In an unpublished decision, the Superior Court of New Jersey Appellate Division has rendered the most recent decision addressing a Medical Provider's Application for an increase in the payment made for its services (University Physician Associates v Transport Drivers, Inc.; decided August 22, 2017). The employee in this case, Manuel Bonilla, was injured on October 10, 2012, when a pallet dropped from a forklift causing serious injuries including a left hip dislocation and left acetabular fracture. Bonilla received treatment from Dr. David Livingston, a general surgeon who completed a hip replacement procedure and billed $10,343 for his services. Dr. Mark Adams, a partner in the same practice, performed an open reduction and internal fixation procedure and billed $71,374 for his services. Both doctors billed at the 95 percentile rate. The carrier paid $3,788.98 to Dr. Livingston and $24,234 for Dr. Adam's treatment, both at the 75 percentile rate which the carrier considered the industry standard in New Jersey.
During the trial, the providers presented only two witnesses: Dr. Livingston's chief financial officer (CFO) and Dr. Livingston himself. The Judge did not find the doctor to be qualified as a professional coder nor as an expert in medical billing. Additionally, the Judge noted that the doctor offered no reimbursement figures for no-fault or Medicaid claims. Similarly, the Judge did not find the testimony of the CFO helpful or informative.
By contrast, the Judge found persuasive the testimony of the carrier's witness, the Vice President of a bill review company. The Judge credited her testimony that the industry standard for reimbursement was paid at the 75 percentile rate as indexed by the (FAIR) Health for New Jersey.
The Judge concluded that the payments were reasonable because the determination was based upon prevailing fees paid in that community. On appeal, the Appellate Division noted that Section 15 requires, "all fees and other charges for such physicians and surgeons treatment and hospital treatment shall be reasonable and based upon the usual fees and charges which prevail in the same community for similar physicians, surgeons and hospital services."
The provider argued that the treatment being rendered was at a Level 1 trauma hospital and that no-fault policies exempt Level 1 and Level 2 trauma hospitals from the fee schedule which incorporates a prevailing fee of 75 percent. The Court rejected that argument stating that the charges still be usual, customary and reasonable. The Court quoted the no-fault statute that requires the carrier to determine the reasonableness of the fee by comparison of the experience of the provider with other providers in the region. National data basis of fees, such as those published by Ingenix, FAIR Health or Wasserman, were referenced as sources that calculate the reasonableness of fees for the providers geographic area. The Court went on to note with approval that when using a data base as evidence for the reasonableness of the fee, the insurer should identify the data base used, the geo-zip and the percentile.
The Appellate Division approved of the Judge's appropriate use of this process. The Court noted the use of paid fees rather than billed fees represented a more accurate measure of reasonable and prevailing fees.
Comment: In defending Medical Provider Applications, this decision makes it clear that the reasonableness of a provider's fee should be compared with other providers in the region using national data bases of fees with an emphasis on the paid fees rather than the billed fees as representing the reasonable and prevailing amount to be paid for the services rendered
For more information, please contact Jeffrey D. Newby, Partner, Workers' Compensation, at jnewby@wglaw.com or 856.667.5804.