A M E R I C A N A R B I T R A T I O N A S S O C I A T I O N NO-FAULT/ACCIDENT CLAIMS AWARD OF DISPUTE RESOLUTION PROFESSIONAL

Transcription

1 CASE NO. 18 Z A M E R I C A N A R B I T R A T I O N A S S O C I A T I O N NO-FAULT/ACCIDENT CLAIMS In the Matter of the Arbitration between (Claimant) AAA CASE NO.: 18 Z v. INS. CO. CLAIMS NO.: PARKWAY INS. CO. DRP NAME: Nicholas J. Fano (Respondent) NATURE OF DISPUTE: Precertification AWARD OF DISPUTE RESOLUTION PROFESSIONAL I, THE UNDERSIGNED DISPUTE RESOLUTION PROFESSIONAL (DRP), designated by the American Arbitration Association under the Rules for the Arbitration of No-Fault Disputes in the State of New Jersey, adopted pursuant to the 1998 New Jersey Automobile Insurance Cost Reduction Act as governed by N.J.S.A. 39:6A-5, et. seq., and, I have been duly sworn and have considered such proofs and allegations as were submitted by the Parties. The Award is DETERMINED as follows: Injured Person(s) hereinafter referred to as: Patient. 1. ORAL HEARING held on 3/15/ ALL PARTIES APPEARED at the oral hearing(s). Claimant appeared telephonically. 3. Claims in the Demand for Arbitration were NOT AMENDED at the oral hearing (Amendments, if any, set forth below). STIPULATIONS were made by the parties regarding the issues to be determined (Stipulations, if any, set forth below). The parties stipulated the following: 1. That this is a post AICRA matter. 2. That any amount awarded will be subject to the Fee Schedule. 3. That the only issue in this case involves the pre-certification issue, and that there is no issue of medical necessity/causation regarding this spinal soft tissue injury case. 4. FINDINGS OF FACTS AND CONCLUSIONS OF LAW: Counsel for the respondent appeared in person at the hearing in this matter, counsel for claimant appeared via telephone.

2 CASE NO. 18 Z The sole issue in this case involves a determination of whether the claimant provider was required to seek pre-certification for seven (7) chiropractic visits from 3/17/00 through 4/14/00 following this 3/2/00 motor vehicle accident. That is, the claimant treated this 12 year old female patient for a total of seven (7) visits over an approximate four (4) week time period - the claimant treated this patient approximately two (2) times per week for her soft tissue spinal injuries. The total bill amounts to $ Respondent contends that its policy requires that all treatment rendered after the initial ten (10) day period immediately following an accident needs to be pre-certified; and further, that if pre-certification is not sought, any assignment of rights under the policy is void. Claimant contends that any treatment or tests rendered in accordance with the care paths need not be pre-certified until a decision point review requirement appears in that care path. The injuries in this case involve soft tissue injuries to the patient s spine. Spinal injuries are identified injuries for which the AICRA care paths apply. Soft tissue spinal injuries fit into care path 1 for the cervical spine, care path 3 for the thoracic spine and care path 5 for the lumbosacral spine. Each of these care paths permits up to 12 spinal manipulation treatment sessions over a four (4) week period, with one (1) to three (3) visits per week. The care path scheme envisioned by AICRA was nicely summed up in the Appellate Division case of N.J. Coalition of Health Care v. DOBI, 323 N.J.Super. 207 (App. Div. 1999), where the court stated, at 223: The regulations purported to maintain quality of care while at the same time discouraging medically unnecessary treatments and diagnostic tests for certain injuries to the neck and back. The regulations set out protocols through the development of care paths which apply only to certain injuries of the neck and back-injuries which DOBI thought were fraught with potential for unnecessary treatment and overutilization of benefits. The care paths use a flow-chart method which presents a diagrammatic view of expected treatment patterns based on patient symptoms and objective evaluations by practitioners... The care paths also contain projected utilization norms for assessing intensity and length of treatment.... In this case the claimant provider rendered treatment within the parameters of the appropriate care paths. He did not deviate from the care path treatment. The care path treatment is deemed to be the medically appropriate treatment for that care path s identified injury. In other words, the treatment outlined in the care paths

3 CASE NO. 18 Z is considered to be the generally accepted treatment for the injury covered by that care path. As stated by the Appellate Division in N.J. Coalition, supra, at 249: [a]n individual who sustains an injury defined by one of the six care paths should, unless otherwise warranted by medical necessity, be treated for that injury in accordance with the provisions of the applicable care path. It is not appropriate to require pre-certification of treatment which adheres to the flow chart of the care paths. In fact, via Bulletin number 99-07, dated 5/3/99, the Department of Banking and Insurance (DOBI) expressly rejected certain pre-certification plans found in some insurance policies which [h]ave undertaken to pre-certify all, or virtually all, medical care provided to injured motorists either by designating in the plan that all medical treatment must be pre-certified or by including an exhaustive list of treatments or procedures for which pre-certification is required. Accordingly, this Bulletin reflects that it was never the intent of AICRA to require pre-certification of all, or virtually all, medical treatment. Furthermore, N.J.A.C. 11:3-4.7(b)(1) states that the plan shall include procedures for the injured person... to provide prior notice to the [carrier]... that additional treatment... is medically necessary.... It is evident that the intent of AICRA to only require pre-certification of treatment for a care path identified injury when the treatment is in addition to, or deviates from, the treatment outlined in that care path. The fact that AICRA and DOBI did not intend to require pre-certification for the type of treatment rendered in this case can further be gleaned from the comment made by the Commissioner of Insurance in the Summary of Public Comments and Agency Responses to the proposed amendment to Adopted Repeal and New Rule: N.J.A.C. 11:3-4. At page 9 of 12 of this publication the Commissioner stated: As noted by the commenter, the diagnoses and tests subject to the Decision Point Review requirements, including the Care Paths, cannot be subject to precertification because the decision point review notice system already provides insurers a way to monitor treatment of those injuries. Accordingly, for identified injuries, for which a care path applies, services outlined in that care path need not be pre-certified until a decision point review is indicated in the flow charge for that care path. No pre-certification was required for the treatment rendered in this case.

4 CASE NO. 18 Z As an aside, on the issue of the language in the respondent s policy which purports to void an assignment where a provider fails to seek pre-certification, it should be noted that this arbitrator finds such an anti-assignment clause to be unreasonable and therefore unenforceable. The policy in question already provides for a failure to pre-certify penalty and states that if there is non-compliance with the policy s precertification provisions, the insured retains responsibility for a co-payment amount of 50%. This co-payment penalty is permitted via N.J.A.C. 11:3-4.8(g). The attempt to further penalize a covered person or medical provider because of a failure to pre-certify is unreasonable.. Our Appellate Division, as recently as 2000, commented on assignment of PIP claims in Lech v. State Farm Ins. Co., 335 N.J.Super. 254 (App. Div. 2000), and held, at 258: To begin with, statutorily, "all choses in action arising on contract shall be assignable." N.J.S.A. 2A:25-1. See Kimball International, Inc. v. Northfield Metal Products, N.J. Super., (App. Div. 2000) (slip op. at 16-17). The insured patients' PIP claims against State Farm are contractual and, thus, assignable. See Tirgan v. Mega Life & Health Ins., 304 N.J. Super. 385 (Law Div. 1997). As assignments of "choses in action," the assignments give to plaintiff the contract right to litigate the object of the assignments, the PIP claims. While an assignee's rights can be no greater than those of the assignor, id. at 391; Allstate Ins. Co. v. Lopez, 325 N.J. Super. 268, 278 (Law Div. 1999), neither can they be any less. Where the assignment conveys a claim that can be sued upon, the assignee "may sue thereon in his own name." N.J.S.A. 2A:25-1. See Russell v. Fred G. Pohl Co., 7 N.J. 32, (1951); Berkowitz v. Haigood, 256 N.J. Super. 342, 346 (Law Div. 1992); 6 Am. Jur. 2d Assignments 113. Indeed, in the context of assignment of PIP claims, it has been held that the health care provider is the real party in interest and that the assignment of a patient's PIP claims against its insurer divests the patient of a right to bring a separate action. Allianz Life Ins. Co. v. Riedl, 264 Ga. 395, , 444 S.E.2d 736, (1994); Jones v. State Farm Mut. Auto. Ins. Co., 228 Ga. App. 347, 349, 491 S.E.2d 830, 832 (1997). See also Gamata v. Allstate Ins. Co., 90 Hawaii 213, 222, 978 P.2d 179, 188 (Haw. Ct. App. 1999); Pay Tel Systems, Inc. v. Seiscor Technologies, Inc., 850 F. Supp. 276, 278 (S.D.N.Y. 1994). To prohibit an assignment of rights running from an injured patient to a medical provider to collect PIP benefits and to prevent an assignment of benefits permitting payment of benefits directly to the medical provider, as opposed to the patient, would cause an avalanche of lawsuits filed in our Superior Court. That is, common sense tells us that if an insurance carrier forwards a check for PIP benefits directly to the patient, as opposed to the doctor, at least some of the patients will not forward the check to the medical provider. Rather, human nature would cause some patients to cash the check and not pay the doctor. Accordingly, the doctor would be forced to sue the patient in Superior Court for collection of his/her bill. This would contravene the entire intent of the New Jersey No-Fault Act and the public policy of this State which is to limit litigation

5 CASE NO. 18 Z in the Superior Court and promote alternative dispute resolution when practical. To prohibit assignments would violate public policy. It is well established that an insurance contract provision will not be enforced if it violates public policy see Zuckerman v. Nat l Union Fire Ins. Co., 100 N.J. 304 (1985). It has been common practice in New Jersey for patients to instruct insurance carriers providing health benefits to forward payment directly to the medical provider. This arbitrator finds no sound reason to now permit an insurance carrier to ignore the request of the insured/patient for direct payment to the medical provider. It has also been common practice to permit a medical provider to file a claim for payment of its bill directly against an insurance carrier. Unless the equities in a case dictate otherwise, I see no sound reason to now prevent that practice. The insured patient executes an assignment with the full expectation that the medical provider will take on the burden of collecting that provider s bill from the carrier. Why then should the assignment not be enforceable? In fact, our highest court has held that where policy language does not accord with the reasonable expectation of the insured, the subject language will not be enforced see Sparks v. St. Paul Ins. Co., 100 N.J. 325 (1985). One of the main purposes of the New Jersey No-Fault Act was to limit litigation. The No-Fault Act is social legislation intended to provide insureds with the prompt payment of medical bills, lost wages and other such expenses without making them await the outcome of protracted litigation. Mandated as a social necessity, PIP coverage should be given the broadest application consistent with the statutory language - See Amiano v. Ohio Casualty Insurance Company, 85 N.J. 85, 90 (1981). Insurance contracts are contracts of adhesion and accordingly they must be liberally construed to provide the broadest coverage to the insured. All ambiguities must be resolved against the carrier. See Sparks v. St. Paul Ins. Co., 100 N.J. 325 (1985). Furthermore, legislation involving automobile insurance must be construed with liberality in effecting the broadest protection of auto accident victims consistent with the language of the pertinent statute. Motor Club of Am. Ins. Co. v. Phillips, 66 N.J. 277, 293 (1984). In a nutshell, our State permits post-loss assignments even when an insurance policy attempts to restrict such assignment; and specifically, via statute and case law, our State permits assignment of PIP benefits to providers of service benefits. However, our legislature and courts have permitted carriers to place reasonable restrictions on those PIP assignments. What is reasonable will have to be decided on a fact by fact basis in each case based on the policy language, and the equities in the case when viewed against the backdrop of the general public policy of permitting unrestricted assignments. Also, via the Administrative Code, only reasonable restrictions on assignments are permissible - See N.J.A.C. 11:3-4.9.

6 CASE NO. 18 Z It is important to note that the mere fact that the Commissioner of Insurance may have approved an insurance policy with conditions/restrictions on PIP assignments does not mean that those conditions/restrictions are enforceable. That is, any policy language attempting to restrict PIP assignments must be reasonable and not violate public policy. The mere approval by the Commissioner of such restrictions/conditions in a policy is not conclusive that the conditions/restrictions will be enforced. Such conditions/restrictions must still be reasonable and not contrary to public policy. Our State s regulatory history is legion with situations where the Commissioner approved policy terms which were later deemed by the courts to violate either a statute or public policy and some of these invalidated provisions remained in insurance policies for years after they were deemed unenforceable by our courts. Some examples of policy terms approved by the Commissioner which were later invalidated by our courts are as follows: 1. In Motor Club of America Ins. Co. v. Phillips, 66 N.J. 277 (1974), the other insurance provision found in the UM endorsement of the MCA policy was declared unenforceable. 2. In Ciecka v. Transamerica Insurance Group, 81 N.J. 421 (1979), a UM setoff provision was invalidated. 3. In Perez v. American Bankers Insurance Co. of Florida, 81 N.J. 415 (1979), a UM corroboration provision was struck down as violating the intent of the Legislature. 4. In Walkowitz v. Royal Globe Insurance Company, 149 N.J. Super. 442 (App. Div.), certif dism d 75 N.J. 584 (1997), a UM provision attempting to setoff worker s compensation benefits was invalidated since it violated statutory law and public policy. It should be noted that New Jersey law dictates that one of the issues to be decided by a AAA arbitrator is interpretation of the insurance policy in issue and that all decisions of [an arbitrator] shall be binding. See N.J.S.A. 39:6A-5.1(c). Accordingly, interpretation of the policy language in issue has been relegated by the legislature to the arbitrator, whose interpretation is binding. The attempted assignment restriction in this policy is invalid. Claimant failed to calculate interest, therefore interest is deemed waived. 5. MEDICAL EXPENSE BENEFITS: Awarded Provider Amount Claimed Amount Awarded Payable to Advanced Health Center P.C. $ $420.00** Provider

7 CASE NO. 18 Z Explanations of the application of the medical fee schedule, deductibles, co-payments, or other particular calculations of Amounts Awarded, are set forth below. **Subject to fee schedule, deductible/copayment. 6. INCOME CONTINUATION BENEFITS: Not In Issue 7. ESSENTIAL SERVICES BENEFITS: Not In Issue 8. DEATH BENEFITS: Not In Issue 9. FUNERAL EXPENSE BENEFITS: Not In Issue 10. I find that the CLAIMANT did prevail, and I award the following COSTS/ATTORNEYS FEES under N.J.S.A. 39:6A-5.2 and INTEREST under N.J.S.A. 39:6A-5h. (A) Other COSTS as follows: (payable to counsel of record for CLAIMANT unless otherwise indicated): $ (B) ATTORNEYS FEES as follows: (payable to counsel of record for CLAIMANT unless otherwise indicated): $1, (This arbitrator required claimant to supply legal research on this novel issue post hearing). (C) INTEREST is as follows: waived per the Claimant. This Award is in FULL SATISFACTION of all Claims submitted to this arbitration. 4/26/01 Date Nicholas J. Fano, Esq.