In the Matter of the Arbitration between Atlantic Orthopaedic Associates a/s/o M.C. CLAIMANT(s), Forthright File No: NJ1010001354284 Insurance Claim File No: 0267652480101027 Claimant Counsel: Law Offices of Schneider- Zenna & Gaffney v. Claimant Attorney File No: SZG-1022 Respondent Counsel: Law Office of Cindy L. Thompson Respondent Attorney File No: 10P3218 Accident Date: 12/05/2009 GEICO Insurance Company RESPONDENT(s). Award of Dispute Resolution Professional Dispute Resolution Professional: Sergio G. Carro Esq. I, The Dispute Resolution Professional assigned to the above matter, pursuant to the authority granted under the "Automobile Insurance Cost Reduction Act, N.J.S.A. 39:6A-5, et seq., the Administrative Code regulations, N.J.A.C. 11:3-5 et seq., and the Rules for the Arbitration of No-Fault Disputes in the State of New Jersey of Forthright, having considered the evidence submitted by the parties, hereby render the following Award: Hereinafter, the injured person(s) shall be referred to as: MC An oral hearing was waived by the parties. An oral hearing was conducted on: 3/22/11 Hearing Information Claimant or claimant's counsel appeared in person. Respondent or respondent's counsel appeared in person. The following amendments and/or stipulations were made by the parties at the hearing: None. NJ1010001354284 Page 1 of 6
Findings of Fact and Conclusions of Law This dispute arises from an automobile accident of 12/5/09 in which the patient assignor, MC, sustained bodily injuries. The Demand seeks to compel payment of medical expense benefits pursuant to the No- Fault/PIP provisions of an automobile insurance policy issued by Respondent. More particularly, Claimant demands payment of $2,033.59 which represents balance billing for surgery performed 6/14/10. The particular services in dispute are the following: 27720 repair of mal-union or non-union, tibia, without graft, $6,200.00 billed, $4,533.54 paid; 20926 tissue graft, $1,500.00 billed, $1,352.67 paid; and 77002 fluoroscopic guidance, $500.00 billed, $280.20 paid. Two issues were presented for determination: (1) whether Claimant s billing represents the correct usual, customary and reasonable (UCR) rates; and (2) whether fluoroscopy was unbundled from billing for the primary procedures. No other issue was presented to the DRP at the time of hearing for determination in this Award. The record evidence establishes that on 12/5/09 MC was involved in an automobile accident in which he sustained a comminuted fracture of his right distal tibial shaft. MC was transported from the scene of the accident to Morristown Memorial Hospital, a Level II trauma center, where he was referred to Dr. Anthony Spinnickie of the Claimant orthopedic practice. Dr. Spinnickie performed an open reduction and internal fixation on the date of accident. Subsequently, it was determined that additional surgery was required as there was radiographic evidence of non-union of the tibial shaft. Therefore, on 6/14/10, MC underwent repair of the non-union using fluoroscopic placement of needle with injection of peripherally derived iliac crest stem cells. The above noted bills were submitted to Respondent and payment was made as indicated. The primary issue for determination is whether the billing represents the correct UCR for the subject services. In this regard, both parties rely on the case of the case of Cobo v. Mkt. Transition Facility, 293 N.J. Super. 374 (App. Div. 1996). Respondent also refers to and the DRP takes note of Bulletin No. 10-30 of the Department of Banking and Insurance (DOBI) as it pertains to the UCR issue. In its bulletin, DOBI states: Many DRPs incorrectly assert that UCR fees can be demonstrated by simply reviewing examples of provider invoices. The DRPs who do so frequently rely upon language from Cobo vs. Mkt Transition Facility, 293 N.J. Super. 374 (App. Div. 1996) as the authority for this position. This is legally incorrect and ignores the fact that through amendments to the PIP Medical Fee Schedule rule adopted subsequent to Cobo, the Department established a different process for how UCR is to be calculated. The Department s rule at N.J.A.C. 11:3-29.4(e)1 clearly states that the provider is to submit his or her usual and customary fee for the service and it is the insurer, not the provider, that is to determine reasonableness. The rule was upheld by the Appellate Division (In Re Adoption of N.J.A.C. 11:3-29 by the State of New Jersey, Department of Banking and Insurance, 410 N.J. Super. 6, 48-55 (App. Div. 2009)), and clearly permits insurers to use NJ1010001354284 Page 2 of 6
national databases to determine the reasonableness of a provider s usual and customary fee. Further, in accordance with the Appellate Division s decision, the Department in Order A10-113 concluded that the Ingenix MDR database can be used by insurers to determine the reasonableness of fees that are not on the fee schedule. Therefore, DRPs should be following this new procedure for determining the appropriate UCR reimbursement. DOBI s bulletin warrants a review of Cobo from a factual basis as well as the Court s actual holding. In the Cobo case, the medical provider, a physical therapy center, customarily billed a daily maximum for physical therapy services. When the New Jersey PIP Fee Schedule was created, the medical provider altered its billing methodology and commenced modality billing rather than daily maximum billing. This effectively tripled its receivables. It warrants noting that the Fee Schedule at the time contained no daily cap on physical medicine and rehabilitation modalities. Nevertheless, prior to the establishment of the Fee Schedule, the provider customarily billed a daily cap. The Court noted that while the provider s billing was at the PIP Fee Schedule rates, the Fee Schedule represented the maximum fee allowed for a service. Relying in part on N.J.A.C. 11:3-29.4(e), the Court further held that the liability of the PIP carrier was limited to the medical provider s usual and customary rate even if that rate is below the Fee Schedule eligible charge. A common misconception of the case is that Cobo stands for the proposition that the provider s bill establishes the usual, customary and reasonable rate in the first instance. Indeed, as DOBI notes in its bulletin, there have been many arbitration awards making just that finding. However, as DOBI also notes, this is not entirely correct. The Court s holding in Cobo cannot be viewed in a vacuum. It must be remembered that the medical provider in Cobo did not prevail even though the billing was set at the Fee Schedule rates, undeniably reasonable rates. Rather, the provider s billing was rejected because it did not represent its usual and customary rates regardless of the reasonableness of those rates. Therefore, the holding in Cobo does not imply that the provider s bill in and of itself establishes the usual, customary and reasonable rate. On the contrary, the Court merely held that the provider establishes its usual and customary rate after which the carrier has the obligation to investigate that bill for reasonableness. It is for this reason that many DRPs including the undersigned require the medical provider to demonstrate that the bill in dispute is its usual and customary rate before calling on the carrier to address reasonableness. The provider invoices to which DOBI refers are accepted into evidence for this purpose. They demonstrate the provider s billing over a period of time thereby establishing whether the proffered bill is indeed its usual and customary rate. Once that usual and customary rate is established, however, the carrier has the burden to investigate the billing for reasonableness including comparison to billing from other providers in the same region. DOBI revised N.J.A.C. 11:3-29.4(e) in part to include subparagraph (1). This subparagraph states: For the purpose of this subchapter, determination of the usual, reasonable and customary fee means that the provider submits to the insurer his or her usual and customary fee. The insurer determines the reasonableness of the provider s fee by comparison of its experience with that provider and with other providers in the region. The insurer may use national databases of fees, such as those published by Ingenix (www.ingenixonline.com) or Wasserman (http://www.medfees.com/), for example, to determine the reasonableness of fees for the provider s geographic region or zip code. NJ1010001354284 Page 3 of 6
Based upon the above understanding of Cobo, DOBI s revision of N.J.S.A. 11:3-29.4(e) including subparagraph (1) is not at all contrary to the Court s holding. The revised regulation merely states in codified form that which the Court had already stated. The provider establishes only its usual and customary rate while the reasonableness is to be investigated by the carrier in order to determine its payment. However, DOBI s revision eliminates any possible misinterpretation of the Court s holding in Cobo and effectively states the law clearly and concisely. The revision also specifically permits reliance on national databases such as Ingenix and Wasserman. It is noted that while the use of Ingenix was temporarily enjoined by the Appellate Division in the case of In Re Adoption of N.J.A.C. 11:3-29 by the State of New Jersey, Dept. of Banking and Ins., 410 N.J. Super. 6 (App. Div. 2009), the injunction was only until such time as DOBI reviewed the database and made a determination as to its reliability. On 8/26/10, DOBI issued its Order No. A10-113 announcing it had completed its investigation into the Ingenix database and concluded that its use is reasonable. DOBI s Order thus permits use of the Ingenix database and the Appellate Division s injunction no longer applies. Turning to the UCR proofs in this case, Claimant submits the affidavit of Dr. Spinnickie who states that the billing is indeed his office s usual and customary rate and that he routinely is reimbursed by insurance carriers at the billed amounts. Claimant also submits exemplar EOBs demonstrating a history of billing at the proffered rates as well as reimbursement at the billed rates for the surgical codes 27720 and 20926. Additionally, Claimant submits relevant portions of the 2008 Ingenix Customized Fee Analyzer for his geographic region. The data for CPT code 27720 shows billing from $4,931.00 at the 50 th percentile to $8,030.00 at the 90 th percentile. It is noted that the data is from two years before the date of service and that Claimant s bill of $6,200.00 would fall slightly above the 85 th percentile which is indicated as $6,071.00. The data for CPT code 20926 shows billing from $885.00 at the 50 th percentile to $1,779.00 at the 90 th percentile. Claimant s bill of $1,500.00 slightly above the 80 th percentile which is reported as $1,423.00. Respondent relies on the Wasserman Physicians Gee Reference for the two surgical codes. The data, after adjustment for the relative value of 1.13 for the applicable geographic region, indicates billing rates for CPT code 27720 from $3,745.95 at the 50 th percentile to $5,679.38 at the 90 th percentile. Respondent s payment of $4,533.54 falls below the 75 th percentile which is $4,864.65. For CPT code 20926, the data indicates a rate of $1,084.80 at the 50 th percentile and $1,663.36 at the 90 th percentile. Respondent s payment of $1,352.67 falls right at the 75 th percentile. For CPT code 77002, neither party submits national database evidence but Respondent notes that its payment of $280.20 was arrived at by cross-coding the service to CPT code 77003, a similar fluoroscopy code which is contained in the PIP fee schedule effective 8/10/09. The payment represents the global rate. This approach is in accordance with N.J.A.C. 11:3-29.4(e), both before and since the revisions effective 8/10/09, which states that the insurer s limit of liability for any medical expense for any service or equipment not set forth in or not covered by the fee schedules shall be a reasonable amount considering the fee schedule amount for similar services or equipment in the region where the service or equipment was provided Only when there is no similar service in the fee schedule does the regulation state that the insurer s limit of liability for any medical expense benefit for any service or equipment not set forth in the fee schedule shall not exceed the usual, customary and reasonable fee. Thus, a UCR analysis requires first a review of the fee schedule for any similar service. Since CPT code 77002 is not appreciably different from CPT code 77003, Respondent s payment of $280.20 is found appropriate in terms of UCR. NJ1010001354284 Page 4 of 6
With respect to CPT code 27720 it is hereby determined that the preponderance of the record evidence supports the billing as the correct UCR. In particular, the record evidence establishes that the billing falls well within the scope of billing represented in both national databases provided by the parties. Accordingly, Claimant is awarded the balance of this bill. With respect to CPT code 20926 it is herby determined that the preponderance of the record evidence establishes Respondent s payment of $1,352.67 as the correct UCR based upon a review of the national database evidence. Accordingly, no further reimbursement is awarded for this procedure. With respect to the unbundling issue, Respondent relies on the Complete Global Service Data for Orthopedic Surgery publication. The relevant portions for CPT code 27720 are in evidence. However, there is no indication in this publication that fluoroscopic guidance is included in this service. It is also noted that Respondent actually made payment for the service indicating it did not find the billing unbundled at the bill was adjusted. As such, there is no record evidence to suggest this service is unbundled. Respondent s reliance on N.J.A.C. 11:3-29.4(o) is misplaced as this sub-chapter pertains to ambulatory surgical centers, not physicians. Finally, as Claimant is found to be a prevailing party, it is also hereby determined that Claimant is entitled to an award of counsel fees and costs as per N.J.S.A. 39:6A-5(g). The fees and costs awarded below are calculated with due regard to the provisions of RPC 1.5 as well as the factors outlined in Enright v. Lubow, 215 N.J. Super. 306 (App. Div. 1987) and Scullion v. State Farm Ins. Co., 345 N.J. Super. 431 (App. Div. 2001). Those factors include: (1) the insurer s good faith in refusing to pay the claim; (2) the excessiveness of plaintiff s demands; (3) the bona fides of the parties; (4) the insurer s justification in litigating the issues; (5) the insured s conduct as it contributes substantially to the need for litigation; (6) the general conduct of the parties; and (7) the totality of the circumstances. Also considered were the fee certification of Claimant s counsel and the objections thereto proffered by Respondent s counsel at hearing. Therefore, the DRP ORDERS: 1. Medical Expense Benefits: Awarded: Disposition of Claims Submitted Medical Provider Amount Claimed Amount Awarded Payable To Atlantic Orthopaedic Associates $2,033.59 $1,666.46 Atlantic Orthopaedic Associates 2. Income Continuation Benefits: Not in issue 3. Essential Services Benefits: Not in issue NJ1010001354284 Page 5 of 6
4. Death or Funeral Expense Benefits: Not in issue 5. Interest: I find that the Claimant did prevail. Interest is awarded pursuant to N.J.S.A. 39:6A-5h.: to be calculated by Respondent in the usual course as mandated by statute. Attorney's Fees and Costs I find that the Claimant did not prevail and I award no costs and fees. I find that the Claimant prevailed and I award the following costs and fees (payable to Claimant's attorney unless otherwise indicated) pursuant to N.J.S.A. 39:6A-5.2g: Costs: $ 225.00 Attorney's Fees: $ 1,200.00 THIS AWARD is rendered in full satisfaction of all claims and issues presented in the arbitration proceeding. Entered in the State of New Jersey Date: 05/06/2011 NJ1010001354284 Page 6 of 6