New trial with a twist on a medical necessity claim

The question of who can testify about medical necessity at trial represents a recurring procedural challenge in New York no-fault insurance litigation. Insurance companies frequently rely on peer review reports to deny claims, asserting that particular treatments or medical equipment were not medically necessary. When these cases proceed to trial, fundamental questions arise about the admissibility of the peer review reports themselves and whether insurance companies must call the actual peer reviewer as a witness or can instead rely on substitute experts.

This issue carries significant implications for both healthcare providers seeking payment and insurance companies defending denials. The procedural rules governing expert testimony, the admissibility of peer review reports, and the scope of permissible expert opinion directly affect trial strategy, case preparation, and ultimate outcomes in medical necessity disputes.

Understanding the proper boundaries of expert testimony becomes particularly important when insurance companies attempt to prove lack of medical necessity through witnesses who did not personally conduct the original peer review. Courts must balance the need for parties to present competent evidence with practical considerations about witness availability and the foundational requirements for expert opinions.

Case Background

In Promed Orthocare Supply, Inc. v Geico Ins. Co., a healthcare provider sued to recover payment for medical supplies it had provided to an injured patient. Geico denied the claim based on a peer review report concluding the supplies were not medically necessary. At trial, Geico presented expert testimony from a witness who had not personally prepared the peer review report upon which the denial was based. The Civil Court refused to consider this testimony, apparently believing that only the actual author of the peer review report could testify about medical necessity or that the peer review report itself needed to be admitted into evidence.

This procedural ruling led to a new trial being ordered after the Appellate Term reversed, establishing important principles about expert testimony in medical necessity cases.

Jason Tenenbaum’s Analysis

Promed Orthocare Supply, Inc. v Geico Ins. Co., 2017 NY Slip Op 51264(U)(App. Term 1st Dept. 2017)

“The Civil Court erred in refusing to consider expert testimony from the witness who did not prepare the peer review report on the ground that the peer review report was not admitted into evidence, and in indicating that testimony from the author of the peer review report was required. Testimony of an expert witness who did not prepare the peer review report upon which an insurer’s denial of claim was based can be used to prove a lack of medical necessity (see e.g. Metropolitan Med. Supplies, LLC v GEICO Ins. Co., 36 Misc 3d 141, 2012 NY Slip Op 51490 ). Moreover, at trial, an insurer cannot use a peer review report to prove its defense of lack of medical necessity (see e.g. A-Quality Med. Supply v GEICO Gen. Ins. Co., 39 Misc 3d 24 ). While the expert witness’s testimony should be limited to the basis for the denial as set forth in the peer review report (e.g. Park Slope Med. & Surgical Supply, Inc. v Progressive Ins. Co., 34 Misc 3d 154, 2012 NY Slip Op 50349 ), it is plaintiff’s burden to make an appropriate objection in the event the testimony goes beyond the basis for the denial and, if necessary, produce the peer review report.”

Here are some interesting rules (enunciated again). First, the peer report never goes into evidence. Second, the expert (whomever it is) can say what (s)he wants subject to an objection that is oversteps the utilization review. Third, the Court cannot act sua sponte.

Legal Significance

This decision establishes several critical principles that govern medical necessity trials in no-fault insurance cases. The Appellate Term confirmed that peer review reports are inadmissible hearsay at trial, preventing insurance companies from simply introducing the written reports as proof of their position. Instead, insurers must present live expert testimony to establish that treatment or equipment was not medically necessary.

Importantly, the court held that the expert witness need not be the same individual who prepared the peer review report upon which the denial was based. This provides insurance companies with flexibility in presenting their defense, particularly when the original peer reviewer is unavailable or would be impractical to produce. However, this flexibility comes with important limitations: the substitute expert’s testimony must remain confined to the grounds articulated in the original peer review report that formed the basis for the denial.

The burden allocation framework established by this decision places responsibility squarely on healthcare providers to monitor the scope of expert testimony and object when insurance company experts stray beyond the boundaries of the peer review report. Courts cannot intervene sua sponte to restrict testimony that exceeds the scope of the original denial. This creates a strategic imperative for providers to obtain copies of peer review reports through discovery and carefully prepare for trial by understanding the specific grounds upon which denials were based.

Practical Implications

Healthcare providers litigating medical necessity disputes must adopt specific trial strategies in light of this decision. First, providers should use discovery tools to obtain complete copies of peer review reports underlying claim denials. Without access to these reports, providers cannot effectively object when insurance company experts exceed the scope of the original denial rationale.

Second, providers must actively monitor expert testimony during trial and make timely objections when witnesses venture beyond the peer review report’s stated grounds for denial. The court will not intervene without a proper objection, meaning passive trial strategy can result in insurance companies expanding their defense beyond what was originally articulated.

For insurance companies, this decision provides valuable flexibility in marshaling expert testimony but requires careful witness preparation. Substitute experts must thoroughly understand the peer review report and limit their testimony to grounds actually stated in that report. Attempting to introduce new bases for denying medical necessity at trial invites objection and potential reversal.

Related Articles

• Why Conclusory Affidavits Fail: Building Strong Opposition to Medical Necessity Summary Judgment Motions
• Civil Court Decisions in No-Fault Insurance: When Legal Reasoning Goes Wrong
• Medical Necessity in No-Fault Insurance: Understanding the First Department’s Victory for Insurance Carriers
• A prima facie case of medical necessity?
• New York No-Fault Insurance Law