MedPay and PIP Benefits in Automobile Cases
Medical Payments, or MedPay, is a coverage option in Missouri that is designed to help pay for medical bills. It can pay out regardless of fault. Insured drivers in Missouri must elect to add this coverage option which can range from $1,000 to sometimes up to $10,000. It can be a much needed relief for claimants when dealing with a motor vehicle accident. Insurance companies can pay medical providers or pay their insured directly up to the MedPay policy limit. If the insured is paid directly, he or she must still satisfy the bill from the provider out of their own pocket, but many times providers will accept less than the billed amount resulting in a net benefit to the claimant. The cost to obtain MedPay coverage is relatively inexpensive and can come in handy when a party to an accident is left with mounting medical bills. When clients come to us for help with an accident, and have this MedPay coverage, we work with them, their insurance company and the medical providers in getting the most benefit for our client while also satisfying the medical bills.
What happens, however, when an insured who has a Missouri automobile insurance contract that includes MedPay coverage is injured in an accident in another state, namely Kansas? Since our metropolitan area encompasses both Missouri and Kansas, this scenario can play out frequently. In Kansas, what is known as MedPay in Missouri is referred to Personal Injury Protection (PIP). PIP works in a very similar way as MedPay and can pay out benefits regardless of fault. In these situations, MedPay benefits are converted to PIP benefits and paid out accordingly.
The big difference between Missouri and Kansas is that under the Kansas Automobile Injury Reparations Act (the “Act”), PIP benefits which include medical payments are subject to subrogation. For example, if a Kansas insured driver is involved in an accident and receives PIP benefits to help pay for medical bills, those benefits are subject to the Act and must be re-paid in any third-party liability claim. By contrast, Missouri subrogation of MedPay payments under a Missouri policy is void as against public policy and do not have to be re-paid.
Therefore, many insurance companies may try to assert, given the fact scenario described above, a re-payment of claims paid out under PIP that was converted from MedPay.
Thankfully, the Kansas Appellate Court does not agree. In State Farm Mutual Automobile Insurance Company v. Baker, 797 P.2d 168 (Kan. App. 1990, review denied), the court concluded that when a person contracts for insurance in another state (e.g. Missouri) the contract for that state is to be applied in interpreting the underlying insuring agreement and the nature of the benefits provided (Id. 172). The holder of the out-of-state policy is “entitled under the terms of the policy to the explicitly bargained for overage and, in the event of an out-of-state accident, replacement of that explicit coverage by coverage required under the law of the sister state.” (Id.). In other words, any benefits paid under the Missouri MedPay provision that was converted to PIP in Kansas, does not have to be paid back.
This can result in an unexpected benefit to claimants who have settled a personal injury claim. It is important, however, for the insured to carefully check the wording of the insurance contract he or she entered into to make sure that MedPay provisions may be extended to states other than the host state. Many Missouri contracts should have language that reads the MedPay payment coverage applies “in the United States of America.”
The anti-subrogation laws in Missouri are well-grounded as a matter of public policy and those with MedPay coverage should take comfort to know that their MedPay benefits travel with them when driving in other states, at least while driving in Kansas.