Court grants American Family Insurance partial dismissal of payment delivery method lawsuit

By Carrie Salls | Jun 1, 2018

KANSAS CITY – The U.S. District Court for the Western District of Missouri partially granted an insurance company’s motion to dismiss a lawsuit related to a dispute over the delivery of insurance payments, according to a May 22 order.

The order said plaintiff Marvin’s Midtown Chiropractic Clinic LLC claimed that American Family Insurance Co. should have sent insurance payments for its clients directly to the clinic under an assignment of benefits agreement instead of issuing the payments to the insured patients.

American Family asked the court to dismiss the case “for lack of standing and failure to state a claim,” the order states.

“Holding that American Family did not owe a duty to deliver payment directly to Marvin’s, and that Marvin’s negligence per se claim is not cognizable, defendants’ motion is granted in part,” U.S. District Court Chief Judge Greg Kays said in his order.

According to the order, the Missouri law in question outlines the rules for assignment of benefits between patients and providers.

The court said in the order that “the primary purpose of the statute is to enable insured individuals who are injured in an automobile accident to seek immediate medical treatment without worrying about how to pay for that treatment up front.”

The court noted that Marvin’s Midtown Chiropractic’s case was not related to personal or property damages, but rather just to a monetary dispute. Kays wrote in the order that “the Missouri Supreme Court has declined to extend negligence per se to such cases, and this court is obliged to apply Missouri law as interpreted by the Supreme Court.”

In addition, the order said the Missouri law in question does not apply in this case.

“The statute itself contains no express terms, nor is there even a clear implication that the statute was intended to give medical providers a private right of action to sue insurance companies under § 376.427,” the order said. “While the legislature plainly meant to make it easier for injured individuals to obtain medical care by facilitating prompt payment to medical providers from insurance companies, it did not create a right to sue.”

As a result, Kays said he denied part of a claim by Marvin’s that the insurer was negligent in issuing payment to the policyholder instead of the provider. However, Kays said Marvin’s did in fact have standing to bring the negligence claim.

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