There has been recent interest in the use of medical review organizations by property and casualty insurance companies to process bodily injury claims. Typically, a medical review organization is sent medical information on a claimant´s injuries and evaluates the medical information. The insurance company then uses the review organization´s evaluation to adjust, reimburse medical expenses or settle the bodily injury claim.
Texas Insurance Code does not prohibit a property and casualty insurer from using medical review organizations for the purpose of furnishing technical assistance to the insurer´s licensed adjusters in the processing of bodily injury claims. The Texas Department of Insurance expects all property and casualty insurance companies to use fair claim settlement practices when using these medical review organizations to process bodily injury claims. For example, a company should not direct or encourage a medical review organization to reach a particular conclusion in an evaluation. Any company that uses a medical review organization or any similar organization to process bodily injury claims should ensure that the organization is properly reviewing medical information. Further, any person who adjusts, or leads others to believe that he or she adjusts claims, must hold an adjuster´s license.
Article 5.06-3 (b) of the Texas Insurance Code requires that automobile liability insurance issued in Texas providing personal injury protection must provide for the payment of "all reasonable expenses" arising from accidents. Other statutory and policy provisions govern additional coverages, i.e. uninsured motorists/underinsured motorists, medical payments and third-party bodily injury. Further, Articles 21.21 (4)(10)(a)(ii) and 21.21-2 (2)(b)(4) of the Texas Insurance Code and § 21.203 of Title 28 of the Texas Administrative Code require all insurers to attempt in good faith to effectuate "fair and equitable" settlements of claims and not engage in unfair settlement practices.
The Texas Department of Insurance will not support attempts by medical providers to charge amounts over and above what is usual and customary in their communities or geographic area, but the Department will vigorously enforce the rights of insureds to receive the benefits to which they are contractually entitled.
The Department will investigate allegations of unfair claims settlement practices, both in the context of individual cases and in the context of general business practices, and will take appropriate enforcement action when such conduct is shown.
Questions regarding this bulletin may be directed to David Nardecchia, Director, Personal & Commercial Lines Division, at 512-305-7544 or david.nardecchia@tdi.state.tx.us.
Sincerely,
C. H. Mah, Senior Associate Commissioner
Property & Casualty Program MC 105-5G