CPM – now it is up to DFS and WCB to address the problem July 7, 2018

Matter of Global Liberty Ins. Co. v ISurply, LLC, 2018 NY Slip Op 04961 (1st Dept. 2018)

The CPM saga came down to the  2014 letter addressing an inquiry from an insurance carrier and a 2016 letter that was responsive to an inquiry from a prominent plaintiff no-fault attorney.  The Court did not care about informal DOH opinions and WCB opinions, or the famous “FAQ” that appeared to override the 2016 letter.

Sadly, this issue has been playing out for about 6 years, mostly in arbitration.  It has had some action in the Courts, but more sporadic.  From my vantage point, the issue needed an end date.  It made no sense to have a purely legal issue bouncing back and forth in probably over 100,000 awards and court decisions.

First, for those who have questioned “what is CPM/CTU”, it is post-rehabilitative machinery that is supposed to increase healing and functionality following extremity surgery.  It is rented from about a 30-60 day period depending on the provider/supplier.  The equipment wholesales for between $6,000-$10,000.  If I am wrong, correct me – I do not have an invoice in front of me.

The rental rate that has been accepted in arbitration and court is $85-$100 per day.  The item as a 2-3 year useful life.  Again, this is what I have heard. It could be more.

therefore, assuming the equipment is used 320 days per year for 3 years, this would yield a billable value of close to $100,000 for the life of the machine.  Not bad for a $6000 investment.  And now you see the genesis of the frustration some of the pragmatists in no-fault have with what is happening here.

The Appellate Division, although couching the decision in terms of rationality held as matter of law that reimbursement shall be at the value of the rental to the general public.  Of course, nobody rents these machines on a cash basis, this there is no accurate general public fee absent “Ingenix” that exists.  And, if you want to call Ingenix a true valuation as to the cost to the general public, then you are sadly mistaken.  The Court’s holding:

“Global failed to present sufficient evidence demonstrating that the Department of Health (DOH) had determined a price for these rentals. The July 3, 2014 letter from Joanne Criscione, Senior Attorney for the Bureau of Health Insurance Programs Division of Legal Affairs for the DOH appeared to indicate that DOH had adopted “a medicaid reimbursement policy for durable medical equipment (DME) rental items that have not been assigned a Maximum Reimbursement Amount (MRA). For DME items that do not have a MRA, the rental fee is calculated at 1/6th of the equipment provider’s acquisition cost.” In her June 8, 2016 letter, however, she makes clear that her July 3, 2014 letter “was not a determination by the Department of Health area office establishing the reimbursement rate” and she “merely state[d] the Medicaid reimbursement as that policy is set forth in the Medical Provider Manual for DME.” None of Global’s other evidence establishes that DOH had adopted the “1/6th of the equipment provider’s acquisition cost” rate.

It is true that the Medicaid DME fee schedule, which listed certain codes for DMEs, some of which had a MRA and some of which did not, established that for those that did not have a MRA, the monthly rate of 1/6th of the equipment provider’s acquisition cost would apply. And it is also true that, pursuant to 12 NYCRR § 442.2(b), “the total accumulated monthly charges shall not exceed the fee amount allowed under the Medicaid fee schedule.” However, it was not irrational for the arbitrator to conclude that this 1/6th rate applied only to items which had codes listed in the Medicaid fee schedule, which the CPM and CTU at issue here did not. Therefore, as Global neither demonstrated that DOH had adopted the 1/6th rental fee guideline, or that DOH had otherwise determined a rental fee, it was not irrational for the arbitrator to conclude that the reimbursement rate would be “the monthly rental charge to the general public” (12 NYCRR 442.2(b).”

Now, it is up to DFS and WCB to finally address this issue.

One more thing.  Many of you out there are unaware of this, and I was not going to share until this opinion was published.  But, WCB has already ruled on this issue, and I suspect this is what prompted the FAQ:

In the Matter of Long Island DDSO, 2016 WL 7010143 (2016):

“As for the amount for the durable medical equipment, the valuation of durable medical equipment is not within the MTG. This is left to the Board’s Fee Schedule, which references the NYS Medicaid DME Services Fee Schedule.
The rental for the continuous passive motion machine is properly billed as E0936-RR. The Medicaid fee schedule does not contain an entry for this billing code. 12 NYCRR 442.2 (DURABLE MEDICAL GOODS FEE SCHEDULE)” provides:
(a) The maximum permissible charge for the purchase of durable medical equipment, medical/surgical supplies, and orthotic and prosthetic appliances shall be the fee payable for such equipment or supplies under the New York State Medicaid program at the time such equipment and supplies are provided, except that the fee for bone growth stimulators (HCPCS codes E0747, E0748 and E0760) shall be paid in one payment and not split. For orthopedic footwear or if the New York State Medicaid program has not established a fee payable for the specific item, then the fee payable, shall be the lesser of:
(1) the acquisition cost (i.e. the line item cost from a manufacturer or wholesaler net of any rebates, discounts or other valuable considerations, mailing, shipping, handling, insurance costs or any sales tax) to the provider plus 50%; or
(2) the usual and customary price charged to the general public.
(b) The maximum permissible monthly rental charge for such equipment, supplies and services provided on a rental basis shall not exceed the lower of the monthly rental charge to the general public or the price determined by the New York State Department of Health area office. The total accumulated monthly rental charges shall not exceed the fee amount allowed under the Medicaid fee schedule.
(c) The maximum permissible charge for the purchase of durable medical equipment, medical/surgical supplies, and orthotic and prosthetic appliances and the maximum permissible monthly rental charge for such equipment, supplies, and services provided on a rental basis as set forth in subdivisions (a) and (b) of this section are payment in full and there are no separate and/or additional payments for shipping, handling, and delivery.
As there is no fee schedule for the continuous passive motion machine, SIF is liable to reimburse the provider in accordance with “the usual and customary price charged to the general public” and that this amount “shall not exceed the lower of the monthly rental charge to the general public or the price determined by the New York State Department of Health area office.”
Therefore, upon review of the record and based upon a preponderance of the evidence, the Board Panel finds that the record supports finding the C-8.1(B) in favor of the provider, to the extent that the SIF is liable for payment for a three-week rental of the continuous passive motion machine at the usual and customary price charged to the general public. Any unpaid balance shall not be the responsibility of the claimant.

Time for action on this issue now!



There was no accident July 7, 2018

Pavlova v Allstate Ins. Co., 2018 NY Slip Op 51061(U)(App. Term 2d Dept. 2018)

“In support of its motion, defendant submitted the transcript of the examination under oath (EUO) of its insured in which she testified that she had been parking her vehicle at the time of the alleged accident, that no accident had occurred and that plaintiff’s assignor, a pedestrian, had not been struck by her vehicle. In a supporting affidavit, the insured attested to the same facts. The EUO testimony and the affidavit are sufficient to demonstrate, prima facie, that “the alleged injury [did] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; see Andromeda Med. Care, P.C. v NY Cent. Mut. Fire Ins. Co., 26 Misc 3d 126[A], 2009 NY Slip Op 52601[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]; Midwood Med. Equip. & Supply, Inc. v USAA Cas. Ins. Co., 25 Misc 3d 139[A], 2009 NY Slip Op 52379[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]”

I just had a discussion with someone regarding 65-.14, which stands for the proposition that contact is not necessary for no-fault eligibility purposes.  The case law has construed that, and properly, to require a discernible nexus between the instrumentality and the injury.  (1) Car must it person.; (2) Person in car that stop shorts; (3) Car hits power line that falls on someone.  But a pedestrian without contacting a vehicle, or a pedestrian that did not contact an object due to a car’s contact with something will continue to require no-fault ineligibility.

MUA trial victory July 7, 2018


The new fee schedule notwithstanding, the question here is whether MUA treatments were necessary.  You saw part of the typical play by play in the MUA world.

Def witness

  • “Defendant’s witness, a chiropractor who had prepared the peer review report upon which defendant had relied…that the assignor had received standard chiropractic treatment for 10 weeks before the MUA treatments commenced.”
  • “The witness also stated that there was no indication that the assignor had not been responding to the chiropractic treatments and that, in the witness’s opinion, the MUA treatments had been done prematurely and were not medically necessary. Defendant’s witness further testified that he “took issue with” the lack of second opinions for the MUAs.”

Plaintiff witness

  • Plaintiff’s rebuttal witness, the examining chiropractor, testified that, because the conservative care which the assignor had received for 10 weeks had resulted in only minimal improvement, he had recommended MUA treatments.
  • Plaintiff’s witness testified that, based upon his own examinations of the assignor following each of the MUA treatments and his review of medical records, the assignor’s condition had improved because of the MUA treatments

District Court

  • [t]he manipulation itself appears to be warranted,” and awarded judgment to plaintiff. “

Appellate Term


What I always find helpful with the MUA cases are the MRI findings, EMG findings and Dr. Cerf is quite emphatic on data reliability and use of the outcome assessment test in formulating a treatment plan.  The question here and perhaps the linchpin is what are “minimal improvements”  and were some of the other treatment notes looked at?

The other thing that is unfortunate is that examinations prior and post MUA to determine whether an examination was done often do not occur.  This would require an EUO to discern of course.  This case, at best, looked a prototypical battle of the experts and plaintiff won. Absent some record gaffe, the order would invariably affirmed.

Material Misrepresentation Defense unsuccessful July 7, 2018

Maxford, Inc. v Erie Ins. Co. of N.Y., 2018 NY Slip Op 51057(U)(App. Term 2d Dept. 2018)

“Defendant cross-moved on the ground that plaintiff’s assignor had fraudulently procured the insurance policy in question by making a material misrepresentation on her policy application as to her place of residence and the principal location for the garaging of the vehicle which was to be insured. Upon a review of the record, we find that defendant failed to establish as a matter of law ” ‘that it would not have issued the same policy if the correct information had been disclosed in the application’ ” (Interboro Ins. Co. v Fatmir, 89 AD3d 993, 994 [2011], quoting Schirmer v Penkert, 41 AD3d 688, 691 [2007]; see Renelique v National Liab. & Fire Ins. Co., 53 Misc 3d 147[A], 2016 NY Slip Op 51615[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]).

Defendant further asserts that plaintiff is collaterally estopped from maintaining the present action by virtue of an order, rendered on default, by the Civil Court, Queens County (Richard G. Latin, J.), in an action against plaintiff’s assignor, finding that the assignor had made “material and/or fraudulent misrepresentations” on her application for the insurance policy. However, the doctrine of collateral estoppel is not applicable here, as plaintiff was not named in the Civil Court, Queens County, action, and, thus, plaintiff was not in privity with the assignor (see Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 486-487 [1979]; Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 67, 69 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]). In view of the foregoing, we reach no other issue.”

The second part of the opinion is old news.  Actually, so is the first part of the opinion.  The Appellate Term has gauged the fraudulent procurement defense under the Ins Law 3105(b) standard for the last 2-3 years,

Dilemma and dogma June 30, 2018

Hertz Vehicles, LLC v Best Touch PT, P.C.,2018 NY Slip Op 04854 (1st Dept. 2018)

(1) “Plaintiff failed to meet its burden of filing “proof of the facts constituting the claim” for a default declaratory judgment (CPLR 3215[f]) against the medical provider defendants, i.e., proof establishing that the notices of examination under oath (EUO) that it served on those defendants complied with the timeliness requirements of 11 NYCRR 65-3.5(b) (see Kemper Independence Ins. Co. v Adelaida Physical Therapy, P.C., 147 AD3d 437 [1st Dept 2017]; Natl. Liab. & Fire Ins. Co. v Tam Med. Supply Corp., 131 AD3d 851 [1st Dept 2015]). An insurer must request any “additional verification . . . to establish proof of claim” within 15 business days after receiving the “prescribed verification forms” it forwarded to the parties required to complete them (11 NYCRR 65-3.5[a], [b]). As none of the motion papers, including the affidavit by plaintiff’s claims adjuster, annexes or gives the dates of the prescribed verification forms or other proofs of claim submitted by the medical provider defendants, it is not possible to determine whether the EUO notices were sent to them within 15 business days of plaintiff’s receipt of the form”

What was interesting is in the last appeal of a lost DJ, the Court appeared to walk around 65-3.5 and 65-3.6 when the issue involved a default.  The rationale could be found in the dissent of Longevity and sub silentio set forth in the majority opinion in the same.  This case now applies the summary judgment standard to defaults.

(2) “Plaintiff’s argument on appeal that the providers’ bills are “prescribed verification forms” and its attempt to relate the deadlines applicable to one defendant’s EUO requests to another defendant’s submission of claims documentation or appearance for an EUO are unpreserved and, in any event, unsupported.”

Certain defense attorneys have tried to use the bootstrap method to establish timeliness.  I never bought it.

(3)  “The court erred in denying plaintiff’s motion for a default judgment against Bellevue on the ground that the motion did not contain any letter reflecting that Bellevue’s EUO transcript was sent to her for signature. The motion does contain such a letter, dated March 14, 2016, as well as a follow-up letter, dated April 20, 2016, and accompanying affidavits of service. As the [*2]failure to submit to an EUO and “subscribe the same” violates a condition precedent to coverage (see 11 NYCRR 65-2.4[c][2]), plaintiff provided adequate proof of its claims against Bellevue (see DTG Operations, Inc. v Park Radiology, P.C., 2011 NY Slip Op. 32467[U], *5-6 [Sup Ct, NY County 2011]”

This should worry anyone because I highly doubt that DFS (absent a Thrasher showing) ever advocated for a voiding of the policy due to the failure to sign a transcript.  I see a circular letter coming on this issue, similar to when DFS issued a circular letter to overturn Soundshore.