New Jersey Medical Provider Claims – first decision.

New Jersey does not have a “fee schedule” for medical services provided to petitioners in workers’ compensation cases, but because the employer controls care, the respondent is able to direct the claimant to medical care providers with whom contractual arrangements have established – usually to refer the provider’s bills for third-party review and repricing. This helps the carrier/employer reduce costs.

In the past few years a huge number of “Medical Provider claims” have been filed in the Division of Workers’ Compensation seeking additional payments for medical services provided to workers’ compensation patients. Typically, the claim is for the difference between the billed amount of services and the amount paid (usually less than 50% of the original billing).

Initially there was confusion within the Division regarding how these cases were to be docketed and litigated. The Division now accomodates the filing of these claims through the use of a new claim form (“Medical Provider Application for Payment or Reimbursement of Medical Payment”). The Division also formed a Task Force on Medical Provider Claims” to address the new actions. The Task Force issued a memorandum in November 2010 which provided a 13-point “checklist” of factors that a workers’ compensation judge should consider when deciding a Medical Provider Claim (“MPC”) – but this list had the force of a “suggestion” rather than a rule or regulation (go to page 8-9 of the memo for the proposed list).

Practitioners representing carriers and self-insureds have suffered from limited guidance on how these claims were to be litigated – simply stated, there have been no reported decisions addressing the proofs and standards for these new claims. In litgating these matters, a form of brinksmanship has developed – in which the defense sought trial and asked to cross-examine the doctor seeking the fee – in order to force the doctor to come to court and presumably lose time that could be spent more profitably treating patients. In practice, these claims are usually compromised – with the parties agreeing to negotiate values and then entering a Section 20 agreement to close the case (pursuant to N.J.S.A. 34:15-20).

In a 77-page decision issued August 31, 2011, Administrative Supervisory Judge Virginia Dietrich (Middlesex County) ruled on a MPC case in which the claimant underwent extensive skin grafting surgery performed by two surgeons. The carrier (NJM) disputed the billing – specifically, that the surgeons submitted two bills for the same surgery – not as “co-surgoens” but rather seperately – as if one surgeon was not assisting the other.

Judge Dietrich ultimately ruled against the surgeons – findings that the carrier had applied the appropriate reductions after their review and audit of the billing.

While this decision is an agency decision, and therefore un-reported, this is the frst decision on this subject – and Judge Dietrich chaired the Division’s Task Force on Medical Provider Claims – so we can expect the reasoning in this decision to influence the way these MPC claims are handled throughout New Jersey.

What’s good in the decision for employers:

  • Judge Dietrich had to decide what the “usual, customary, and reasonable” fees for the surgeries performed was. Judge Dietrich decided to rely on paid fees as appropriate as opposed to billed fees for services rendered.
  • In finding what was the “usual, customary, and reasonable allowance” Judge Dietrich also found it was appropriate to look at all payments made to the medical providers rather those exclusively made by commercial carriers.
  • Judge Dietrich also found that contractual carriers or government programs should be considered in determining what is customarily accepted by the provider.
  • The Judge also suggested that the more payments that are considered, the better – stating “It is only by reviewing every payment that a determination can be made as to what an acceptable payment is.
  • Judge Dietrich was reviewing bills relating to very specialized care – she found that

    “[t]he instant case is somewhat unusual because it deals with burn surgeryIn New Jersey there are very few practitioners. There are none in northern New Jersey to compare with. The fact is, however, that the Burn Surgeons do accept all manners of insurance coverage including self-pay, government programs, contractual payers and commercial carriers. It is possible then to compare what the petitioner deems acceptable from other payers.

    This is important for defense practititioners to keep in mind in cases where the petitioenr has been rendered specialized or emergent treatment.

What’s bad:

  • Judge Dietrich found that

    “In trying these cases it is helpful to have witnesses familiar with coding and billing processes. Dr. Marano was a necessary witness in this case as there was a question as to the work done in the surgery. In those cases in which the dispute is over payment only and not whether the procedures were completed or the manner in which the procedures were completed I find that it is unnecessary to have the doctor testify. The petitioner must produce a party responsible for the data and an expert who can interpret it if necessary.”

    This is bad for employers because it means that the doctor who is seeking additional payments does not have to tactually come to court (and thereby lose time she could be spending treating and billing) but can send “a party responsible for the data and an expert to interpret it if necessary” to prosecute her claims.

    Case: Burn Surgeons of St. Barnabas v. Shop Rite, decided August 31, 2011. (Note: this is an agency decision and has no precedential value. Burn Surgeons of St. Barnabas has an abolute right of appeal in this case. I will continue to follow this case closely and report on any appellate developments.)

    Greg Lois is the managing partner of LOIS LLC, a 19-attorney law firm dedicated to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@lois-llc.com