New Jersey Automobile Medical Fee Schedule Held to Apply to New York No-Fault Claim

NO-FAULT – NEW JERSEY FEE SCHEDULE – PREVAILING FEE IN THE GEOGRAPHIC LOCATION OF THE PROVIDER – EXCESSIVE FEE DEFENSE PRECLUSION
Surgicare Surgical Assoc. v National Interstate Ins. Co.
(App. Term, 1st Dept., decided 10/8/2015)

It's not that the care for persons injured in New York motor vehicle accidents is better in New Jersey.  It's that some providers think the New York Workers' Compensation Fee Schedule does not apply to health care services rendered in New Jersey and they get to charge New York no-fault insurers whatever they want for such services.  An appellate-level court in New York has finally addressed this issue, holding:

where a reimbursable health care service is performed outside the State of New York in a jurisdiction that has enacted a medical fee schedule prescribing the permissible charge for the service rendered, an insurer may properly rely on such fee schedule to establish the "prevailing fee" within the meaning of 11 NYCRR 68.6, and demonstrate compliance therewith by payment in accordance with that fee schedule.

Plaintiff's patient was injured in in a New York motor vehicle accident but treated at plaintiff's New Jersey location. Plaintiff billed defendant National Interstate $10,800 for arthroscopic knee surgery, but National Interstate paid only $5,996.67 in accordance with the New Jersey Automobile Medical  Fee Schedule.  Plaintiff brought this action for the $4,803.33 difference between the billed and paid amounts.  Bronx County Civil Court GRANTED National Interstate's CPLR 3211 motion to dismiss the complaint, and plaintiff appealed.

In AFFIRMING, the order appealed from, the Appellate Term, First Department, first noted that New York Insurance Regulation (11 NYCRR) § 68.6 provides that "[i]f a professional health service reimbursable under Insurance Law § 5102(a)(1) is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider."  The appellate court then cited and relied on a 2003 opinion letter of the then-New York State Insurance Department (who remembers those?) in holding:

Significantly, the Superintendent of Insurance issued an opinion letter stating that the reimbursement amount under section 68.6 "is determined by the permissible cost" in the out-of-state location (Guatemala) (see Ops Gen Counsel NY Ins Dept No 03-04-03 [Apr 2003]). The Superintendent's interpretation is entitled to deference, since it is neither irrational nor unreasonable, nor counter to the clear wording of a statutory provision (see LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [2009]). Indeed, the Superintendent's reliance upon the "permissible cost" in the foreign jurisdiction is consistent with [*2]the legislative purpose underlying Insurance Law § 5108 and implementing regulations - to "significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium" (Goldberg v Corcoran, 153 AD2d 113, 118 [1989], appeal dismissed 75 NY2d 945 [1990]). 

Applying section 68.6 as interpreted by the Superintendent, the "prevailing fee in the geographic location of a provider" is the "permissible" reimbursement rate authorized in the foreign jurisdiction. Here, the permissible rate authorized in New Jersey for the services rendered by plaintiff is set forth in New Jersey's no-fault statute and applicable fee schedule. Allowing plaintiff to bill at a rate significantly higher than the permissible charges in the New Jersey fee schedule would undermine the purpose of Insurance Law § 5108, and thwart the core objectives of the No-Fault Law - "to provide a tightly timed process of claim, disputation and payment" (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 319 [2007][citation omitted]), to "reduce the burden on the courts and to provide substantial premium savings to New York motorists" (Matter of Medical Socy. of State of NY v Serio, 100 NY2d 854, 860 [2003]).

Contrary to plaintiff's claim, the omission of the term "fee schedule" from the regulation does not indicate that its exclusion was intended. Construed within the context of the regulation, whose scope and application broadly extends to all geographic locations outside the State of New York, the legislature's use of the comprehensive term "prevailing fee," rather than the less inclusive term "fee schedule," comports with common sense and the reality that the different jurisdictions have not unanimously adopted a no-fault regime, and/or uniformly based the permissible reimbursement charge upon a medical fee schedule.

Plaintiff provider also argued that National Interstate's excessive fee/fee schedule defense was precluded because it was not raised within 30 days of defendant's receipt of the plaintiff's bill.  In rejecting that argument, the appellate court further held that "since the services here were rendered after April 1, 2013, the defense of excessive fees is not subject to preclusion (see 11 NYCRR 65-3.8[g][eff Apr. 1, 2013)."

On the same day (October 8, 2015), the Appellate Term, First Department, issued a similar decision in Cliffside Park Imaging & Diagnostic v Travelers Ins. Co., holding that "[i]nasmuch as the health services underlying plaintiff's no-fault claim were rendered in New Jersey, defendant may properly rely upon the New Jersey fee schedule to establish the 'prevailing fee' within the meaning of 11 NYCRR 68.6[.]"