Fee Schedule and 8 unit issue

Fee Schedule Defenses and the Eight-Unit Limitation

Fee schedule defenses in no-fault insurance litigation require insurers to demonstrate that billed charges exceed permissible reimbursement rates under the workers’ compensation fee schedule. However, establishing this defense involves more than simply asserting that charges are excessive—insurers must prove they applied correct conversion factors and properly calculated allowable reimbursement. When insurers also rely on unit limitations set forth in Physical Medicine Ground Rule 11, additional evidentiary hurdles emerge.

The Appellate Term, Second Department’s decision in Liberty Chiropractic, P.C. v. 21st Century Insurance Co. addresses the interplay between fee schedule calculations and the eight-unit per diem limitation for physical medicine procedures. The case highlights common evidentiary failures by insurers attempting to establish fee schedule defenses and provides important guidance on authentication requirements for documents proving prior payments to other providers.

This decision raises intriguing questions about whether chiropractors performing chiropractic manipulative treatment (CMT) are subject to the same eight-unit limitations as other physical medicine modalities. The court’s treatment of this issue—or lack thereof—leaves room for continued debate about how Physical Medicine Ground Rule 11 applies to different categories of providers.

Case Background

In Liberty Chiropractic, P.C. v. 21st Century Insurance Co., the plaintiff chiropractor sought reimbursement for no-fault services rendered to an injured patient. 21st Century moved for summary judgment, asserting two related defenses: first, that the fees charged exceeded the amounts set forth in the workers’ compensation fee schedule; and second, that another provider (Harvard Medical, P.C.) had already been paid for eight units of physical medicine procedures for certain dates of service, thereby exhausting the maximum units permitted under Physical Medicine Ground Rule 11.

The insurer submitted documentary evidence purporting to show that Harvard Medical had billed for and been paid eight units per visit on the dates in question. 21st Century argued that because the maximum allowable units had already been paid to Harvard Medical, Liberty Chiropractic was not entitled to any additional payment for services rendered on those same dates.

Liberty Chiropractic opposed the motion, challenging both the fee schedule calculations and the proof that eight units had actually been paid to the other provider. The plaintiff argued that the defendant failed to demonstrate use of the correct conversion factor and that the documents regarding Harvard Medical’s claims lacked proper authentication and foundation. The Civil Court granted the insurer’s motion, and Liberty Chiropractic appealed.

Jason Tenenbaum’s Analysis:

Liberty Chiropractic, P.C. v 21st Century Ins. Co., 2016 NY Slip Op 51409(U)(App. Term 2d Dept. 2016)

“Plaintiff properly argues on appeal that defendant failed to establish its defense, that the fees charged exceeded the amounts set forth in the workers’ compensation fee schedule, as a matter of law (see Rogy Med., P.C. v Mercury Cas. Co., 23 Misc 3d 132, 2009 NY Slip Op 50732 ). For example, defendant failed to demonstrate that it had used the correct conversion factor in calculating the reimbursement rate. In addition, defendant sought to demonstrate that plaintiff was not entitled to any payment for services rendered by plaintiff on specific dates because defendant had already paid another provider, Harvard Medical, P.C., for eight units of physical medicine procedures and/or modalities, the full number of units permitted by Physical Medicine Ground Rule 11, for each of those dates. However, the documents relied upon by defendant were attached to the motion papers without authentication, foundation or even discussion. Even if we were to take the documents at face value, they show only that Harvard Medical, P.C. had billed for a total of three units for each of the applicable dates.”

This was one is interesting and necessitates some discussion. Has the Court agreed that a chiropractor is limited to 8 units, even when CMT is performed? Unsure. What authentication is necessary to prove the other 8 units? Discussion in the affidavit that we received billings from other provider and paid 8 units per diem? Does the Court require proof that the others units were actually paid? Unsure, but probably yes.

Legal Significance

The Appellate Term’s reversal of the lower court’s summary judgment award highlights the stringent evidentiary requirements insurers must satisfy when asserting fee schedule defenses. Simply attaching fee schedule calculations to motion papers is insufficient—insurers must affirmatively demonstrate through competent evidence that they applied the correct conversion factors mandated by the applicable regulations. This requirement prevents insurers from making self-serving calculations that undervalue services.

The court’s criticism that the insurer provided documents “without authentication, foundation or even discussion” establishes a clear procedural standard. When insurers rely on documentary evidence to prove facts, they must lay proper foundation through affidavits from persons with knowledge of the documents’ creation and accuracy. Attaching documents to attorney affirmations without explanation fails to satisfy this burden.

More significantly, the decision exposes a critical flaw in the insurer’s eight-unit defense. Even setting aside the authentication problems, the documents showed that Harvard Medical had billed only three units per date, not eight. This factual error suggests the insurer failed to carefully review the evidence before moving for summary judgment. The discrepancy undermines the credibility of the insurer’s position and demonstrates the importance of thorough document review before making fee schedule arguments.

The unresolved question identified in Jason Tenenbaum’s analysis—whether chiropractors performing CMT are subject to the eight-unit limitation—reflects ambiguity in how Physical Medicine Ground Rule 11 applies across different provider categories. Some practitioners argue that CMT constitutes a distinct service category not subject to the eight-unit limitation that applies to physical therapy modalities. The Appellate Term’s decision does not address this issue, leaving it open for future litigation.

Regarding authentication requirements, the decision suggests that insurers must do more than simply produce billing records from other providers. At a minimum, insurers should submit affidavits from claims personnel with personal knowledge of the receipt, processing, and payment of the other provider’s claims. These affidavits should specifically state that payment was made, identify the amount paid, and confirm that the payment was properly credited against the injured person’s policy limits.

Practical Implications

For medical providers challenging fee schedule reductions, Liberty Chiropractic provides a roadmap for opposition. Providers should carefully scrutinize insurers’ conversion factor calculations and demand proof that the correct factors were used. When insurers assert that other providers exhausted unit limitations, providers should challenge the authentication of documents and demand proof that payments were actually made rather than merely billed.

Chiropractors, in particular, should consider whether their services fall within or outside the eight-unit limitation. When chiropractors perform CMT as distinguished from physical therapy modalities, arguments exist that Physical Medicine Ground Rule 11’s limitations do not apply. Providers should preserve this argument in opposition papers even when courts have not definitively resolved the issue.

For insurance carriers, the decision underscores the importance of properly supporting fee schedule defenses with competent evidence. Claims personnel preparing summary judgment motions should ensure that affidavits specifically address conversion factor calculations, identify the sources for applicable rates, and explain how the insurer determined the correct reimbursement amount. These affidavits must come from persons with actual knowledge of the fee schedule application process.

When asserting eight-unit limitations based on payments to other providers, insurers must present authenticated documentation showing what services were actually paid, not merely what was billed. Submission of unverified billing statements or payment ledgers without supporting affidavits will not satisfy the insurer’s prima facie burden. The safer approach is to include affidavits from claims representatives who processed the prior payments and can testify to their accuracy.

Related Articles

• Fee schedule defense requirements and competent evidence standards
• Comprehensive analysis of fee schedule defense requirements in no-fault cases
• Understanding medical billing and down-coding in no-fault insurance claims
• First application of regulation 11 NYCRR 65-3.8(g)(1)(ii)
• New York No-Fault Insurance Law

Legal Update (February 2026): The no-fault fee schedule and Physical Medicine Ground Rule 11 provisions discussed in this 2016 case may have been subject to regulatory amendments or clarifications since publication. Practitioners should verify current fee schedule provisions, unit limitations, and applicable ground rules, as reimbursement rates and procedural requirements are periodically updated by the New York State Insurance Department.