To the Point: Questions and Answers on First Party Med Pay when an “Excess” Policy is in Effect

With Gary Lewkovich, DC and Shawn Steel, Esq.

Dr. Lewkovich: Your reputation in the chiropractic community is almost legendary. You have been an ardent supporter of our profession for de cades, assisting in many legal battles, both directly and indirectly. Now, once again, you are offering assistance to chiropractors battling insur ance companies on “excess” med pay policy issues. How relevant is this “excess” med pay issue to the chiropractic profession?

Shawn Steel, Esq.: First of all, thank you for the kind comments. It has been a pleasure to serve the chiropractic profession, especially when it has done so much for me, my family, and friends. As you know, I come from three generations of chiropractors.

As for your question on the relevance of “excess” med pay policies, every chiropractor treating PI cases needs to know about this latest insurance tactic. Some carriers use this ploy very effectively taking advantage the healthcare provider and their own in sured. Ignorance on this topic is costly to chiropractors and their patients in terms of hard cash benefits. If you are asleep at the wheel on this one, you will lose, I guarantee it. Dr. Lewkovich: I think you got our attention. Could you please define what is meant by “excess” med pay in first party auto policies?

Shawn Steel_ Esq.: “Excess” med pay policies are sold to unsuspecting drivers by some insurance companies. The essence of this type of policy is that the med pay insurer will only pay the uncovered or “excess” medical bills after the primary health insurer has paid.

Dr. Lewkovich: Is this type of policy a relatively new insurance creation?

Shawn Steel_ Esq.: Yes, but there are more policies showing up with this “excess” provision all the time.

Dr. Lewkovich: What does this mean to the chiropractor treating PI cases?

Shawn Steel_ Esq.: It means that chiropractors need to know the facts and fight back. The prime reason for this type of policy is to limit the reimbursement to healthcare professionals. If you do nothing, guess what? They win!

Dr. Lewkovich: And how does this “excess” policy limit reimbursement?

Shawn Steel_ Esq.: The “excess” carriers limit reimbursement by how they arbitrarily choose to interpret the Explanation of Benefits (EOB) form from the primary health insurer. In a managed care setting, these limitations are draconian. Since these reductions are so severe in this area, let’s concentrate here. Under managed care contracts you typically have the following conditions: the reimbursement for a given service is quite low, the number of visits authorized is below established norms, and the number of modalities/procedures and durable medical goods allowed are restricted. In this type of setting, the “excess” carriers salivate at how much they can cut your reimbursement.

Dr. Lewkovich: And they try to cut your reimbursement based upon what rationale?

Shawn Steel_ Esq.: The reasoning here is straightforward but is based on a faulty assumption. Those carriers assert, according to the doctor’s contract with the managed care company, that you are obligated to accept the reimbursement paid by that in surer plus any applicable co-pays as full payment for your services. Thus, the auto med pay insurer may attempt to pay just for the applicable co-pays; just that paltry $5.00 to $10.00 per visit! This was never the intent of your managed care contract. Their twisted reasoning and total disregard for the facts of the matter are used to cut, cut, cut. It is the ultimate “slasher” script, but this one is not from Hollywood.

Dr. Lewkovich: So a chiropractor, under this scenario, could end up with a small fraction of the normal reimbursement on a case?

Shawn Steel, Esq.: That’s exactly right.

Dr. Lewkovich: And all that supposedly is made possible by the managed care contract limitations?

Shawn Steel, Esq.: Yes, at least that’s what the auto insurers would like you to believe. In reality, the managed care contracts almost always contain provisions allowing for exceptions in personal injury cases. These exceptions allow one to override many of the normal contract limitations in PI cases. This means that you are probably entitled to the total charges billed. You need to look at your individual contracts and find the applicable sections. Read them, understand them, and apply them. They can save you loads of headaches and thousands of dollars.

Dr. Lewkovich: Sounds great. But aren’t there specific rules under which these exceptions apply?

Shawn Steel, Esq.: I see you’ve been reading your contracts. Yes, you are correct. There are specific rules you have to follow in order to apply the contract exceptions. But with so many different contracts out there, we really can’t go into that here.

Dr. Lewkovich: So let’s spell it out completely. What should chiropractors do when they receive a letter from the auto med pay stating that an “excess” policy is in effect?

Shawn Steel, Esq.: Typically, the doctor will have to bill the regular health insurance first, then obtain and submit the written EOB to the auto med pay insurer. If this insurer doesn’t pay the balance of the medical bills, then you need to do two things. First, find the relevant section of your contract that spells out the exception rules on PI cases and copy it. Second, send this copy along with your variation of the letter I have constructed that appears at the end of this interview. The law and the contract are both on your side. Hold the med pay insurer’s feet to the fire and demand that they pay the balance immediately.

Dr. Lewkovich: And if they refuse?

Shawn Steel, Esq.: File a complaint with the Department of Insurance and then send the med pay insurer a copy. Notify the patient in writing that you believe their auto insurer may be guilty of bad faith and advise them to get an attorney to pursue it. Be sure to mail copies of this letter to the in surer as well. That should get their attention. Plus, there is always that great, underused friend of chiropractic, the small claims court. Armed with the facts, you and your patient can typically force the med pay carrier to pay what is fair and just.

Dr. Lewkovich: At our office, I can verify the fact that the words “bad faith” carry a lot of weight when dealing with auto med pay insurance companies. Have you had the same experience?

Shawn Steel, Esq.: The words “bad faith” can appear like the avenging angel of death to a guilty insurance company. They just spent $60,000,000 defeating the “bad faith” propositions 30 and 31, so you know it is their Achilles’ heel. Fortunately, “bad faith” is still applicable to first party cases and all auto med pay falls into this category. Believe me, they will bend over backward to avoid this type of lawsuit. But remember, the doctor’s documentation must be complete and in order.

Dr. Lewkovich: Shawn, on behalf of myself and the chiropractic profession I want to thank you for your time and assistance on this issue.

Shawn Steel, Esq.: My pleasure. As always, if any chiropractor has any PI related questions, he or she can phone my PI Hotline at (800) 626-0003. Our e-mail address is This email address is being protected from spambots. You need JavaScript enabled to view it..

About the authors: Shawn Steel, Esq. comes from a family of chiropractors and has a long history of being anenergetic and dedicated defender of chiropractic. He teaches jurisprudence at Cleveland Chiropractic College, Los Angeles and quarterly at Palmer West and LACC. Mr. Steel has been known for decades as an exuberant and informative lecturer throughout the nation. He has three offices in Califon and specializes in personal injury.

Gary N Lewkovich, DC is the chairperson of the CCA’s Personal Injury Committee. He is a chiropractic orthopedist, a QME, the author of numerous articles for the CCA Journal, and a frequent lecturer at Los Angeles College of Chiropractic. He is also editor of the Personal Injury Review, monthly newsletter to attorneys, and specializes in personal injury cases. For the last 17 years he has practice in San Marcos, CA.

8383 Wilshire Boulevard #640
Beverly Hills, CA 90021


Auto Insurance Co.
Attn: Jane Smith, Med Pay Representative
1234 Main St., Suite A
Pleasanton, CA 90001


Your insured / Our patient: William Victim
Your claim number: 02011655A
Date of Accident:11/19/2015

Dear (name of med pay representative):

We understand that No Pay Insurance Company is declining full coverage for our patient’s med pay benefits. As No Pay Insurance
Company is aware, this denial is contrary to the requirements of the Insurance Code and the rules promulgated by the Department of Insurance. Your company maintains that due to my contract limitations with Landfill Managed Care, that No Pay Insurance Company is not obligated to reimburse the full balance of my unpaid reasonable and customary bills.

This position is contrary to law and the contract requirements of Landfill Managed Care.

Please see the attached section of the relevant portions of the applicable contract which specifically states that the reduction of benefits is NOT applicable in a personal injury case. Moreover, this contract specifically exempts the participating physician for having to limit his or her reasonable and customary fees for personal injury cases.

Therefore, we demand the following:

Immediately pay the balance due to this office within seven days from the date of this letter. Failure to honor No Pay Insurance
Company’s duty bound and legal obligation to your insured will compel our patient to file a grievance with the Department of Insurance. Additionally, we will file jointly with our patient a court action against No Pay Insurance Company. Moreover, should we prevail in court, then No Pay Insurance Company should certainly anticipate a Bad Faith First Party action.

Very truly yours,

NOTE: Both the patient and the doctor should sign this letter to show the unity of the parties, making the correspondence much more powerful.

(signature of doctor)
Howard Fightback, DC

(signature of patient)
William Victim

cc:William Victim

encl: copy of relevant portion managed care contract


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