Kentucky PIP Arbitration

Image of a Kentucky mapThe Kentucky Insurance Arbitration Association (KIAA) was created by KRS 304.39-290 and mandates arbitration to resolve intercompany disputes arising from subrogation rights specific to but not limited to KRS 304.39-070. The KIAA’s Plan of Operation endorses Arbitration Forums, Inc. (AF) as an alternative forum. The Plan (Article 4e) includes the following, which is commonly known as the "PIP subrogation deductible":
In order that there be fair allocation of significant losses, while at the same time eliminating the unnecessary costs in the handling and shifting of insignificant losses, no member shall make application for or be entitled to receive, and no arbitration award shall be made for damages paid or payable to the member reparations obligor for the first $1,000 in the aggregate of loss so paid arising from a single occurrence without regard to the number of persons to whom basic or added reparations benefits are paid or payable.
To avoid confusion for the arbitrators hearing these cases, we suggest:
  • Applicants should subtract $1,000 from their company claim amount and clearly indicate in their contentions that they did so (or explain why they did not, if appropriate).
  • Respondents should raise and support the deductible argument as a damage dispute if the Applicant did not do as noted above.
  • Arbitrators should review the company claim amount and amount paid to see if the deductible has been applied, and if not, the award should be reduced.
AF will be unable to take corrective action if the above steps are not taken, and a post-decision inquiry is submitted requesting a reduction in the award. The matter will need to be resolved by the parties to ensure compliance with Article 4e.
 


Article published in: January 2019 E-Bulletin