calendar days after the insurer receives from the provider notice of the claim for the services. At any time during the first 50 calendar days after the insurer receives notice of claim, the provider shall, within 10 business days, answer in writing questions from the insurer regarding the claim. For purposes of determining when the 60-day period provided by this paragraph has elapsed, counting of days shall be suspended if the provider does not supply written answers to the insurer within 10 days and shall not resume until the answers are supplied.

In this case, there is evidence that Dr. . . . received ‘notice of denial of the charges’ as to  $276.54, and there is evidence that the Hospital received notice of such denial for $2,066.06.  As a consequence, there is no presumption of ‘reasonable and necessary.’

    I specifically find that the language on Exhibit 110 satisfies the requirement of notice to a provider.

    The argument is made that ORS 742.528 was violated and that should also result in a presumption of reasonable and necessary.  That statute provides [emphasis supplied]:

Notice of denial of payment of benefits. An insurer who denies payment of personal injury protection benefits to or on behalf of an insured shall:

    (1) Provide written notice of the denial, within 60 calendar days of receiving a claim from the provider, to the insured, stating the reason for the denial and informing the insured of the method for contesting the denial; and

    (2) Provide a copy of the notice of the denial, within 60 calendar days of receiving a claim from the provider, to a provider of services under ORS 742.524 (1)(a).

    In the PIP statutes, the word ‘insured’ is not defined.  In ordinary usage, it means the policy holder.  Some policies include broader definitions, but not this one (to the extent the policy was provided to me).  There are statutory situations where the word insured is defined to include passengers, for instance, in the UIM statutes.  However, there is no similar definition in the PIP statutes.

    ORS 742.528 was enacted as Oregon Laws 1987, c. 588 § 4.  Section 2 of the same act also added the similar language in ORS 742.524(1)(a) [then ORS 743.805].  ORS 743.800(1) [now 742.520] requires that policies shall provide PIP benefits “to the person insured thereunder, . . . , passengers, . . . ,” thus distinguishing between the person insured, and passengers.

    There is no case interpreting this language in ORS 742.528, and it is poorly drafted.  There is no case stating that a passenger is an insured as a matter of law for purposes of PIP.  It does not make complete sense that notice of denial would go to the Driver; and notice is already sent to the provider under ORS 742.524(1)(a) and 742.528(2), but I think the statute does not require notice to passengers whose PIP benefits are denied, whether or not it should.

    Even if it does, I do not think that failure to send the notice to Plaintiff has the same effect of creating a presumption that ORS 742.524(1)(a) does.  The two statutes, ORS 742.524(1)(a) and 742.528(1), use different language.  In ORS 742.524(1)(a), the insurer must give notice of the denial but it not required to explain why or provide any other information (though it may be implied and this insurer did), nor must it explain how to contest the denial, but the penalty of the creation of a presumption is express.  In ORS 742.528, the notice must give the reason for the denial and explain how to contest the denial, but no presumption is created.

    Again, the language in both statutes was created in the same act, and the language is different.  A cardinal rule of statutory construction is that where the legislature uses different language (especially in the same act), it means different things.  Why did the legislature use different language in the two sections in 1987?  We don’t know, but we don’t get to rewrite the statute just because it is murky.  Each of us would rewrite it differently.  Rather, we must do our best to apply what is written.

The Ivanov decision

    Finally, on August 9, 2006, after Plaintiff’s complaint was filed in this action, and even after the day that the arbitration first began, the Oregon Court of Appeals rendered its decision in Ivanov v. Farmers Insurance.  In Ivanov, the trial court granted summary judgment against plaintiffs on the basis that they had failed to prove that their care was reasonable and necessary.  On appeal, the plaintiffs urged various presumptions and arguments as to why there was a jury issue.  The Court of Appeals rejected every argument. 

    As presented to me, this case is on all fours with Ivanov.  I believe that Plaintiff could have obtained evidence to satisfy the prima facie and the preponderance standards of evidence with respect to reasonableness and necessity of the the Hospital services and their expense.  But she did not.  In this situation, what the Court of Appeals said in Ivanov is compelling [footnotes omitted]:

    No provision of the PIP statutes relieves an insured who challenges an insurer's denial of benefits on the ground that medical expenses were not necessarily incurred from the burden of producing prima facie evidence that the claimed expenses were necessarily incurred.

    * * *

    We agree with plaintiff that an insured can meet the initial burden to establish that medical expenses were necessary in a proof of loss submitted for claim processing purposes under ORS 742.520(4) by submitting no more than evidence that the expenses were incurred. That is so because, should the insurer fail to deny a claim for medical expenses within 60 days of receiving the claim, in any ensuing action or arbitration proceeding, the mere existence of the expenses gives rise to a presumption that they were necessary. ORS 742.524(1)(a). As discussed, the statutory presumption does not apply where, as here, the insurer timely denied the claim. Id.

    * * *

    The term "reasonable medical expenses" has well-established proof requirements in Oregon common-law personal injury claims. The plaintiff in a personal injury claim may "recover, as a part of his damages, his reasonable expenses for medicines and medical treatment, but there must be some evidence that the charges are reasonable." Tuohy v. Columbia Steel Co., 61 Or. 527, 532, 122 P 36 (1912) (emphasis added); see also Pinder v. Wickstrom, 80 Or. 118, 120, 156 P 583 (1916) (holding that in making proof of medical expenses incurred, it was necessary to show that they were reasonable).

    This court recently applied that principle in Lea v. Farmers Ins. Co., 194 Or. App. 557, 560, 96 P3d 359 (2004). In Lea, the plaintiff sued his uninsured motorist coverage insurance carrier to recover medical expenses that he incurred in an accident, caused by an uninsured motorist. At trial, the plaintiff offered his medical bills into evidence. Id. at 561. At the close of the evidence, the defendant moved to strike the plaintiff's claim for medical expenses on the ground that the plaintiff had failed to prove their reasonableness and necessity. Relying on Tuohy, we held that Oregon case law was "unequivocal" in requiring proof of the reasonableness of medical expenses incurred as damages. And, despite the evidence of the plaintiff's medical bills, we held that there was no evidence from which a trier of fact could infer that the expenses were reasonable. Id. at 559-61. We further stated:


Id. at 560-61. In sum, at common law and, specifically, in personal injury cases, proof that medical expenses were incurred does not give rise to an inference that the expenses were reasonable. Logically, the same principles apply to the determination whether such expenses were medically necessary.

    * * *

    Although the PIP statutes provide for a streamlined procedure for resolving disputes between insured and insurer, when an insurer rejects a claim for medical expenses, the claimed expenses are not "presumed to be reasonable and necessary." ORS 742.524(1)(a). Even though, as plaintiffs observe, there is a difference between a presumption and an inference, the statutory framework plainly puts a claimant to his or her proof in such circumstances and, in so doing, it is logical to conclude that the legislature had in mind the common law proof requirements for reasonable and necessary medical expenses. Accordingly, we reject plaintiffs' argument that, when a PIP insurer denies a claim for medical expenses on the ground that they were not necessarily incurred, evidence that the expenses were incurred is sufficient to create a permissible inference that they were necessary.

    * * *

    In sum, we conclude that, when a PIP insurer timely rejects a medical expense claim on the ground that it was not necessarily incurred, the production of evidence that the expense was incurred does not, by itself, satisfy the statutory requirement for proof that the expense was necessary.

     Simply because an exhibit is admitted, does not make it persuasive.  Nor does the fact that documents are admitted without objection fill gaps in proof.  There was no evidence submitted that the expenses at the Hospital were necessary or reasonable.  I personally do not doubt that evidence could have been obtained from the Hospital that the services provided on the day of admission were reasonable and necessary, but there was nothing in the documents submitted to me, pro forma, self serving, or whatever, with the magic words.  I am not authorized to render an award based on what I think could be produced as evidence; only on what has been produced.

    My final award will award Plaintiff $315.53 (the unpaid amounts to Dr. . . . and the chiropractor). 

    Defendant has contended that Plaintiff is not the real party in interest.  I assume that this is based on the contention that Plaintiff has not paid her providers.  This argument is wrong.  If potential obligors (insurers or defendants in general) were never liable for damages incurred but not paid by indigent plaintiffs, there would be an incentive not to pay otherwise valid obligations, and in some instances, to refuse to pay in order to create financial embarrassment.  While that extreme is not the situation in this case, the bottom line is that if Plaintiff owes the money for services that are within the PIP obligation, The insurer should pay it.  The insurer has means at its disposal to ensure that the money reaches the proper hands, such as honoring PIP liens or paying by joint check.

    I also have the authority to order that the damages be paid jointly to the unpaid providers, and I so order, Wilson Leasing Co. v. Seaway Pharmacal Corp., 53 Mich App 359, 220 NW 2d 83, 87 (1974).

    Finally, I should add that the unfair claims settlement practices act does not create any rights enforceable by Plaintiff in this action.  Farris v. U.S. Fid. and Guar. Co., 284 Or 453, 458, 587 P2d 1015 (1978).  Because it does not, I do not address the question of whether it was or was not violated.

    Pursuant to UTCR 13.210 I enclose a draft form of award.  Plaintiff’s Attorney should present a cost bill and a petition for attorney fees, on the time lines set forth in ORCP 68, with the starting date being today.  Insurer’s attorney has the time to object set forth in ORCP 68.  Either party having objections to my proposed form of award should let me know what they think should be changed.  This is not an opportunity to request reconsideration or submit additional evidence.
    As an aside, given that I believe Plaintiff’s Attorney can convince a jury to award Plaintiff another $2,066 by presenting the proper evidence, but that it will cost his client a certain amount of unrecoverable expense, I recommend that the parties find some way to settle this case.