NEW JERSEY MANUFACTURERS INSURANCE COMPANY VS. SPECIALTY SURGICAL CENTER OF NORTH BRUNSWICK (L-3647-17 AND L-4927-17, BERGEN COUNTY AND STATEWIDE) (CONSOLIDATED)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NOS. A-0319-17T1
A-0388-17T1
NEW JERSEY MANUFACTURERS
INSURANCE COMPANY,
APPROVED FOR PUBLICATION
Plaintiff-Respondent,
January 29, 2019
v. APPELLATE DIVISION
SPECIALTY SURGICAL CENTER
OF NORTH BRUNSWICK a/s/o
CLAIRE FIORE, and SURGICARE
SURGICAL ASSOCIATES OF FAIR
LAWN a/s/o MARTINO CHIZZONITI,
Defendants-Appellants.
_______________________________
Argued December 11, 2018 – Decided January 29, 2019
Before Judges Hoffman, Suter and Geiger.
On appeal from Superior Court of New Jersey, Law
Division, Bergen County, Docket Nos. L-3647-17 and
L-4927-17.
Keith J. Roberts and Richard B. Robins argued the
cause for appellant Specialty Surgical Center of North
Brunswick (Brach Eichler, LLC, attorneys; Keith J.
Roberts, of counsel and on the briefs; Richard B.
Robins, on the briefs)
Joseph A. Massood argued the cause for appellant
Surgicare Surgical Associates of Fairlawn (Massood
Law Group, LLC, attorneys; Joseph A. Massood, of
counsel and on the briefs; Tara M. McCluskey, on the
briefs).
Gregory E. Peterson argued the cause for respondent
(Dyer & Peterson, PC, attorneys; Gregory E. Peterson,
on the brief).
Susan Stryker argued the cause for amicus curiae
Insurance Council of New Jersey and the Property
Casualty Insurers Association of America (Bressler,
Amery & Ross, PC, attorneys; Susan Stryker, of
counsel and on the briefs; Michael J. Morris, on the
briefs).
The opinion of the court was delivered by
HOFFMAN, J.A.D.
In these back-to-back appeals involving automobile insurance, which we
now consolidate for purposes of this opinion, defendants appeal from Law
Division orders vacating binding arbitration awards entered in their favor
against plaintiff New Jersey Manufacturers Insurance Company (NJM). In
both cases, the trial court held the PIP 1 medical fee schedule does not provide
for payment to an ambulatory surgical center (ASC) for procedures not listed
as reimbursable when performed at an ASC. We affirm.
1
PIP refers to personal injury protection coverage, which auto insurers must
provide in "every standard automobile liability insurance policy." N.J.S.A.
39:6A-4.
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I.
N.J.S.A. 39:6A-4.6(a) requires the Department of Banking and Insurance
(the Department) to "promulgate medical fee schedules on a regional basis for
the reimbursement of health care providers . . . for medical expense benefits
. . . under [PIP] coverage . . . ." These fee schedules shall "incorporate the
reasonable and prevailing fees of [seventy-five percent] of the practitioners
within the region." Ibid. To comply with this statutory mandate, the
Department promulgated new regulations and amendments to N.J.A.C. 11:3 -
29.
N.J.A.C. 11:3-29.5(a) states, "ASC facility fees are listed in Appendix,
Exhibit 1[2] by CPT[3] code. Codes that do not have an amount in the ASC
facility column are not reimbursable if performed in an ASC." The Fee
Schedule has three columns relevant to the instant matter: one column lists
CPT codes and two columns list corresponding ASC fees, "ASC Fees North"
2
Exhibit 1 is titled "Physician's & Ambulatory Surgical Center (ASC) Facility
Fee Schedule" (the Fee Schedule).
3
CPT stands for Current Procedural Terminology.
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and "ASC Fees South." The Fee Schedule does not list CPT code 63030 as a
code eligible for reimbursement for physicians or ASCs. 4
In the first case, Claire Fiore, an NJM insured, sustained injury to her
lower back in a May 2014 accident involving an automobile. In November
2015, Fiore underwent a lumbar discectomy at the ASC operated by defendant
Specialty Surgical Center of North Brunswick (Specialty Surgical). Following
the procedure, Specialty Surgical sought $32,500 in reimbursement from NJM
under CPT code 63030; however, NJM denied payment, claiming the treatment
was not medically necessary and further asserting "the CPT code charged by
the facility – 63030 – had no reimbursement value for the ASC on the [F]ee
[S]chedule."
In the second case, Martino Chizzoniti also sustained injury to her lower
back in a May 2014 accident involving an automobile. In November 2015,
Chizzoniti underwent lumbar decompression surgery at an ASC operated by
defendant Surgicare Surgical Associates of Fair Lawn (Surgicare). Following
the procedure, Surgicare sought $49,000 in reimbursement under Chizzoniti's
PIP coverage with NJM for the procedure under CPT code 63030; however,
4
CPT code 63030 does appear in Exhibit 7 of the Appendix, which lists
"hospital outpatient facility fees." N.J.A.C. 11:3-29.5(b).
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NJM denied reimbursement because "the CPT code charged by the facility –
63030 – had no reimbursement value for the ASC on the [F]ee [S]chedule."
In each case, the ASC filed a demand for arbitration with Forthright, Inc.
(Forthright),5 and the parties proceeded to binding arbitration pursuant to
N.J.A.C. 11:3-5.1(a) and the PIP endorsement in NJM's policy. After a
Forthright DRP and a Forthright appellate panel found against NJM in each
case,6 NJM filed Law Division actions seeking to vacate each award under
N.J.S.A. 2A:23A-13 of the Alternative Procedure for Dispute Resolution Act
(APDRA),7 alleging the awards resulted "from an erroneous and prejudicial
application of the law to the facts." On August 14, 2017, the trial court filed a
final order and written decision in each case, vacating each award and holding
that the ASC "shall receive no reimbursement, of any kind[,] in connection
with [ASC] fees for CPT code 63030" for the surgical procedure in each case.
These appeals followed.
5
Forthright is "the organization that contractually provides the State with
[Dispute Resolution Professionals (]DRPs[)] who hear PIP matters . . . ."
Kimba Med. Supply v. Allstate Ins. Co., 431 N.J. Super. 463, 467 (App. Div.
2013).
6
In the Fiore case, the panel affirmed an award of $25,500 in favor of
Specialty Surgical, and in the Chizzoniti case, the panel affirmed an award of
$13,940.72 in favor of Surgicare.
7
N.J.S.A. 2A:23A-1 to -30.
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II.
We first address the applicable jurisdictional constraint set forth in the
APDRA. Pursuant to N.J.S.A. 2A:23A-13, a party seeking to vacate, modify,
or correct an award may bring "a summary application" in the trial court.
According to the statute, that judicial scrutiny by the trial court should
constitute the final level of appellate review. N.J.S.A. 2A:23A-18(b) provides
that "[u]pon the granting of an order confirming, modifying[,] or correcting an
award, a judgment or decree shall be entered by the [trial] court in conformity
therewith and be enforced as any other judgment or decree. There shall be no
further appeal or review of the judgment or decree." (Emphasis added).
Based on the explicit language in the statute, "appellate review is
generally not available" to challenge a trial judge's order issued in cases
arising under the APDRA; however, "there are exceptions." Morel v. State
Farm Ins. Co., 396 N.J. Super. 472, 475 (App. Div. 2007). In Mt. Hope
Development Associates v. Mt. Hope Waterpower Project, LP, 154 N.J. 141,
152 (1998), our Supreme Court identified a child support order as an example
of such an exception. In addition, the Court indicated there may be other "'rare
circumstances' . . . . where public policy would require appellate court review,"
including cases where review is necessary for it to carry out its "supervisory
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function over the courts." Ibid. (quoting Tretina Printing, Inc. v. Fitzpatrick &
Assocs., Inc., 135 N.J. 349, 364-65 (1994)).
The "rare circumstances" enabling further review beyond the trial court
in APDRA matters arise only in situations where such appellate review is
needed to effectuate a "nondelegable, special supervisory function," of the
appellate court. Riverside Chiropractic Grp. v. Mercury Ins. Co., 404 N.J.
Super. 228, 239 (App. Div. 2008) (citing Mt. Hope Dev. Assocs., 154 N.J. at
152). In a few exceptional instances, we have elected to perform such
appellate review in an APDRA matter. See, e.g., Selective Ins. Co. of Am. v.
Rothman, 414 N.J. Super. 331, 341-42 (App. Div. 2010) (reversing a trial
court's order erroneously upholding a decision of a DRP, who failed to enforce
a clear statutory mandate involving a "matter of significant public concern"),
aff'd, 208 N.J. 580 (2012); Kimba 431 N.J. Super. at 482 (invoking the
jurisdictional exception to undertake appellate review of unresolved and
recurring legal questions concerning the proper interpretation of APDRA).
Similar to Kimba, public policy supports our review of the trial court's
decisions here because conflicting interpretations of N.J.A.C. 11:3-29.4 will
likely lead to continued litigation, thereby undermining the Legislature's intent
in enacting APDRA. In Kimba, we invoked the public policy exception in
interpreting procedural matters under the APDRA, because the issue before us:
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1) had only been addressed in unpublished cases; 2) involved matters that
"should not be guessed at by the participants from case to case," including
"[t]he repeat players in the PIP system – claimants, insurers, DRPs, lawyers,
and trial judges –" who could all "benefit from definitive precedential
guidance"; and 3) involved a matter of statutory interpretation. Id. at 482-83.
In the cases under review, we must interpret a regulation that Forthright
and the Law Division have interpreted inconsistently. No published cases
have addressed the issue before us; in light of the absence of needed precedent,
public policy favors review of the instant matter.
Moreover, the Legislature enacted APDRA to "create a new procedure for
dispute resolution which would be an alternative to the present civil justice
system and arbitration system in settling disputes. It is intended to provide a
speedier and less expensive process for resolution of disputes than traditional
civil litigation . . . ." Mt. Hope Dev. Assocs., 154 N.J. at 145 (citing
Governor's Reconsideration and Recommendation Statement to Assembly Bill
No. 296, at 1 (Jan. 7, 1987), reprinted at N.J.S.A. 2A:23A-1). Additionally,
the Legislature intended for APDRA to provide "a formal method of resolving
disputes with predictable rules, procedures, and results . . . ." Ibid. (citing
Draftsman's Legislative History, reprinted at N.J.S.A. 2A:23A-1). Thus,
declining to address this matter would frustrate the Legislature's intent because
A-0319-17T1
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without guiding precedent, continued litigation will likely ensue, burdening
insureds, insurers, and medical providers with unnecessary costs of liti gation
and unwelcome delays. We therefore invoke the public policy exception to
address the following issue: whether automobile insurers are required to
reimburse ASCs where the CPT code for the procedure does not appear in the
Fee Schedule.
III.
On appeal, both defendants argue the trial court mistakenly concluded
the arbitrators erroneously applied the law to the issues and facts in the cases
before them. We exercise de novo review of legal questions. State v. Gandhi,
201 N.J. 161, 176 (2010); Manalapan Realty, LP v. Twp. Comm. of
Manalapan, 140 N.J. 366, 378 (1995).
Defendants base their argument on the fact that, on January 1, 2015, the
Federal Center for Medicare and Medicaid Services (CMS or Medicare)
revised its approved procedures list. Among the newly-added procedures
reimbursable to ASCs, the revised list included CPT code 63030 – "lower back
disk surgery."
Defendants contend an applicable regulation states the Fee Schedule
shall be interpreted in accordance with the amended Medicare claims manual
in effect when the service was provided, notwithstanding the absence of a CPT
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code in the Fee Schedule. Specifically, defendants rely upon N.J.A.C. 11:3-
29.4(g), which provides, in pertinent part:
Except as specifically stated to the contrary in this
subchapter, the fee schedules shall be interpreted in
accordance with the following, incorporated herein by
reference, as amended and supplemented: the relevant
chapters of the Medicare Claims Processing Manual,
updated periodically by CMS, that were in effect at
the time the service was provided.
Defendants therefore argue the plain language of N.J.A.C. 11:3-29.4(g)
requires insurance companies to reimburse ASCs for any procedures
performed under CPT codes subsequently approved by the CMS. Because
defendants performed the procedures at issue after Medicare updated its ASC
reimbursement guidelines to include CPT 63030, defendants contend they are
entitled to reimbursement for the subject procedures.
In response, NJM argues the plain language of another regulation
controls, prohibiting payment to ASCs for CPT codes not listed in the Fee
Schedule. Specifically, NJM relies upon N.J.A.C. 11:3-29.4(e), which
provides:
Except as noted in (e)[(1)] through (3) below, the
insurer's limit of liability for any medical expense
benefit for any service or equipment not set forth in or
not covered by the fee schedules shall be a reasonable
amount considering the [F]ee [S]chedule amount for
similar services or equipment in the region where the
service or equipment was provided . . . . The amount
that the insurer pays for the service shall be in
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accordance with this subsection. Where the [F]ee
[S]chedule does not contain a reference to similar
services or equipment as set forth in the preceding
sentence, the insurer's limit of liability for any medical
expense benefit for any service or equipment not set
forth in the fee schedules shall not exceed the usual,
customary[,] and reasonable fee.
....
3. Codes in [the Fee Schedule] that do not have an
amount in the ASC facility fee column are not
reimbursable if performed in an ASC and are not
subject to the provision in (e) above concerning
services not set forth in or covered by the fee
schedules.
NJM supports its position by citing the Department's responses to
commenters during the notice and comment period for the Fee Schedule, as
well as the following question and answer posted on the Department's website,
under "Auto Medical Fee Schedule Frequently Asked Questions":
[Question] 6. There is no fee in the ASC facility fee
column of [the Fee Schedule] for the service I want to
provide in an ASC.
[Department Response.] N.J.A.C. 11:3-29.5(a) and
29.4(e)(3) state that when there is no fee in the ASC
facility fee column of [the Fee Schedule] for a service,
the facility fee for that service is not reimbursable if
performed in an ASC. Stated another way, the only
facility fees that are reimbursable for services
performed in an ASC are those CPT and HCPCS
codes that have facility fees listed in the ASC Facility
Fee Column of [the Fee Schedule]. The fact that,
subsequent to the promulgation of the fee schedule
rule, CMS may have authorized additional procedures
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to be performed in an ASC does not permit an ASC to
be reimbursed for those services unless there is an
amount listed in the ASC Fee Column on [the Fee
Schedule] for the corresponding CPT code . . . .
Thus, NJM argues:
[W]hile an ASC may receive payment for hosting a
spine surgery for a CMS/Medicare patient, these
services are not payable to ASCs under New Jersey
PIP. Stated another way, an ASC may host a
procedure utilizing the "new" spine surgery codes[,]
but it cannot be paid by a No-Fault insurer.
NJM further asserts that because of this court's deference to an agency's
interpretation of its own rules, the Department guidance "definitely resolves"
the instant matter. See N.J. Ass'n of School Adm'rs v. Schundler, 211 N.J.
535, 549 (2012) ("Courts afford an agency 'great deference' in reviewi ng its
'interpretation of statutes within its scope of authority and its adoption of rules
implementing' the laws for which it is responsible." (quoting NJSCPA v. N.J.
Dept. of Agriculture, 196 N.J. 366, 385 (2008))).
In 2007, the Department adopted new rules and amendments modifying
reimbursement to medical providers, including ASCs. These regulations were
challenged, but affirmed. In re Adoption of N.J.A.C. 11:3-29, 410 N.J. Super.
6, 13 (App. Div. 2006). In 2012, the Department adopted revised "regulations
addressing reimbursable medical procedures and the facilities in which they
can be performed," and related issues. The revised regulations were also
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challenged and affirmed. N.J. Healthcare Coal. v. N.J. Dept. of Banking &
Ins., 440 N.J. Super. 129, 133 (App. Div. 2015).
The 2012 Fee Schedule listed various CPT codes. For many, there was
an amount listed that could be reimbursed to an ASC if it performed the
service listed. For some other listed CPT codes, there was no reimbursement
figure for an ASC. Clearly, if the CPT code is listed and no amount is set forth
for an ASC, the ASC cannot receive payment for that service. Defendants do
not dispute this point; however, they argue this case presents a different issue,
the situation where the CPT code in question does not appear at all in the Fee
Schedule.
The history of the adoption of the 2012 Fee Schedule supports NJM's
position in this case. The Department announced its proposed amendments to
the Fee Schedule on August 1, 2011. 43 N.J.R. 1640a. Significantly, that
proposal included CPT code 63030; however, it provided for reimbursement to
physicians only – it did not provide for reimbursement to ASCs.
The regulation was reproposed on February 21, 2012, with substantial
changes, apparently based on comments the Department received. The
Department then excluded 117 CPT codes relating to neurosurgery, and
provided the following explanation:
Amendments are also proposed to . . . the Physicians'
and Ambulatory Surgical Center Facility Fee
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Schedule, to delete physician fees for 117 CPT codes
for low-frequency, high-cost procedures performed by
neurosurgeons and spinal surgeons that were added in
the proposal. Comments submitted on the proposal
provided data indicating that there are only
approximately [eighty] such specialists currently
practicing in New Jersey. Consequently, and as was
noted in the proposal, the available data on the fees
paid to these providers for these low-frequency
procedures is limited. For this reason, the Department
has determined that caution is warranted and further
study of more comprehensive data is needed before a
final conclusion is reached to include these codes on
the Physicians' Fee Schedule. Accordingly, [the Fee
Schedule] is proposed to be amended upon adoption to
delete the physician fees for the 117 CPT codes
referenced above. CPT codes for which there is no
amount in the Physicians' Fee column of [the Fee
Schedule] are reimbursed at the usual, customary, and
reasonable fee for the service. Forty-two of the 117
codes remain in [the Fee Schedule] because, although
there is no physician fee for the code, there is an ASC
facility fee for that code. The Department will make a
further study of the issues raised in these comments as
part of its biennial review of the fee schedules
required by N.J.S.A. 39:6A-4.6.
[44 N.J.R. 383(a).]
In November 2012, after the adoption of the Fee Schedule at issue, the
Department responded to a comment as follows:
Upon review of the comments received, the
Department has determined that additional study of
the physician fees for 117 CPT codes on the
Physicians' Fee Schedule for spinal and neurosurgical
procedures is required. As was noted in the proposal,
the available data on the fees paid to providers for
these low-frequency procedures is limited. As was
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referenced in the notice of proposed substantial
changes, the Department is removing the fees for these
codes from the Physicians' Fee Schedule upon
adoption until this issue can be studied further.
[44 N.J.R. 2652(c).]
Thus, when the regulation was proposed originally, CPT code 63030
provided for reimbursement to doctors but not to ASCs. Then the Department
removed code 63030 and other codes from the Fee Schedule for doctors
because it did not have enough experience to have confidence that the
reimbursement numbers were sound. This history indicates the Department
did not intend to require that ASC's should receive reimbursement for code
63030 procedures. That position is consistent with the Department's answer to
frequently-asked question number six.
We conclude that ASCs should not receive reimbursement for CPT code
63030 procedures because no reimbursement was listed in the ASC columns in
the Fee Schedule, as originally proposed. This omission provides a clear
indication of the Department's intent not to reimburse ASCs for CPT code
63030 procedures. The fact that Medicare now includes the CPT code does
not result in the automatic amendment of the Fee Schedule; instead, we
conclude it is the Department, not Medicare, that amends the Fee Schedule.
Any arguments not specifically addressed lack sufficient merit to
warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
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Affirmed.
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