It is a two way street April 10, 2009

In reading the Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 2009 NY Slip Op 02589 (2d Dept. 2009) case that involved the validity of a denial based upon workers compensation primacy, it appeared (at first blush) that the providers obtained a true victory against the carriers. Whereas compensation is somewhat consistent with managed health care, no-fault is the exact opposite. Furthermore, the scope of medical services compensated under no-fault is far greater than the services reimbursed under Workers Compensation. One only needs to ask a certain bunch of attorneys who are fighting this exact issue in the context of whether a Licensed Massage Therapist may receive compensation under no-fault for rendered services inasmuch as the same services are not compensable under Workers Compensation. This same battle arises in the realm of acupuncture that an L.AC performs and services a chiropractor renders outside the chiropractor fee schedule.

But, does this also mean that “priority of coverage” issues may also be subject to the 30-day pay or deny rule? Let me rephrase this statement. Does this mean that a primacy of coverage defense may be adjudicated in court or arbitration against a Claimant, because another insurance carrier might be primary?

Here are two examples. 1) John Doe, a Geico insured, is involved in a motor vehicle accident while occupying an Elrac rental vehicle in New York. Or, 2) John Doe, while in a Elrac vehicle is in an accident in Montana.

Under scenerio “1”, Elrac is primary. Under scerio “2”, Geico is primary. Simply put, the rule in New york is that coverage follows the vehicle, except that when the accident occurs outside NEw York, it follows the person.

Medical provider submits bills to Geico under scenerio #1 and Elrac in scenerio #2. Both of the carriers the bills were submitted to are not the first in line under a priority of payment analysis. Geico in example #1 and Elrac in example #2 timely denies the bills. Now what?

Under conventional wisdom, issues involving primacy of payment must be adjudicated in 5105 mandatory arbitration. See, 65-3.12; SZ Medical, P.C. v. Lancer Ins. Co., 7 Misc.3d 8 (App. Term 2d Dept. 2005). In other words, the secondary carrier must adjust the claim in the normal and ordinary course of business and then seek reimbursement against the primary carrier through intercompany arbitration. The SOL would be three years from the payment, so it cannot be said that the carrier should be too unhappy with this result. Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co. 89 N.Y.2d 214 (1997).

Under the current system, money from the secondary insurer would have to be paid out on the front end, but may be recovered on the back end.

Now, because of the Westchester Case, it appears that priority of payment issues may be raised and defended at any time through a timely denial. Thus, next time I receive a denial when there is a primary of payment issue, maybe I actually have a defense? So, you can say this is the other side of the two-way street…

Be careful what you wish for.

The Workers Comp Mess April 4, 2009

Westchester Med. Ctr. v Lincoln Gen. Ins. Co.
2009 NY Slip Op 02589 (2d Dept. 2009)

This case has a few issues. The first issue can be resolved relatively easily. Factually, the carrier apparently failed to indicate to the provider the specific person from whom verification was sought. This defect rendered the EUO scheduling letters and the ensuing denials improper. The cases the Westchester court cited explain this principle quite well. To explain for those unfamiliar with this concept, a delay letter has to say what you are delaying for and who you are seeking the information from. The letters have to be highly specific, lest you wish to be subject to Presbyterian preclusion.

The better issue is the Workers Comp issue. The Court, for the first time that I can remember, is apparently holding that a Workers Comp denial must be timely. The Court fails to consider Workers Comp as a coverage issue. This is problematic, because I believe the law is clear.

In O’Hurley-Pitts v. Diocese of Rockville Centre 57 A.D.3d 633 (2d Dept. 2008), the Court held as follows:

“The Court of Appeals has held that the Workers’ Compensation Board “has primary jurisdiction over the issue of the availability of [workers’ compensation] coverage,” and if a plaintiff fails to litigate that issue before the Board, “the court should not express an opinion as to the availability of compensation but remit the matter to the Board,” since “[t]he compensation claim is a jurisdictional predicate to the civil action” (Liss v Trans Auto Sys., 68 NY2d 15, 21 [1986]; see Botwinick v Ogden, 59 NY2d 909 [1983]; O’Rourke v Long, 41 NY2d 219 [1976]). Accordingly, in considering the defendants’ motion, the Supreme Court should not have entertained their contention that the plaintiff was barred from recovery pursuant to Workers’ Compensation Law § 11. The case must be referred to the Workers’ Compensation Board for a determination as to whether the plaintiff has a valid cause of action for damages or whether he is relegated to benefits under the Workers’ Compensation Law”

The Regulation states the following:

11 NYCRR Sec. 65-3.9(a)(9): “Pursuant to section 5102(b)(2) of the Insurance Law, when the applicant is entitled to workers’ compensation benefits due to the same accident, the workers’ compensation carrier shall be the sole source of reimbursement for medical expenses.

I believe the Appellate Division messed up. I just hope a good record was preserved.

LMK will never go away April 4, 2009

LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co.
2009 NY Slip Op 02481 (2009)

Everybody now knows the LMK decision. Many people have posted and blogged about it. I could discuss it here at length, but it would be fruitless. I will share a few observations. First, the decision was poorly written. When I say poorly written, I mean this in the sense that modern no-fault jurisprudence is nuanced. Does anybody remember the entire line of cases which construed interest tolling based upon a definition of the word “Applicant”?

The Court of Appeals, in a cavalier fashion, used the words: “insured”, “claimant”, and “cause of action” all throughout their opinion. These phrases have created hundreds of court decisions from the lower courts up through the Appeals Courts. I will highlight the examples of the internally inconsistent language that the Court of Appeals used in this decision:

1) “the Superintendent stated

“[that provision] makes it clear that the amount of attorneys’ fees awarded will be based upon 20% of the total amount of first party benefits awarded. That total amount is derived from the total amount of individual bills disputed in either a court action or arbitration, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured.”

2) “For purposes of calculating attorneys’ fees, the Superintendent has interpreted a claim to be the total medical expenses claimed in a cause of action pertaining to a single insured, and not — as the courts below held — each separate medical bill submitted by the provider.”

3) “Thus, this Court accepts the Insurance Department’s interpretation of its own regulation and, upon remittitur, directs Supreme Court to calculate attorneys’ fees based on the aggregate of all bills for each insured

So now, we have different interpretations of this rule. Does the LMK rule involve each “cause of action” no matter how pleaded? Does this rule involve the “aggregate of all bills” for the insured? Or, does LMK stands for what it means: “Because this interpretation is neither irrational, unreasonable, nor runs counter to the clear wording of the statute, it is entitled to deference.”

I will take option #3. The Appellate Terms will inevitably clean this mess up, and hold that option #3 is the most logical path to follow. But LMK at all levels just goes to show how careful things need to be expressed, or else unintended consequences will be abound.

Wagman? April 4, 2009

In the matter of PLP Acupuncture, P.C. v Progressive Cas. Ins. Co., 2009 NYSlipOp 50491(U)(App. Term 2d Dept. 2009), the Appellate Term observed the following:

Defendant’s affirmed peer review report and the affidavit of its peer review acupuncturist established prima facie that there was no medical necessity for the services provided by plaintiff. We note that as some of the medical reports relied upon by defendant’s acupuncturist in his peer review report were prepared by plaintiff, plaintiff could not challenge the reliability of its own medical records and reports (see Cross Cont. Med., P.C. v Allstate Ins. Co., 13 Misc 3d 10 [App Term, 1st Dept 2006]; see also Home [*2]Care Ortho. Med. Supply, Inc. v American Mfrs. Mut. Ins. Co., 14 Misc 3d 139[A], 2007 NY Slip Op 50302[U] [App Term, 1st Dept 2007]). Furthermore, since it has been held that an “expert witness’s testimony of reliance upon out-of-court material to form an opinion may be received in evidence, provided there is proof of reliability” (Wagman v Bradshaw, 292 AD2d 84, 85-86 [2002]), the fact that defendant’s peer reviewer relied upon medical reports from other medical providers in forming his opinion as to the medical necessity of the service performed does not render the peer review report insufficient to establish a lack of medical necessity.

Two observations:

1) There was no reason to reach, rely or discuss Wagman. It is hornbook law that the Defendant may use the Plaintiff’s [whether it be assignor or assignee] medical records against him or his assignee. I have dedicated numerous posts on this point.

2) Can Plaintiffs in threshold cases get around the current requirement that the reports their experts rely on be “affirmed” or “sworn to”, because of the Appellate Term’s interpretation of Wagman?

3) Has the spill-over effect of no-fault litigation once again contaminated other areas of law?

Dangerous case. Proper result, poorly reasoned.

Choice of law – and the deemer statute – it is just the beginning March 22, 2009

Careplus Med. Supply, Inc. v Selective Ins. Co. of Am., 2009 NYSlipOp 29109 (App. Term 2d Dept. 2009)

I think someone out there knew it would be a matter of time before a “Trans-Hudson” (a term involving a New Jersey policy and New York loss) no-fault case would find its way into the court system. It just did. Not surprisingly, the court ruled New Jersey law would apply.

Factually, the case involved a New Jersey policy, New Jersey insured and a New York accident. There is a legion of case law out there that made this result preordained. There are, however, broader issues that this case represents. Arguably, a case predicated upon New Jersey law must be brought within two years of the last payment or two years fromthe date of loss, which ever is greater (New Jersey PIP Law). Stranger pedestrians, consistent with NJ Pip law, are exempted from coverage, upon the presentation of a proper policy endorsement. Furthermore, a provider must make a prima face case of medical necessity and causation to be entitled to no-fault benefits under New Jersey law.

But under New Jersey law, there are pre-certification requirements and sizable deductibles. While the standard New Jersey policy offers $250,000 in first-party benefits, the New Jersey fee schedule rules, in accordance with New Jersey’s 1998 Automobile Insurance Cost Reduction Act (AICRA), do not allow certain services to be compensable. Case and point: CPT services and video fluoroscopy services are per se not compensable under New Jersey law. We all know this is not the case in New York. I will leave the policy determination as to whether these tests should be compensable to somebody else.

But, the deemer statute (Ins Law 5107) adds some wrinkles to this paradigm.

In fact, wouldn’t the deemer statute mandate that the injured person (or his assignee) receive the benefit of the vast array of services, without the co-pays and pre-certs, that the New York fee schedule offers? Otherwise, the deemer statute is without force.

Consider the hypothetical no-fault statute that allows unlimited benefits, yet charges a 90% co-pay up to some indeterminate sum. Clearly, the deemer statute would mandate New York style benefits up until the first $50,000 that is paid out under the policy.

Therefore, it follows that in these “Trans-Hudson” cases, benefits up until the first $50,000 should be paid in accordance with the greater of the New Jersey or New York fee schedule. Should the sister-state’s policy allow for first-party no-fault benefits in excess of $50,000 (this includes only New Jersey and Michigan), then that state’s fee schedule rules would be in effect from dollar $50,0001 up until the policy limit. But, if the sister state’s fee schedule rules are more beneficial to the Claimant that New York’s fee schedule rules, then it would follow that the sister state’s fee schedule rules would need to be followed.

But you can see that we have just touched the surface with these Trans Hudson cases… The details will need to be filled in at a later time.