Choices: Applying Tousignant to a PPO Policy

Bacon or sausage with your eggs over medium. Paper or plastic when bagging your groceries. Michael Jackson dancing in the street telling us that Pepsi was the choice of a new generation.

Life is about choices. And choices are precisely what the Michigan Court of Appeals discussed in the recent published decision of Advance Therapy & Rehab, Inc v Auto-Owners Insurance Company.

At its most basic, the appellate court discussed the choices under your health insurance coverage and whether a No-Fault insurer is required to coordinate coverage when a choice to treat is made.

The facts of the matter were relatively straightforward – the claimant was injured in a motor vehicle accident and sought treatment for his injuries. He had health insurance through CIGNA and coordinated No-Fault insurance through Auto-Owners. CIGNA was the primary payer, Auto-Owners was the secondary payer.

Probably the key distinguishing characteristic of this case, versus other coordination of benefits cases, is that CIGNA provided coverage through a Preferred Provider Organization (PPO), which offered coverage for treatment from both in-network and out-of-network providers.

At some point after the motor vehicle accident, the claimant sought treatment from Advance Therapy & Rehab, Inc, an out-of-network provider. Advance Therapy submitted the bill to CIGNA, who processed it and applied the payment to the claimant’s out-of-network deductible. Thereafter, Advance Therapy sought reimbursement from Auto-Owners for the amount of the deductible.

Auto Owners declined to do so, arguing that payment was not required because the claimant’s decision to treat with out-of-network provider versus an in-network provider was more costly (i.e., CIGNA paid 60% for out-of-network treatment versus 80% for in-network treatment). For support, Auto Owners primarily relied upon Tousignant v Allstate Insurance Company.

The appellate court held that the claimant properly treated within the confines of his PPO policy. Furthermore, it held that there was nothing in either the No-Fault Act or Tousignant requiring the claimant to maximize the amount covered by a primary PPO insurer by treating with an in-network provider.

Distinguishing this case from Tousignant was the fact that it concerned a PPO. In Tousignant, the health insurance was a more restrictive HMO that only paid for treatment from an in-network provider – no out-of-network benefit was available.

Applying the holding, the appellate court stated that Advance Therapy could only obtain reimbursement from Auto Owners if the claimant received treatment that was covered and paid by CIGNA. Although his treatment was with an out-of-network provider, it was within the confines of his PPO policy. Therefore, the claimant satisfied his obligations.

You made the choice to read this far – so what is the takeaway from Advance Therapy & Rehab, Inc? Coordination of benefits is fact specific. Whether a No-Fault insurer will be required to provide secondary coverage will depend on the choices provided by the health insurance policy.

To put it another way, the possibility of secondary coverage from a No-Fault insurer will depend on the answer to this question – did the insured treat within the confines of his or her health insurance policy? If the answer is “yes,” there is a good chance that secondary coverage will need to be provided.

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