Saddle Brook Surgicenter, LLC v. All State Ins. Co., 2015 N.Y. Slip Op. 25099 (Civ. Ct., Bronx 4/7/2015)
In a case of first impression, the New York City Civil Court, Bronx County held that pursuant to the 2013 amendment to the No-Fault regulations, a No-Fault insurer’s defense based on billing in excess of the applicable fee schedule need not be precluded in a timely denial. The court also reiterated its prior holding that where a New York No-Fault claimant treats in New Jersey, the New Jersey PIP fee schedule constitutes the “prevailing rate” for the purposes of determining the permissible fee for the services provided.
In this case, the plaintiff, a New Jersey medical provider, provided treatment to an eligible injured party under a New York No-Fault claim. The plaintiff submitted a claim to the defendant in the amount of $11,778.00 and the defendant issued payment in the amount of $1,629.75 in accordance with the amount permitted under the New Jersey PIP fee schedule. The defendant did not issue a denial. The plaintiff commenced the action seeking reimbursement for the full amount of the claim. The defendant moved for summary judgment and the plaintiff opposed, arguing that the permissible charges were not limited to the New Jersey fee schedule but rather to the prevailing rate in the provider’s geographic region and that the defendant was barred from even raising its fee schedule defense based on its failure to issue a timely denial.
Here, the court likewise found that “the ‘prevailing fee’ as that term is used in section 68.6 is the amount permitted under New Jersey’s fee schedule”. In doing so, the court pointed to the fact that allowing out-of-state providers to bill in excess of the fee schedule applicable to the provider’s geographic region would run counter to the No-Fault laws stated purposes of significantly reducing the amount paid by insurers and reducing the burden on the courts. This decision is in accord with the court’s prior holding that “the “permissible” charge for health services rendered in New Jersey are limited by the maximum amounts permitted under New Jersey’s fee schedule. Based on the foregoing, this Court holds that, when services are rendered outside of New York but in a jurisdiction which utilizes a fee schedule, the insurer complies with Section 68.6 by paying the “permissible” charge for that particular medical service, that is, the amount permitted by that jurisdiction’s fee schedule.” Surgicare Surgical v. National Interstate Ins. Co., 2014 N.Y. Slip op 24362 (Civ. Ct., Bronx 11/17/2014).
In a case of first impression, the court also addressed the question of whether a fee schedule defense must be preserved in a timely denial under the amended regulations that took effect April 1, 2013. The court acknowledged prior appellate decisions holding that a fee schedule defense is not a coverage defense and is therefore subject to preclusion but found that such case law is abrogated by 11 NYCRR 65-3.8(g) of the amended regulations. 11 NYCRR 65-3.8(g)(1)(ii) states that, where the claimed medical service fees exceed the permissible charges, “no payment shall be due for such claimed medical services under any circumstances”. Thus the court held that “’any circumstances’ includes instances where the insurer fails to issue a denial raising fee schedule as an issue within thirty days of its receipt.” The court further noted that allowing an insurer to raise a fee schedule defense even in the absence of a timely denial “is in harmony with the no-fault statute’s goal of significantly reducing ‘the amount paid by insurers…thereby helping to contain the no-fault premium’.”