State Farm’s Reduced PIP Payments to Medical Providers Unlawful

State Farm Mutual Automobile Insurance Co. may not use Medicare guidelines to reduce payments to medical providers who are entitled to recover a “reasonable” amount for caring for people covered under under Delaware’s personal injury protection law, a state court said. It granted a provider summary judgment against the insurer.

State Farm’s practice of capping its payments to Spine Care Delaware LLC at the rate Medicare would have reimbursed the provider was unlawful, because there was no evidence the payments were logically and consistently related to what the provider’s reasonable charges should have been, the Delaware Superior Court said.

There ...