The Bulging Disc and the No-Fault Threshold
A rear-end collision on Nimitz Highway: our insured struck a stopped vehicle at roughly 25 mph. The claimant's own PIP carrier has paid $4,400 in chiropractic treatment and $1,800 in wage loss; neither the $10,000 PIP limit nor the policy's monthly wage-loss cap of $1,200 is exhausted. Claimant's attorney demands $35,000 for pain and suffering, asserting a 'bulging disc' on MRI and six weeks of care. Total medical expenses incurred to date are $4,400. The chiropractor notes no surgery, no nerve impingement, and has not rated permanency. Our insured carries 20/40/10 liability limits with no excess coverage. The demand letter allows ten days to pay before suit is filed, and the claimant's treatment is still ongoing.
1. May the claimant pursue a tort claim for pain and suffering against our insured on these facts? Explain the analysis and state what you do before answering the demand.
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Framing. Hawaii's no-fault law (HRS ch. 431:10C) abolishes tort liability for pain and suffering arising from a motor vehicle accident unless the injury crosses the statutory threshold: medical expenses exceeding $5,000, or a 'serious injury' as defined in the statute (death, fracture, permanent loss of a body function or member, permanent disfigurement, and similar objective conditions).
Application. Damages incurred are $4,400, below the $5,000 medical threshold. A disc bulge on MRI, standing alone and without herniation, nerve impingement, surgery, or a permanency rating, is generally not the kind of objective, permanent injury the definition contemplates. But that is a conclusion the file must support, not one to be drawn from opposing counsel's letter.
Action before responding. Request the complete chiropractic records, the MRI report and radiologist's read (not just the treating chiropractor's summary), a treating-physician narrative addressing permanency, and any prior medical history for the same region. Consider an IME if permanency is asserted. Confirm the claimant's PIP file and lien status. Then respond in writing within the ten-day window, neither admitting nor denying the threshold, reserving all rights, and stating the records needed. Do not pay general damages on an undocumented threshold.
2. Which of the claimant's economic losses can still be pursued against our insured in tort, and how do you prevent paying the same dollar twice?
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Rule. The tort threshold bars only non-economic (pain and suffering) recovery. Economic damages not paid by PIP - medical expenses above the PIP limit, wage loss above the PIP wage-loss cap, and similar out-of-pocket items - remain recoverable in tort regardless of whether the threshold is met.
Computation on these facts. Medical expenses of $4,400 fall entirely within the $10,000 PIP limit, so no uncovered medical loss exists. Wage loss is $1,800; with a $1,200 monthly cap and roughly one month of lost time, $600 is uncovered and recoverable.
Avoiding duplication. Obtain the PIP payment log from the claimant's carrier and confirm its subrogation or reimbursement interest. Any settlement must be structured so the claimant does not collect the same economic item from both PIP and our insured, and the release should address the PIP lien so the carrier's recovery right is not extinguished by our payment. Paying the $600 without that coordination invites a double payment and a later lien claim against the settlement.
3. The demand expires in ten days and threatens suit. What does Hawaii's unfair claim settlement practice standard require you to do now?
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Standard. HRS 431:13-103 defines unfair claim settlement practices, and the core duties are procedural: acknowledge and act reasonably promptly on communications, conduct a reasonable investigation before denying or offering, not refuse to pay without a reasonable basis, and not fail to attempt good-faith settlement where liability is reasonably clear.
Application. Ten days is not a reasonable period to complete a threshold determination requiring records and a permanency opinion, and ignoring the letter is the worst option - silence and delay are what the statute targets. Send a written response that: acknowledges receipt and the deadline; identifies the specific records and authorizations needed; commits to a realistic evaluation date; reserves all rights, including the no-fault threshold defense; and invites counsel to supply the MRI read and permanency narrative directly.
File discipline. Document the request, the date sent, and any non-response. If the records later show documented permanency, re-evaluate promptly and do not defend a position the evidence no longer supports - a low offer in the face of clear liability creates exposure under the same statute. Note that settlement value is driven by the economic loss plus a general-damages figure only if the threshold is crossed.