New Jersey Healthcare Coalition v. Nj Dep't of Banking and Insurance , 440 N.J. Super. 129 ( 2015 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1038-12T2
A-1445-12T2
A-1636-12T2
A-1792-12T2
NEW JERSEY HEALTHCARE COALITION,
ALLIANCE FOR QUALITY CARE, INC.,
NEW JERSEY ASSOCIATION OF APPROVED FOR PUBLICATION
AMBULATORY SURGERY CENTERS, NEW March 31, 2015
JERSEY ASSOCIATION OF OSTEOPATHIC
PHYSICIANS AND SURGEONS, NORTH APPELLATE DIVISION
JERSEY ORTHOPAEDIC SOCIETY,
ATLANTIC ORTHOPEDIC ASSOCIATES, LLC,
and NEW JERSEY STATE SOCIETY
OF ANESTHESIOLOGISTS,
Appellants,
v.
NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,
Respondent.
____________________________________
NEW JERSEY COALITION FOR QUALITY
HEALTHCARE,
Appellant,
v.
NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,
Respondent.
____________________________________
NEW JERSEY ASSOCIATION FOR JUSTICE,
Appellant,
v.
NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,
Respondent.
____________________________________
UNITED ACUPUNCTURE SOCIETY OF NEW
JERSEY,
Appellant,
v.
NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,
Respondent.
____________________________________
Argued October 28, 2014 – Decided March 31, 2015
Before Judges Reisner, Haas and Higbee.
On appeal from the Department of Banking and
Insurance.
Keith J. Roberts argued the cause for
appellants in A-1038-12 (Brach Eichler,
attorneys; Mark E. Manigan, Mr. Roberts and
John D. Fanburg, of counsel; Mr. Roberts and
Richard B. Robins, on the brief).
A. Ross Pearlson argued the cause for
appellant New Jersey Coalition for Quality
Healthcare in A-1445-12 (Wolff & Samson,
attorneys; Mr. Pearlson, on the brief).
Gerald H. Baker and Daniel E. Rosner argued
the cause for appellant New Jersey
Association for Justice in A-1636-12 (Scott G.
2 A-1038-12
Leonard, President, attorney; Mr. Baker and
Mr. Rosner, on the brief).
Shay S. Deshpande argued the cause for
appellant United Acupuncture Society of New
Jersey in A-1792-12 (Zwerling & Deshpande,
attorneys; Mr. Deshpande, of counsel and on
the brief; David J. Zwerling, on the brief).
Daniel J. Kelly, Deputy Attorney General,
argued the cause for respondent New Jersey
Department of Banking and Insurance (John J.
Hoffman, Acting Attorney General, attorney;
Melissa H. Raksa, Assistant Attorney
General, of counsel; Mr. Kelly, on the
brief).
Susan Stryker argued the cause for
intervenors Insurance Council of New Jersey
and The Property Casualty Insurers Association
of America (Bressler, Amery & Ross,
attorneys; Ms. Stryker, of counsel and on
the brief).
Anthony J. Murgatroyd argued the cause for
amicus curiae New Jersey State Bar
Association (Sharon A. Balsamo, Counsel &
Director of Legal Affairs, attorney; Kevin P.
McCann, of counsel and on the brief; Mr.
Murgatroyd, on the brief).
The opinion of the court was delivered by
REISNER, P.J.A.D.
This appeal is the latest battle in a long-running conflict
between health care providers and other interested parties, and
the Department of Banking and Insurance (the Department), over
the Department's personal injury protection (PIP) regulations.
3 A-1038-12
In this dispute, appellants1 challenge the Department's 2012
revised PIP regulations addressing reimbursable medical
procedures and the facilities in which they can be performed,
the fees health care providers can charge for those procedures,
counsel fees that may be awarded at PIP arbitration, and other
related issues. See 44 N.J.R. 2652(c) (Nov. 5, 2012).2
1
Appellants are New Jersey Healthcare Coalition, Alliance for
Quality Care, Inc., New Jersey Association of Ambulatory Surgery
Centers, New Jersey Association of Osteopathic Physicians and
Surgeons, North Jersey Orthopaedic Society, Atlantic Orthopedic
Associates, LLC, and New Jersey State Society of
Anesthesiologists (A-1038-12); New Jersey Coalition for Quality
Healthcare (A-1445-12); New Jersey Association for Justice (A-
1636-12); and United Acupuncture Society of New Jersey (A-1792-
12). The New Jersey State Bar Association filed an amicus
curiae brief supporting appellants. The Insurance Council of
New Jersey and the Property Casualty Insurers Association of
America intervened in support of the Department.
2
The Department adopted new rules to be codified as N.J.A.C.
11:3-4.7A, 4.7B, 29.5, and N.J.A.C. 11:3-29 Appendix, Exhibits 1
through 7; adopted amendments to N.J.A.C. 11:3-4.2, 4.4, 4.7,
4.8, 4.9, 5.2, 5.4, 5.5, 5.6, 5.12, and 29.1 through 29.4, and
repealed N.J.A.C. 11:3-29 Appendix, Exhibits 1 through 7. As
further discussed in this opinion, the Department delayed the
effective date of N.J.A.C. 11:3-4.7B pending contemplated
further amendments. The adoption of the remaining provisions
followed an extensive public process that started with an August
1, 2011 rule proposal. After receiving and responding to
numerous public comments, the Department published proposed rule
changes, which were subject to another exhaustive round of
public comments, to which the Department responded in detail.
The current rules were adopted on November 5, 2012, and with the
exception of subsection 4.7B and an amendment not germane to
these appeals, became operative on January 4, 2013. Both this
court and the Supreme Court denied appellants' application for a
stay pending appeal.
4 A-1038-12
The litigants, and this court, have plowed the same ground
several times in the course of successive challenges to the
Department's original and revised regulations. The most
enduring subject of dispute has been N.J.S.A. 39:6A-4.6, which
authorizes the Department to adopt, for providers of medical
care under the PIP statute, medical fee schedules "on a regional
basis," that "incorporate the reasonable and prevailing fees of
75% of the practitioners within the region."
The legislative scheme, its history and purpose, and the
regulatory background, have been reviewed at length in our prior
opinions and need not be repeated in detail here. See, e.g., In
re Adoption of N.J.A.C. 11:3-29, 410 N.J. Super. 6 (App. Div.),
certif. denied, 200 N.J. 506 (2009); Coal. for Quality Health
Care v. N.J. Dep't of Banking & Ins., 358 N.J. Super. 123 (App.
Div. 2003) (Coalition III); In re Comm'r's Failure to Adopt 861
CPT Codes, 358 N.J. Super. 135 (App. Div. 2003); Coal. for
Quality Health Care v. N.J. Dep't of Banking & Ins., 348 N.J.
Super. 272 (App. Div.), certif. denied, 174 N.J. 194 (2002)
(Coalition II); N.J. Coal. of Healthcare Prof'ls. Inc. v. N.J.
Dep't of Banking & Ins., 323 N.J. Super. 207 (App. Div.),
certif. denied, 162 N.J. 485-86 (1999) (Coalition I). From the
beginning, we have made clear that it is not our role to second-
guess the Department's policy choices concerning the
implementation of the legislative scheme aimed at reducing
5 A-1038-12
insurance costs while expediting medical treatment for accident
victims. See Coalition I, supra, 323 N.J. Super. at 269. We
find no basis to do so here, and we affirm the Department's
adoption of the challenged regulations.3
I
Our standard of review on this appeal is well-understood
and limited. "Administrative regulations are accorded a
presumption of validity." N.J. State League of Municipalities
v. Dep't of Cmty. Affairs, 158 N.J. 211, 222 (1999). That
deference "stems from the recognition that agencies have the
specialized expertise necessary to enact regulations dealing
with technical matters and are 'particularly well equipped to
read and understand the massive documents and to evaluate the
factual and technical issues that . . . rulemaking would
invite.'" Ibid. (quoting Bergen Pines Cnty. Hosp. v. N.J. Dep't
of Human Servs., 96 N.J. 456, 474 (1984)).
As we stated in a prior case involving this same regulatory
scheme:
3
Although, as will be discussed infra, many of appellants'
arguments were raised and rejected in our prior opinions, and
hence warrant more summary treatment here, we publish this
opinion because PIP reimbursement is a matter of general public
importance. Moreover, we anticipate that the disputes addressed
here will be the subject of periodic future appeals, and it is
important to memorialize in a published opinion the Department's
clarification of the regulations, as later noted in this
opinion. See R. 1:36-2(d)(6).
6 A-1038-12
Administrative regulations are entitled
to a presumption of validity and
reasonableness. In re Protest of Coastal
Permit Program Rules, 354 N.J. Super. 293,
329 (App. Div. 2002). We will generally
defer to an agency's determination, and our
deference is a function of our courts'
recognition that "an agency's specialized
expertise renders it particularly well-
equipped to understand the issues and enact
the appropriate regulations pertaining to
the technical matters within its area." Id.
at 330. "Particularly in the insurance
field, the expertise and judgment of the
Commissioner may be allowed great weight."
In re Commissioner's Failure to Adopt 861
CPT Codes, supra, 358 N.J. Super. at 149.
We will overturn an administrative
determination only if it was arbitrary,
capricious, unreasonable or violated express
or implied legislative policies. Ibid. The
party challenging the agency action bears
the burden of overcoming the presumption of
validity and reasonableness. Ibid.[In re adoption of N.J.A.C. 11:3-29, supra,410 N.J. Super. at 24-25.]
"'An agency's interpretation of its own rule is owed
considerable deference because the agency that drafted and
promulgated the rule should know the meaning of that rule.'" In
re Freshwater Wetlands Gen. Permit No. 16, 379 N.J. Super. 331,
341-42 (App. Div. 2005) (quoting Essex Cnty. Bd. of Tax'n v.
Twp. of Caldwell, 21 N.J. Tax 188, 197 (App. Div.), certif.
denied, 176 N.J. 426 (2003)). In light of agency expertise, we
"must give great deference to an agency's interpretation and
implementation of its rules enforcing the statutes for which it
is responsible." In re Freshwater Wetlands Prot. Act Rules, 180
7 A-1038-12
N.J. 478, 488-89 (2004). However, an agency may not issue a
regulation that is outside "'the fair contemplation of the
delegation of the enabling statute,'" N.J. State League, supra,158 N.J. at 222 (quoting N.J. Guild of Hearing Aid Dispensers v.
Long, 75 N.J. 544, 561-62 (1978)), or that is otherwise
"inconsistent with legislative mandate." Id. at 222-23
(citations omitted).
We will reject challenges that "are fundamentally
disagreements with the policies expressed in [the governing
statutory scheme] and its implementing regulations." Coalition
I, supra, 323 N.J. Super. at 269. As we observed in
adjudicating a prior challenge to the Department's regulations:
"Under our system of government, these policy choices are made
by the Legislature and implemented by the Executive. We review
the regulations to determine their legality, not to participate
in the policy debate." Ibid. (citations omitted).
II
On this appeal, appellants have raised a plethora of
issues, which can be summarized as follows4:
I. THE DEPARTMENT EXCEEDED ITS AUTHORITY IN
SETTING NEW FEE SCHEDULES FOR PROVIDERS AND
AMBULATORY SURGICAL CENTERS.
4
The following list does not precisely track the point headings
in each appellant's brief, but rather is intended as a synopsis
of the multiple, often overlapping, issues they raised.
8 A-1038-12
II. THE DEPARTMENT EXCEEDED ITS AUTHORITY
OR ACTED ARBITRARILY IN CHANGING THE
DEFINITION OF A "STANDARD PROFESSIONAL
TREATMENT PROTOCOL."
III. THE DEPARTMENT ACTED ARBITRARILY IN
ENDING PIP REIMBURSEMENT TO AMBULATORY
SURGICAL CENTERS FOR CERTAIN PROCEDURES.
IV. THE DEPARTMENT ACTED ARBITRARILY BY
MAKING ACUPUNCTURE PROCEDURES SUBJECT TO THE
DAILY FEE CAP.
V. THE DEPARTMENT EXCEEDED ITS AUTHORITY
BY ALLOWING INSURERS TO ASSIGN DUTIES TO
PROVIDERS INSTEAD OF JUST ASSIGNING BENEFITS
TO THEM.
VI. THE DEPARTMENT VIOLATED DUE PROCESS BY
REQUIRING PIP ARBITRATIONS TO BE "ON-THE-
PAPERS" FOR DISPUTES VALUED BELOW $1000.
VII. THE DEPARTMENT EXCEEDED ITS AUTHORITY
BY LIMITING PIP ARBITRATION ATTORNEY FEE
AWARDS.
VIII. THE DEPARTMENT ACTED ARBITRARILY BY
REQUIRING INSURERS TO PAY ARBITRATION AWARDS
OF ATTORNEY FEES TO THE PROVIDER RATHER THAN
DIRECTLY TO THE ATTORNEY.
IX. THE DEPARTMENT EXCEEDED ITS AUTHORITY
OR ACTED ARBITRARILY BY SETTING APPEAL
DEADLINES SHORTER THAN THOSE SPECIFIED BY
STATUTE.
X. THE REGULATIONS ARE INVALID BECAUSE
THE DEPARTMENT DID NOT PRODUCE EVIDENCE TO
SUPPORT ITS ASSERTION THAT INCREASED PIP
COSTS WERE CAUSING UPWARD PRESSURE ON
INSURANCE PREMIUMS.
Before turning to those issues, we deem it appropriate to
address the proper scope of this appeal. In addition to
challenging regulations that have been adopted and have taken
9 A-1038-12
effect, appellants appeal from Department regulations concerning
internal appeals which are to be pursued prior to a demand for
PIP arbitration (issue IX above). The effective date of those
regulations has been postponed, in contemplation of further
amendments. See 43 N.J.R. 1640-42 (proposed Aug. 1, 2011) (to
be codified at N.J.A.C. 11:3-4.7B).5 Because the regulations may
be amended before they take effect, the issues raised here are
not ripe and we decline to adjudicate them.
Having reviewed the record in light of the remaining
issues, we conclude that the regulations do not represent an
abuse of discretion, are sufficiently supported by the record,
and on this facial challenge, are not inconsistent with the
Department's governing statute.
The majority of appellants' issues are a rehash of
contentions we have considered and rejected in prior cases.
Most of the arguments represent a difference of view over policy
choices the Legislature has entrusted the Department to make.
Virtually all of the arguments were included in comments the
parties submitted to the Department and were exhaustively and
5
At the time this appeal was argued, the Department was
considering amending the regulations by November 2014. The
agency has again extended the regulations' operative date, until
November 5, 2015, to "afford the Department additional time to
consult with insurers and providers on necessary amendments to
these rules, as was referenced in the notice of adoption." 46
N.J.R. 2159(a) (Nov. 3, 2014).
10 A-1038-12
convincingly addressed by the Department, comment by comment, in
its nearly 100 pages of responses accompanying the rule
adoption. See 44 N.J.R. 2652(c). Except as further discussed
herein, appellants' arguments are without sufficient merit to
warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
While we find no merit in appellants' contentions overall,
it is important to note certain clarifications by the Department
which narrow the scope of the issues before us and will be
important in the future application of these regulations. In
that context, we briefly address the challenge to the
regulations concerning counsel fee awards. N.J.A.C. 11:3-
5.6(e)(1), (2). The rule essentially adopts the classic rubric
set forth by the Supreme Court in Rendine v. Pantzer, 141 N.J.
292, 334-44 (1995).6 However, appellants argue that, read
literally, the rule departs from Rendine in that it would not
allow an upward adjustment of the lodestar, as opposed to a
downward adjustment. In its brief the Department advised us
that it construes the regulation as also allowing an upward
adjustment in an appropriate case; the Department's counsel
confirmed that position at oral argument of this appeal.
6
The lodestar calculation under the rule is also keyed to Rule
1.5 of the Rules of Professional Conduct. N.J.A.C. 11:3-
5.6(e)(1).
11 A-1038-12
In light of the Department's clarification, we deem that
aspect of the appeal to be moot and, as so construed, the rules
concerning calculation of the fees passes legal muster. Because
the statute, N.J.S.A. 39:6A-5.2(g), specifically provides that
"[f]ees shall be determined to be reasonable if they are
consonant with the amount of the award," appellants' challenge
to the proportionality analysis aspect of the fee rule is
without merit. See also Szczepanski v. Newcomb Med. Ctr., Inc.,
141 N.J. 346, 366 (1995) ("The trial court's responsibility to
review carefully the lodestar fee request is heightened in cases
in which the fee requested is disproportionate to the damages
recovered."). Of course, if an insurer wrongfully refuses to
pay a small claim and forces the insured or the provider to
respond to multiple meritless objections, we do not construe the
regulation as precluding the dispute resolution professional
(DRP) from awarding the claimant a counsel fee that reflects the
time required to respond to the issues raised. See Velli v.
Rutgers Cas. Ins. Co., 257 N.J. Super. 308, 310 (App. Div.),
certif. denied, 130 N.J. 597 (1992).
Finally, because the regulation requires the DRP to set
forth a written analysis of all factors pertaining to the fee
award, it should be relatively easy to discern whether, in
practice, the rule is being applied consistently with the
principles set forth in Rendine and in the PIP statute. See
12 A-1038-12
N.J.A.C. 11:3-5.6(d), (e). No further discussion on this point
is warranted. R. 2:11-3(e)(1)(E).
Appellants also contend that another section of the
regulations concerning counsel fees, N.J.A.C. 11:3-5.6(f),
improperly precludes direct payments of counsel fees to medical
providers' attorneys. In its brief, the Department has
clarified that the rules do not preclude a DRP from ordering the
payment of fees directly to a medical provider's attorney. In
fact, the Department's brief advised us that it has "directed
the administrator of the PIP arbitration system to notify users
of the system that payments for attorneys' fees will continue to
be processed with direct payment to the attorneys."
Consequently, we conclude that the issue, which is
understandably important to the attorneys who handle PIP cases,
is moot.
Appellants also challenge N.J.A.C. 11:3-4.9(a), which
provides that "an insured may only assign benefits and duties
under the policy to a provider of service benefits." They
contend that by referring to "duties," this section
impermissibly requires the assignment of duties as well as
benefits to a medical provider. They posit that the regulation
will allow insurers and DRPs to impose burdensome discovery
requirements on medical providers. In its brief, and as
confirmed by its counsel at oral argument, the Department
13 A-1038-12
clarified that the rule is aimed at defining the persons to whom
an insured may make an assignment, and explained that the rule
permits but does not require the assignment of duties as well as
benefits. That is a reasonable construction of the regulation.
More importantly, the Department states that the rule does
not "address[] the scope of discovery in a PIP arbitration" and
is not intended to circumvent the holding in Selective Insurance
Co. of America v. Hudson East Pain Management, 210 N.J. 597, 607
(2012). According to the Department, a provider's "duties"
would consist of obligations already imposed by law on health
care providers in PIP cases, such as providing patient medical
records to document the medical services for which reimbursement
is being sought. See N.J.S.A. 39:6A-13(b); Coalition II, supra,
348 N.J. Super. at 318-19. The Department agreed that the rule
would not permit the kind of wide-ranging, burdensome discovery
of which the Court clearly disapproved in Selective, supra, 210
N.J. at 609. That position is also consistent with the
Department's responses to comments when it adopted the rule.
See 44 N.J.R. 2685-86. We agree that, as thus narrowly
construed, the rule passes muster. Appellants' arguments on
that point warrant no further discussion. R. 2:11-3(e)(1)(E).
An additional issue, which appellants have raised, is that
the new regulations will result in accident victims being unable
to obtain medical care. They claim, for example, that patients
14 A-1038-12
will be unable to find treatment providers, will be prohibited
from obtaining the types of medical care they need, or will
incur greater expense due to obtaining treatment at hospitals
rather than free-standing medical facilities. It is undisputed
that there is, in this record, no legally competent evidence to
support those claims.
However, the Department has committed to monitoring the
implementation of the new regulations to determine whether
accident victims are experiencing any such negative effects.
That is a critically important commitment, because one of the
central purposes of the PIP statute is to ensure that accident
victims receive prompt medical care. See Selective, supra, 210
N.J. at 609. The Department has represented to this court that,
as part of its monitoring process, it will accept and consider
evidence submitted by appellants on those issues. The
Department has also represented that appellants have the option
of petitioning the Department for rulemaking, seeking rule
amendments that would address any such negative impacts if they
occur. In that process, they would also have the opportunity to
create an evidentiary record to support their claims. We expect
the Department to honor those commitments, and we decline to
further address appellants' arguments on this point due to the
lack of an evidentiary record.
15 A-1038-12
Next we address appellants' arguments concerning the way
the Department calculated reimbursement rates. In a nutshell,
we find no basis to conclude that the Department's methodology
was arbitrary or capricious. The Department's responses to
comments are persuasive to us in explaining its methodology.
Moreover, the competing expert reports submitted on behalf of
appellants and the insurance industry demonstrate that well-
qualified experts can disagree on the appropriate methods to
calculate the rates. To cite one example, appellants' expert
opined that the Department should have relied on physicians'
billed fees. However, the insurance companies' expert cogently
explained that physicians' billed fees, as opposed to the fees
they actually accept in payment, are often inflated and
therefore are an unreliable foundation on which to set PIP
reimbursement rates. We have repeatedly upheld the use of paid
fees, versus billed fees, in setting the PIP reimbursement
rates, and the issue requires no further discussion. See In re
Adoption of N.J.A.C. 11:3-29, supra, 410 N.J. Super. at 38-39;
Coalition III, supra, 358 N.J. Super. at 126-29.
In setting the rates, the Department used a combination of
sources, including the Resource Based Relative Value System
(RBRVS) used to set federal Medicare reimbursement rates, and a
proprietary database obtained from the Fair Health organization,
an entity whose data appellants' expert, Mr. Weiss, actually
16 A-1038-12
lauded as reliable.7 See 44 N.J.R. 2690-91, 2703. We previously
approved the Department's consideration of the federal Medicare
RBRVS in setting reimbursement rates. In re Adoption of
N.J.A.C. 11:3-29, supra, 410 N.J. Super. at 32-36. Moreover,
the PIP statute specifically authorizes the Department to use
proprietary databases in setting rates. N.J.S.A. 39:6A-4.6(a);
In re Adoption of N.J.A.C. 11:3-29, supra, 410 N.J. Super. at
15.
Absent a clear showing of arbitrariness, which is not
present here, the Department, not this court, is authorized to
choose the rate-setting methods. See Coalition I, supra, 323
N.J. Super. at 269. We find no basis to disturb the
Department's chosen methodology or the resulting reimbursement
rates.
Appellants also challenge the Department's regulation
denying reimbursement for certain procedures performed in
ambulatory surgery centers (ASCs), while permitting
reimbursement for those procedures if performed in a hospital
outpatient surgery facility. N.J.A.C. 11:3-29.4(e)(3). The
Department relied on federal Medicare rules, which deny
reimbursement based on the federal government's conclusion that
7
Consistent with our opinion in In re Adoption of N.J.A.C. 11:3-
29, supra, 410 N.J. Super. at 43, the Department did not use the
Ingenix database in formulating the current regulations.
17 A-1038-12
performing those procedures in ASCs is unsafe for patients. 44
N.J.R. 383-84, 394 (Feb. 21, 2012). We cannot conclude that the
Department's decision to follow Medicare's policy was arbitrary.
Nor, as previously noted, is there legally competent evidence in
this record that the regulation will have a negative impact on
patients.8 Contrary to appellants' contentions, the Department
has authority to limit individual PIP beneficiaries' choices in
selecting medical providers, where those limits are justified
"within the broad regulatory authority the Legislature has
granted" to the agency. Coalition II, supra, 348 N.J. Super. at
309; see also Coalition I, supra, 323 N.J. Super. at 236-39.
We likewise find nothing arbitrary in the Department's
decision to include acupuncture services in the schedule of
treatment codes subject to a daily maximum fee allowed. As we
have previously noted, In re Adoption of N.J.A.C. 11:3-29,
supra, 410 N.J. Super. at 15, the PIP statute specifically
authorizes that approach for bundled services:
8
We note that after virtually every major amendment to the
regulations, appellants have warned of dire consequences for
accident victims, whom they allege would be stripped of access
to medical treatment by virtue of regulatory restrictions. Yet,
the reported opinions do not reflect that they have documented
the occurrence of those consequences. See In re Adoption of
N.J.A.C. 11:3-29, supra, 410 N.J. Super. at 26 n.4 (noting that
appellants could file "as-applied" challenges to the regulations
"as experience with the new rates develops"); Coalition III,
supra, 358 N.J. Super. at 135 (concluding that "appellants' dire
predictions are purely speculative and unsupported by any
evidence").
18 A-1038-12
The fee schedule may . . . establish the use
of a single fee, rather than an unbundled
fee, for a group of services if those
services are commonly provided together. In
the case of multiple procedures performed
simultaneously, the fee schedule and
regulations promulgated pursuant thereto may
also provide for a standard fee for a
primary procedure, and proportional
reductions in the cost of the additional
procedures.
[N.J.S.A. 39:6A-4.6(b).]
The Department adopted that approach based on its finding
that acupuncture is commonly performed in chiropractic offices
and physical therapy facilities and is provided together with
other procedures whose codes are on the daily maximum list. See
43 N.J.R. 1646 (Aug. 1, 2011); 44 N.J.R. 2705-07. We find
nothing arbitrary in limiting the fees that will be paid for
bundled services provided to the same patient on the same day.
See Coalition III, supra, 358 N.J. Super. at 132-33. Moreover,
as the Department also notes, the regulation allows an exception
when "the severity or extent of the injury is such that
extraordinary time and effort is needed for effective
treatment." N.J.A.C. 11:3-29.4(m). Examples include severe
brain injury and non-soft-tissue injuries to more than one part
of the body. Ibid. Furthermore, if a patient visits a stand-
alone acupuncture office and only receives acupuncture services
on a particular day, nothing in the regulation prevents the
19 A-1038-12
acupuncturist from being paid the full daily maximum fee.
Ibid.; 44 N.J.R. 2706.
Subject to the Department's commitment to monitor the
effect of the regulation, we find nothing unauthorized or
improper in the regulation permitting DRP organizations to adopt
rules providing for "on-the-papers" PIP arbitrations where all
parties consent or where there is no further medical treatment
at issue and the amount in controversy is $1000 or less.
N.J.A.C. 11:3-5.2 (defining "on-the-papers proceeding"); see 43
N.J.R. 1642, 1650-51. There appears to be no dispute that few
DRP hearings currently involve oral testimony. See 44 N.J.R.
2688. Further, the enabling statute, N.J.S.A. 39:6A-5.1, does
not, on its face, preclude arbitration decisions rendered on the
basis of an exchange of paper submissions, and conducting paper
reviews in cases involving de minimis claims is certainly
consistent with the statute's overall purpose to reduce costs
and expedite the decision of claims. Nonetheless, we expect the
Department, as part of its monitoring function noted earlier, to
consider information from appellants and the DRP organization as
to whether on-the-papers proceedings are being routinely held in
20 A-1038-12
cases where there are disputed issues of material fact which
testimony would ordinarily be required to resolve.9
We reject appellants' argument that the Department
unreasonably defined "standard professional treatment protocols"
as "evidence-based clinical guidelines/practice/treatment
published in peer-reviewed journals." See N.J.A.C. 11:3-4.2.
To put the issue in context, to be reimbursable, treatment
rendered to a patient must be medically necessary. One factor
in determining medical necessity is whether a treatment is "the
most appropriate level of service that is in accordance with . .
. standard professional treatment protocols." N.J.A.C. 11:3-4.2
(defining "medical necessity"). This language tracks the
statutory definition of "medically necessary," N.J.S.A. 39:6A-
2(m). Subsection (m) also authorizes the Department to determine
the standard professional treatment protocols that it will
recognize or designate. Ibid.9
Appellants speculate that a decision resulting from a mandatory
on-the-papers arbitration might have a collateral estoppel
effect in "subsequent proceedings which are of greater
magnitude." The issue is not ripe for decision here. However,
we note that appellants rely on a case in which the plaintiff
cited "no limitation on her opportunity to present evidence or
otherwise to be heard in the PIP arbitration," Habick v. Liberty
Mut. Fire Ins. Co., 320 N.J. Super. 244, 262 (App. Div.),
certif. denied, 161 N.J. 149 (1999), and a case in which the
parties voluntarily submitted their issues for decision on the
papers. Kozlowski v. Smith, 193 N.J. Super. 672, 674-75 (App.
Div. 1984).
21 A-1038-12
The Department cogently explained that providing a
regulatory definition of "standard professional treatment
protocols" was a response to prior attempts by some providers to
manipulate the PIP system, by arranging for their colleagues to
publish articles in non-peer-reviewed journals, advocating the
use of certain procedures based only on anecdotal evidence. In
turn, the providers would then cite those articles in support of
their applications for reimbursement for those procedures.10 See
43 N.J.R. 1640. We find no abuse of the Department's discretion
in adopting its definition of a standard professional treatment
protocol.
Appellants' reliance on Thermographic Diagnostics, Inc. v.
Allstate Insurance Co., 125 N.J. 491 (1991), is misplaced. In
addressing new treatments for which reimbursement is sought
under the PIP statute, the Court stated: "The use of the
treatment, procedure, or service must be warranted by the
circumstances and its medical value must be verified by credible
and reliable evidence." Id. at 512. We find that the
challenged regulation is not facially inconsistent with that
standard.
10
As the insurance intervenors note, providers have an economic
incentive to use new medical tests or treatments that are not
covered by the Department's existing CPT codes, which set dollar
limits for the coded procedures.
22 A-1038-12
Appellants' remaining arguments are without sufficient
merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
Affirmed.
23 A-1038-12