Court Opinion

ID: 9503293
Source: CourtListenerOpinion
Date Created: 2023-08-06 19:40:44.604387+00
Date Added: 2024-06-11T09:03:22.654271
License: Public Domain

*424DE MUNIZ, C. J.
This case involves Oregon’s Personal Injury Protection (PIP) statutes, ORS 742.518 to 742.540. Plaintiffs initiated this case by filing what they initially styled as a class action against defendant insurance companies (Farmers), seeking payment of PIP-related medical expenses that Farmers had denied. Plaintiffs also sought a declaratory judgment holding that “Farmers may not deny [PIP] benefits to its insureds solely on the basis of generalized criteria not specific to claimants’ injuries,” and that “Farmers may not deny [PIP] benefits to [its] insureds * * * unless [the] determination is based on a contemporaneous physical examination [IME] of the insured by a physician selected by Farmers.” In response, Farmers filed a “Motion for Summary Judgment and Memorandum in Opposition to Plaintiffs’ Motion for Class Certification.”1
In its summary judgment motion, Farmers did not address plaintiffs’ claims that, in using generalized preplanned criteria not specific to each claimant, Farmers’ claim review process breached its insurance contracts and violated the PIP statutes. Instead, Farmers argued that: (1) under ORS 742.524, insureds such as plaintiffs, whose PIP claims had been timely denied, had the burden of proving that their claims were medically necessary before their challenge to Farmers’ claims review process could proceed to a trier of fact, and (2) plaintiffs had failed to produce sufficient medical opinion evidence on that issue in response to Farmers’ summary judgment motion. In opposing summary judgment, plaintiffs argued that Farmers’ denials of their PIP claims were based on generalized criteria that (1) were not specific to the insured’s injuries; (2) were not based on an IME; and (3) in any event, involved bills for medical charges that were presumed to be medically reasonable and necessary at the time they were submitted, thus allowing the medical bills themselves to provide the evidence needed for plaintiffs’ case to proceed to a determination on the merits.
The trial court subsequently granted Farmers’ summary judgment motion and disposed of all of plaintiffs’ *425claims. The trial court concluded that, “[as] a matter of law the PIP statutes do not require a contemporaneous medical examination [IME] of the insured prior to the denial of any claim” and that, in any dispute over the payment of a PIP claim, “the insured bears the burden of [proving that their medical expenses are medically reasonable and necessary].” On appeal, the Court of Appeals affirmed, albeit on narrower grounds. It held that, as a predicate to challenging Farmers’ claims review process, plaintiffs were required to prove that their PIP expense claims were medically reasonable and necessary and that, in the absence of expert medical opinion, plaintiffs had failed to produce “evidence from which a trier of fact could infer that the claimed expenses were necessarily incurred).]” Ivanov v. Farmers Ins. Co., 207 Or App 305, 317, 140 P3d 1189 (2006). We allowed plaintiffs’ petition for review and, for the reasons explained below, reverse the decision of the Court of Appeals and the judgment of the trial court.
In reviewing a grant of summary judgment, we view the facts from the summary judgment record and all reasonable inferences that we may draw from them in the light most favorable to the nonmoving party — in this case, plaintiffs. Oregon Steel Mills, Inc. v. Coopers & Lybrand, LLP, 336 Or 329, 332, 83 P3d 322 (2004). In accordance with that methodology, the record establishes that plaintiffs are Oregon residents who each purchased automobile insurance policies from Farmers and were subsequently involved in automobile accidents. Because of those accidents, plaintiffs each submitted claims for their respective medical expenses under the PIP provisions of their policies and Farmers denied those claims.
As a result of those claim denials, plaintiffs filed this action against Farmers, alleging that the process underlying Farmers’ denial of their PIP-related medical claims constituted breach of contract, fraud, breach of the implied covenant of good faith, tortious breach of the duty of good faith, and intentional interference with contractual relations.2 Specifically, plaintiffs alleged that Farmers had failed to inform *426its insureds that, as part of an undisclosed cost containment policy, Farmers had made a business determination to employ computerized billing or file review services as a way to justify the denial of otherwise valid claims for PIP benefits. According to plaintiffs’ complaint, Farmers knew that the review services it employed used automatic medical cost containment software based on generalized, preplanned criteria not specific to a claimant’s particular injuries. Farmers’ goal in using such review services, plaintiffs asserted, was to avoid full reimbursement of otherwise “reasonable and necessary” medical expenses.3 In addition to money damages, plaintiffs’ complaint also sought declaratory relief prohibiting Farmers from denying medical treatment claims based on generalized criteria not specific to a claimant’s injuries and on determinations that specific treatments were not medically necessary, unless those determinations were made by an examining physician.
As previously noted, Farmers moved for summary judgment on all of plaintiffs’ legal claims, contending that the overriding question presented by plaintiffs was a question of law that could be resolved under ORS 742.524(l)(a). In moving for summary judgment, Farmers did not deny that it used the software and protocols just described to decide whether to pay plaintiffs’ claims. Neither did Farmers attempt to establish on the record that its claims review process met contractual and statutory PIP requirements, either as to plaintiffs’ specific claims, or as to general claims for medical expenses like those that plaintiffs made. Farmers argued, instead, that plaintiffs were required to prove the medical reasonableness *427and necessity of their individual claims. However, as we explain below, plaintiffs’ complaint challenged Farmers’ claims review process itself as failing to comply with contractual and statutory PIP criteria, and the issues raised by the complaint thus are logically akin to the issue of whether a specific plaintiffs medical expenses should be covered.
A brief recitation of the purposes and functions of the PIP statutes provides a useful foundation for our analysis. ORS 742.524(1) provides, in part:
“Personal injury protection benefits as required by ORS 742.520 shall consist of the following payments for the injury or death of each person:
“(a) All reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and prosthetic services incurred within one year after the date of the person’s injury, but not more than $15,000 in the aggregate for all such expenses of the person. Expenses of medical, hospital, dental, surgical, ambulance and prosthetic services shall be presumed to be reasonable and necessary unless the provider [of those services] is given notice of denial of the charges not more than 60 calendar days after the insurer receives from the provider notice of the claim for the services. At any time during the first 50 calendar days after the insurer receives notice of claim, the provider shall, within 10 business days, answer in writing questions from the insurer regarding the claim. For purposes of determining when the 60-day period provided by this paragraph has elapsed, counting of days shall be suspended if the provider does not supply written answers to the insurer within 10 days and shall not resume until the answers are supplied.”
(Emphasis added.)
In Perez v. State Farm Mutual Ins. Co., 289 Or 295, 300, 613 P2d 32 (1980), this court described the PIP statutes as having been created “to provide, promptly and without regard to fault, reimbursement for some out-of-pocket losses resulting from motor vehicle accidents.” Under that no-fault format, every motor vehicle liability policy issued in Oregon must provide “personal injury protection benefits” to the person insured under the policy. ORS 742.520. Claims for those statutorily mandated benefits are presumed to be “reasonable and necessary” unless the insurer denies a claim within *42860 days of receiving it. ORS 742.524 (l)(a). Among other things, the benefits set out in the statutes cover “[a] 11 reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and prosthetics services incurred within one year after the date of the person’s injury, but not more than $15,000 in the aggregate for all such expenses of the person.” Id. The statute requires an insurer to “pay all personal protection benefits promptly after proof of loss has been submitted to the insurer.” ORS 742.520(4) (emphasis added). The term “promptly’ takes into consideration a 60-day period following an insurer’s receipt of the claimed expenses during which time the insurer can deny the claim. ORS 742.524(l)(a). During the first 50 days of that period, an insurer may tender written questions to the healthcare provider regarding the claim and the provider must answer within 10 business days of the tender. Should a provider fail to respond within that time, the 60-day period is tolled until the insurer receives an answer from the healthcare provider. Id. To challenge a denied claim, the insured may submit to binding arbitration under ORS 742.520(6) and ORS 742.522 or, as plaintiffs did in this case, file a civil action against the insurer.4 If the insured prevails, the insured can recover attorney fees from the insurer. ORS 742.061.
 To prevail on summary judgment as the moving party, Farmers had the burden of showing that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law. Stanfield v. Laccoarce, 288 Or 659, 665, 607 P2d 177 (1980). As noted, according to Farmers, plaintiffs cannot challenge Farmers’ PIP claim processing practices in this civil action unless plaintiffs can first demonstrate, in response to Farmers’ summary judgment motion, that their claimed medical expenses were necessary. Specifically, Farmers asserts, as it did before the trial court and the Court of Appeals, that plaintiffs’ medical bills alone are insufficient to establish the requisite proof of medical necessity.
*429 Farmers’ argument in that regard, however, and its framing of the issue to be decided on summary judgment, are both premised on a faulty reading of ORS 742.524(l)(a). ORS 742.524(l)(a) creates a presumption that PIP-related claims for medical expenses submitted by a healthcare provider are reasonable and necessary at the time that they are submitted to an insurer. The effect of such a presumption is set forth in ORS 40.120, which provides:
“In civil actions and proceedings, a presumption imposes on the party against whom it is directed the burden of proving that the nonexistence of the presumed fact is more probable than its existence.”5
Consequently, we believe that it follows that the presumption established by the legislature in ORS 742.524(l)(a) attaches to PIP claims at their inception and, once established, functions as any other civil presumption, i.e., it shifts the burden of proof to the party against whom it is directed— in this case, the insurer. That means that the legislature intended that, under ORS 742.524(l)(a), the presumption would operate as follows: When a healthcare provider submits a PIP claim for medical expenses on behalf of an insured, the expenses are presumed to be reasonable and necessary. An insurer may issue a timely denial of a claim to a provider and, once it does so, the expenses are no longer entitled to that presumption. However, it is not the validity of Farmers’ claim denials that plaintiffs seek to challenge in this action. Instead, plaintiffs challenge the sufficiency of Farmers’ investigation of their claims before Farmers’ issued its denials, i.e., they challenge Farmers’ actions or lack thereof at the time the claims were presumed medically reasonable and necessary.
*430In Best v. U. S. National Bank, 303 Or 557, 561, 739 P2d 554 (1987), the court restated the long standing rule in Oregon “that there is an obligation of good faith in the performance and enforcement of every contract.” That obligation of good faith performance and enforcement applies equally to the contractual relationship that exists between Farmers and its insureds seeking their contractual and statutory PIP benefits. In determining the manner in which the common-law obligation of good faith imposed on Farmers applies here, we note that the legislature has prohibited insurers from denying payment of claims without conducting a “reasonable investigation” of those claims. In that regard, ORS 746.230(1) provides, in part:
“No insurer or other person shall commit or perform any of the following unfair claim settlement practices:
“(d) Refusing to pay claims without conducting a reasonable investigation based on all available information [.]”
(Emphasis added.) Under that statute, an insurer is obligated to conduct a “reasonable investigation” sufficient to support a decision to deny a medical expense claim that is statutorily “presumed to be reasonable and necessary.” Obedience to that prohibition is a component of Farmers’ good faith obligation in this context.
Contrary to the determinations below that plaintiffs had the initial burden of establishing medical necessity, the nature of plaintiffs’ claims instead required Farmers to establish that the denials it had issued were based on reasonable investigations before Farmers could prevail on its summary judgment motion. As the moving party, Farmers had the burden of showing “that there is no genuine issue as to any material fact and that the moving party is entitled to prevail as a matter of law.” ORCP 47 C. At the time that Farmers was processing the medical claims at issue here, those claims were presumed to be medically necessary; as a result of that presumption, plaintiffs were not responsible for establishing medical necessity at that point in time. Consequently, because the gravamen of plaintiffs’ complaint was that Farmers’ review methodology was an impermissible *431one, Farmers needed to establish that the procedures it employed to deny plaintiffs’ claims satisfied its statutory and common-law duties and did not violate the prohibition set out in ORS 746.230(l)(d). In seeking summary judgment, however, Farmers presented nothing to support the validity of its claims review process in general, nor any evidence in particular establishing that the process included a reasonable investigation of the submitted claims in this case. Because the resulting evidentiary record failed to establish that Farmers’ claim denials were supported by reasonable investigations, plaintiffs did not have to produce evidence of medical necessity (beyond the still-valid presumption regarding their medical bills) in order to defeat Farmers’ summary judgment motion.6
We do not intend our disposition of the parties’ summary judgment arguments to resolve the question of whether Farmers’ claim denials are legally sustainable with respect to the named plaintiffs in this case; that is an issue which has yet to be decided at trial. As already noted, the trial court ruled, as a matter of law, that the PIP statutes do not require an IME to be an integral part of each and every investigation of each and every claim for which payment is denied. We agree with that statutory interpretation — as far as it goes— but note that the basis for the trial court’s holding was, in part, the now-rejected notion that the presumption set out in ORS 742.524(1) exists only if an insurer does not deny a PIP claim within 60 days. We have corrected that error here and this case must be returned to the circuit court for further proceedings. As to those proceedings, we note only that, although it is clear that the statutes do not expressly require an IME in every instance, an IME may nevertheless be required as part of a reasonable investigation, depending on the facts of an individual claim.
We conclude that at the time an insurer decides to accept or deny a PIP claim — the time period at issue in this *432action — those expenses are presumed to be medically reasonable and necessary. Because the record on summary judgment did not raise any factual question concerning validity of Farmers’ claim review process — much less establish the validity of that process as a matter of law — Farmers was not entitled to prevail on its summary judgment motion. Both the trial court and Court of Appeals erred in granting judgment in Farmers’ favor.
The decision of the Court of Appeals is reversed. The judgment of the circuit court is reversed. The case is remanded to the circuit court for further proceedings.

 The trial court resolved the case on Farmers’ motion for summary judgment and therefore did not decide plaintiffs’ motion for class certification.

 In the course of considering Farmers’ summaryjudgment motion, neither the parties nor the trial judge raised issues regarding the individual elements of the various legal claims set out in plaintiffs’ complaint. The parties have similarly ignored those matters on review.

 Throughout their action, plaintiffs have used the statutory terms “necessary” and “reasonable” primarily to distinguish between two distinct classes of complainants: those to whom Farmers denied PIP benefits based on a determination that the services they received were not medically necessary, and those denied PIP benefits based on a determination that the fees charged for those services were not reasonable — allegedly because those fees exceeded Farmers’ predetermined fee schedules. Plaintiffs contended that the use of fee schedules was improper, and the resulting “fee schedule” issue came to denominate a specific damages subclass within plaintiffs’ class action framework. Plaintiffs, however, abandoned those particular claims on appeal. See Ivanov, 207 Or App at 309 n 2 (so stating). Nevertheless, because plaintiffs’ fee schedule claims class was, as a matter of record, distinct from the class of policyholders whose medical expenses were denied as medically unnecessary, there is no basis from which to infer that plaintiffs’ abandonment of their fee schedule issue was meant to have any impact on the primary issue now before this court.

 The potential existence of a tort cause of action against any person does not relieve an insurer from its duty to pay PIP benefits under the statutes. ORS 742.520(5).

 We note that, at one time, the legislature distinguished among conclusive presumptions, rebuttable presumptions, and permissive inferences within Oregon’s statutes. That no longer is true. In State v. Rainey, 298 Or 459, 462 n 2, 693 P2d 635 (1985), this court explained that, because the legislature had since omitted any reference to conclusive presumptions in the Oregon Evidence Code, the only presumption remaining in this state’s evidentiary rules is one that is disputable or rebuttable within the terms specified in ORS 40.120. See also State v. Dahl, 336 Or 481, 487, 87 P3d 650 (2004) (concluding that, when legislature referred to a “rebuttable presumption” within the statutes at issue in that case, it intended to refer to the procedural device described in ORS 40.120).

 Plaintiffs did not file a cross-motion for summary judgment and have not contended at any stage of the proceedings that they were entitled to anything more than the right to have their claims decided by a trier of fact.