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In University Physicians Associates v. Transport Drivers, Inc., A-3350-15T2 (App. Div. August 22, 2017), the Appellate Division considered an argument that Level I and II Trauma Centers should be given different treatment when it comes to billing along the lines that they receive under the fee schedule for No-Fault automobile policies.
The case stemmed from an accident that took place on October 10, 2012 when a pallet dropped from a forklift and seriously injured Manuel Bonilla, a Transport employee. Bonilla was taken by ambulance to University Hospital, which is a Level 1 trauma center in Newark, N.J. There Dr. David Livingston, a general surgeon, performed a hip relocation procedure under conscious sedation. Two days later, Dr. Mark Adams, an orthopedic surgeon, performed an open reduction and internal fixation under general anesthesia to repair an acetabular fracture. Dr. Livingston billed $10,343 for his services ($952 for a consultation and $9391 for the hip relocation), and Dr. Adams billed $71,374 for his services.
Respondent’s workers’ compensation carrier paid for $3,688.98 for the services of Dr. Livingston and $24,234.50 for the services of Dr. Adams. The doctors had billed at the 95th percentile (meaning that on a scale of 100, only five doctors billed more for charges which prevail in the same community). The carrier reimbursed at the 75th percentile, which means they paid at a level that was higher than 75 of 100 doctors for charges which prevail in the same community.
The litigation began in the Division of Workers’ Compensation with a Medical Claim Petition, but unlike 99% of such claims which normally settle, this case went to trial. Dr. Livingston and the hospital CFO testified. Respondent produced a Certified Coder on its behalf. The Judge of Compensation, The Honorable Nilda Hernandez, found for the carrier and dismissed the claim petition. University Physicians Associates appealed.
The Appellate Division noted that the Judge of Compensation expressed a valid rationale for her decision because respondent’s witness, Sandra Corradi, was the vice president of a bill review company retained by respondent’s insurer. She was truly an expert in coding and said that the industry standard of reimbursement is paid at the seventy-fifth percentile as indexed by FAIR Health for New Jersey. The Judge of Compensation noted that Dr. Livingston and the CEO were not expert coders. They did not provide data on what they were paid by Medicare or other systems.
The Appellate Division found the expertise of the coder to be compelling but also addressed the central argument of the University Physicians Associates, namely that the Court should follow No-Fault regulations which exempt trauma services at Level I and II from its fee schedule. One of the problems with this argument is that workers’ compensation has no fee schedule to begin with in New Jersey. The Appellate Division also observed that even if the No-Fault law contains this exemption, all charges by Level 1 and II trauma hospitals must still be proven to be usual, customary and reasonable.
In this case, the Appellate Division affirmed the Judge of Compensation “[b]ecause the judge based her determination upon the usual fees and charges that prevail in New Jersey for similar physicians’ and surgeons’ services.” The Appellate Division arguably did all parties a favor by so ruling, including hospitals. To do otherwise would have discouraged the use of Level I and II trauma centers as there would be very little predictability on costs if employers and carriers had to devise a completely different repricing approach for such centers.
John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group. Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at firstname.lastname@example.org.