ALLSTATE NEW JERSEY INSURANCE COMPANY VS. GREGORIO LAJARA (L-4091-08, UNION COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1151-16T4
ALLSTATE NEW JERSEY INSURANCE
COMPANY, ALLSTATE INSURANCE
COMPANY, ALLSTATE INDEMNITY
COMPANY, ALLSTATE PROPERTY AND
CASUALTY INSURANCE COMPANY,
ALLSTATE NEW JERSEY PROPERTY
AND CASUALTY INSURANCE COMPANY,
and ENCOMPASS INSURANCE, f/k/a
CONTINENTAL INSURANCE COMPANY,
and COMMERCIAL INSURANCE
COMPANY OF NEWARK, N.J.,
Plaintiffs-Respondents,
v.
GREGORIO LAJARA; PEDRO GONZALEZ;
MILEYDIS T. DIAZ a/k/a MILLY DIAZ;
AWILDA D. RODRIGUEZ a/k/a AWILDA D.
GONZALEZ; KENNETH J. VIAFORA;
JOSE ORLANDO HERNANDEZ;
FRANCISCA HERNANDEZ; FRANCISCO
CABA; AQUALINA RAMOS; HARSHAD
PATEL; ASHRAF Y. AZIR; MUHAMMAD
A. SHAMSHAIR; MICHAEL C. GOLOWSKI;
ELVIA BEDOYA; NYDIA MARTINEZ;
NEREDA ZUNIGA; ALEXANDRA
GALLEGOS; BIBARS KAGHDOU, D.C.;
STEPHEN LOMANTO, D.C.; DAVID
STEPHENS, D.C.; THOMAS J. BONACUSO,
D.C.; MICHAEL CARLESIMO, D.C.; BRYAN
SIEGEL, D.C.; KEITH LEWANDOWNSKI,
D.C.; WEI JU; LUCY LIU; JIANMIN LI, a/k/a
JIAN MIN LI; SHAN S. NAGENDRA, M.D.;
ALEKSANDR LEVIN, M.D.; MANOJ D.
PATHARKAR, M.D.; ALFRED REZK
TAWADROUS, M.D.; HOWARD KESSLER,
M.D.; DAVID WALKER, ESQ.; MEDICO
MANAGEMENT CO., INC.; UNION
COLLECTIONS, LLC; PLAINFIELD
MEDICAL MANAGEMENT, INC.; SPINAL
ADJUSTMENT CENTER, INC.; RAHWAY
SPINAL INJURY PC f/k/a RAHWAY SPINAL
CENTER CORP.; ADVANCED SPINAL
CARE, PC; MILLENNIUM TOTAL HEALTH,
PC; ALEVE CHIROPRACTIC, PC; IN-LINE
CHIROPRACTIC, PC; BAYVIEW HEALTH,
PC a/k/a BAYVIEW HEALTH SERVICE, PC;
BOUND BROOK CHIROPRACTIC, PC; NEW
WAVE CHIROPRACTIC, PC; ABSOLUTE
CHIROPRACTIC, PC; BACK PAIN PC;
AM PAIN CARE, PC; ACUPUNCTURE
ACADEMY PC; TCM ACUPUNCTURE, PC;
AMERICAN ACUPUNCTURE ACADEMY,
PC; CONVERY MEDICAL GROUP, PC;
RARITAN PAIN MANAGEMENT AND
REHAB CENTER, PC; ASBURY MEDICAL
AND REHABILITATION PC; PAIN
MANAGEMENT ASSOCIATES OF CENTRAL
JERSEY, PA; BEST HEALTH MEDICAL, PC;
PERTH AMBOY HEALTH CARE, LLC d/b/a
"PERTH AMBOY DIAGNOSTIC IMAGING";
A.P. DIAGNOSTIC IMAGING, INC.;
LIBERTY SUPPLIES, LLC; K-MED
SERVICES, INC.; PRESTIGE MEDICAL
SUPPLIES, LLC; THERAPEUTIC DEVICES, INC.,
A-1151-16T4
2
Defendants,
and
NATALIO DAMIEN, M.D.,
Defendant-Appellant,
and
COMMISSIONER OF THE NEW JERSEY
DEPARTMENT OF BANKING AND
INSURANCE,
Plaintiff/Intervenor-Respondent.
_____________________________________
Submitted September 12, 2018 – Decided March 8, 2019
Before Judges Yannotti, Gilson, and Natali.
On appeal from Superior Court of New Jersey, Law
Division, Union County, Docket No. L-4091-08.
Bramnick, Rodriguez, Grabas, Arnold & Mangan,
LLC, attorneys for appellant Natalio Damien, M.D.
(Carl A. Salisbury, on the briefs).
Pringle Quinn Anzano, PC, attorneys for respondent
Allstate New Jersey Insurance Company (Daniel S.
Hunczak and Doris Cheung, on the briefs).
Brach Eichler LLC, attorneys for amici curiae Medical
Society of New Jersey and Radiological Society of
New Jersey (John D. Fanburg, of counsel; Joseph M.
Gorrell, of counsel and on the brief; Richard B.
Robins, on the brief.)
A-1151-16T4
3
PER CURIAM
Defendant Natalio Damien, M.D., (Damien) appeals from an August 31,
2016 final order that dismissed claims against him, but which ordered
defendants A.P. Diagnostic Imaging, Inc. (APDI) and Harshad Patel (Patel) to
disgorge payments they received "based on Dr. Damien's violations" of
N.J.A.C. 13:35-2.6(m)(3), (m)(6), (m)(7), and (k)(8) (2005). Damien seeks
reversal of a December 8, 2015 decision that he violated those provisions,
which the court issued in a statement of reasons disposing of cross-motions for
summary judgment filed by plaintiffs Allstate New Jersey Insurance Company,
Encompass Insurance Company, their related entities (collectively, Allstate),
and defendants Damien, APDI, and Patel. Damien also challenges the court's
April 4, 2016 decision denying reconsideration of the December 8, 2015
decision. Having considered the parties' arguments in light of the record, we
reverse the court's determination that Damien violated paragraphs (k)(8) and
(m)(7), but affirm its decision as to paragraphs (m)(3) and (m)(6).
I.
Damien is a diagnostic radiologist certified by the New Jersey State
Board of Medical Examiners (the Board or BME). By 2005, Damien began
reading and interpreting MRIs and x-rays for APDI, a diagnostic testing
A-1151-16T4
4
facility that provides medical imaging services on a referral basis. Damien
became the medical director for the APDI facility located in Edison, New
Jersey, in 2008. At all relevant times, Allstate provided insurance coverage to
some of APDI's referred patients (the insureds).
On December 15, 2008, Allstate filed a complaint alleging APDI, Patel,
Damien, and sixty other defendants violated several regulations and statutes,
including the New Jersey Insurance Fraud Prevention Act (IFPA), N.J.S.A.
17:33A-1 to -30, by engaging in a widespread automobile insurance fraud
scheme.1 In Count 27, Allstate sought a declaratory judgment that Damien,
APDI, and co-defendants violated, among other regulations, N.J.A.C. 13:35-
2.6(k)(8) and (m) by: performing diagnostic tests that were not medically
necessary; failing to disclose in MRI reports the existence of prior tests
performed on an insured that were "pertinent to" the same insured's presenting
medical condition or injury; and failing to "institute or follow procedures to
assure that sufficient clinical data was provided" to justify the requested tests.
In Count 28, Allstate sought disgorgement of the payments those
defendants purportedly received in connection with their alleged regulatory
violations. Count 29 alleged those defendants fraudulently, knowingly, and
1
The parties have not included the entire complaint in the record.
A-1151-16T4
5
intentionally misled Allstate to believe the tests were medically necessary and
were performed in accordance with the administrative regulations, and that
they knowingly benefitted from that misconduct in violation of IFPA.
The Commissioner of the New Jersey Department of Banking and
Insurance (Commissioner) filed a motion to intervene, and for leave to file an
amended complaint as a co-plaintiff, which the court granted on January 6,
2012. The parties engaged in extensive discovery during which they explored
the practices and protocols in place at APDI during the timeframe of the
allegedly unlawful activity.
For example, at an April 17, 2013 deposition, an MRI technician for
APDI from February 2003 to November 2005, Stuart Orange, testified that
APDI did not provide him with a physical written policy, procedure, protocol,
or manual to follow with respect to performing MRIs. Orange also testified
that, other than checking for contraindications (e.g., a pacemaker or metal in
the body) and claustrophobia, the prerequisite for testing at APDI was a
prescription.
APDI's corporate designee Rajesh Bhagat similarly testified at a June 12,
2013 deposition that medical doctors at APDI "do not" take patient histories
prior to testing and that APDI used "the same process" for testing patients
A-1151-16T4
6
regardless of whether a chiropractor, medical doctor, or osteopath referred the
patient. Bhagat further stated that APDI "is not there to decide medical
necessity. Our facility is licensed to do the testing."
Damien testified at his deposition that while he worked for APDI, he did
not examine patients or "look at" their files prior to the tests. In addition, from
March 2005 to March 2011, Damien prepared reports that do not cross-
reference any other tests, even though there were prior tests performed at the
same facility on the same insured.
Similarly, Thurairasah Vijayanathan, M.D., who also read films and was
a medical director at APDI, testified at his deposition that he never reviewed
patient files before tests were performed and never examined patients to
determine whether a medical necessity existed for the test. He opined, "it is
impossible for a radiologist reading all the teleradiology to decide whether . . .
there's a medical necessity or not." When discussing "an appropriate test,"
however, Vijayanathan testified that, "for example, [if] the patient has
headaches, and they are giving you an MRI of the foot, you have to find out
what happened. Somebody made a mistake." Vijayanathan stated he believed
the medical director would bear ultimate responsibility for such a mistake.
A-1151-16T4
7
Malini Jayarama, an imaging technician at APDI who became an
administrator in 2003 or 2004, testified at her deposition that prior to testing,
she would check patients for contraindications, allergies, and pregnancy, but
"[n]ever" examined patients to determine if testing was medically necessary.
At all relevant times, N.J.A.C. 13:35-2.6(k)(8) required referral-
receiving physicians to prepare a "comprehensive report" containing "[c]ross-
references to any other tests performed on the same patient pertinent to the
patient's presenting medical condition or injuries, if not addressed in a
consolidated report . . . ." Further, N.J.A.C. 13:35-2.6(m) (2008) provided:
Any practitioner, in any location, whether or not
licensed by DOHSS, accepting a referral for the
performance of a diagnostic test, except with respect
to emergency care, shall:
1. Require that the referral be preceded by verbal
communication or delivery of the written request
(which may be faxed) as set forth in (l) above;[ 2]
2
N.J.A.C. 13:35-2.6(l) (2008) mandated that practitioners who requested
another practitioner perform a "clinically supported" diagnostic test, id. at
(b)(2), to make that request:
in writing or by a personal communication
documented in the patient record . . . setting forth: 1)
The patient's reported symptoms and objective signs,
if any, pertinent to the problem; 2) A brief history of
the reported medical condition; and 3) An indication
(continued)
A-1151-16T4
8
2. Retain a copy of the referring request or document
the personal communication in the patient record;
3. Institute a procedure to assure that sufficient
clinical data has been provided to justify the
requested test;
4. Personally consult with the referring practitioner in
advance of performing the test, if additional
information is needed to determine if the diagnostic
test requested is the most appropriate test to elicit
the clinical information sought;
5. Perform a focused clinical examination if, in the
practitioner's discretion, such examination is
necessary;
6. Verify the indications for and appropriateness of
diagnostic testing, if the referral has been made by
a practitioner with a limited license to a plenary
licensee;
7. Prepare a report containing the information set
forth in section (k) above; and
8. Assure that explanation has been provided to the
patient and, where there is significant risk or
likelihood of side effects, obtain informed
consent.[3]
(continued)
of prior testing relating to the medical condition and
results thereof.
3
By amendment effective January 2, 2018, 50 N.J.R. 209(a) (Jan. 2, 2018),
the Board revised subsections (k) through (n), and other subsections of the
(continued)
A-1151-16T4
9
Allstate filed a motion for partial summary judgment against APDI and
Damien with respect to Counts 27 and 28, and sought disgorgement in the
amount of $188,038.72. Allstate claimed APDI and Damien violated N.J.A.C.
13:35-2.6(m)(3) and (m)(6) by failing "to verify the necessity and
appropriateness" of diagnostic tests requested by chiropractors and "did not
review a patient's file for medical necessity before the MRI test was performed
on the patient at APDI." Further, Allstate argued that APDI and Damien
violated N.J.A.C. 13:35-2.6(k)(8) and (m)(7) because "none of the test reports"
that they prepared referenced any prior tests performed on the same insured.
Allstate did not submit expert testimony to support its interpretation of
N.J.A.C. 13:35-2.6(k)(8). Instead, Allstate offered a certification of a non-
physician, special investigation unit analyst, Benjamin J. Hickey, which
attached as exhibits certain reports prepared by Damien and other
practitioners, and concluded that "none of the reports contain cross-references
to any other tests performed on the same patient pertaining to that patient's
presenting injury or condition."
(continued)
regulation, in an effort to "assur[e] that the rules are not interpreted in such a
way as to have a negative impact on the quality, cost, or access to diagnostic
testing or screening services." 49 N.J.R. 1660(a) (June 19, 2017).
A-1151-16T4
10
Damien and APDI opposed Allstate's motion and filed a cross-motion
for summary judgment. APDI claimed that as a diagnostic office licensed by
the State Department of Health and Senior Services, the BME regulations did
not apply to it. Damien maintained he fully complied with the regulations.
Further, APDI and Damien claimed that if the court adopted Allstate's
interpretation of N.J.A.C. 13:35-2.6(m)(6), Damien and "similarly situated
physicians" would be required to discriminate against referrals from
chiropractors in violation of N.J.A.C. 13:35-6.9.4 Damien and APDI also
argued that Allstate was required, but failed, to produce expert testimony to
substantiate its claim that Damien violated N.J.A.C. 13:35-2.6(k)(8).
At a December 8, 2015 hearing, a motion judge heard oral arguments
and issued a written statement of reasons detailing the court's decision on the
cross-motions for summary judgment. The court decided the regulations at
issue applied to Damien, but not to APDI, and stated there was no factual
4
N.J.A.C. 13:35-6.9(b) requires physicians with plenary licenses to "provide
diagnostic radiological services to [a requesting] chiropractic or podiatric
physician without discrimination on the basis of classification of license,
provided the diagnostic radiological services requested pertain to skeletal areas
of the body." Further, N.J.A.C. 13:35-6.9(c) provides that "[d]enial of
professional diagnostic radiological services, as set forth herein, shall
constitute purposeful and intentional discrimination and shall subject the
licensee to appropriate disciplinary action by the [BME]."
A-1151-16T4
11
dispute that Damien failed to follow the regulatory protocol and, accordingly,
concluded "a judgment on liability will . . . be entered against him for those
tests for which he was responsible."
The court based its decision on Damien's and Vijayanathan's deposition
testimony that they did not "examine patients referred by limited licensees . . .
to verify the necessity and appropriateness of the diagnostic test and did not
review the patient's file to determine necessity, in violation of [N.J.S.A. 13:35 -
2.6](m)(3) and (6)." The court also found expert testimony was not required to
prove Damien violated N.J.A.C. 13:35-2.6(k)(8). Thus, the court determined,
"on those films for which [Damien] was responsible, the mandatory protocol
established by N.J.A.C. 13:35-2.6(k)(8) and (m) was not followed" and
"Damien shall disgorge all payments made by Allstate . . . ."
Trial proceedings on the remaining counts against Damien and other
defendants began on January 4, 2016. On January 13, 2016, while the bench
trial was ongoing, the BME met to discuss the court's December 8, 2015
decision and announced in a document entitled "open board minutes":
The Board using its expertise carefully considered the
[court's December 8, 2015] decision in conjunction
with its regulations specifically N.J.A.C. 13:35-
2.6(k)(8), (m)(3), [and] (m)(6) and found that the
language of the [fifteen] year old regulation is capable
of being interpreted in a manner that is inconsistent
A-1151-16T4
12
with how the delivery of diagnostic testing services
are actually scheduled and conducted. Indeed, the
decision interprets the regulation in an expansive
manner which was never the intent of the Board.
Further, it appears to impose obligations, such as a
physical examination and record review, on
radiologists which are not practical, the medical
standard or the intent of the Board. It is the Board's
interpretation of the regulation that a radiologist's
reliance on a legitimate prescription from a licensee
legally authorized to make the referral for a diagnostic
test is sufficient indication of appropriateness to
accept the referral. Any further review prior to the
performance of the diagnostic test is left to the
professional discretion of the radiologist and not
imposed as mandatory protocol by the Board
regulation.
The minutes also explained, "[i]t is the position of the Board that it is within
the Board's jurisdiction to make findings as to whether or not Board
regulations are violated by a Board licensee (especially in a case like [this
case] where Board expertise should be utilized in interpreting the regulation)."
On February 29, 2016, APDI and Damien filed a motion for
reconsideration of the court's December 8, 2015 decision based on the BME's
open board minutes. Counsel for the Commissioner submitted a letter to the
trial court, enclosing the open board minutes and explaining: 1) the minutes
were "draft minutes"; 2) the BME "typically approves minutes of a particular
A-1151-16T4
13
meeting at a subsequent meeting"; and 3) the next meeting was scheduled for
March 9, 2016.5
At an April 4, 2016 hearing on the motion for reconsideration, the court
found:
that the comments - the unsolicited and surprising
letter from the attorney for the Board of Medical
Examiners is not evidence, that it is not compelling.
And, therefore, the [c]ourt[,] while it certainly
understands why the motion [for reconsideration]
would be made[,] respectfully declines it.
On April 18, 2016, the court rendered its decision on the IFPA claims
that Allstate filed against Damien. The court found:
As I've stated in this matter, [the motion judge] has
already made a finding that there were Administrative
Code violations by Dr. Damien that resulted in the
determination that he is required to pay back any
monies paid by Allstate, based upon his report
submitted to that entity. I am not changing that
decision in any way . . . .
....
5
Damien's brief advises that the Board "subsequently adopted the minutes as
drafted and published them on the Board's website." However, aside from the
Commissioner's counsel's letter, there is no indication in the record or the
website to which Damien directs our attention as to when that "subsequent
adopt[ion]" by the Board occurred. Thus, there is no competent evidence in
the record that the Board had adopted the draft minutes prior to the April 4,
2016 hearing.
A-1151-16T4
14
Be that as it may, I cannot find that anything Dr.
Damien has done constitutes a violation of [IFPA].
His reports were his genuine and credible findings and
there was nothing misleading about them. I further
find that he did not conspire with anybody, including
Harshad Patel, to mislead insurance companies
regarding payment . . . for medical bills.
And based upon all of the above the case of insurance
fraud against Dr. Damien is dismissed with prejudice.
Consistent with these findings, the court signed a verdict sheet on April 18,
2016, which found, among other things, that plaintiffs failed to prove Damien,
APDI, and Patel had committed insurance fraud under IFPA "as a result of
violations" of N.J.A.C. 13:35-2.8(k)(8), (m)(3), (m)(6), and (m)(7).6
The trial judge entered final orders of judgment on June 29, 2016,
resulting in judgments amounting to approximately ten million dollars in favor
of Allstate against APDI, Patel, and eight other defendants, but not Damien,
and a judgment in favor of the Commissioner. The June 29, 2016 orders do
not appear to have been based on the court's December 8, 2015 decision
because on or about July 18, 2016, Allstate filed a motion for certification of
6
According to the court's April 18, 2016 decision, Allstate argued at trial the
motion judge's December 8, 2015 determination that Damien violated N.J.A.C.
13:35-2.6(k)(8) and (m) was "evidence" that Damien violated the IFPA.
A-1151-16T4
15
the court's December 8, 2015 statement of reasons and sought disgorgement
from Damien, APDI, and Patel pursuant to the December 8, 2015 decision.
Following oral argument on that post-trial motion,7 the trial judge
entered an August 31, 2016 final order of judgment denying Allstate's motion
for disgorgement from Damien because it was "conceded by all parties that Dr.
Damien did not receive any payments" from Allstate to disgorge. In addition,
the order purports to dismiss with prejudice "all counts" against Damien.
However, the court's order required that any payments made to APDI and Patel
"based upon Dr. Damien's violations of the New Jersey Administrative Code"
were to be returned by APDI and Patel under Counts 27 and 28 of Allstate's
complaint. Thus, with respect to Damien, the August 31, 2016 order dismissed
all counts against him except Count 27 because the August 31, 2016 order, by
its own terms, was predicated upon the court's December 8, 2015 decision that
Damien violated the regulations under Count 27.
Several cross-appeals were filed by various parties. On May 18, 2017,
we granted the Medical Society of New Jersey and Radiological Society of
New Jersey's motion to appear as amici curiae. All of the remaining
7
The parties did not include the transcript of that oral argument in the record.
A-1151-16T4
16
defendant-appellants have settled their appeals, except for Damien, who
remains the lone appellant before us.
II.
Before reaching the merits, we address a procedural and a justiciability
issue. First, for reasons unclear from the record, the court failed to render an
order or judgment on the parties' summary judgment motions, contrary to Rule
4:46-2(c), or an order memorializing its April 4, 2016 decision denying
Damien's motion for reconsideration. We recognize that appeals ordinarily are
taken only from orders or judgments. In re Berkeley, 311 N.J. Super. 99, 101
(App. Div. 1998). However, "[w]e have at times opted to overlook technical
insufficiencies in order to reach the merits of [an] appeal." State v. Benjamin,
442 N.J. Super. 258, 262 (App. Div. 2015). Here, the August 31, 2016 final
order clearly incorporated the December 8, 2015 and April 4, 2016
interlocutory decisions as the final order was entered against APDI and Patel
"based upon Dr. Damien's violations" of the regulations as determined by the
interlocutory decisions. Further, at the April 4, 2016 reconsideration hearing,
the court determined its December 8, 2015 decision was "an interlocutory
order," and at the April 18, 2016 hearing, the court stated the December 8,
2015 decision was an entry of summary judgment against Damien for
A-1151-16T4
17
violations of N.J.A.C. 13:35-2.6(k)(8), (m)(3), and (m)(6). Accordingly, we
address the merits of the court's December 8, 2015 and April 4, 2016
decisions, despite the absence of a formal order.
Second, we acknowledge that "[o]nly a party aggrieved by a judgment
may appeal therefrom." Howard Sav. Inst. of Newark, N.J. v. Peep, 34 N.J.
494, 499 (1961). Here, the August 31, 2016 final order, which Damien
identified in his case information statement as an order from which he
appealed, dismissed the claims against him, which would suggest that Damien
is not an aggrieved party. However, that final order, by its express terms, was
entered against APDI and Patel "based upon Dr. Damien's violations" of the
administrative code and after the court determined at the April 18, 2016
hearing that it would not change the December 8, 2015 decision "in any way."
Because "a party aggrieved is one whose personal or pecuniary interests, or
property rights, have been injuriously affected by the order or decree," Eugster
v. Eugster, 89 N.J. Eq. 531, 533 (E. & A. 1918), we conclude the reputational
harm that may visit Damien as a licensed professional adjudicated to have
practiced his profession in violation of the law is sufficiently injurious to his
professional and personal interests to be considered an aggrieved party for
purposes of this appeal.
A-1151-16T4
18
III.
Turning to the merits, Damien maintains the court incorrectly interpreted
N.J.A.C. 13:35-2.6(m)(3) and (m)(6) as requiring radiologists to examine
patients and review their records and medical files to determine whether
diagnostic testing was "medically necessary" for every patient referred by a
limited licensee, such as a chiropractor.8 Specifically, he claims the court's
interpretation is contrary to the BME's intent and placed Damien "and all other
New Jersey radiologists in jeopardy of violating" N.J.A.C. 13:35-6.9, which
prohibits plenary licensees from denying referrals based on a limited licensee's
status as such. Further, Damien argues his mere receipt of a referral from a
licensed practitioner constituted compliance with paragraphs (m)(3) and
(m)(6), which he contends required only that he verify the referring
practitioner had complied with N.J.A.C. 13:35-2.6(l) (2014).
Similarly, amici contend the court's decision imposes a "more difficult"
standard of care for radiologists to satisfy than was "contemplated by the
regulation" by "forcing" radiologists to determine the "medical necessity" of a
8
See N.J.A.C. 13:35-6.16(f)(3)(i) (explaining chiropractors are practitioners
with a limited scope of license, i.e. limited licensees, as opposed to plenary
licensees).
A-1151-16T4
19
patient's prescribed test when the radiologist "may not have the expertise" to
make that determination. 9
In addition, Damien claims the court incorrectly concluded expert
testimony was not necessary for Allstate to prevail on its claim under N.J.A.C.
13:35-2.6(k)(8). Specifically, Damien maintains that whether a prior test was
pertinent to a patient's presenting medical condition or injury under paragraph
(k)(8) "requires an evaluation by a competent and qualified medical
professional because the medical and diagnostic relationship of a prior test to a
patient's presenting medical condition is beyond the ken of the average finder
of fact." Further, Damien claims subsection (l) required the referring
physician to reference any relevant prior tests, and that he was "entitled to
presume" the referring practitioner complied with that duty and no pertinent
9
Amici also inject a new issue into this appeal: whether Allstate had a private
cause of action to institute this litigation. "[A]s a general rule an amicus
curiae must accept the case before the court as presented by the parties and
cannot raise issues not raised by the parties." Bethlehem Twp. Bd. of Educ. v.
Bethlehem Twp. Educ. Ass'n, 91 N.J. 38, 48-49 (1982). Although Allstate
responded to this issue in its opposition brief, the issue was not raised by the
parties during the seven years of proceedings before the trial court, so we
conclude its resolution "should await a case in which the issue is squarely
presented." See Byram Twp. Bd. of Ed. v. Byram Twp. Ed. Ass'n, 152 N.J.
Super. 12, 18 (App. Div. 1977); see also State v. Gandhi, 201 N.J. 161, 191
(2010); Fed. Pac. Elec. Co. v. N.J. Dep't of Envtl. Prot., 334 N.J. Super. 323,
345 (App. Div. 2000).
A-1151-16T4
20
prior test existed when the referral did not mention such tests. Thus, he claims
he was not at fault under paragraph (k)(8) for failing to cross-reference any
test not mentioned in the referral, even if those tests were pertinent.
We agree with Damien that expert testimony was required for Allstate to
satisfy its burden under subsection (k)(8). We also agree with Damien and
amici that the trial court incorrectly interpreted the regulations as requiring
Damien to conduct a physical examination of any patient to determine the
medical necessity of testing. Further, we agree with Damien that a referral-
receiving practitioner could satisfy paragraph (m)(6), by verifying the referring
practitioner complied with subsection (l).
However, we disagree with Damien that he was "entitled to presume" the
referring practitioner had complied with subsection (l) and that his mere
receipt of a referral constituted compliance with N.J.A.C. 13:35-2.6(m)(3) and
(m)(6). Accordingly, because Damien failed to present any competent
evidence in opposition to Allstate's summary judgment motion that he
instituted a procedure to ensure the referring practitioner complied with
subsection (l), or that he ever used particular care with respect to referrals
from limited licensees, we affirm on those limited grounds.
A-1151-16T4
21
IV.
We review summary judgment rulings de novo and apply the same
standard as the motion judge. Townsend v. Pierre, 221 N.J. 36, 59 (2015).
Summary judgment is appropriate when there is "no genuine issue as to any
material fact challenged and . . . the moving party is entitled to a judgment or
order as a matter of law." R. 4:46-2(c). We consider "whether the competent
evidential materials presented, when viewed in the light most favorable to the
non-moving party, are sufficient to permit a rational factfinder to resolve the
alleged disputed issue in favor of the non-moving party." Davis v. Brickman
Landscaping, Ltd., 219 N.J. 395, 406 (2014) (quoting Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 540 (1995)). A disputed fact is material if its
resolution in the non-movant's favor ultimately will entitle that party to
judgment. Rosenberg v. Otis Elevator Co., 366 N.J. Super. 292, 297 (App.
Div. 2004) (quotation omitted). If no material factual issue exists, our inquiry
is limited to "whether the trial court correctly interpreted the law." DepoLink
Court Reporting & Litig. Support Servs. v. Rochman, 430 N.J. Super. 325, 333
(App. Div. 2013) (quotation omitted).
When interpreting a regulation, the "paramount goal" is to discern the
intent of its drafters. US Bank, N.A. v. Hough, 210 N.J. 187, 199 (2012).
A-1151-16T4
22
That process begins with the regulation's plain language, giving the words used
their ordinary meaning unless they clearly have a technical or special meaning.
Safeway Trails, Inc. v. Furman, 41 N.J. 467, 478 (1964). We construe the text
of the enactment "in context with related provisions so as to give sense" to the
regulation "as a whole." Spade v. Select Comfort Corp., 232 N.J. 504, 515
(2018) (quoting N. Jersey Media Grp., Inc. v. Twp. of Lyndhurst, 229 N.J.
541, 570 (2017)); see N.J.S.A. 1:1-1. "We do not add terms which may have
been intentionally omitted," State v. Perry, 439 N.J. Super. 514, 523 (App.
Div. 2015), and where the drafters have "carefully employed a term in one
place and excluded it in another, it should not be implied where excluded," GE
Solid State, Inc. v. Dir., Div. of Taxation, 132 N.J. 298, 308 (1993).
If a regulation is amenable "to more than one plausible interpretation,"
we may resort to extrinsic evidence of the drafters' intent. Bedford v. Riello,
195 N.J. 210, 222 (2008). That extrinsic evidence includes an agency's
interpretation of its own regulation, to which we usually defer unless the
interpretation is "plainly unreasonable." Hough, 210 N.J. at 200 (quoting In re
Election Law Enf't Comm'n Advisory Op. No. 01-2008, 201 N.J. 254, 262
(2010)). Applying these principles to the facts and regulation before us, we
begin our analysis with paragraphs (k)(8) and (m)(7).
A-1151-16T4
23
A.
Pursuant to N.J.A.C. 13:35-2.6(k)(8) (2014), Damien was required to
"prepare and retain a comprehensive written report" containing "[c]ross -
references to any other tests performed on the same patient pertinent to the
patient's presenting medical condition or injuries, if not addressed in a
consolidated report . . . ." See N.J.A.C. 13:35-2.6(m)(7) (2014) (requiring
practitioners to prepare a report containing the information in subsection (k)).
The trial court held that because Damien's reports did not cross-reference any
prior tests performed on the same patient, Damien violated paragraphs (k)(8)
and (m)(7). Further, the court deemed expert testimony on the issue
unnecessary because "[o]ne does not need a medical degree to read a report
and see whether there are cross-references." We disagree with the court's
interpretation and its determination that Allstate could satisfy its burden of
proving Damien violated these regulations without offering expert testimony.
Under paragraphs (k)(8) and (m)(7), the only tests that Damien was
required to cross-reference were those "pertinent to" the patient's presenting
medical condition or injuries. N.J.A.C. 13:35-2.6(k)(8) (2014). This entails a
three-step inquiry: 1) what is the patient's presenting medical condition or
injury; 2) were other tests performed on the patient; and 3) are any of the prior
A-1151-16T4
24
tests "pertinent to" the patient's presenting medical condition or injury.
Damien's argument that expert testimony is necessary to determine whether a
prior test is pertinent to the patient's presenting medical condition or injury has
support in the plain language of the regulation and its history.
As originally proposed, N.J.A.C. 13:35-2.6(k)(8) would have required
reports to cross-reference "any other tests performed on the same day . . . ." 32
N.J.R. 19(a) (Jan. 3, 2000). In response to comments, the BME amended the
proposed rule to require reports to cross-reference "any other tests performed
on the same patient pertinent to the patient's presenting medical condition or
injuries . . . ." 33 N.J.R. 670(a) (Feb. 20, 2001). As the BME explained:
[T]he [Radiological] Society objected to the
requirement of paragraph (k)[(8)] for cross-
referencing the existence and conclusions of separate
tests, contending that this should apply only when
relevant or pertinent, that is when the multiple tests
performed have some sort of relationship to one
another.
....
[T]he Board is satisfied that when separate tests have
been deemed appropriate in the judgment of the
specialist testing practitioner and are or have been
performed on the same patient for the same medical
condition or injury, they are virtually always relevant
or pertinent in treating the "whole patient."
[Ibid.]
A-1151-16T4
25
The BME's repeated use of "relevant or pertinent" indicates an
understanding that those terms were synonymous, an understanding which
comports with a common definition of the term. See, e.g., Black's Law
Dictionary 1328 (10th ed. 2014) (pertinent defines as "[o]f, relating to, or
involving the particular issue at hand; relevant"). Further, the regulatory
history defines "relevant or pertinent" tests as those that "have some sort of
relationship to one another," and which would "virtually always" encompass
tests performed on "the same medical condition or injury . . . ." 33 N.J.R.
670(a) (Feb. 20, 2001).
We conclude that such an analysis required expert testimony, and
without those proofs, Allstate failed to carry its burden as a summary judgment
movant. See R. 4:46-2(c) (requiring the movant to show there is no genuine
issue of material fact); Brill, 142 N.J. at 523 (explaining that whether a
material factual issue exists depends on "the competent evidential materials
presented"); Dare v. Freefall Adventures, Inc., 349 N.J. Super. 205, 215-16
(App. Div. 2002) (affirming the trial court's grant of summary judgment to
defendant because plaintiff failed to produce necessary expert testimony).
Expert testimony is necessary when "the matter to be dealt with is so esoteric
that jurors of common judgment and experience cannot form a valid judgment"
A-1151-16T4
26
as to the reasonableness of a party's conduct. Butler v. Acme Markets, Inc., 89
N.J. 270, 283 (1982); Nowacki v. Cmty. Med. Ctr., 279 N.J. Super. 276, 282–
83 (App. Div. 1995).
Here, the "matter to be dealt with" is the medical relationship between a
patient's prior test and the patient's presenting medical condition or injury. We
conclude that a factfinder of ordinary knowledge could not reasonably be
expected to interpret a test, diagnose the medical condition or injury indicated
by the test, then relate that diagnosis to the patient's presenting medical
condition or injury. Accordingly, the court committed error when it decided
that Allstate satisfied its burden to show Damien failed to cross-reference
"pertinent" prior tests under N.J.A.C. 13:35-2.6(k)(8) without introducing
expert evidence to demonstrate that any prior test had some relationship to the
challenged report, including that the tests were performed on the same medical
condition or injury.
B.
Under N.J.A.C. 13:35-2.6(m)(3), Damien was required to "[i]nstitute a
procedure to assure that sufficient clinical data has been provided to justify the
requested test . . . ." In addition, pursuant to paragraph (m)(6), Damien was
required to "[v]erify the indications for and appropriateness of diagnostic
A-1151-16T4
27
testing, if the referral [was] made by a practitioner with a limited license to a
plenary licensee . . . ." N.J.A.C. 13:35-2.6(m)(6) (2014). The court addressed
paragraph (m)(3) in conjunction with paragraph (m)(6), and concluded that
under those rules, Damien was required to "examine patients referred by
limited licensees . . . to verify the necessity and appropriateness of the
diagnostic test" and to "review the patient's file to determine [the] necessity"
of the tests. Specifically, the court found "the gravamen" of Damien's
"infraction is that there was no effort to independently determine whether the
diagnostic testing requested was medically necessary, as was required by the
regulations."
Initially, we reject Damien's claim that the court's interpretation of
paragraph (m)(6) placed practitioners "in jeopardy of violating" N.J.A.C.
13:35-6.9. A practitioner violates that regulation by denying a referral from a
limited licensee "on the basis of" the referring practitioner's status as a limited
licensee. See N.J.A.C. 13:35-6.9(b); Brodie v. State Bd. of Med. Exam'rs, 177
N.J. Super. 523, 530 (App. Div. 1981). The court's interpretation of paragraph
(m)(6) did not require Damien to deny any referrals "on the basis of" the scope
of the referring practitioner's license. Instead, the court's interpretation
required referral-receiving practitioners to perform an independent evaluation
A-1151-16T4
28
of patients referred by limited licensees to determine whether, in the judgment
of the referral-receiving practitioner, the requested testing was medically
necessary. Any proper denial of a referral pursuant to the court's interpretation
of paragraph (m)(6) would have been based on the referral-receiving
practitioner's independent professional judgment, after a physical examination
of the patient, that the requested diagnostic testing was not medically
necessary.
Nonetheless, we disagree with the court that paragraph (m)(6) required
Damien to examine patients referred by limited licensees to determine whether
testing was medically necessary. We also disagree with the court's conclusion
that paragraph (m)(3) required Damien to institute a procedure of examining
patients to determine medical necessity. The only reference to any
examination in subsection (m) appears in paragraph (m)(5), which gives the
referral-receiving practitioner "discretion" to perform a "focused clinical
examination" if he or she deems one is necessary. N.J.A.C. 13:35-2.6(m)(5).
Although the difference between a "focused clinical examination" and any
other examination is not clear from the face of the regulation, the regulatory
history explains:
this term is readily understood in the medical
community. A patient referred for a diagnostic test
A-1151-16T4
29
has been sent by the treating practitioner in order to
answer a medical diagnosis question or a treatment
question. The consultant is expected to perform a
clinical examination, when indicated, which, at a
minimum, is not necessarily a comprehensive physical
examination but, rather, one which brings the
specialist's knowledge to bear upon the particular
problem to be solved, that is, "focused clinical
examination."
[33 N.J.R. 670(a) (Feb. 20, 2001) (emphasis added).]
Accordingly, because the only physical examination to determine "the
particular problem to be solved" is a discretionary one under paragraph (m)(5),
we agree with Damien that the court incorrectly interpreted paragraphs (m)(3)
and (m)(6) as requiring Damien to "examine" patients.
Further, the phrase "medically necessary" does not appear anywhere in
the regulation. Those words should be given their ordinary meaning , and the
Legislature's definition in N.J.S.A. 39:6A-2(m) is consistent with that
meaning:
"Medically necessary" means that the treatment is
consistent with the symptoms or diagnosis, and
treatment of the injury (1) is not primarily for the
convenience of the injured person or provider, (2) is
the most appropriate standard or level of service
which is in accordance with standards of good practice
and standard professional treatment protocols, . . . and
(3) does not involve unnecessary diagnostic testing.
[N.J.S.A. 39:6A–2(m); see also N.J.A.C. 11:3-4.2.]
A-1151-16T4
30
Because part of the definition of "[m]edically necessary" is that the
treatment is "the most appropriate standard or level of service," N.J.S.A.
39:6A-2(m), the words "[v]erify the indications for and appropriateness of
diagnostic testing" in N.J.A.C. 13:35-2.6(m)(6) (2014) must require less than
verifying the test was medical necessary.
Nonetheless, we reject Damien's claim that his mere receipt of "a written
or documented referral from a chiropractor, without more, meets the
verification requirement" under paragraph (m)(6) and was, in itself, a
procedure that meets the requirements of paragraph (m)(3), 10 notwithstanding
Damien's argument that extrinsic evidence of the Board's intent, specifically
the BME draft minutes, supports his interpretation. 11
10
Allstate's opposition brief states Damien argued "documents produced in
response to [p]laintiffs' discovery requests for APDI's protocols, policies
and/or procedures and employee handbooks and/or manuals . . . rebut
[p]laintiffs' claim that APDI did not have any written procedures regarding
standard protocols for MRI studies." Damien makes no such argument in his
briefs, so, to the extent he ever made that claim, his failure to brief it operates
as a waiver. 539 Absecon Blvd., L.L.C. v. Shan Enterprises Ltd. P'ship, 406
N.J. Super. 242, 272 n.10 (App. Div. 2009). Further, the discovery documents
Allstate references do not indicate any procedure existed for ascertaining
whether sufficient clinical data has been provided to justify diagnostic tests.
11
Damien also argues that the court failed to make the requisite findings to
justify its conclusion that he violated paragraph (m)(3). However, he does not
(continued)
A-1151-16T4
31
In 1991, the BME adopted N.J.A.C. 13:35-2.5 in response to the
increasing number of diagnostic medical practices where physicians abdicated
their medical decision-making to technicians and staff. 23 N.J.R. 2858(a)
(Sept. 16, 1991). The BME found this inappropriate delegation of medical
duties led to reduced quality of patient care, so N.J.A.C. 13:35-2.5 was
adopted to require physicians to implement protocols to avoid unnecessary
testing or retesting. Ibid. The BME noted that the regulation would "most
likely" have an economic impact on radiologists who "merely attended the
office to pick up and provide a reading of the films and authorize bills." Ibid.In December 1998, pursuant to legislative directive, L. 1998, c. 21, § 12,
the BME adopted N.J.A.C. 13:35-2.6 to "govern the validity of diagnostic tests
intended to establish medical diagnoses for the purpose of recommending an
appropriate course of treatment." N.J. Coal. of Health Care Prof'ls v. N.J.
Dep't of Banking and Ins., Div. of Ins., 323 N.J. Super. 207, 227 (App. Div.
(continued)
raise that argument in his merits brief, and as we have previously stated,
"[r]aising an issue for the first time in a reply brief is improper." Borough of
Berlin v. Remington & Vernick Eng'rs, 337 N.J. Super. 590, 596 (App. Div.
2001). Further, the court's determination that Damien violated section (m)(3),
when read in context with the court's other factual findings, e.g. that Damien
was not "relieved" of his "duty to verify . . . referrals," support the conclusion
that the court determined Damien's mere receipt of a prescription, without
more, was not a procedure that satisfied paragraph (m)(3).
A-1151-16T4
32
1999). N.J.A.C. 13:35-2.6 was also adopted to address the "widespread
recognition that the problem of inappropriate diagnostic testing had reached
such proportions that individual disciplinary actions by the several health care
Professional Boards were insufficient to stem the tide." 33 N.J.R. 670(a) (Feb.
20, 2001). In 2001, N.J.A.C. 13:35-2.5 was repealed, and replaced by
amendment of N.J.A.C. 13:35-2.6, in "an effort to avoid diversion of scarce
monetary and personnel resources from meeting the legitimate health care
needs of the public." 33 N.J.R. 670(a) (Feb 20, 2001).
As originally proposed, N.J.A.C. 13:35-2.6(m)(3) would have required
the referral-receiving practitioner to "[a]scertain whether sufficient objective
or clinical data have been provided to determine that the requested diagnostic
test is appropriate . . . ." 32 N.J.R. 19(a) (Jan. 3, 2000). However, in response
to comments, the BME amended that proposed rule and adopted the language
that appeared in the regulation throughout the relevant times of this litigation:
the referral-receiving practitioner was required only to "[i]nstitute a procedure
to assure that sufficient clinical data has been provided to justify the requested
test . . . ." N.J.A.C. 13:35-2.6(m)(3) (2005). As the BME noted in its
summary of the 2001 amendments to N.J.A.C. 13:35-2.6(m), although "the
practitioner need not ascertain him or herself whether there is sufficient
A-1151-16T4
33
objective or clinical data to support the referral," he or she "must institute a
procedure that will ensure that such data has been provided." 33 N.J.R. 670(a)
(Feb. 20, 2001).
Thus, paragraph (m)(3) required Damien to do more than merely receive
a referral, but he was not required to perform a clinical examination to
determine the medical necessity of the testing, as the trial court incorrectly
held. Instead, paragraph (m)(3) required Damien to institute some procedure
to assure himself that the referring physician had provided to Damien clinical
data sufficient, in Damien's professional judgment, to justify the requested test.
Merely verifying that the referral was from a licensed practitioner was
insufficient to satisfy that duty. Indeed, the BME noted that it "expects that
the practitioner receiving a patient referral shall implement a procedure to
assure that a referring physician has complied with the requirements of
subsection (l), to facilitate the exercise of professional judgment on whether
and how the referral should be accepted." 33 N.J.R. 670(a) (Feb. 20, 2001).
In light of that clear expression of intent, we reject Damien's claims that he
was "entitled to presume" the referring practitioner complied with subsection
(l) and that Damien's mere receipt of a referral could constitute a sufficient
A-1151-16T4
34
procedure to enable him to exercise "professional judgment" as to whether a
"referral should be accepted." Ibid.12
Similarly, with respect to paragraph (m)(6), the notes preceding the
proposed regulation explain simply that "[p]articular care shall be exercised
when accepting a referral from a practitioner who does not hold a plenary
license." 32 N.J.R. 19(a) (Jan. 3, 2000). Paragraph (m)(6) was adopted as
proposed. 33 N.J.R. 670(a) (Feb. 20, 2001). Therefore, we conclude that
merely receiving a referral and verifying it was from a licensed physician,
without more, was insufficient to satisfy either N.J.A.C. 13:35-2.6(m)(3) or
(m)(6), and there was no factual dispute that any pre-testing procedure Damien
might have employed was limited to, at most, receiving a referral and verifying
that it was from a licensed practitioner.
For example, Bhagat testified that APDI did not take new patient
histories and that "as long as the patient has a valid prescription from a
12
Although Damien states in a footnote that "[t]here was no claim in this case
that any party ever violated [subsection] 2.6(l) of the regulations," the fact
remains that Damien was required to institute a procedure to verify the
referring practitioner's compliance with that subsection. Damien's claim that
he was "entitled to presume" the referring practitioner complied with
subsection (l) demonstrates that Damien did not, in fact, institute a procedure
to verify the referring practitioner's compliance with subsection (l), and there
is no competent evidence in the record to suggest a different conclusion.
A-1151-16T4
35
qualified registered physician and somebody is going to pay the bill APDI
would perform the MRI testing." Bhagat also testified that the only review or
screening of the patient prior to MRI testing was done by the technologist for
contraindications, and other APDI staff members provided similar testimony.
Further, he testified that APDI used "the same process" for testing patients
regardless of who made the referral, as opposed to using particular care when a
limited licensee made the referral.
Thus, the undisputed evidence established that, upon receipt of a referral
or prescription from a licensed physician, no procedures existed or were
employed to assure sufficient clinical data existed or had been provided to
justify the compliance with N.J.A.C. 13:35-2.6(m)(3) (2014), and no particular
care was used when a referral was made by a limited licensee to comply with
paragraph (m)(6). If the BME intended for receipt of a prescription to satisfy
N.J.A.C. 13:35-2.6(m), the BME knew how to express that intention. See 33
N.J.R. 670(a) (Feb. 20, 2001) (explaining a treating physician may request
another physician perform diagnostic testing without providing "a formalized
written report" as "a prescription will be sufficient" under former N.J.A.C.
13:35-2.6(l), but omitting any similar language from the summary of the
requirements under former N.J.A.C. 13:35-2.6(m)).
A-1151-16T4
36
V.
Finally, because there is no competent evidence in the record to support
the notion that the trial court was provided with anything more than a draft of
the minutes of the BME's meeting to consider at the April 4, 2016
reconsideration hearing, we perceive no abuse of discretion by the court in
declining reconsider its decision. See R. 4:49-2; Cummings v. Bahr, 295 N.J.
Super. 374, 389 (App. Div. 1996). Further, even assuming the draft minutes
were competent evidence or were adopted by the BME by the time of the April
4, 2016 hearing, we owe no deference to "plainly unreasonable" agency
interpretations of a regulation. Hough, 210 N.J. at 200 (quoting In re Election,
201 N.J. at 262). As we have concluded, the interpretation that mere receipt of
a referral from a licensed physician constituted compliance with paragraphs
(m)(3) and (m)(6) is in direct conflict with the intent of the BME as expressed
in 33 N.J.R. 670(a) (Feb. 20, 2001) (stating clearly the BME's expectation that
a referral-receiving practitioner would exercise "professional judgment on
whether . . . the referral should be accepted").
To the extent not addressed, defendant's remaining arguments lack
sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
A-1151-16T4
37
Affirmed in part, reversed in part. We do not retain jurisdiction.
A-1151-16T4
38