Amendment of 11 NYCRR 68.6 coming soon

Okay, tell me you did not see this one coming?  But as long as “Avanguard” is the law of the land in New York, New Jersey will still be a lucrative market for no-fault providers.  And, I do not see how you can apply Avanguard to New Jersey in light of this regulation.  But greater and shiftier minds than mine will certainly try I am sure.



Charges for Professional Health Services
I.D. No. DFS-39-16-00007-P
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed Action: Amendment of section 68.6 (Regulation 83) of Title 11

Statutory authority: Financial Services Law, sections 202 and 302; Insurance Law, sections 301, 2601, 5221 and art. 51 Subject: Charges for Professional Health Services.

Purpose: Limit reimbursement of no-fault health care services provided outside NYS to highest fees in fee schedule for services in NYS.  Text of proposed rule: Section 68.6 is amended to read as follows:
Section 68.6 Health services performed outside New York State.

(a)(1) If a professional health service reimbursable under [section 5102(a)(1) of the] Insurance Law section 5102(a)(1) is performed outside [New York] this State, the [permissible charge] amount that the insurer shall reimburse for [such] the service shall be the prevailing fee in the
geographic location of the provider with respect to services:

(i) that constitute emergency care;
(ii) provided to an eligible injured person that is not a resident of this State, or
(iii) provided to an eligible injured person that is a resident of this State who is outside this State for a continuous period of at least fourteen days for reasons unrelated to the treatment.
(2) For purposes of this subdivision, emergency care means all medically necessary treatment of a traumatic injury or a medical condition manifesting itself by acute symptoms of sufficient severity such that absence of immediate attention could reasonably be expected to result in: death; serious impairment to bodily functions; or serious dysfunction of a bodily organ or part. Emergency care shall include all medically necessary care immediately following an automobile accident, including immediate pre-hospitalization care, transportation to a hospital or trauma center, emergency room care, surgery, critical and acute care. Emergency care extends during the period of initial hospitalization until the patient is discharged from acute care by the attending physician. Emergency care shall be presumed when medical care is initiated at a hospital within 120 hours of the accident.
(b) If a professional health service reimbursable under Insurance Law section 5102(a)(1) is performed outside this State with respect to an eligible injured person that is a resident of this State, the amount that the insurer shall reimburse for the service, except as provided in subdivision (a) of this section, shall be the fee set forth in the region of this State that has the highest value in the fee schedule for such services.
(c) Notwithstanding anything else in this subdivision, an insurer shall not reimburse an amount for a service that exceeds the amount that the provider is legally permitted to charge under the laws of the jurisdiction where the services are provided.
Text of proposed rule and any required statements and analyses may be obtained from: Hoda Nairooz, New York State Department of Financial Services, One State Street, New York, NY 10004, (212) 480-5595, email:

Data, views or arguments may be submitted to: Same as above.
Public comment will be received until: 45 days after publication of this notice.
This rule was not under consideration at the time this agency submitted its Regulatory Agenda for publication in the Register.

Regulatory Impact Statement
1. Statutory authority: Sections 202 and 302 of the Financial Services Law, and Sections 301, 2601, 5221, and Article 51 of the Insurance Law. Insurance Law Section 301 and Financial Services Law Sections 202 and 302 authorize the Superintendent of Financial Services (the “Superintendent”) to prescribe regulations interpreting the provisions of the Insurance

Insurance Law Section 2601 prohibits insurers from engaging in unfair
claim settlement practices and requires insurers to adopt and implement
reasonable standards for the prompt investigation of claims arising under
insurance policies.
Insurance Law Section 5221 specifies the duties and obligations of the
Motor Vehicle Accident Indemnification Corporation with respect to the
payment of no-fault benefits to qualified persons.
Article 51 of the Insurance Law contains the provisions authorizing the
establishment of a no-fault reparations system for persons injured in motor
vehicle accidents, and Section 5108 specifically authorizes the Superintendent
to adopt or promulgate fee schedules for health care benefits payable
under the no-fault system.

2. Legislative objectives: Chapter 892 of the Laws of 1977 recognize
the necessity of establishing schedules of maximum permissible charges for professional health services payable as no-fault insurance benefits in order to contain the costs of no-fault insurance. To that end, in accordance with Insurance Law section 5108(b), the Superintendent adopted those fee schedules that are promulgated by the Chairman of the Workers’ Compensation Board (the “Chairman”). In addition, the Superintendent, after consulting with the Chairman and the Commissioner of Health, established fee schedules for those services for which schedules have not been prepared and established by the Chairman.
3. Needs and benefits: The current rule provides that the maximum permissible charge for health care services rendered outside this State to a person eligible for New York no-fault benefits shall be the prevailing fee in the geographic location of the provider. The proposed rule limits insurers’ reimbursement of no-fault health care services provided outside the State at the election of a New York State eligible injured person to the fees set forth in the region of this State that has the highest value in the fee schedule for those services. An exception to the proposed amendment would be when the health care services constitute emergency care, are
provided to an eligible injured person who does not reside in this State, or are provided to an eligible injured person who is a resident of this State and who is outside the State for a continuous period of at least 14 days for reasons unrelated to the treatment. In such cases, the current rule will continue to apply.
There has been no uniform interpretation of the prevailing fees outside the State. As a result, no-fault claimants are being referred to certain health care providers outside New York, usually in New Jersey, who take advantage of the absence of specific fee schedules and submit excessive
charges under exaggerated claims, well above the corresponding New York State fee schedules applicable to those health care services rendered. Since basic personal injury protection coverage under no-fault is only $50,000, the higher the bills, the sooner the injured person will find coverage exhausted. This results in no-fault benefits available to injured persons being depleted more quickly, to their detriment.
Representatives of both the insurance industry and the medical profession have conveyed to the Department that amending the current regulation is necessary in order to close these loopholes that have resulted in increased no-fault claim bills. In addition, numerous arbitrators that serve
on the Department’s no-fault arbitration panel have indicated that this issue has generated a significant number of disputes due to the significant disparity between the excessive fees being charged by out of state health care providers and those permitted under the current rule. By setting a maximum fee that out-of-state health care providers may receive as reimbursement for no-fault-related health services, this amendment should lead to reduced arbitration and litigation costs for insurers and self insurers, which are typically passed to consumers in the form of higher premiums, as well as help to stem the rapid depletion of no-fault benefits
available to eligible injured persons.
4. Costs: This rule imposes no compliance costs upon state or local governments. However, the rule will impact out-of-state health care providers who will now be reimbursed for health services pursuant to the applicable fee schedule prescribed in the proposed rule.
5. Local government mandates: This rule does not impose any requirement upon a city, town, village, school district, or fire district. However, local governments who are self-insurers for no-fault coverage shall only be required to reimburse out-of-state health care providers at the rates
prescribed in the proposed rule, rather than the subjective prevailing rate in the geographic location of the out-of-state provider.

6. Paperwork: This rule does not impose any additional paperwork on any persons affected by the rule.

7. Duplication: This rule will not duplicate any existing state or federal rule.
8. Alternatives: In order to effectuate the cost savings goals of New York’s no-fault laws, the Department has determined that there are no other viable alternatives to this rule.
9. Federal standards: There are no minimum federal standards for the same or similar subject areas. The rule is consistent with federal standards or requirements.

A sighting of “interboard” in action

TC Acupuncture, P.C. v Tri-State Consumer Ins. Co., 2016 NY Slip Op 50978(U)(App. Term 1st Dept. 2016)

(1)”Defendant made a prima facie showing of entitlement to partial summary judgment dismissing plaintiff’s no-fault claims for services rendered July 12, 2010 through August 31, 2010, by demonstrating that it timely and properly denied the claims based on the June 17, 2010 independent medical examination (IME) report of its examining doctor, which set forth a sufficient basis and medical rationale for the conclusion that there was no need for further acupuncture treatment (see AutoOne Ins./Gen. Assur. v Eastern Is. Med. Care, P.C., 136 AD3d 722 [2016]). Plaintiff’s opposition consisting of an attorney’s affirmation unaccompanied by any medical evidence or other competent proof was insufficient to raise a triable issue as to medical necessity (see Diagnostic Medicine, P.C. v Clarendon Natl. Ins. Co., 34 Misc 3d 143[A], 2012 NY Slip Op 50102[U][App Term, 1st Dept. 2012]). The assignor’s subjective complaints of pain cannot overcome the objective medical tests detailed in the affirmed report of defendant’s examining doctor (see Arnica Acupuncture PC v Interboard Ins. Co., 137 AD3d 421 [2016]).”

(2) “Defendant’s position that the charges billed under CPT Code 97039 are not reimbursable because plaintiff is not licensed to provide physical medicine modalities is unpersuasive”

It’s interesting to see a Second and First Department case that I won in the first three cited to cases.  The Arnica case is a killer on the IME cut off cases because it requires the provider to marshal real proof, not manufactured affidavits that at their root say nothing.

The fee schedule issue is correct and yet another iteration of why the commercial EOB systems need to be manually overridden when acupuncture fee schedule issues outside the standard 97810-97814 codes arise.


The denial just has to set forth a fee schedule defense

Renelique v Tri State Consumers Ins. Co., 2016 NY Slip Op 50866(U)(App. Term 2d Dept, 2016)

“Plaintiff’s argument—that defendant is precluded from raising its defense that the fees charged exceeded the amount allowed by the workers’ compensation fee schedule because defendant’s denial of claim form did not set forth this defense with sufficient particularity—lacks merit (see A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d 779 [2007]).”

I have seen the new trend in AAA arbitration where a fee schedule defense based upon 8 units paid to another provider must be raised with specificity, i.e., the other provider to whim the units were paid.  This case clearly states that this line of thinking is wrong on the law.  I assume it will take the Appellate Division to convince AAA to follow the law.


Interesting new regulation fee schedule discussion and an example of sloppiness?

Tyorkin v Garrison Prop. & Cas. Ins. Co., 2016 NY Slip Op 50846(U)(Civ. Ct. Kings Co. 2016)

(1) “In the case at bar, Defendant’s affiant, Raina Lira, a Claims Adjuster employed by Defendant, avers that Defendant, through its vendor, Auto Injury Solutions (AIS), mailed the [*2]Explanation of Reimbursement Form (EOR) to the medical provider. There is no indication that a NF-10 form was issued in this matter although Ms. Lira avers that in applicable instances, the Denial of Claim Form (NF-10) is sent. Further, there is no indication that the EOR form, which was the only document issued in response to Plaintiff’s claim, is a form or letter approved by the Department as so allowed by 11 NYCRR 65-3.8(c)(1). Thus, notwithstanding both parties’ arguments with regards to the substantive merits of the peer review defense, the Court finds that such defense is precluded by Defendant’s failure to issue a NF-10 Denial of Claim form.”

Here’s a silly question.  Was this is an out of state based policy?  Did anyone argue that out of state law applied?  The policy mandates arbitration?    Alrof, Bright Supply, bad affidavits?

(2)  “Likewise, in this instance, the Court finds that Defendant’s fee schedule defense is neither precluded by timeliness or its failure to issue a Denial of Claim form as the language of the statute strictly mandates that “no payment shall be due .under any circumstances” for medical service fees that exceed the fee schedule charges. 11 NYCRR 65-3.8(g). In other words, [*3]Plaintiff would only be entitled to the payment of the subject bill at the rates permissible and authorized in the state of New Jersey. The Court is unpersuaded by Defendant’s argument that payment for Plaintiff’s bill is outright prohibited simply because the billed amount is higher than permissible. The regulation only reduces payment to the amount authorized by the applicable fee schedule.

This is an important statement as various arbitrators have taken the position that over-billing is tantamount to failure to provide proof of claim and nothing should be awarded.  While inartfully drafted, 65-3.8(g)(iii) sought to overturn Mercury v. Encare, which disallowed the insurance company to raise a fee schedule defense to grossly over-billed services.

(3)  “In Ms. Moreno’s affidavit, upon which she concludes that the proper amount of the bill would be $5,976.50, rather than the billed amount of $10,144.88, there is no further explanation as to what the sum comprises of. While the Court may consider an attorney affirmation in the explanation of fee schedule provisions and the Court may take judicial notice of the fee schedule (see Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13, 18 [App. Div. 2d Dep’t 2009]), the attorney affirmation of Dianne Galluzzo neither explains Ms. Moreno’s analysis or explains allowable reductions. The Court cannot presume to be knowledgeable of fee schedule reductions that, on its face, cannot be specifically adduced, and will not make any findings of fact as to such reductions. As such, a triable issue of fact remains as to its fee schedule defense. Further, the Court notes that while Ms. Moreno’s analysis sufficiently raises a triable issue, her analysis alone is inarticulate and insufficient to be the basis of summary judgment.

Very sloppy.  There is no quality control over these cases.


CPT Code 97026

New Age Acupuncture, P.C. v 21st Century Ins. Co., 2016 NY Slip Op 50737(U)(App. Term 2d Dept. 2016)

“Upon a review of the record, we find that defendant’s moving papers failed to demonstrate defendant’s prima facie entitlement to summary judgment with respect to so much of the complaint as sought to recover for services billed using CPT code 97026 (Rogy Med., P.C. v Mercury Cas. Co., 23 Misc 3d 132[A], 2009 NY Slip Op 50732[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]; see generally Sunrise Acupuncture PC v Tri-State Consumer Ins. Co., 42 Misc 3d 151[A], 2014 NY Slip Op 50435[U] [App Term, 1st Dept 2014]).

Accordingly, the order, insofar as appealed from, is reversed and the branch of defendant’s motion seeking summary judgment dismissing so much of the complaint as sought to recover for services billed using CPT code 97026 is denied.

This would be the infrared code.  I suspect the insurance carrier denied the billing as “our of scope”.  The recent case law would suggest otherwise and this is just a further elucidation of the recent case law.

Supreme Court held that Medicaid fee schedule applies to CPM rental

In the matter of Accelerated DME Recovery, INC. a/a/o Ana Pleitz v. State Farm Mutual Auto. Ins Co.. Index # 706132/15 (Sup. Ct. Queens  Co. 2015)(Modica, AJSC)

While the denial of an Article 75 challenge to a master arbitrator’s decision is not generally newsworthy, this Decision from Supreme Court appears to have gone a step further and on its face would have probably granted State Farm’s challenge to an arbitration award.

What you will discern through a reading of this opinion is the Court has found as a matter of law that the Medicaid formula for determining the proper amount of reimbursement for CPM, i.e. (1/6th * invoice /30) is proper.  I would parenthetically note that the DOH opinion that State Farm obtained on this issue appears to be 1) dispositive; and 2) the potential death knell to the argument that CPM providers can charge reasonable and customary.

I sense this may be a game changer.

Good job to counsel for State Farm on this discreet issue.  At fee schedule, will surgery providers deem CPM to be absolutely necessary for the recovery of surgery causally related to a motor vehicle accident?  I know where my vote is on that question.



New Jersey fee schedule prevails

Surgicare Surgical Assoc. v National Interstate Ins. Co., 2015 NY Slip Op 25338 (App. Term 1st Dept. 2015)

(1) “Insurance Department regulation (11 NYCRR) § 68.6 provides that where a health service reimbursable under Insurance Law § 5102(a)(1) “is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider” (emphasis added). We agree, essentially for reasons stated by Civil Court (46 Misc 3d 736 [2014]), that where a reimbursable health care service is performed outside the State of New York in a jurisdiction that has enacted a medical fee schedule prescribing the permissible charge for the service rendered, an insurer may properly rely on such fee schedule to establish the “prevailing fee” within the meaning of 11 NYCRR 68.6, and demonstrate compliance therewith by payment in accordance with that fee schedule.”

In one long paragraph, the Appellate Term has held that a no-fault fee schedule in a sister state will be deemed the appropriate fee schedule for services performed in the sister state.

(2) “We note that since the services here were rendered after April 1, 2013, the defense of excessive fees is not subject to preclusion (see 11 NYCRR 65-3.8[g][eff Apr. 1,2013).”

Lack of conformity of billing in accordance with the fee schedule is a defense for all services rendered after April 1, 2013.    This is important for a reason you may not appreciate.  Many defense counsel are arguing that the bizarre wording of 65-3.8(g) has made billing in conformity with fee schedule and proof that the service was rendered part of the prima facie case.  At face value, this is a good argument.  The problem with this argument is the evil 3.8(g) was ameliorating was the precluability of the defense of fee schedule and billing fraud.  The two cases that 3.8(g) sought to overrule were Mercury v. Encare and Fair Price v. Travelers.  Taken in the light that this must be taken in, the Court has held that the “defense excessive of fees is not subject to preclusion”

It has been my fervent believe that a provider should need to plead and prove the foundation elements of a no-fault action – necessity, causal relationship, overdue and damages.  The Courts have uniformly held that all four elements are satisfied through submission of bill or, in the context of Domotor, proof of receipt of a global denial or its equivalent.  As they say, deal with it.

Also, a favorable mention to Aaron Peretta for prosecuting this appeal.  It was a mine field – and I have stepped in too many lately – but he did the best he could.



Coder’s affidavit is sufficient to prove non-conformity with the fee schedule

GBI Acupuncture, P.C. v 21st Century Ins. Co., 2015 NY Slip Op 51235(U)(App. Term 2d Dept. 2015)

“Furthermore, the affidavit executed by defendant’s certified professional coder established that defendant had properly used the workers’ compensation fee schedule to determine the amount which plaintiff was entitled to receive for the services at issue”

I am sensing this case (among a few others) might cut into the argument (more so raised at arbitration) that the affidavit of the coder is insufficient to reduce the fee charged since the coder is not a medical professional.

Another old fee schedule 20553 reduction case

Alleviation Med. Servs., P.C. v State Farm Mut. Auto. Ins. Co., 2015 NY Slip Op 50778(U)(App. Term 2d Dept. 2015)

“Plaintiff’s main argument on appeal with respect to defendant’s cross motion is that defendant failed to demonstrate that it had properly reduced the sum billed for CPT code 20553 from $4,000 to $645.90 pursuant to the workers’ compensation fee schedule. Contrary to plaintiff’s contention, the affidavit submitted by defendant was sufficient to demonstrate, prima facie, that Ground Rule 3 and Ground Rule 5 were appropriately applied to the services billed, and that defendant properly applied CPT code 20552 in order to determine the amount due, which it calculated to be $645.90. It is of no relevance to the determination of this appeal that defendant has described a potential alternate calculation which, had defendant used it, would have concluded that only $416.85 was due.”

It is so nice to see the Court mention codes by number and to explain their methodology for reaching a given conclusion that the reduction is correct.  Now I am curious how much money the carrier would recoup if they brought an unjust enrichment claim against Alleviation/ Guiterrez for the difference between $645,90 and $416,85 that was paid.

Assume there were 5000 claims with this pattern.  That would be  $1,145,250.

First application of 11 NYCRR 65-3.8(g)(1)(ii)

Saddle Brook Surgicenter, LLC v All State Ins. Co.,  2015 NY Slip Op 25099 (Civ. Ct. Bx. Co. 2015)

“Accordingly, for all of these reasons the Court holds that the “prevailing fee” as that term is used in section 68.6 is the amount permitted under New Jersey’s fee [*3]schedule. (Surgicare Surgical v National Interstate Insurance Co., 997 NYS2d 296 [Civ Ct Bx Co 2014] [holding “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 amount permitted by that jurisdiction’s fee schedule.”]).

Timeliness of Denial
11 NYCRR § 65-3.8(a)(1) provides in pertinent part that “[n]o-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim . . .” Here there is no dispute that Defendant did not deny Plaintiff’s claim within 30 calendar days after it received proof of Plaintiff’s claim.

“There are substantial consequences [for] an insurer’s failure to pay or deny a claim within 30 days.” (A.M. Medical Services, P.C. v Progressive Casualty Insurance Company, 101 AD3d 53, 65 [2nd Dept 2012] citing Hospital for Joint Diseases v Travelers Property Casualty Insurance Company, 9 NY3d 312 [2007] [internal quotations omitted]). Where an insurance carrier fails to deny a claim within the 30-day period, it is generally precluded from asserting a defense against payment of that claim. (Id., citing Presbyterian Hospital in City of NY v Maryland Casualty Company, 90 NY2d 274, 282-83 [1997]). However, a narrow exception to this preclusion rule is recognized in “situations where an insurance company raises a defense of lack of coverage.” (Hospital for Joint Diseases, 9 NY3d at 318). Under these circumstances, “an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed.” (Hospital for Joint Diseases, 9 NY3d at 318).

The test for “determining whether a specific defense is precluded . . . or available . . . entails a judgment: Is the defense more like a normal’ exception from coverage (e.g., a policy exclusion), or a lack of coverage in the first instance (i.e., a defense implicating a coverage matter)?” (Fair Price Medical Supply Corp. v Travelers Indemnity Co., 10 NY3d 556, 565 [2008] [internal citations omitted]). An example of a normal exception from coverage/policy exclusion is where the insurer alleges the billed for services were never rendered. (Id.). Thus, an insurer is precluded from raising this defense unless timely raised in its denial. (Id.). An example of a lack of coverage in the first instance is an insurer’s “founded belief that the alleged injury does not arise out of the insured incident.” (Central General Hospital v Chubb Group of Insurance Companies, 90 NY2d 195, 199 [1997]). An insurer is not precluded from raising this defense even though it failed to issue a denial within the 30 day period under Insurance Law § 5106(a) and 11 NYCRR 65-3.8(a). (Id.).

Appellate authority stands for the proposition that a defense that the provider’s bill exceeds the maximum allowed under the fee schedule is a policy exclusion defense and thus precluded if not preserved within a timely issued denial of claim. (Mercury [*4]Casualty Co. v. Encare, Inc., 90 AD3d 475, [1st Dept 2011] lve denied 18 NY3d 810 [2012] [holding fee schedule defense does not fit within narrow exception for denials based on lack of coverage]; Okslen Acupuncture P.C. v NY Central Mutual Fire Ins. Co, 37 Misc 3d 127(A) [app T 1st Dept 2012]) [holding “insurer did not timely deny the claim for first-party no-fault benefits within the prescribed 30-day period, [therefore,] it is precluded from asserting the defense that the fees charged were excessive.”]).

However, a February, 2013, amendment to the insurance regulations regarding timeliness of fee schedule defenses calls into question whether Mercury Casualty Co. and Okslen Acupuncture P.C. are still controlling authority. 11 NYCRR § 65-3.8 provides in pertinent part that:

(g)(1) Proof of the fact and amount of loss sustained pursuant to Insurance Law section 5106(a) shall not be deemed supplied by an applicant to an insurer and no payment shall be due for such claimed medical services under any circumstances:
(i) when the claimed medical services were not provided to an injured party; or

(ii) for those claimed medical service fees that exceed the charges permissible pursuant to Insurance Law sections 5108(a) and (b) and the regulations promulgated thereunder for services rendered by medical providers.[FN1]
Here the parties agree that the medical services were provided to an “injured party”, someone having a claim for benefits pursuant to New York’s statutory and regulatory no-fault insurance scheme and this case does not involve an issue under Insurance Law § 5108(a), a New York fee schedule dispute.

The relevant portion of section 65-3.8(g)(1) for this case is subsection (ii) and its reference to Insurance Law § 5108(b). This case is within the rubric of section 5108(b) because the Court is called upon to interpret 11 NYCRR § 68.6, a regulation promulgated by the insurance superintendent, and as already stated above, the Court interprets 11 NYCRR § 68.6 as requiring Plaintiff to bill for its services at the applicable New Jersey fee schedule rate for its geographic location. As such, this case involves a [*5]fee that exceeds the charges permissible pursuant to Insurance Law § 5108(b) requiring the Court to interpret and determine the applicability of 11 NYCRR § 65-3.8(g)(1)(ii).

The parties do not cite to a case interpreting section 65-3.8(g)(1)(ii) and the Court did not find such a case. Therefore, it appears to be a question of first impression whether 65-3.8(g)(1)(ii) allows an insurer to assert a fee schedule defense even though it did not issue a denial of claim within 30 days of receipt of the claim asserting that the provider billed at a rate above the amount permitted under the applicable fee schedule for the provider’s geography location.

Parsing section 65-3.8(g)(1) assists in its interpretation. 11 NYCRR § 65-3.8(g)(1) relieves insurers from the obligation to pay first party no-fault benefits under two sets circumstances. Section 65-3.8(g)(1)(i) relieves a insurer from paying a claim when the medical provider renders services to a patient who is not an injured party. (11 NYCRR § 65-3.8[g][1][i]). In other words, the insurance company is not required to reimburse a provider for medical services provided to someone who is not an accident victim as that term is understood under Insurance Law. (See Insurance Law § 5108[b]). Section 65-3.8(g)(1)(i) codifies an example of a defense that is more akin to a lack of coverage in the first instance because coverage never legitimately came into existence. (Fair Price Medical Supply Corp., 10 NY3d at 565).

The Court determines that the superintendent intended the same result for section 65-3.8(g)(1)(ii). The Court reaches this determination for two reasons. First because, the plain language of the regulation relieves an insurer of paying the provider “under any circumstances” when the claimed medical service fees exceed the permissible amount pursuant to the applicable fee schedule for the provider’s geographic location. (Klein v. Empire Blue Cross and Blue Shield, 173 AD2d 1006, 1009 [3rd Dept 1991] [noting that “[generally, the plain language used in a regulation should be construed in its natural and most obvious sense.” [citation omitted]). Therefore, “any circumstances” includes instances where the insurer fails to issue a denial rasing fee schedule as an issue within thirty days of its receipt. Second, because the preceding subsection (i) is a codification of a defense that falls squarely within the realm of defenses that are more akin to lack of coverage in the first instance. (MHG Enterprises Inc. v. City of New York, 91 Misc 2d 842, 846 [Sup Ct NY Co 1977] [reasoning that “[i]n interpreting the language of a statute or regulation, the court must give meaning to its words in the context of their particular setting.'” [quoting MVAIC. Eisenberg, 18 NY2d 1, 3 [1966]).

This interpretation of section 65-3.8(g)(1)(ii) conflicts with the holdings of Mercury Casualty Co. and Okslen Acupuncture P.C. wherein the First Department Appellate Division and Appellate Term held that fee schedule defenses are precluded if not raised in a timely issued denial. However, those cases predate the amendment to section 65-3.8(g)(1) and the Court determines that subsection (ii) abrogates Mercury Casualty Co. [*6]and Okslen Acupuncture P.C. The Court reaches this determination because “[a]n administrative agency’s exercise of its rule-making powers is accorded a high degree of judicial deference, especially when the agency acts in the area of its particular expertise” (Consolation Nursing Home, Inc. v Commissioner of New York State Department of Health, 85 NY2d 326, 331 [1995]) and where the regulation is “in harmony with the statute’s over-all purpose.” (General Electric Capital Corp. v New York State Division of Tax Appeals Tribunal, 2 NY3d 249, 254 [internal quotation and citations omitted]). Here, the regulation pertains to an area of expertise within the Insurance Division of the Department of Financial Services. (Consolation Nursing Home, Inc., 85 NY2d at 331). Furthermore, allowing an insurer to rase a fee schedule defense even though it was not preserved in a timely issued 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”. (Goldberg, 153 AD2d at 118; General Electric Capital Corp., 2 NY3d at 254).

For theses reasons, the Court holds that where an insurer fails to issue a denial within 30 days of its receipt rasing a fee schedule issue, under 11 NYCRR § 65-3.8(g)(1)(ii) the insurer is not precluded from raising its defense that the provider billed above the applicable amount permitted under the fee schedule for the provider’s geographic location in an action by the provider for first party no-fault benefits.”

This completely makes sense.  The purpose of this regulation is to overturn Mercury v. Encare.  A court has finally seen this.