RENDERED: AUGUST 20, 2026 TO BE PUBLISHED
Supreme Court of Kentucky 2024-SC-0348-DG
DAYELIN GONZALEZ ALVAREZ APPELLANT
ON REVIEW FROM COURT OF APPEALS V. NO. 2023-CA-0013 JEFFERSON CIRCUIT COURT NO. 22-CI-002647
ALLSTATE PROPERTY AND APPELLEE CASUALTY INSURANCE COMPANY
OPINION OF THE COURT BY CHIEF JUSTICE LAMBERT AFFIRMING
Dayelin Gonzalez Alvarez (Alvarez) was involved in a motor vehicle accident and filed a claim for basic reparation benefits (BRB) from Allstate Property and Casualty Insurance Company (Allstate), her reparation obligor. Per Allstate’s request, Alvarez participated in an examination under oath (EUO), but her attorney refused to allow her to answer questions concerning possible statutory misconduct by her healthcare provider.
Allstate filed a petition in Jefferson Circuit Court pursuant to KRS 1 304.39-280(3) requesting to ask her such questions. The circuit court granted Allstate’s petition and ruled it could ask her about whether she was unlawfully solicited by her healthcare provider and whether her healthcare provider had
1 Kentucky Revised Statutes.
engaged in fraudulent billing practices. Alvarez appealed that ruling, and the Court of Appeals affirmed. After review, we hold that the trial court did not err by granting Allstate’s petition for further questioning, nor did it err by allowing Allstate to ask Alvarez questions regarding potential illegal solicitation and fraudulent billing practices.
I. FACTS AND PROCEDURAL BACKGROUND On January 24, 2022, Alvarez was traveling on I-65 in Jefferson County when the right side of her vehicle was sideswiped by another driver. The police report from the incident classified it as a minor, non-injury collision and noted that Alvarez did not receive any medical treatment at the scene. On January 31, 2022, Alvarez applied for BRB—also known as personal injury protection (PIP) benefits or no-fault benefits—with Allstate, her reparation obligor. Her application asserted that she had been injured as a result of the January 24 accident, and listed her injuries as “neck, shoulders, right hip down to leg, stiff neck.” It further stated that she had not gone to a hospital for medical treatment but had instead been treated by Iroquois Chiropractic (Iroquois). At some point following the accident, the other driver’s insurer settled Alvarez’s injury claim exclusive of BRB.
Four months after submitting her BRB application, Alvarez participated in an EUO at Allstate’s request pursuant to the terms of her policy, which stated, inter alia:
A person making a claim must:
...
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3. Cooperate with us in our effort to investigate the accident or loss and settle any claims.
4. Allow us to take signed and recorded statements, including sworn statements and examinations under oath, separately and apart from others, and answer all reasonable questions we may ask as often as we may reasonably require.
During Alvarez’s brief EUO, Allstate asked her basic background questions such as her personal information and place of employment. It then asked her to describe what occurred before, during, and immediately after the collision up until the time she spoke with police at the scene. Thereafter, Allstate asked, “How did you find Iroquois Chiropractic that you went to?” This garnered an objection from Alvarez’s attorney, who asserted that line of questioning “doesn’t have anything to do with the facts and circumstances of the accident[,]” and instructed her not to answer. The EUO was concluded without further questioning.
Rather than denying Alvarez’s BRB claim outright based on an alleged failure to cooperate with its investigation, Allstate filed a “Petition under KRS 304.39-280(3)” in Jefferson Circuit Court, requesting an “order requiring [Alvarez] to submit to an [EUO] regarding her knowledge of the facts and circumstances surrounding” the accident. Allstate asserted that, as an insurance carrier authorized to conduct business in Kentucky, it had a duty pursuant to KRS 304.47-080(1) “to deter and investigate fraudulent insurance acts[.]” It additionally argued, citing Temple v. State Farm Mut. Ins. Co., 548 S.W.2d 838 (Ky. 1977) and State Farm Mut. Auto. Ins. Co. v. Adams, 526 S.W.3d 63 (Ky. 2017), that an insurance carrier has a right to enforce
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conditions precedent to coverage. Those conditions include, inter alia, requiring a claimant to submit to an EUO and to cooperate with the carrier’s investigation of the claim.
Allstate’s petition further recounted several concerns it had developed as a result of its investigation into Alvarez’s claim. Primarily, it contended that Iroquois is a medical provider that was known by Allstate to solicit patients in violation of KRS 367.4082(1) (“During the first thirty (30) days following a motor vehicle accident a healthcare provider. . . shall not. . . solicit a person involved in a motor vehicle accident for the provision of reparation benefits, as defined by KRS 304.39-020(2)). Allstate also believed that Alvarez’s claimed injuries were too significant for such a minor collision, that her treatment may have been performed by an unlicensed individual, that Iroquois may have billed her for services it did not render, and that it may have billed for treatment to areas of her body that were not injured in the accident. Allstate’s petition specifically listed the following lines of inquiry it wished to pursue during its questioning of her based on the foregoing concerns:
a) Standard background information, including, but not limited to, name, address, previous addresses, co-residence, education history, work history, etc.;
b) Detailed testimony of all the facts and circumstances regarding the subject accident;
c) Complete testimony relative to all claims, injuries, and bills which respondent is submitting as a result of this subject accident;
d) Detailed testimony regarding any communications between [Alvarez] and others regarding this accident;
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e) Detailed testimony regarding pre-existing medical conditions and injuries and related bills arising out of her prior accidents;
f) Detailed testimony regarding claim history; and g) Detailed testimony regarding solicitation.
It further stated that it intended to ask questions that included “in-depth factual details surrounding the subject accident, injuries sustained in the subject accident[,] and the medical treatment [Alvarez] received as a result of the collision.”
During the August 31, 2022, hearing on Allstate’s petition, counsel for Allstate alleged that certain chiropractors in Louisville hire “runners” that monitor chatter on police scanners and go to the scenes of accidents. The runners will then solicit accident victims in violation of state law. Allstate explained that it was concerned Alvarez was unlawfully solicited by Iroquois and was further concerned that Iroquois had engaged in insurance fraud. Allstate clarified that it was not accusing Alvarez of anything untoward; it simply wanted access to information she had regarding her treatment about which it did not expect Iroquois to be forthcoming.
Allstate further expounded that Kentucky’s anti-solicitation statutes provide that any medical bills that result from illegal solicitation are void. KRS 367.4083. Accordingly, if Allstate’s investigation established that Alvarez had been solicited by Iroquois, neither Allstate nor Alvarez would owe Iroquois for her treatment. This would in turn benefit Alvarez because she would have access to more BRB monies than she otherwise would have if the bills issued by Iroquois were not voided. Allstate contended it was illogical for Alvarez’s
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counsel to forbid such questions when no prejudice to her could result from them.
Alvarez’s counsel responded that Adams did not permit Allstate to ask questions that were unrelated to the facts and circumstances of the accident and that the questions it sought to ask fell squarely outside of what Adams allows. Counsel argued Allstate should be required to follow the law and should not be permitted to vex his client by co-opting her into its investigation.
Following the hearing, the circuit court entered an opinion and order on October 14 granting Allstate’s request to “finish” its initial EUO via a second round of questioning under oath. It found:
Allstate has been investigating the circumstances around Ms.
Alvarez’s claim, including a first EUO on April 4, 2022. As part of their investigation, Allstate has developed suspicions that Ms.
Alvarez may have been improperly solicited for medical care the day after the accident. Allstate now seeks a second EUO to further investigate “the circumstances surrounding the accident.” [Adams, 526 S.W.3d at 68]. Ms. Alvarez objects to this second EUO, arguing that Allstate already gathered all the information it needs at the first EUO.
Kentucky law does not prohibit a second EUO, and the circumstances of this case warrant it. EUO’s (sic) are permissible for investigating the circumstances surrounding an accident.
Adams, 526 S.W.3d at 68. While Ms. Alvarez would limit the circumstances to just the accident itself, the scope is necessarily broader. The medical care received as a result of an accident logically falls under the circumstances surrounding an accident. If insurance companies are required to investigate claims to prevent fraud, then they must be able to carry out those investigations.
KRS 304.47-080. Allstate’s request here is proper and not an attempt to unduly harass or delay Ms. Alvarez and her claim.
The court ordered that a second EUO take place within thirty days of the issuance of the order. However, the parties thereafter disputed what
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questioning the order permitted: counsel for Alvarez believed it allowed Allstate to ask questions “about medical treatment and injuries[,]” but did not allow it to ask questions about solicitation. Counsel for Allstate believed the antisolicitation statutes were clearly the crux of the hearing and order, but nevertheless filed a motion to enforce the court’s October 14 opinion and order. The court held a hearing on Allstate’s motion to enforce and reiterated that it meant what it said in its initial order: Alvarez must participate in a second round of questioning under oath and answer Allstate’s questions, solicitation questions included. However, it cautioned Allstate that the questioning should not take more than a few hours and that the court would not allow it to become a weeks-long investigation.
On November 30, the court entered a second order that counsel for Allstate had previously tendered as an attachment to its motion to enforce. The order provided that the questioning “shall include questioning regarding[] alleged injuries from subject accident, medical treatment for subject accident[,] and solicitation[,]” and “shall also include questioning on all other matters Allstate has outlined within their petition.” It further ordered Alvarez to produce the following at least ten days prior to the date of the questioning:
1. All documents in [her] possession which support, or which are related to, any and all claims [she] is making to Allstate regarding this accident, including, but not limited to, correspondence, medical and treatment records, medical bills, receipts, employment records[,] and evidence to support the occurrence of this accident and how it occurred.
2. Any damage estimates, repair records, photographs or video of the vehicles involved in this accident, prior to and following the subject accident.
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The court struck the portion of the proposed order that requested Alvarez’s telephone records from January 25, 2022, to January 31, 2022. Alvarez thereafter filed a notice of appeal to the Court of Appeals, which challenged both the October 14 and November 30 circuit court orders.
A split Court of Appeals panel affirmed. Alvarez v. Allstate Prop. & Cas.
Ins. Co., No. 2023-CA-0013-MR, 2024 WL 3210270, at *2 (Ky. App. June 28, 2024). The majority reasoned that because claimants are only “entitled to receive BRB for motor vehicle accident-related losses, reparation obligors are entitled to conduct a reasonable investigation to determine if such relationship exists.” Id. To expedite those investigations, it went on, the Kentucky Motor Vehicle Reparations Act (MVRA) provides for the disclosure of certain information by a claimant, and when a dispute arises regarding what information must be disclosed, KRS 304.39-280(3) allows an obligor to petition the appropriate circuit court for further discovery, including questioning under oath. Id. Alvarez asserted that the scope of that questioning must be limited to the accident itself. Id. The Court of Appeals rejected this argument, and agreed with the circuit court’s conclusion that “the scope is necessarily broader.” Id. It explained that
As in Adams, some of the issues listed by Allstate pertained to the acquisition of accident-related information. Moreover, Allstate's claim investigation deemed Alvarez's claim suspicious. Indeed, the day after the accident, Alvarez went to a medical provider known by Allstate to solicit in violation of Kentucky law. Further, the medical provider billed Alvarez for an “extensive amount of chiropractic treatment” resulting from a “non-injury collision” with “minor” damage to both vehicles. Allstate further expressed
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concerns that the medical provider billed for services not rendered and that an unlicensed individual performed the treatments allegedly rendered to Alvarez.
Id. at *3. It accordingly held that the circuit court did not abuse its discretion in finding that Allstate had demonstrated good cause under KRS 304.39-280(3) for further questioning. Id.
Alvarez filed a motion for discretionary review of the Court of Appeals’
opinion with this Court. We granted her motion and heard oral arguments, and this case is now before us for decision. Additional facts are discussed below as necessary.
II. ANALYSIS
This matter requires this Court to address two issues: (1) whether the circuit court erred in finding good cause to grant Allstate’s petition for further questioning under KRS 304.39-280; and (2) as a matter of first impression, whether the circuit court violated Adams by permitting the substance of that questioning to include inquiries regarding alleged illegal solicitation and insurance fraud.
Although this appeal presents matters of first impression, we do not paint on a blank canvas. As always, our primary obligation is to honor the language of, and policy considerations behind, the MVRA. KRS 304.39-010, et seq. Over five decades ago now, the General Assembly adopted the MVRA to serve the following purposes:
(1) To require owners, registrants and operators of motor vehicles in the Commonwealth to procure insurance covering basic
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reparation benefits and legal liability arising out of ownership, operation or use of such motor vehicles;
(2) To provide prompt payment to victims of motor vehicle accidents without regard to whose negligence caused the accident in order to eliminate the inequities which fault-determination has created;
(3) To encourage prompt medical treatment and rehabilitation of the motor vehicle accident victim by providing for prompt payment of needed medical care and rehabilitation;
(4) To permit more liberal wage loss and medical benefits by allowing claims for intangible loss only when their determination is reasonable and appropriate;
(5) To reduce the need to resort to bargaining and litigation through a system which can pay victims of motor vehicle accidents without the delay, expense, aggravation, inconvenience, inequities and uncertainties of the liability system;
(6) To help guarantee the continued availability of motor vehicle insurance at reasonable prices by a more efficient, economical and equitable system of motor vehicle accident reparations;
(7) To create an insurance system which can more adequately be regulated; and
(8) To correct the inadequacies of the present reparation system, recognizing that it was devised and our present Constitution adopted prior to the development of the internal combustion motor vehicle.
KRS 304.39-010 (emphasis added). Put simply, the legislature recognized the delay in coverage and general mayhem that resulted from our previous system of requiring a fault determination prior to allowing individuals involved in motor vehicle accidents to obtain coverage for medical care and other losses. It therefore implemented our current no-fault system that mandates a maximum of $10,000.00 in BRB to be paid for qualifying losses regardless of who was at fault for the underlying accident. KRS 304.39-010(2), (3); KRS 304.39-040(1)
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(“Basic reparation benefits shall be paid without regard to fault.”). BRB “are payable monthly as loss accrues[,]” unless the obligor rejects the claim and provides written notice and an explanation for the rejection. KRS 304.39- 210(1), (5).
Thus, the MVRA is a remedial statutory scheme and must be liberally construed to effectuate its beneficial purposes for motor vehicle accident victims. Coleman v. Bee Line Courier Serv., Inc., 284 S.W.3d 123, 130 (Ky. 2009) (collecting cases). In order to effectuate those beneficent purposes, the MVRA directs that “[i]f the accident causing injury occurs in this Commonwealth every person suffering loss from injury arising out of maintenance or use of a motor vehicle has a right to reparation benefits[.]” 2 KRS 304.39-030(1) (emphasis added). Those benefits include, inter alia, medical expenses which are defined under the Act as “reasonable charges incurred for reasonably needed products, services, and accommodations[.]” KRS 304.39-020(5)(a). And, significantly, the Act directs that “[t]here shall be a presumption that any medical bill submitted is reasonable.” Id. (emphasis added).
A. The circuit court did not err by granting Allstate’s petition for further questioning under oath pursuant to KRS 304.39-280(3).
The threshold issue before us is whether the circuit court erred by finding that Allstate demonstrated good cause to grant its petition for further questioning of Alvarez under oath. The MVRA provides, in relevant part, that
2 Unless that right has been explicitly rejected pursuant to KRS 304.39-060(4).
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[i]n case of dispute as to the right of a claimant or reparation obligor to discover information required to be disclosed, the claimant or reparation obligor may petition the Circuit Court in the county in which the claimant resides for an order for discovery including the right to take written or oral depositions. Upon notice to all persons having an interest, the order may be made for good cause shown.
KRS 304.39-280(3). Accordingly, a petition under KRS 304.39-280(3) may be granted only “for good cause shown.” A good cause determination “is essentially one of reasonableness to be determined by the particular facts of each case.” Deadwyler v. Grange Prop. & Cas. Ins. Co., 697 S.W.3d 539, 543 (Ky. App. 2024) (quoting Nichols v. Ky. Unemployment Ins. Comm'n, 677 S.W.2d 317, 321 (Ky. App. 1984)). This Court must accordingly review the circuit court’s decision to grant Allstate’s petition under the deferential abuse of discretion standard, id., and will affirm unless the circuit court’s “decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles.” Commonwealth v. English, 993 S.W.2d 941, 945 (Ky.1999).
As the Court of Appeals previously observed in Deadwyler, “[s]cant jurisprudence exists illuminating an answer to the question when a party petitioning for an EUO has adequately shown good cause.” 697 S.W.3d at 544. Nevertheless, it went on to conclude, and we agree, that the case law concerning CR 3 35.01 provides sufficient “guidance by analogy.” Id. CR 35.01 permits a court to order a party or a person in the custody of or under the legal control of a party to submit to an involuntary medical examination (IME).
3 Kentucky Rules of Civil Procedure.
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Similar to a petition under KRS 304.39-280(3), an order for an IME under CR 35.01 may be granted “only on motion for good cause shown and upon notice to the person to be examined and to all parties[.]” As the Deadwyler Court explained:
Good cause under CR 35.01 requires the movant to demonstrate that the issue the movant seeks to resolve by IME “‘is really and genuinely in controversy[.]’” Metro. Prop. & Cas. Ins. Co. v.
Overstreet, 103 S.W.3d 31, 39 (Ky. 2003) (quoting Schlagenhauf v.
Holder, 379 U.S. 104, 118 (1964)). Further, “[g]ood cause is shown when information of the same degree of reliability is not available from another source and it is useful in the preparation, trial, or disposition of the cause.” Perry v. Commonwealth, ex rel.
Kessinger, 652 S.W.2d 655, 660 (Ky. 1983). A CR 35.01 motion should be denied “[o]nly if no additional relevant information could be gleaned from such an examination[.]” Taylor v. Morris, 62 S.W.3d 377, 380 (Ky. 2001) (citing Duncan v. The Upjohn Co., 155 F.R.D. 23, 25 (D. Conn. 1994)).
697 S.W.3d at 544 (internal parallel citations omitted).
Point being, “good cause” is by no means a high bar, and in this case Allstate’s petition certainly satisfied it. Alvarez, Allstate’s insured, was in a minor car accident and sought BRB for treatment she received from a chiropractor. Allstate contended that the chiropractor was “known by” it to unlawfully solicit motor vehicle accident victims. Allstate was also concerned that the chiropractor had engaged in fraudulent billing practices based on the disparity between the minor nature of the accident and the bills it received in relation to Alvarez’s treatment. How Alvarez came to treat with Iroquois, and whether the treatment it billed for corresponded with the treatment she actually received, assuming she remembers, are both matters within Alvarez’s knowledge.
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Although Alvarez participated in an EUO, as required by her policy, her counsel instructed her not to answer Allstate’s questions about potential solicitation by Iroquois. And, given her counsel’s consistent stance that the “circumstances of the accident” under Adams is limited to the accident itself, he presumably would have done the same for any questions regarding fraudulent billing. As Allstate believed it was entitled to information about those subjects, a dispute arose “as to the right of [the]. . . reparation obligor to discover information required to be disclosed[.]” KRS 304.39-280(3). Because we conclude below that solicitation and insurance fraud are proper subjects for an obligor to explore during an EUO, we cannot conclude that the circuit court’s finding of good cause for additional questioning “was arbitrary, unreasonable, unfair, or unsupported by sound legal principles.” English, 993 S.W.2d at 945.
B. The circuit court did not err by permitting Allstate’s questioning to include inquiries about potential solicitation and insurance fraud.
The next issue we must address is whether the circuit court erred in permitting the content of Allstate’s questioning to include questions about solicitation and insurance fraud. The questions a reparation obligor is or is not permitted to ask during questioning under oath is a question of law we review de novo, affording no deference to the circuit court’s ruling. See Adams, 526 S.W.3d at 65 (citing Cumberland Valley Contractors, Inc. v. Bell Cnty. Coal Corp., 238 S.W.3d 644, 647 (Ky. 2007)).
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Our jurisprudence’s leading case on this issue is Adams. In Adams, State Farm insured a vehicle owned by Milton Mitchell. 526 S.W.3d at 64. Mitchell was stopped at a red light with three passengers—Roniesha Adams, her minor child, and the child’s father, Barry—when another vehicle struck him in the rear and fled the scene. Id. Mitchell, Adams, and Barry each asserted claims against State Farm seeking BRB and uninsured motorist coverage under Mitchell’s policy. Id. State Farm initially made those payments, but suspended them after its investigator obtained inconsistent, unsworn statements from the trio regarding “where they were going that day, where they had been, and what happened when they were hit.” Id. State Farm was also suspicious of the fact that Adams and Barry had been in several motor vehicle accidents the year prior. Id. Seeking to resolve its concerns, State Farm informed Mitchell, Adams, and Barry that Mitchell’s policy 4 required them to submit to questioning under oath regarding four issues:
Whether the bodily injury or property damage was caused by the accident.
Whether the injury was caused by a hit-and-run motor vehicle, so as to qualify as an uninsured motor vehicle under the Uninsured Motor Vehicle coverage.
Whether the accident arose out of the ownership, maintenance, or use of an uninsured motor vehicle as defined in the policy.
If [Mitchell, Adams, or Barry] . . . has made false statements with the intent to conceal or misrepresent any material fact or circumstance in connection with any claim under [the] policy.
4 Mitchell’s policy, like Alvarez’s policy, mandated any individual seeking
coverage to “submit to an examination under oath, provide a statement under oath, or do both as reasonably often as [the obligor may] require.” Id. at 64 n.1.
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Id. Mitchell participated in questioning, and State Farm provided coverage to him. Id. at 65. Adams and Barry, however, refused to submit to questioning, and State Farm denied them any further payments. Id. Adams and Barry sued State Farm, and State Farm filed a counterclaim seeking a declaratory judgment that it did not have to provide them coverage because they failed to cooperate in its investigation. Id. The circuit court ruled in State Farm’s favor, finding that “[u]nder the terms of the policy, the plaintiffs failed to cooperate in the investigation of their claims, thus their claims for BRB and uninsured motorist benefits are barred.” Id. Adams appealed, Barry did not, and the Court of Appeals reversed based on its holding that State Farm had to obtain a court order before it could require Adams to sit for questioning under oath. Id.
Thus, the Adams Court addressed “whether [a reparation obligor] is permitted unilaterally to require that a person seeking coverage undergo questioning under oath[,]” as well as what the substance of that questioning may entail. Id. at 64, 67-68. As to the first issue, the Court held that “[b]ecause a claimant is only entitled to receive BRB for motor vehicle accident- related losses, reparation obligors are entitled to conduct a reasonable investigation to determine if such a relationship exists[,]” and that “nothing in the MVRA [prevented] State Farm from requiring a person seeking benefits under the policy to submit to a statement under oath as to the circumstances surrounding the accident.” Id. at 66, 68; accord Temple, 548 S.W.2d at 840.
As for what State Farm was permitted to ask during that questioning, the
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Court first discussed that the MVRA provides mechanisms for the disclosure of information concerning a claimant’s medical information. Id. at 66-67. Specifically, KRS 304.39-280(1)(b) directs that
[t]he claimant shall deliver to the reparation obligor a copy of every written report, previously or thereafter made, relevant to the claim, and available to him, concerning any medical treatment or examination of a person upon whose injury the claim is based and the names and addresses of physicians and medical care facilities rendering diagnoses or treatment in regard to the injury or to a relevant past injury, and the claimant shall authorize the reparation obligor to inspect and copy relevant records of physicians and of hospitals, clinics, and other medical facilities.
Id. at 66 (emphasis added). It further noted KRS 304.39-280(3)’s means of resolving a dispute regarding discoverable evidence via a petition for further discovery, as well as KRS 304.39-270(1)’s authorization for an obligor to “petition the circuit court for an order directing the [claimant] to submit to . . . examination by a physician[,]” if the mental or physical condition of the claimant is material to a BRB claim. Id. at 67. Accordingly, the Adams Court concluded that “the MVRA provides for the disclosure of medical information, and it provides a method to obtain that information if it is not forthcoming and a method to resolve disputes regarding a claimant’s physical and mental condition.” Id. (emphasis added). “However,” it went on, “the MVRA does not specifically provide for the disclosure of information regarding the underlying motor vehicle accident.” Id. (emphasis added). The Court therefore concluded that
because the MVRA specifically provides for the sharing of documentation regarding a claimant’s medical condition and methods for resolving disputes regarding failure to provide that
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documentation as well as for resolving disputes regarding a claimant’s mental or physical condition, a reparation obligor must avail itself of the provisions of the MVRA to resolve such issues. A reparation obligor cannot attempt to resolve those issues through “questioning under oath” or any other similar procedure that is outside the boundaries established by the MVRA.
Id. at 68. Notwithstanding, it determined that “nothing in the MVRA prevents [a reparations obligor] from requiring a person seeking benefits under [a] policy to submit to a statement under oath as to the circumstances surrounding the accident.” Id.
The Court then went on to address the four specific categories of questioning State Farm sought via questioning of Adams under oath. Id. As to the first—“whether bodily injury or property damage was caused by the accident”—the Court held “[involved] medical information and State Farm should have pursued resolution of that issue through the provisions of the MVRA.” Id. The second and third issues—“whether injury was caused by a hit-and-run vehicle[,]” and “whether the accident arose out of the ownership, maintenance, or use of an uninsured motor vehicle”—the Court held were “related to the accident itself and are proper subjects for questioning under oath.” Id. As to the fourth and final issue—“whether Adams had made false statements in connection with her claim”—the Court held it may have “[involved] both medical and accident-related questions[,]” and any medical- related questions should have been pursued through the MVRA. Id. In sum, “[b]ecause some of the issues listed by State Farm involved the acquisition of accident-related information, the circuit court correctly found that Adams was
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required to submit to questioning under oath regarding those issues as a condition precedent to coverage.” Id.
Although Adams is distinguishable in some ways on its facts, 5 its practical takeaway that is applicable for our purposes is this: if the MVRA provides a means to obtain a particular category of information, an obligor must utilize the means provided for under the MVRA to obtain it. But, if the MVRA does not provide a means to obtain certain information, and does not otherwise forbid it, an obligor may use an EUO to attempt to obtain that information. With this tenet as our guidepost, we now address whether solicitation and insurance fraud are proper subjects for questioning in an EUO.
1) Solicitation The MVRA is altogether silent on the matter of illegal solicitation.
Rather, the statutes concerning solicitation are housed within Kentucky’s Consumer Protection Act (CPA). KRS 367.4082(1) of the CPA directs that
[d]uring the first thirty (30) days following a motor vehicle accident a healthcare provider or an intermediary, at the request or direction of a healthcare provider, shall not solicit 6 or knowingly
5 By way of example: In Adams, the obligor initially made payments to the
claimants but thereafter suspended the payments and ultimately denied the claim based on the claimant’s refusal to sit for an EUO as a condition precedent to coverage. Here, Alvarez participated in an EUO, and Allstate has never made BRB payments to Alvarez nor formally denied her claim. And, in Adams, the obligor suspected the claimant of misconduct whereas, here, Allstate suspects a healthcare provider of misconduct.
6 KRS 367.4081(4)(a) defines “solicit” as
the initiation of communication with a person involved in a motor vehicle accident, including but not limited to any face-to-face contact with the person, in writing, electronically, or by any form of telephonic communication, in anticipation of financial gain or remuneration for the communication itself or for prospective charges for healthcare services.
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permit another individual to solicit a person involved in a motor vehicle accident for the provision of reparation benefits, as defined by KRS 304.39-020(2).
It further provides that “[a]ny charges owed by, or on behalf of, a person involved in a motor vehicle accident for health services rendered by a healthcare provider to the person, in violation of KRS 367.4082, shall be void[,]” and that
[a]ny charges billed and paid by, or on behalf of, a person of a motor vehicle accident for health services rendered by a healthcare provider to the person, in violation of KRS 367.4082, shall be returned to the reparations obligor or other payor. The healthcare provider who violates KRS 367.4082 shall not pursue collection from the person.
KRS 367.4083(1)-(2). As the MVRA does not address solicitation, it does not provide a statutory means for an obligor to obtain information regarding whether a claimant was unlawfully solicited. The CPA likewise does not provide a means for an obligor to obtain that information. It therefore would not run afoul of Adams to permit an obligor to ask questions during an EUO regarding whether a claimant was solicited.
Additionally, we conclude that whether a claimant was unlawfully solicited following an automobile accident falls under the umbrella of “circumstances surrounding the accident[]” pursuant to Adams. 526 S.W.3d at 68. In other words, although Alvarez asserts that phrase should be limited to
Public advertising; telemarketing which is taken from a general list of phone numbers, is not directed at motor vehicle accident victims, and does not violate Kentucky’s prohibition on telephone solicitation under KRS 367.46951 to 367.46999 and 367.990; and contact between a healthcare provider and an individual with a pre- existing provider-patient relationship with that provider are excluded from the definition of “solicit.” KRS 367.4081(4)(b).
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the accident itself, we agree with both of the lower courts’ conclusions that it must necessarily be broader. And, at any rate, solicitation certainly does not fall under the umbrella of information about “a claimant’s medical condition[.]” Id. at 68. Based on the foregoing, the circuit court did not err in permitting Allstate to inquire about Alvarez’s potential solicitation via questioning under oath.
2) Intentional Misrepresentations of Fact Unlike solicitation, the MVRA does discuss benefits that are paid as the result of “intentional misrepresentations of material fact.” KRS 304.39-210(4). We conclude that the fraudulent acts that Allstate suspects Iroquois of committing in this case—billing for unrendered services, billing for treatment to body parts not injured in the subject accident, and/or allowing an unlicensed individual to provide treatment—would fall into this category. However, the statutory provision that discusses said misrepresentations does not contain any means for an obligor to obtain information about those potential misrepresentations. Rather, it simply states:
A reparation obligor may bring an action to recover benefits which are not payable, but are in fact paid, because of an intentional misrepresentation of a material fact, upon which the reparation obligor relies, by the insured or by a person providing an item of medical expense. The action may be brought only against the person providing the item of medical expense, unless the insured has intentionally misrepresented the facts or knows of the misrepresentation. An insurer may offset amounts he is entitled to recover from the insured under this subsection against any basic or added reparation benefits otherwise due.
KRS 304.39-210(4). There is no other provision in the MVRA that provides a means to obtain information regarding whether a healthcare provider has
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perpetrated the kind of fraud that Allstate alleges. Thus, we conclude it is proper for Allstate to ask questions of Alvarez, to the extent she can answer them, regarding whether Iroquois perpetrated fraud and affirm the circuit court’s ruling in that regard.
Certainly, consistent with Adams, Allstate must utilize the means provided by the MVRA to obtain Alvarez’s treatment records. But those records, alone, do nothing to illuminate the issue of whether Iroquois’ billing practices were fraudulent. For example, Allstate could obtain Alvarez’s treatment records through KRS 304.39-280. It could then use the EUO process to ask Alvarez: “Your treatment records indicate that Iroquois performed heat and stim treatment and billed us for it. Did they perform heat and stim treatment on you?” If she were to respond in the negative, Allstate’s suspicions would potentially be confirmed. But Allstate could not do that without the ability to have Alvarez either confirm or dispute what exists within the four corners of her medical records and bills. Thus, although this line of questioning treads closer to “a claimant’s medical condition” than solicitation questions, we cannot conclude such questioning would violate Adams because the questions Allstate desires to ask cannot be answered simply by obtaining Alvarez’s medical records through the MVRA; it also requires her personal knowledge of what actually occurred in order to cross-reference that knowledge with what it was billed for.
Notwithstanding, as a final note, we are compelled to highlight that Allstate has yet to either pay Alvarez’s BRB claim or formally deny it. To be
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clear, absent a formal denial, Allstate should not have withheld payment of Alvarez’s BRB until such time as it was satisfied that neither solicitation nor insurance fraud occurred. While this Court does not dispute that insurance providers have a duty to investigate potential illegal activity, we are unable to conclude that duty trumps or invalidates an individual’s entitlement to prompt BRB payments. See KRS 304.39-030(1) (“[E]very person suffering loss . . . has a right to basic reparation benefits[.]”); KRS 304.39-020(5)(a) (“There shall be a presumption that any medical bill submitted is reasonable.”).
To hold otherwise would unmistakably and unacceptably frustrate the MVRA’s explicit purposes. See KRS 304.39-010(3) and (5). Indeed, permitting an obligor to withhold BRB until it is satisfied that illegal activity by a healthcare provider did not occur would place claimants in a similar position as the pre-no-fault system that the MVRA was designed to remedy. Assuming a claimant otherwise satisfies the conditions precedent to coverage under a given policy, there is no reason that claimant should be burdened by not receiving the BRB to which he or she is legally entitled because an obligor is suspicious of a healthcare provider.
Thus, to the extent permitted, reparation obligors may question their claimants in an effort to investigate potentially illegal activity on behalf of medical providers, but they may not withhold payment of BRB while they do so. Rather, they must pay those expenses to claimants monthly as they accrue, KRS 304.39-210(1), and, if their suspicions of illegal activity are
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substantiated, they must seek repayment of those monies as provided for under KRS 304.39-210(4) of the MVRA and/or KRS 367.4083 of the CPA.
KRS 304.39-210(4) provides that “[a] reparation obligor may bring an action to recover benefits which are not payable, but are in fact paid, because of an intentional misrepresentation of material fact.” (Emphasis added). Compare this language with KRS 304.39-215, the statute that immediately follows it. That section forbids any referral by a healthcare provider to a person or entity with whom the provider has either an ownership or investment interest or a compensation arrangement. KRS 304.39-215(2). But, unlike KRS 304.39-210(4), which contemplates payment by the obligor followed by an action to recover that payment, KRS 304.39-215(4)(a) directs that “[n]o insurer shall be required to pay basic or added reparations benefits to a person or entity for heath care services referred to that person or entity in violation of this section.” (Emphasis added). If the General Assembly had contemplated that an obligor could withhold payment of BRB until it was satisfied that an intentional misrepresentation of material fact had not occurred, it would have worded KRS 304.39-210(4) in the same manner it worded KRS 304.39- 215(4)(a). It did not.
Similarly, KRS 367.4083(2) of the CPA states that “Any charges billed and paid by, or on behalf of, a person of a motor vehicle accident for healthcare services rendered by a healthcare provider to the person, in violation of KRS 367.4082 [(the anti-solicitation statute)], shall be returned to the reparations obligor.” (Emphasis added). Again, the clear presumption contemplated by
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statute is for the obligor to pay BRB first, and then seek indemnification if its investigation does uncover illegal activity.
III. CONCLUSION
Based on the foregoing, we affirm the Court of Appeals.
All sitting. Bisig, Conley, Goodwine, Keller, and Nickell, JJ., concur. Thompson, J., concurs in result only by separate opinion.
THOMPSON, J., CONCURRING IN RESULT ONLY: I am troubled by the open-ended latitude of what an insurance company is allowed to ask in examinations under oath (EUO), especially when it comes to questions about solicitation in violation of KRS 367.4082. Pursuing chiropractors for running afoul of the solicitation law is largely irrelevant to pursuing information relating to a motor vehicle accident. Therefore, I would strictly limit what insurance companies are allowed to ask about this topic. I agree with the common-sense limit provided by the trial court, which was quoted in Deadwyler v. Grange Prop. & Cas. Ins. Co., 697 S.W.3d 539, 543 (Ky. App. 2024):
1) Were you referred to [health care provider] within thirty (30) days of the [date of the] motor vehicle collision? If the answer is “no,” then the inquiry is over. If the answer is “yes,” counsel may ask the next question.
2) If so, what is the name of the person who referred you?
More extensive inquiries are not appropriate, and I disagree with the interpretation of State Farm Mut. Auto. Ins. Co. v. Adams, 526 S.W.3d 63, 68 (Ky. 2017), provided in Deadwyler that “[s]o long as the inquiry does not veer into questions regarding the actual provision of medical care, it is not prohibited by statute or case law.” 697 S.W.3d at 545. Our Courts should set
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appropriate limits to avoid initial and subsequent EUO from becoming fishing expeditions and imposing unnecessary burdens on insureds.
Accordingly, I concur in result only.
COUNSEL FOR APPELLANT:
John Patrick Ward, Jr. Ward & Simms PLLC
COUNSEL FOR APPELLEE:
Eric Shawn Rice Daniel S. Gumm Robert Christian Garrison Rice Gumm PLLC