Court ruling limits demands for records
Court ruling limits demands for records
The Appellate Division of New Jersey has delivered a resounding victory to the provider community, protecting them from endless and harassing requests for confidential business information while "investigating" whether providers should receive payment for services.
In a case handed down recently in which attorney Charles Gormally, JD, of the Roseland, NJ, law firm Brach Eichler represented a group of medical providers, the court instructed insurance carriers that they are not entitled to bully medical providers into producing information beyond that expressly allowed by statute.
In Selective Insurance Company v Hudson East Pain Management Docket No. A-0433-09T1, the Appellate Division barred the carrier from requesting "corporate charters, partnership agreements, annual reports, shareholder agreements and lease agreements." The court accepted all of the arguments Gormally made on behalf of providers and ruled that insurance policies' cooperation provisions do not require that medical providers produce this information, Gormally says.
The ruling specifically applied to New Jersey's statute regarding personal injury protection (PIP), a type of no-fault automobile coverage that is available in many states. PIP can include coverage for medical bills, loss of income, funeral expenses, and other expenses. Gormally says the ruling will affect more than just PIP and will influence other states besides New Jersey.
"It's a dispute that's been going on for a while, out of the courts, between health care providers and automobile insurance carriers for some time," Gormally says. "It's good to get one decided and published by the appellate course with such clarity and direction."
Insurers made huge requests
The statutory provisions governing PIP disputes do not require that medical providers produce this information, the court ruled, and New Jersey's public policy of curbing insurance fraud does not, without specific allegations of wrongdoing, require production of this information. (See the story on page 141 for more details about the ruling.)
"This ruling dismissed the carrier's complaint and delivered a significant blow to the insurance industry's delay payment strategy of holding up payment to medical providers for failure to produce information," Gormally says. "The ruling was ordered to be published, which will provide support for providers in their dealings with carriers in the future."
The statute in New Jersey that sets the framework for payment of PIP benefits states that when a provider submits a bill to the insurer, the carrier has a right to request certain information to confirm that the services were provided, were medically necessary, and related to a motor vehicle accident. Those requests are reasonable and legitimate most of the time, Gormally says.
"But two or three years ago, we started to see in the industry, arising from the effort to ferret out insurance fraud, insurance carriers started to request information far beyond what was related to a specific patient or a specific treatment," he says. "Instead, they started to submit these really onerous requests, and when I say onerous I mean they were way beyond what was pertinent to the case. I do litigation for a living, so I'm no stranger to document requests, but [the] amounts of these requests were way out of line."
The requests typically came from an insurance adjuster to the health care provider, acknowledging receipt of the bill and noting that more information was required before it could be processed. Attached would be a 10- or 15-page document requesting information about everyone who worked at the facility, all the information related to corporate governance, such as the officers' and directors' backgrounds and formation documents, licenses for all professionals, equipment inventories, serial numbers for all the equipment, a listing of all liens on the equipment, and other mundane information.
"They did it under the guise of determining whether or not the medical provider was qualified to submit a bill for reimbursement," Gormally says. "They supposedly were trying to make sure that your facility was properly licensed and in good standing to submit a bill. It was a very, very deep and invasive query, and for the providers it was expensive and time-consuming to reply."
Ruling will influence other states
Many providers responded as well as they could, but often the insurer would point to minor omissions as reason to delay or deny the claim, Gormally says. The insurers knew that providers did not have the staff or money to devote to such invasive queries, so the insurers benefitted when a large number of claims were delayed or moved to an arbitration proceeding, he says.
In the case heard by the appellate court, Gormally represented a physician practice that refused to hand over the information unrelated to the patient's treatment. The trial court ruled that, largely due to the intense focus throughout the industry to prevent health care fraud, the insurer was allowed to make extensive requests and the provider had to comply if it wanted to be paid. The appellate court disagreed. (See article below for an excerpt from the appellate court's opinion.)
Though the ruling technically only applies in New Jersey, Gormally says he expects it to have influence in other jurisdictions.
"Often, when our courts struggle with interpretation of our PIP statute, they look to other states that have compulsory medical coverage for automobile accidents to help interpret our statute," Gormally says. "They track what other states are doing. I would expect that any state in which these kind of onerous document requests are occurring, or if they start occurring later, would look to the New Jersey ruling for guidance."
Source
Charles Gormally, JD, Brach Eichler, Roseland, NJ. Telephone: (973) 403-3111. E-Mail: [email protected].
The Appellate Division of New Jersey has delivered a resounding victory to the provider community, protecting them from endless and harassing requests for confidential business information while "investigating" whether providers should receive payment for services.Subscribe Now for Access
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