New Jersey fee schedule is proper as a matter of law

Surgicare Surgical v National Interstate Ins. Co., 2014 NY Slip Op 24362 (Civ. Ct. Bronx Co. 2014)

The quick synopsis of this case is that were the services are performed in a state where there is a fee schedule for these types of service, the state’s fee schedule will control.  It makes sense, and the Court goes on to note that not applying this rule will turn every “simple” no-fault matter into a battle of coding and billing experts.  This is antithetical to the realm of no-fault.  I personally like how the Court uses 68.5(b) to create a rule that a reasonable and customary amount will only be permissible upon there being no way to harmonize the fee schedule with the service provided.

“In a claim brought under New York’s Comprehensive Motor Vehicle Insurance Reparations Act, otherwise referred to as the “No-Fault Law” (see New York Insurance Law § 5101, et seq.), a provider’s reimbursement for eligible health services performed in New York “shall not exceed the charges permissible under ” (see Insurance Law § 5108). Under subdivision (b), “no provider of health services may demand or request any payment in addition to the charges authorized ” (Insurance Law § 5108).

Responsibility for administering the Insurance Law rests with the Superintendent of Insurance who has “broad power to interpret, clarify, and implement the legislative policy” (see Insurance Law § 301; A.M. Med. Services, P.C. v Progressive Cas. Ins. Co., 101 AD3d 53, 64 ). In the no-fault context, Section 5108 (b) of the Insurance Law empowers the Superintendent to “promulgate rules and regulations implementing and coordinating the provisions of …” These rules, found in Part 68 of the New York Insurance Department Regulations, “govern the charges for professional health services” (see Great Wall Acupuncture v Geico General Ins. Co., 16 Misc 3d 23 ).

Within this regulatory framework, the Insurance Department has promulgated Section 68.6 which provides that:

“If a professional health service is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider” (11 NYCRR § 68.6).

The question of exactly what constitutes the “prevailing fee” in this context appears to be one of first impression since neither of the parties nor this Court have located authority interpreting Section 68.6 in relation to a state which utilizes a no-fault fee schedule. However, the Superintendent of Insurance has issued a formal Opinion interpreting Section 68.6 in the context of a foreign jurisdiction that apparently did not have a fee schedule. The Opinion, which involved a question of licensure for physical therapists providing health services in Guatemala, specifically cites the Section at issue and states:

As to the amount of the reimbursement, where the health services are provided outside of New York State … he dollar amount of the reimbursement for physical therapy services (or other professional health services) performed on an eligible injured person under a New York No-Fault insurance policy in Guatemala is determined by the permissible cost for such services in Guatemala (General Counsel Opinion 4-1-2003 (No.3), 2003 WL 24312368 (US), 2 ).

The Superintendent’s use of the word “permissible” is significant as it strongly suggests that reimbursement for health services performed in a foreign jurisdiction may be regulated by that jurisdiction’s laws, including a governing no-fault regime. Indeed, the principle of limiting reimbursements to “permissible” amounts is mirrored in the section of the Insurance Law that codifies the No-Fault Law’s salient feature of explicitly restricting reimbursement for health services performed in New York to the amounts allowable by this State’s fee schedule (see Ins. Law Section 5108); therefore, it is only logical that the same principle should apply to foreign jurisdictions. Consistent with the use of “permissible ” in the core provision of the No-Fault Law, the Superintendent has reasonably interpreted the language of Section 68.6 to require that an insurer pay for any health service performed in a locale outside of New York at the permissible cost for that location. As such, the Superintendent’s interpretation of its own regulations is entitled to deference (LMK Psychological Services, P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [“the Insurance Superintendent’s interpretation of its own regulations if not irrational or unreasonable, will be upheld in deference to his special competence and expertise with respect to the insurance industry, unless it runs counter to the clear wording of a statutory provision’”).

In addition, the language of the preceding subsection within Section 68.6 also utilizes the term “prevailing fee.” That subsection, Section 68.5 (b), states that:

“If a professional health service is performed which is , but is not set forth in fee schedules adopted or established by the superintendent, and if the superintendent has not adopted or established a fee schedule applicable to the provider, then the permissible charge for such service shall be the prevailing fee in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent” (11 NYCRR § 68.5 the insurer pays a “prevailing fee,” as plaintiff defines that term, only after all possible fee schedule applications have been exhausted.

Both the Insurance Department’s Opinion and Section 68.5 (b)’s formula for applying the “prevailing fee” comport with the policy goals underlying the Legislature’s adoption of a fee schedule. The purpose of a fee schedule is “to significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium” (Goldberg v Corcoran, 153 AD2d 113, 118 citing Governor’s Program Bill, 1977 McKinney’s Session Laws of NY, at 2449; Governor’s Memorandum in Support of Assembly Bill 7781—A). Moreover, per Insurance Department regulation, the express purpose of the fee schedule was to “contain the cost of no-fault insurance” (see 11 NYCRR 68.0). Like New York, New Jersey passed similar no-fault legislation as a “cost containment initiative” (see Casinelli v Manglapus, 181 NJ 354, 360, 858 A2d 1113, 1116 ). In furtherance of policy goals akin to New York’s, New Jersey’s Department of Insurance has promulgated a medical fee schedule (see 11 NJSA 11:3-2.9). Thus, the “permissible” charge for health services rendered in New Jersey are limited by the maximum amounts permitted under New Jersey’s fee schedule.

Based on the foregoing, this Court holds 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 “permissible” charge for that particular medical service, that is, the amount permitted by that jurisdiction’s fee schedule. There being no dispute that defendant issued payment on plaintiff’s claim in accordance with New Jersey’s fee schedule, plaintiff is not entitled to more. Since plaintiff’s action is based entirely on its claim of entitlement to reimbursement in excess of New Jersey’s “permissible” charge, the relief sought in the complaint must be denied and the action dismissed.

Contrary to plaintiff’s position, this Court neither exceeds its “jurisdiction” nor subverts the plain language of Section 68.6 by holding that an insurer complies with Section 68.6 when the reimbursement amount is consistent with another state’s fee schedule. Rather, this Court merely adopts a reading of Section 68.6 that comports with both the Insurance Department’s interpretation of its own regulation, as well as the policy goals underlying New York’s (not to mention, New Jersey’s) No-Fault Law.

Aside from the core objective of “provid a tightly timed process of claim, disputation and payment” (see LMK Psychological Services, P.C., 12 NY3d at 223), another important goal of the no-fault laws was also to “reduce the burden on the courts” (see Hosp. for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 ). If this Court were to accept plaintiff’s interpretation of Section 68.6, rather than “reduce the burden on the courts,” similar no-fault disputes would routinely call upon trial courts to conduct evidentiary hearings on local billing practices to determine the “prevailing fee” in a neighboring location notwithstanding the fact that such a jurisdiction has already established its own legally permissible fee. Such a situation would undoubtedly subvert the No Fault Law’s core objective of creating a speedy process of claim, dispute resolution, and, ultimately, payment.

Equally important, the goals of consistency and fairness are undermined when injured parties, or their provider-assignees, can be reimbursed for the same health services at different rates [*4]from those permitted under either New York’s or even another state’s fee schedule simply because the services were rendered outside of New York but are to be paid in this State. Plaintiff’s proposed reimbursement scheme would only frustrate the purposes of both jurisdictions’ no fault laws because providers would be incentivized to treat New York patients in other jurisdictions hoping to receive more for performing the same health service outside of New York’s borders.

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Legal Update (February 2026): Since this 2014 decision, New York’s no-fault fee schedules and reimbursement regulations under Insurance Law §§ 5101 and 5108 may have been subject to amendments or updates through regulatory changes by the Department of Financial Services. Practitioners should verify current fee schedule provisions and any modifications to the reasonable and customary charge standards discussed in this case, as regulatory guidance and fee schedule amounts are periodically revised.