Medical Providers Should be Required to Follow Fee Agreements in Workers' Compensation Matters


Category: New Jersey

A recent dispute between a medical provider and an insurance company for payment of services rendered to an injured worker points out that when a fee agreement is in place, providers will be required to follow the agreement.

Aetna Life Insurance Company (Aetna) and Raritan Bay Medical Center (Raritan Bay) entered into a contract called the Managed Care Agreement (MCA). A dispute arose regarding Raritan Bay's treatment of an injured worker and Aetna's payment for services rendered at a discounted rate under the MCA.

Under the MCA, medical care provided by Raritan Bay was done at a discounted rate to members of a plan. In exchange, Aetna agreed to steer business to Raritan Bay by listing the facility in its participating provider directory. Aetna was not the payor of the plan, but was to inform the payor of the discounted rates in the MCA. Payors of the plan included workers' compensation carriers. Raritan Bay billed the payor at its ordinary rate, which Aetna then re-priced to the rates agreed upon under the MCA.

Aetna was able to introduce new plans into the MCA and did so. Aetna introduced the Aetna Workers' Compensation Access program under which Aetna intended workers' compensation products to become "plans" under the MCA. Raritan Bay was provided with the opportunity to opt out of this program and declined.

Raritan Bay went on to regularly treat injured workers covered under the program for five years. In 2010, Raritan Bay treated an injured worker and then claimed the program was not defined by the MCA and the participant in the program, in this case the workers' compensation carrier, was not entitled to pay the discounted rates.

The parties disagreed on the definition of "plan" under the MCA. That term was defined as "any health benefit product of plan issued, administered, or serviced by" Aetna. Raritan Bay argued the program did not meet the definition of plan. It also argued Aetna's re-pricing of bills sent to program participants at the discounted rates violated an implied covenant of good faith and fair dealing as the program was not a plan. Raritan Bay believed Aetna must be responsible for the difference between the provider's ordinary rate and the re-priced bill.

Even if the program did not meet the definition of plan, entitling it to reduced rates under the MCA, Raritan Bay could not recover under breach of contract. There was no provision within the MCA "imposing obligations on Aetna related to non-qualifying health benefit plans."

Additionally, by Raritan Bay asking the U.S. Court of Appeals for the 3rd Circuit to obligate Aetna to be responsible for the difference of the ordinary rate billed and the re-priced bill, the Court noted the provider was asking to impose obligations and provide remedies not provided for in the MCA.

Comment: This last point can be particularly persuasive to judges in the Division of Workers' Compensation when addressing medical provider applications. If the provider files an application with the Division seeking the difference between the ordinary rate billed and the re-priced bill, it is in essence asking the Court to require the carrier to provide a remedy not provided for in the fee agreement. When a fee agreement is in place between the workers' compensation carrier and medical provider for fees for services rendered to injured workers, the providers should be required to adhere to the agreement.

For more information, please contact Jeffrey Newby at or 856.667.5804, or Vanessa Mendelewski at or 973.854.1061.

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Lexi Burchmore

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