American Arbitration Association New York No-Fault Arbitration Tribunal In the Matter of the Arbitration between: Ortho Pros DME, LLC (Applicant) - and - State Farm Mutual Automobile Insurance Company (Respondent) AAA Case No. 17-16-1052-1438 Applicant's File No. Insurer's Claim File No. 32-8S01-014 NAIC No. 25143 1. ARBITRATION AWARD I, Nicole J. Simmons, the undersigned arbitrator, designated by the American Arbitration Association pursuant to the Rules for New York State No-Fault Arbitration, adopted pursuant to regulations promulgated by the Superintendent of Insurance, having been duly sworn, and having heard the proofs and allegations of the parties make the following AWARD: Injured Person(s) hereinafter referred to as: IP Hearing(s) held on 08/04/2017 Declared closed by the arbitrator on 08/04/2017 Marc Schwartz, Esq. from Marc L. Schwartz P.C. participated in person for the Applicant Matthew Kelly, Esq. from Richard T. Lau & Associates participated in person for the Respondent 2. 3. The amount claimed in the Arbitration Request, $ 1,873.50, was NOT AMENDED at the oral hearing. Stipulations WERE NOT made by the parties regarding the issues to be determined. Summary of Issues in Dispute Whether Respondent's delays based on Applicant's failure to respond to verification requests are sustainable. Whether Respondent's denials based on its assertion that Applicant's billing for durable medical equipment was excessive are sustainable. Page 1/9
4. Findings, Conclusions, and Basis Therefor I have reviewed and considered all pertinent documents contained in the American Arbitration Association's ADR Center. The case was decided based upon the submissions of the parties and the oral arguments of the parties' representatives made at the arbitration hearing. There were no witnesses. The Arbitrator shall be the judge of the relevance and materiality of the evidence offered, and strict conformity to legal rules of evidence shall not be necessary. The Arbitrator may question any witness or party and independently raise any issue that the Arbitrator deems relevant to making an award that is consistent with the Insurance Law and Department Regulations. 11 NYCRR 65-4.5(o)(1). (Regulation 68-D.) IP (JR), a 20-year old female, was involved in a motor vehicle on June 17, 2016. As a result, she was prescribed durable medical equipment (DME) following arthroscopic surgery to her left knee. In dispute are three bills Respondent received from the Applicant in the total amount of $1,873.50 covering rentals of DME from August 23, 2016 to September 12, 2016 including CPT codes E0935 (knee continuous passive motion device/cpm), E0236 (cold therapy unit/ctu), E0188 (sheepskin pad), and E0249 (water circulating pad). I find that Applicant has established its prima facie case as Applicant has met the requirements enunciated in Ave T MPC Corp. v Auto One Ins. Co., 32 Misc 3d 128[A], 2011 NY Slip Op 51292[U] [App Term, 2d, 11th & 13th Jud Dists 2011]). The Court held that "A no-fault provider establishes its prima facie entitlement to summary judgment by proof of the submission to the defendant of a claim form, proof of the fact and the amount of the loss sustained, and proof that the defendant either failed to pay or deny the claim within the requisite 30-day period, or issued a timely denial of claim that was conclusory, vague or without merit as a matter of law." (see Insurance Law 5106 [a]; Westchester Med. Ctr. v Nationwide Mut. Ins. Co., 78 AD3d 1168 [2010]; see also New York & Presbyterian Hosp v. Allstate 31 AD3d 512 [2006]). Verification 11 NYCRR 65-3.5 (c) mandates that the insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested. In addition, 11 NYCRR 65-3.5 (o) states in pertinent part: An applicant from whom verification is requested shall, within 120 calendar days from the date of the initial request for verification, submit all such verification under the applicant's control or possession or written proof providing reasonable justification for the failure to comply. The insurer shall advise the Page 2/9
applicant in the verification request that the insurer may deny the claim if the applicant does not provide within 120 calendar days from the date of the initial request either all such verification under the applicant's control or possession or written proof providing reasonable justification for the failure to comply. 11 NYCRR 65-3.8 (b)(3) then provides that: An insurer may issue a denial if, more than 120 calendar days after the initial request for verification, the applicant has not submitted all such verification under the applicant's control or possession or written proof providing reasonable justification for the failure to comply, provided that the verification request so advised the applicant as required in section 65-3.5(o) of this Subpart. Respondent's submissions show that E0188 (sheepskin pad), and E0249 (water circulating pad) were both paid in full ($53.50). The remaining items in dispute are E0935 (knee CPM) for which Respondent issued a denial on 11/7/16, and E0236 (CTU), for which no denial has been issued as the bill was delayed due to Respondent's contention that verification remains outstanding. The bills for these items are for 7-day rentals for both the CPM and CTU. The rental period for the first bill was for 8/23/16 through on 8/29/16. The rental period for the second bill was 8/30/16 to 9/5/16. The third bill was for the period from 9/6/16 to 9/12/16. Upon receipt of these bills, Respondent issued timely requests for verification on 9/23/16 and 10/27/16 seeking wholesale invoices, letters of medical necessity and other information it deemed necessary to verify the claims for the CPM and the CTU. Applicant sent a response to the requests which was received by the Respondent on 10/22/16. Applicant provided Respondent with a wholesale invoice for the CPM device, E0935. The Applicant did not provide the manufacturer's invoice for CTU device, E0236. Respondent then denied the bills for the CPM device based on a fee schedule defense. To date, Applicant has not provided a complete response to the verification request for the CTU device. As a result, Respondent claims it is unable to determine the proper fee schedule amount due. Respondent relies in part on a similar case, CPM Medical Supply Inc. a/a/o Carlos Espinoza-Calle v. State Farm, Civil Court, Kings County, Part 41, Index No. 013566/15, decided on 6/16/16. In that case, Applicant received verification requests for an invoice for DME as in the case herein. In that matter, Judge Richard J. Montelione, found that "as Defendant demonstrated, and it is undisputed, that Plaintiff rejected Defendant's demand for the invoices, and in light of the Court's finding that such rejection was improper, Defendant's demand remains outstanding and Plaintiff's complaint is premature." Respondent's evidence herein demonstrates that it sent Applicant a letter dated 10/27/16 advising that the invoice for the CTU remains outstanding. There was no subsequent response from the Applicant. Page 3/9
Fee Schedule In response to the Respondent's verification requests regarding the CPM device, Applicant provided Invoice #17067048/Invoice date 8/16/16 that identified the CPM device as an Optiflex K1 with a unit cost of $1,350.00. Respondent then added the sum of $94.50, the cost to ship the item, for a total acquisition cost of $1.444.50. Respondent surmises that the monthly rental fee for the item is 1/10 of the total acquisition cost, which comes to $144.45. Respondent then divided that amount by 30 days to establish the daily rate, $144.45 divided by 30 equals $4.82. For a 7-day rental, the fee schedule amount due would be $33.74, found by multiplying $4.82 by 7 days. Initially for each bill pertaining to E0935, Respondent only reimbursed the applicant for $4.82. According to Respondent's calculations, it owes Applicant an additional reimbursement of $28.92 for each of the three bills in dispute for a total of $86.76. Respondent's denial states that: "Pursuant to Insurance Law 5108(a), 11 NYCRR 68.1 and 12 NYCRR 442.2, the DME Fee Schedule has been applied. 12 NYCRR 442.2(b) states that the maximum permissible monthly rental charge for equipment, supplies and services provided on a rental basis shall not exceed the lower of the monthly rental charge to the general public or the price determined by the New York State Department of Health area office. Pursuant to the New York State Department of Health area office, the maximum monthly rental fee is calculated at 1/6th of the equipment provider's acquisition cost. Pursuant to the Policy Guidelines of the New York State Medicaid DME Fee Schedule, the monthly rental fee is calculated at 1/6th of the equipment provider's acquisition cost for DME items that have not been assigned a Maximum Reimbursement Amount (MRA) in New York State Medicaid Program DME Fee Schedule." Despite the language of Respondent's Explanation of Benefits, Respondent has calculated the rental rate at 10% of the purchase price stating that the language in the New York State Medicaid Program for DME has been updated as of July 1, 2016 to state: For DME items that do not have a MRA, the rental fee is calculated at 10% of the equipment provider's acquisition cost "The maximum permissible monthly charge shall not exceed the lower of the monthly rental charge to the general public or the price determined by the New York State Department of Health area office," and relying on an email by Mark Arunasalem, a member of the Policy and Research Unit at the New York Workers' Compensation Board, stating: "Since E0935 is not on the DME fee schedule, the question of the monthly reimbursement value is addressed by section 442.2(b), and states: Page 4/9
"Since there is no monthly fee associated with this item in the Medicaid DME fee schedule, the NYSDOH office will use the Medicaid DME policy and guidelines to ascertain that the monthly rental shall not exceed one-sixth of the acquisition cost and that the total monthly charges shall not exceed the acquisition costs (see p. 13 of the DMEpolicyhttps://www.emedny.org/ProvderManuals/DME/PDFS/DME_Policy_S Please note that this is not a new regulation change. Please feel free to use this email for informational purposes." Applicant essentially argued that since there are no designated fee schedule rates for these items and no fees have been determined by the local NYS DOH area office, there are no MRAs. Since these are unlisted items for which there are no applicable MRAs, the appropriate rate of reimbursement is the monthly rental charge to the general public. This finding is based on 12 NYCRR 442.2(b) which states as follows: "The maximum permissible monthly rental charge for [durable medical equipment], supplies and services provided on a rental basis shall not exceed the lower of the monthly rental charges to the general public or the price determined by the New York State Department of Health area office. The total accumulated monthly rental charges shall not exceed the fee amount allowed under the Medicaid fee schedule." Respondent has the burden of coming forward with competent evidentiary proof to support its fee schedule defenses. See Robert Physical Therapy PC v. State Farm Mutual Auto Ins. Co., 2006 NY Slip Op 26240, 12 Misc.3d 172, 822 N.Y.S.2d 378, 2006 N.Y. Misc. LEXIS 1519 (Civil Ct, Kings Co. 2006). If Respondent fails to demonstrate by competent evidentiary proof that an Applicant's claims were in excess of the appropriate fee schedule, Respondent's defense of noncompliance with the appropriate fee schedule cannot be sustained. See, Continental Medical PC v. Travelers Indemnity Co., 11 Misc.3d 145A, 819 N.Y.S.2d 847, 2006 NY Slip Op 50841U, 2006 N.Y.Misc. LEXIS 1109 (App. Term, 1st Dep't, per curiam, 2006). Respondent's original explanation in their NF-10 calculates the rental fee at 1/6th of the acquisition cost. No affidavit is submitted to support this position. To the extent that it is based on a contention that the DOH has adopted a fee reimbursement of 1/6 the acquisition costs, I reject this explanation as well. Applicant has submitted two letters from the DOH. While a letter dated July 3, 2014 from the Senior Attorney at the New York State Department of Health, Joanne Criscione, states in pertinent part "The Department of Health's Office of Health Insurance Programs has established a Medicaid reimbursement policy for durable medical equipment (DME) rental of items that have not been assigned a Maximum Reimbursement Amount (MRA). For DME items that do not have a MRA, the rental fee is calculated at 1/6th of the equipment provider's acquisition cost." Ms. Criscione issued a subsequent letter on June 8, 2016 in which she clarified that her letter of July 3, 2014 was not a determination by the Department of Health area office establishing the reimbursement rate applicable to Worker Page 5/9
Compensation/no-fault claims. She further advised that, in any event, she did not have the authority to establish such reimbursement rate. "My letter of July 3, 2014 was not a determination by a Department of Health area office establishing the reimbursement rate applicable to Work Compensation claims, nor did I have the authority to do so." Her letter of July 3, 2014 merely stated the Medicaid reimbursement policy as set forth in the Medicaid provider manual for DME. However, as indicated above, the legislative intent indicates that the "Medicaid provider manual and the policy guidance for durable medical equipment are not included as part of the durable medical equipment fee schedule used in workers' compensation cases." 12 NYCRR 442.2 (g). Respondent argues that the fees charged were excessive and improper under the circumstances, and that it has determined the proper amount for the services at issue. However, it did not provide an affidavit or statement from an expert or certified fee schedule coder to explain how the charges in the bill are excessive or improper and has proffered several different, and at times conflicting, arguments in support of its position. Based on the foregoing, I find that Respondent properly delayed the claim for the CTU as Applicant did not provide an adequate response to Respondent's reasonable verification request, and thus dismiss that portion of Applicant's claim without prejudice. Additionally, I find that Respondent has failed to adequately substantiate its fee schedule defense regarding the CPM and award Applicant $1,245.54 representing the outstanding $415.18 per each of the three bills submitted for the rental of the CPM device. 5. Optional imposition of administrative costs on Applicant. Applicable for arbitration requests filed on and after March 1, 2002. I do NOT impose the administrative costs of arbitration to the applicant, in the amount established for the current calendar year by the Designated Organization. 6. I find as follows with regard to the policy issues before me: The policy was not in force on the date of the accident The applicant was excluded under policy conditions or exclusions The applicant violated policy conditions, resulting in exclusion from coverage The applicant was not an "eligible injured person" The conditions for MVAIC eligibility were not met The injured person was not a "qualified person" (under the MVAIC) The applicant's injuries didn't arise out of the "use or operation" of a motor vehicle The respondent is not subject to the jurisdiction of the New York No-Fault arbitration forum Page 6/9
Accordingly, the applicant is AWARDED the following: A. Medical From/To Claim Amount Status Ortho Pros DME, LLC 08/23/16-09/12/16 Awarded: $1,873.50 $1,245.54 Total $1,873.50 Awarded: $1,245.54 B. The insurer shall also compute and pay the applicant interest as set forth below. (The filing date for this case was 12/30/2016, which is a relevant date only to the extent set forth below.) The insurer shall compute interest and pay the Applicant the amount of interest computed from the filing date as indicated above at the rate of 2% per month, simple, not compounded, calculated on a pro rata basis using a thirty-day month, and ending with the date of payment of the award. C. Attorney's Fees The insurer shall also pay the applicant for attorney's fees as set forth below The Respondent shall pay the Applicant an attorney's fee in accordance with 11 NYCRR 65-4.6(d) of 20 percent of the total amount of first-party benefits and any additional first-party benefits, plus interest thereon subject to a maximum fee of $1,360.00. D. The respondent shall also pay the applicant forty dollars ($40) to reimburse the applicant for the fee paid to the Designated Organization, unless the fee was previously returned pursuant to an earlier award. This award is in full settlement of all no-fault benefit claims submitted to this arbitrator. Page 7/9
State of New York SS : County of Nassau I, Nicole J. Simmons, do hereby affirm upon my oath as arbitrator that I am the individual described in and who executed this instrument, which is my award. 09/04/2017 (Dated) Nicole J. Simmons IMPORTANT NOTICE This award is payable within 30 calendar days of the date of transmittal of award to parties. This award is final and binding unless modified or vacated by a master arbitrator. Insurance Department Regulation No. 68 (11 NYCRR 65-4.10) contains time limits and grounds upon which this award may be appealed to a master arbitrator. An appeal to a master arbitrator must be made within 21 days after the mailing of this award. All insurers have copies of the regulation. Applicants may obtain a copy from the Insurance Department. Page 8/9
ELECTRONIC SIGNATURE Document Name: Final Award Form Unique Modria Document ID: 8855b10b9a85edcc277c8648c393ab84 Electronically Signed Your name: Nicole J. Simmons Signed on: 09/04/2017 Page 9/9