No Fault (PIP) Insurance FAQ’s

Does Fee Splitting Constitute a Valid Defense under No-Fault?

According to the Appellate Division, First Department—NO!  Recently, the Appellate Division, First Department held that a fee-sharing arrangement does NOT constitute unprofessional conduct and is NOT a viable defense under No-Fault law.  The Court holds it does not constitute a defense to a no-fault action.  See, Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C., 2015 NY Slip Op 09184 (1st Dept. 2015) Decided on December 10, 2015.  Link:http://www.nycourts.gov/reporter/3dseries/2015/2015_09184.htm

 

In that case, the Supreme Court, New York County (Cynthia S. Kern, J.) denied a petition to vacate the award of the master arbitrator, and confirmed the award which held that a fee-sharing arrangement does not constitute an unprofessional conduct and it is a viable defense to a no-fault action.  The Appellate Division, First Department affirms and holds:

Whether or not the fee-sharing arrangement at issue constitutes unprofessional conduct (see 8 NYCRR 29.1[b][4]), it does not constitute a defense to a no-fault action (compare State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005] [“insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims”]). It is solely a matter for the appropriate state licensing board (see e.g. Necula v Glass, 231 AD2d 457 [1st Dept 1996]; see also H & H Chiropractic Servs., P.C. v Metropolitan Prop. & Cas. Ins. Co., 47 Misc 3d 1075, 1078 [Civ Ct, Queens County 2015]).

The Appellate Division, First Department cites to H & H Chiropractic Servs., P.C. v Metropolitan Prop. & Cas. Ins. Co., 47 Misc 3d 1075, 1078 (Civ Ct, Queens County 2015). In that case, the court noted that there is no court that has found improper fee-splitting to constitute fraud or a licensing requirement.   In that case the claims representative employed by defendant issued a timely denial of plaintiff’s bill based, inter alia, upon plaintiff’s alleged illegal fee-splitting.

 

In support of its motion for summary judgment, Defendant submitted a notice to admit, pursuant to CPLR 3123, upon the plaintiff, seeking to admit a copy of a contract purportedly entered into between plaintiff and its billing company, Systems Management Group, Inc. (SMG). The purported contract states that “[t]he Practice will pay SMG 6% of all fees charged & ultimately collected by SMG.”  Defendant also submits the deposition transcript of one of the members of the plaintiff’s practice, wherein he admitted that plaintiff employed SMG and they are paid a fixed fee of five percent of collections.

Defendant argues that since plaintiff allegedly pays six (or five) percent of its fees to its billing company, that its billing company owns six percent of plaintiff’s practice.

The court held that improper fee-splitting is not a defense in a no-fault action.  The defendant failed to prove that the provider filed any fraudulent documents with the State and allowed non-physicians to control any aspect of their practice.

“As such, it is the conclusion of this court that impermissible fee-splitting, standing alone, is not a violation of a licensing requirement, does not constitute an available defense to a no-fault action and, as such, any action is solely within the purview of the appropriate state licensing board.”

Does Fee Splitting Constitute a Valid Defense under No-Fault?

According to the Appellate Division, First Department—NO!  Recently, the Appellate Division, First Department held that a fee-sharing arrangement does NOT constitute unprofessional conduct and is NOT a viable defense under No-Fault law.  The Court holds it does not constitute a defense to a no-fault action.  See, Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C., 2015 NY Slip Op 09184 (1st Dept. 2015) Decided on December 10, 2015.  Link:http://www.nycourts.gov/reporter/3dseries/2015/2015_09184.htm

 

In that case, the Supreme Court, New York County (Cynthia S. Kern, J.) denied a petition to vacate the award of the master arbitrator, and confirmed the award which held that a fee-sharing arrangement does not constitute an unprofessional conduct and it is a viable defense to a no-fault action.  The Appellate Division, First Department affirms and holds:

 

Whether or not the fee-sharing arrangement at issue constitutes unprofessional conduct (see 8 NYCRR 29.1[b][4]), it does not constitute a defense to a no-fault action (compare State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005] [“insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims”]). It is solely a matter for the appropriate state licensing board (see e.g. Necula v Glass, 231 AD2d 457 [1st Dept 1996]; see also H & H Chiropractic Servs., P.C. v Metropolitan Prop. & Cas. Ins. Co., 47 Misc 3d 1075, 1078 [Civ Ct, Queens County 2015]).

 

The Appellate Division, First Department cites to H & H Chiropractic Servs., P.C. v Metropolitan Prop. & Cas. Ins. Co., 47 Misc 3d 1075, 1078 (Civ Ct, Queens County 2015). In that case, the court noted that there is no court that has found improper fee-splitting to constitute fraud or a licensing requirement.   In that case the claims representative employed by defendant issued a timely denial of plaintiff’s bill based, inter alia, upon plaintiff’s alleged illegal fee-splitting.

 

In support of its motion for summary judgment, Defendant submitted a notice to admit, pursuant to CPLR 3123, upon the plaintiff, seeking to admit a copy of a contract purportedly entered into between plaintiff and its billing company, Systems Management Group, Inc. (SMG). The purported contract states that “[t]he Practice will pay SMG 6% of all fees charged & ultimately collected by SMG.”  Defendant also submits the deposition transcript of one of the members of the plaintiff’s practice, wherein he admitted that plaintiff employed SMG and they are paid a fixed fee of five percent of collections.

Defendant argues that since plaintiff allegedly pays six (or five) percent of its fees to its billing company, that its billing company owns six percent of plaintiff’s practice.

The court held that improper fee-splitting is not a defense in a no-fault action.  The defendant failed to prove that the provider filed any fraudulent documents with the State and allowed non-physicians to control any aspect of their practice.

“As such, it is the conclusion of this court that impermissible fee-splitting, standing alone, is not a violation of a licensing requirement, does not constitute an available defense to a no-fault action and, as such, any action is solely within the purview of the appropriate state licensing board.”

EUO’s:

Things You Need To Know About Provider EUO’s

First and foremost, failure to appear and comply with an EUO request is considered a violation of a condition precedent and a material breach of the patient’s No-Fault policy, which precludes you to recover on unpaid claims. Therefore, immediate action is required and legal representation is highly recommended.

The EUO stage is conducted during the verification of the proof of claim stage. According to the law, the Insurance Carrier shall not be adversarial. In fact, the Insurance Carrier is required to assist you. The pertinent provisions of 11 NYCRR 65-3.2, states in pertinent part.

Claim practice principles to be followed by all insurers.

  1. Have as your basic goal the prompt and fair payment to all automobile accident victims.
  2. Assist the applicant in the processing of a claim.  Do not treat the applicant as an adversary.
  3. Do not demand verification of facts unless there are good reasons to do so.  When verification of facts is necessary, it should be done as expeditiously as possible…  (Emphasis Added).

Why Do Insurance Carriers Request EUO’s?

There are a number of reasons why Insurance Carriers want to conduct an EUO. First and foremost, they know that they can use this device to delay, deny and eventually not pay viable claims. However, an Insurance Carrier may claim that they discovered some issue during their verification of a proof of claims submitted by other providers or during an EUO of the patient. For example, a patient may not recall the services provided to them, they bring up some issue that requires further verification from the provider or the patient may have even claimed that some of services billed for were not rendered. Sometimes they notice a pattern of billing and they want to inquire into whether there is excessive billing. They might have issues pertaining to the whether you have employees working for you or independent contractors.

An Insurance Carrier may use an EUO request to look into your so-called corporate structure. This is an area you definitely need to explore before you sit down for your EUO. There is sufficient evidence that Insurance Carriers use the EUO request in hopes that a provider will not show up for an EUO and thus they will not have to pay the provider for all bills submitted. In fact, there have been a number of carriers that will drop their EUO request once you inform them and they know you are serious of attending.

 

Where are the EUO’s held?

Most Insurance Carriers and their attorneys will schedule the EUO at a location convenient to them- their attorney’s law office. However, under No-Fault law, you are entitled to have the EUO at a convenient location, time and date, but you must object to the location, preserve and raise this issue in your response, otherwise you will waive this right.

What Are The Insurance Carriers Looking for at an EUO?

An insurance carrier will typically ask you questions surrounding your knowledge and treatment of the patient(s). This includes questions concerning the type of treatment your facility rendered to them and the medical necessity of the services provided. An Insurance Carrier may also wish to inquire into your billing practices, the CPT codes you utilize and bill for and frequency of billing. They will most likely ask questions pertaining to the names of your employees, whether they are employees or independent contractors and how you get your referrals.

Most significant, Insurance Carriers often use EUO requests to delve into your so-called corporate structure. They will attempt to explore whether your corporation is in compliance with N.Y. Business Corporation Law §§ 1507, 1508, and N.Y. Education Law § 6507(4)(c).  Unfortunately, the Insurance Department, Department of Financial Services (regulatory body overseeing insurance) and the New York State Court of Appeals have held that the Insurance Carriers are afforded this right. See, State Farm Mut. Auto. Ins. Co. v. Robert Mallela, 4 N.Y.3d 313 (2005). 11 NYCRR § 65-3.2 (c) states an insurance carrier can only delay payment of a claim to pursue investigations solely for good cause.  In the licensing context, carriers will be unable to show good cause unless they can demonstrate behavior tantamount to fraud.  The insurance carrier bears the burden of proving that the provider’s conduct rises to the level of “behavior that is tantamount to fraud”.

There are limits and provisions that guide and protect abuse and they are finally being enforced by Courts and Arbitrators. An Insurance carrier is not entitled to engage in a fishing expedition. Nevertheless, Insurance Carriers unquestionably use EUO’s to their advantage in the hopes of not delaying, denying and not paying claims, which is in direct contradiction the purpose and intent of No-Fault law. Therefore, you need to be represented by a skilled, competent and experience law firm to protect your rights.

Finally, some insurance carriers will demand the production of documents pertaining to financial statements, ledgers, tax returns or bank statements.  This is highly sensitive and there are limitations on what information you need to provide and turnover to the Insurance Carrier. Tax returns are generally not discoverable in the absence of a strong showing that the information is indispensable to the claim and cannot be obtained from other sources. Compelled disclosure of income tax returns is disfavored because of their private and confidential nature. Thus, the party seeking such disclosure must make a strong showing of necessity and demonstrate that the information contained in the returns is not available from any other source.

Are You Entitled To Know What Information The Carrier Is Looking For before you sit for an EUO?

The short answer is yes. The better answer is- you should be. The developing case law seems to support disclosure of said information. Although most insurance carriers and their attorneys generally and routinely refuse to give you information pertaining to the basis and reason for said EUO request prior to you appearing, there is some developing case law requiring said production.  As such, you need your attorney that is knowledgeable about the law and a law firm that has experience arguing these issues before a Court or Arbitrator.

Again, if you have received a letter, notification and or scheduling request to appear at an EUO, please feel free to contact this office at any time via email atggoodman@gganylaw.com or (631) 656-8180.  We will zealously and competently represent and defend you at the EUO.  We will give you a free consultation and we will explain to you your legal rights and options available to you as a healthcare provider.

Diagnostic Testing:

Electrodiagnostic Testing

MRI’s

Other diagnostic testing

Pf-NCS exam

The pf-NCS exam is a pain fiber nerve condition study that utilizes the AXON II.  It functions, operates and it even looks different than a Quantitative Sensory Test (QST) and a Neurotron (the machine used for Neurometer/CPT testing). The pf-NCS exam detects the stimulus strength causing the threshold action potential (nerve firing).  It uses a detector that allows the examiner to see the microvoltage amplitude of the action potential. Many experts and treating health providers are of the opinion that the pf-NCS test is the only test that specifically targets pain in the nerve fibers, specifically in the delta fibers.  In particular, providers that utilize this test claim that this test is the best for testing A Delta Fibers.  The Delta fibers are the best indicators where the pain is located.  As such, the pf-NCS is a great diagnostic tool in locating and pinpointing the exact nerve root that may be injured and causing pain when performed as soon after the injury as possible—during the acute phase of the injury.

In the spinal cord, A-delta fibers synapse with motor neurons in the ventral motor pathway, so firing generates voltage directly from the A-delta fibers and sub-threshold voltage from the motor fibers.  In minutes a provider can test all the major nerves and their branches in a region – 18 (9 bilateral) in the cervical and 14 (7 bilateral) in the lumbar region. The nerve(s) requiring the highest voltage to fire identifies the injured nerve(s). Once the injured nerve is identified, testing proximal and distal to a suspected site of injury easily verifies the location. Many healthcare providers claim that pf-NCS test is simply the best tool that locates and pinpoints the location where the patient is injured and where they are experiencing pain.  Some of our client even state that the pf-NCS tests are even more reliable that an EMG/NCV or MRI in locating the A Delta pain fibers.

Our law firm represents several healthcare professionals that utilize the pf-NCS exam as a diagnostic tool in their treatment of their patients. Unfortunately, there is a lot of misunderstanding, prejudice and misinformation surrounding this test.  Most of this misinformation is disseminated and proffered by Insurance carriers and their hired peer review doctors.  As a result, many arbitrators and judges have developed an aversion to this test.  The Insurance Carriers have convinced many arbitrators and judges that the pf-NCS exam is essentially a Neurometer/CPT or QST exam. That is why you need to be represented by attorneys that are experienced and knowledgeable about this specific test. Our law firm has been very successful in persuading and arguing the effectiveness and usefulness of this test.  What’s more, our law firm has provided judges and arbitrators with literature and well-reasoned legal arguments and facts demonstrating the difference between pf-NCS and other CPT/Neurometer or QST exams.  If you are experiencing trouble collecting viable claims, contact this office to discuss your legal options.   If you believe that this test is medically necessary for the course of treatment of your patient, there is no reason why you should not be reimbursed for your treatment.  Contact our law firm and we can assist you on developing a legal strategy to get your claims recovered.

EMG/NCV

Perhaps the most respected diagnostic tool a provider has. Considered the gold standard by many.  Carriers are now spending  more money and time in opposing and denying this test, because they know it is well respected as a useful tool yielding positive results. You need a skilled law firm and group of attorneys that are knowledgeable and are able to argue the medical rationale and reasons why the test was medically necessary for the particular case also assist you in rebutting with a meaningful affidavit from the.

ROM/MMT

Many providers are utilizing computerized range of motion exams. There are a number studies and literature indicating they are far superior for obtaining a more accurate reading. In fact the AMA has indicated the 3 readings rather the one reading most IME doctors.  It is important to understand the fee schedule issues that are presented with this test.  As with most diagnostic tools, insurance carriers are fighting back, because they simply do not want to pay.

 

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Gregory A. Goodman, P.C.

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Email: ggoodman@gganylaw.com