Strategies, Challenges, and Answers

Remedies For An Automobile Insurance Company’s Breach Of Nevada’s “Prompt Pay” Statute Are Administrative, Not Judicial

Under Nevada law, insurance companies have an obligation to pay claims promptly.  See N.R.S. 690B.012.  But what is the remedy if the insurance companies don’t pay on time?  In the case of Allstate Ins. Co. v. Thorpe, 123 Nev. 565, 170 P.3d 989 (2007) a doctor and a chiropractor sued the insurance company in court and learned that their complaints of delays cannot go directly to a judge.  They must be administratively handled instead.

In that case the doctor and a chiropractor apparently believed that they were being treated unfairly by several automobile insurance companies.  They felt that bills they were sending to the insurance companies for medical payments benefits were not being paid quickly enough.  They filed suit under N.R.S. 690B.012, sometimes called Nevada’s “prompt-pay” statute.  The providers decided that they were going to sue the insurance companies directly in the District Court to force timely payment.

1064585_time_is_money_1 In its Opinion, the Nevada Supreme Court told the medical providers that the statute did not give them the right to sue the carriers in the district court.  However, the providers were not left without a remedy.  Rather than sue in court, the providers had to file their complaints relating to tardy payments with the Nevada Department of Insurance.  The complaints would be heard in the Department of Insurance’s administrative system and not by a judge at the courthouse.  These types of administrative cases can ultimately end up in district court, but only after they have been heard and the Insurance Department remedies have been exhausted by the claimant.  The Nevada Supreme Court was quick to note that its ruling did not foreclose actions for tortuous and contractural bad faith claims against first party insurers.  It simply restricted recovery under NRS 690B.021 to the administrative remedies cited.

This case is important for insurance companies because it prevents medical providers from directly suing them in court for slow payment of claims.  However, the insurance companies must pay timely because providers can still seek remedies through the Department of Insurance for delayed payments on medical claims.

About Michael Mills

Mr. Mills practices in the area of civil litigation and appeals, with particular experience in matters involving trucking liability, insurance defense, insurance coverage, premises liability, products liability and defense of personal injury. Mr. Mills is a member of the Trucking Insurance Defense Association, the Defense Research Institute Trucking Committee and the Nevada Motor Transport Association. Mr. Mills is licensed to practice before the Nevada Supreme Court and the Utah Supreme Court. He is also licensed to appear before the United States Supreme Court, the U.S. District Courts for the Districts of Nevada and Utah, as well as the U.S. Court of Appeals for the Ninth Circuit. Mr. Mills has created 3 Blogs for the benefit of the insurance industry. He serves as editor and publisher of the Nevada Insurance Law Blog, the Nevada Coverage and Bad Faith Blog and the Nevada Trucking Law Blog.

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