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Federal Appeals Court Rules in Favor of Geico on Car Insurance Claim

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A federal appeals court has affirmed a lower court ruling in favor of insurance giant Geico, dismissing a class action originally filed in 2006.

According to court documents, the primary plaintiff, Sharon Anderson, was hurt in a car accident in 2004, complaining of back and neck discomfort. She was treated immediately after the crash, and filed a claim with Geico under her auto insurance policy. The insurance company paid some of the expense, but reduced the reimbursement by $31 based on an internal policy referred to as the "geographic reduction rule." Under this policy, Geico limits charges for any medical procedure to the 80th percentile billed by similar providers in the area.

A year after the accident, Anderson went to her doctor, complaining that the neck and back pain had never gone away, but had, in fact, worsened. Her doctor prescribed physical therapy, but when she submitted the PT bills to Geico, she was allowed only $1,000 in total reimbursements (she'd been prescribed 12 PT sessions). Geico defended this action by employing another internal policy, the so-called "passive modality" rule, which allowed the company to take a closer look at some types of treatment-rehab, physical therapy and ultrasound among them-provided those types of treatment are sought more than two months after an accident.

Anderson brought legal action against Geico and sought to certify a class action. While gathering evidence, Geico discovered that Anderson had sought treatment for neck and lower back pain before she was involved in the car accident. When they deposed her doctor, he testified that the pain of which she complained could have been caused by a pre-existing condition.

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