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Judge of Compensation Rejects Medical Reimbursement Claim and Adopts Paid Fees as Being Most Reliable Measure of Reasonable and Necessary Care

By on June 13, 2016 in Controlling Costs with 0 Comments

The New Jersey Division of Workers’ Compensation has thousands of medical reimbursement claims in various stages of negotiation and litigation.  Few cases actually get tried because most medical providers do not want to come to court to defend their charges. The vast majority of cases get settled through negotiations.  One recent case, however, involved testimony by a trauma surgeon to obtain reimbursement at the 95th percentile of his charges in the matter of University Physicians Associates v. Transport Drivers CP# 2013-18665.  The case was decided on March 17, 2016.

The case arose from a serious injury to the hip of Mr. Manuel Bonilla who received a workers’ compensation award.  Dr. David Livingston, the Chief of the Trauma Division of University Physicians Associates (UPA), came to court to testify that the insurance carrier, Patriot Risk Services, unreasonably reduced his charges.  He said he performed diagnostic tests and determined that Mr. Bonilla suffered a dislocated hip, crush injury and left acetabular fracture in a 2012 work accident.  He repaired the dislocated hip under conscious sedation without surgery on an emergency basis.  He documented his care as CPT code 27250 and the rate of $9,391. He was paid $3,188.75 and claimed that Patriot Risk owed him $6,202.25.   CPT Code 27250 reads, “closed treatment of hip dislocation, traumatic without anesthesia.” He said that during 2012 he performed three procedures under this code and got paid in full by two different PIP carriers for $9,391. Dr. Livingston also charged $952 for his consult under CPT Code 99245 with modifier code 25 (meaning considerable time was expended). He was paid $500.23 and sought the balance of $451.77.

Following the closed reduction, another surgeon at UPA performed an open reduction and internal fixation to repair the acetabular fracture.  This surgeon, Dr. Adams, did not testify in the case.  He documented his care under CPT Code 27228 at a rate of $71,374 and was paid $24,234.50.  He sought the balance of $47,139.50.

The trial consisted of testimony by Dr. Livingston, Simi Bakshi, the Chief Financial Officer of UPA, and Sandra Corradi (Certified Professional Coder) for respondent.  Dr. Livingston emphasized that he was the Chief of Trauma at a Level One Trauma Hospital, the only one in the northern part of the state.  He said that the New Jersey Department of Banking and Insurance approved a modifier entitled “TS” (trauma service) exclusively for use on PIP charges, but he offered no evidence to prove this point.  He also admitted that CPT Code 25250 is reimbursed at a rate of $150.48 by Medicare.  The remainder of usual and customary rates in New Jersey range from the 50th percentile with payment of $2,376 to the 95th percentile with payment at $9,391 (the amount he contended he should have been paid).

Ms. Bakshi testifed for UPA but admitted that she is not credentialed as a professional coder.  She had no information in court regarding allowed billings by PIP, Medicare or Medicaid.  She stressed that UPA always bills at the 95th percentile of allowed amounts.  The Honorable Nilda Hernandez, Judge of Compensation, did not find her testimony to be helpful on the issues in the case.  However, Judge Hernandez did credit the testimony of Sandra Corradi as a Certified Professional Coder since 1995. Corradi said that she utilizes her certification in her job as Vice-President of bill review, responsible for operating and overseeing about 85,000 workers’ compensation claims.  She said that her job with MCMC, a vendor company that reviews workers’ compensation medical claims, requires review of the applicable codes to determine the appropriate amount of payment.  MCMC uses Fair Health Solutions for value guidance in states that do not have fee schedules (New Jersey, for example).  Fair Health Solutions provides information by geographic region based on zip codes for charges billed and paid.

Judge Hernandez noted that the New Jersey statute requires that reasonable charges must be “based upon the usual fees and charges which prevail in the same community for similar physicians’, surgeons’ and hospital services.” N.J.S.A. 34:15-15. In this case, Ms. Corradi’s company forwarded their assessment to Patriot Risk, which paid the UPA doctors at the 75th percentile.   She also noted that any claim in excess of $25,000 requires review by a nurse, who compares the CPT codes billed against the correlating documentation.  Here the charges were compared with other similar services in the Newark, N.J. zip code.

On cross examination, Ms. Corradi was asked whether her company’s agreement with Patriot Risk contained any incentives for reducing payments.  Ms. Corradi indicated that there were no such incentives.  Her company was paid $8.50 per reviewed submitted bill.

Judge Hernandez rejected the argument of UPA that the decision should turn on only those payments by other commercial carriers with Medicare and Medicaid being disregarded.  She relied on Coalition for Quality Healthcare vs. New Jersey Department of Banking and Insurance, 358 N.J. Super. 123 (App. Div. 2003) for the proposition that paid fees are a more accurate measure of value than billed fees.  “So far as this is applicable to workers’ compensation, I accept that it is appropriate to use paid fees rather than billed fees to make a determination as to the usual and prevailing fees in billing.” Judge Hernandez was persuaded by the testimony of Ms. Corradi and her expertise.  The Judge noted that UPA failed to provide expert testimony to the contrary.  She also found that there is no use of modifiers for physicians’ credentials to warrant a higher amount of payment.  She dismissed the claim with prejudice.

This case is of great importance to practitioners, employers, medical professionals, and carriers because it provides a very useful template for how to handle trials on medical reimbursement claims.  One key element in this case was the use of expert testimony.  Patriot Risk wisely produced an expert in coding, while UPA did not.  Another key aspect of this case is that the Judge of Compensation did not buy the argument that a doctor’s credentials justified an enhanced percentile or modifier.  In this case, Dr. Livingston emphasized his credentials at trial, noting that in addition to being the Director of the Trauma Center, he was a Full Professor at Rutgers School of Medicine.  He contended that these credential justified his practice of always billing at the 95% percentile.  The Judge did not accept that there was any legal standard requiring a use of modifiers based on physician credentials.  The use of a modifier is based more on additional time expended.

What this case shows is that trials on medical reimbursement claims require thought and planning.  One does not just submit bills into evidence and make a request of the judge for payment.  Detailed testimony is required.  The party with the better expert will likely prevail.  For employers the take-away should be that when large amounts are at stake, parties should retain appropriate experts.  In this case, Patriot Risk paid not a cent more after trial than it originally paid.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, a shareholder and co-chair of Capehart Scatchard's Workers' Compensation department, 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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