Court addresses question of when No Fault PIP insurer owes fees; State Farm penalized

In Balalas v. State Farm Insurance Company, three judges of the Court of Appeals upheld the award of attorney fee sanctions against State Farm after it refused to pay PIP benefits to Balalas. Under the No Fault statute, attorneys' fees may be awarded to an injured person if PIP benefits are overdue and the insurer "acted unreasonably in delaying payment." If a legitimate question of fact or statutory construction exists, no fees are awarded, however, in the instant case, the adjuster denied wage loss benefits without conducting a reasonable investigation. She had no medical opinion justifying her action and did not know the injured man's job duties when she refused to pay wage loss recommended by his treater. The man was undergoing treatment and the insurer's investigator acknowledged that he did not observe any actions by the man that were inconsistent with his restrictions. The Court held that it was irrelevant that a later medical opinion by a retained "IME" doctor supported the adjuster's denial [an opinion rejected by the jury, parenthetically]. On the question of fees, when the adjuster's decision was made, originally, there was no evidence on file to support a denial of benefits--making the decision "unreasonable."