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Court Rejects Argument that Level I and II Trauma Centers Deserve Special Fee Schedules in Comp

By on August 24, 2017 in Claims with 0 Comments

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.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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