All posts by Christopher Major

Christopher Major is an attorney who handles workers' compensation and general litigation at Lois LLC. Christopher defends the rights of carriers and self-insureds in reimbursement claims under New York WCL § 29 and New Jersey’s Section 40 (N.J.S.A. 34:15-40) as well as any other related litigation. He can be reached at 201-880-7213 x 103.

Health Insurance Matching Program (HIMP-1) Defense at LOIS

What is the Health Insurance Matching Program?

Picture the following scenario: the carrier litigates a workers’ compensation claim to its conclusion, maybe even reaching a “full and final” Section 32 settlement. The carrier has a bottom line for its exposure, knows its total costs, and the file is closed. Then, three years later, a $100,000 surgical bill comes through the door. This scenario is all too common, and is a byproduct of the Health Insurance Matching Program

Sections 325-5 and 325-6 of Title 12 of the New York Codes, Rules and Regulations set forth certain procedures and prerequisites under which health insurers may seek reimbursement from the workers’ compensation carrier for bills paid for medical treatment rendered to the claimant. Collectively referred to as the Health Insurance Matching Program (“HIMP”) Rules and Regulations, the right to reimbursement inures in New York Workers’ Compensation Law § 13(a), which provides that the workers’ compensation carrier is responsible to pay the cost of medical benefits arising from any work-related injury. The New York State Workers’ Compensation Board collects data in order to identify injured workers who make the same claim for medical benefits to both the health insurer and the workers’ compensation carrier. This data is then provided to the health insurer who has already paid for the medical benefit claim and now seeks reimbursement from the workers’ compensation carrier. Depending on the data received from the Workers’ Compensation Board, the health insurer can initiate a claim for reimbursement for the amount it paid which may have been the responsibility of the workers’ compensation carrier. If the health insurer is notified of a “full match” by the Board, they are permitted to serve a HIMP-1 demand on the workers’ compensation carrier.

Put simply, the Health Insurance Matching Program is the means by which a health insurer can recover reimbursement for medical expenses paid which may have been the responsibility of a workers’ compensation carrier.

Objecting to a HIMP-1 Claim

HIMP Rules and Regulations § 325-6.4 sets forth the permissible and impermissible objections the workers’ compensation carrier can raise. An objection must be filed within 90 days of service of the HIMP-1 form by the health insurer. The HIMP-1 form contains both a section for the carrier to fill out in objecting to the reimbursement request and a “checklist” which the carrier can use to raise permissible objections.

A carrier’s objections to a HIMP-1 claim are, by and large, objections they would have had if the bills were submitted through the Workers’ Compensation Board normally. Claims for which accident, notice and causal relationship (“ANCR”) have not been established are ineligible for arbitration. The carrier is not liable for payment of treatment that is not causally-related (i.e., to an unestablished injury site). Where the Board has denied authorization for treatment, or the carrier denied authorization and that denial was not contested, the treatment bills are objectionable under the HIMP Rules and Regulations. Additionally, the health insurer is required to provide certain information and documentation in support of the HIMP claim (detailed in Section 325-6.3(c)). Prior payment for the services, or pro-rating of a bill, are also valid objections. Services rendered after approval of a Section 32 waiver agreement that closes future medical treatment are not subject to reimbursement. If the carrier is asserting a third-party credit under WCL § 29 that would reduce the amount of the bill, or avoid payment of it entirely, an objection can be raised on this basis. Treatment by a Board-authorized provider that was inconsistent with the New York Medical Treatment Guidelines is likewise objectionable.

Stated another way, the carrier should ask a basic question: would I have been able to object to this if it was submitted through the Workers’ Compensation Board process?

How Do We Defend Against HIMP-1 Claims?

The HIMP Rules and Regulations have very specific, delineated requirements for a valid claim. Many health insurers fail to demonstrate strict compliance with the timing and service requirements. The health insurer has three years from the date of payment for the medical services at issue to either submit the data to the Board for a match or have received a full match in connection with the workers’ compensation claim. Additionally, the HIMP-1 reimbursement request must be served within one year of the latest date of: (i) acceptance of the claim or establishment of ANCR to the particular body part or disease in question; (ii) the date the Board notifies the health insurer of a “full match” pursuant to § 325-5; (iii) the date of payment for services; or (iv) the effective date of the HIMP regulation. The policy rationale for the timing requirements is evident: the further removed the HIMP-1 is from the date of services, the more difficult it is for the carrier to properly investigate the validity of the claim. A failure to adhere to the timing requirements is a valid (and strong) basis to deny a HIMP-1 reimbursement request. However, beyond the timing limitations, there are likewise requirements for valid execution of the HIMP-1 form by the health insurer. For instance, adherence to the following standards is required:

  • The health insurer must have been notified of a full match by the Board;
  • The health insurer must complete all information required on the HIMP-1 form before serving on the carrier;
  • The health insurer must include copies of all provider bills for which the health insurer is claiming entitlement to reimbursement (not just payment ledgers!). Moreover, these bills from the provider must include specific information, such as the name of the person receiving treatment, a diagnosis with applicable ICD codes, dates of hospitalization, itemization of services rendered with corresponding billing codes, etc.; and
  • The insurer must include proof of ANCR or proof of acceptance of the claim by the carrier, as well as proof of valid service.

A failure to adhere to any of the foregoing requirements is a basis for the workers’ compensation carrier to object to the HIMP-1 request. Once objected to, a HIMP-1 claim becomes eligible for arbitration provided certain conditions are met. However, no request for reimbursement is eligible for arbitration unless it has been timely filed and served in accordance with the HIMP Rules and Regulations. Additionally, claims that have not been established by either acceptance of the claim by the carrier or the Board finding ANCR are ineligible for arbitration.

Objections based on defects in form or service of the HIMP-1 request are not the only way to defend against HIMP-1 claims. Section 325-6.3(e) provides specifically that the workers’ compensation carrier’s liability for payment is limited to what it would have ordinarily been liable to pay under New York State Workers’ Compensation Medical Fee Schedules. This is a strong defense to raise in the alternative as it is one of the few means of placing an approximate value on what the arbitration award may ultimately be. Arbitration awards are subject to the whims of the individual arbitrator and can be somewhat unpredictable. Placing a firm valuation on the claim per the New York fee schedules is strong leverage in settlement negotiations, in addition to objections based on defects in service or form of the HIMP-1 request.

One of the most difficult and intricate means of defending a HIMP-1 claim is objecting based on treatment inconsistent with the Medical Treatment Guidelines (“MTGs”). This requires a working knowledge of the types of injuries subject to the MTGs and what treatment falls outside the parameters. Was a Form C-4AUTH submitted if it was a surgery requiring prior authorization? Was a Form MG-2 variance request submitted if the treatment deviated from the MTGs? Was the surgery indicated based on the criteria listed in the MTGs? Is the treating doctor Board-authorized?

Competent defense counsel will be able to analyze the treatment at issue and determine whether this objection can be raised. As always, however, some of the strongest weapons in our arsenal are proper discovery and litigation. The workers’ compensation carrier should never take the health insurer’s claims at face value. The HIMP Rules and Regulations specifically authorize the carrier to demand the medical records at issue in the HIMP-1 from the providers (Section 325-6.3(f)). Following up with subpoenas to the medical providers helps us confirm that all aspects of the claimed services are related to compensable injuries or conditions. Obtaining the full records at issue permits a proper investigation and audit, which is particularly helpful for determining whether the treatment is causally-related and within the MTGs, and whether the bills are within the NYS fee schedules.

Additionally, while health insurers are all too happy to serve HIMP-1 requests, they are frequently unwilling to take the matter to arbitration. This is partly because of the unpredictable nature of arbitration awards but is also because of the inherent difficulty in proving the legitimacy of claims that are several years old. Put differently, the workers’ compensation carrier should be ready, willing, and able to arbitrate if necessary. Oral argument is always recommended (the carrier can request an oral hearing within 14 days of receipt of the arbitration request from the health insurer), both for the purpose of showing the health insurer that the carrier intends to fight, and for the purpose of getting all valid arguments out in front of the arbitrator to give the carrier the best chance to win.

While developing valid objections, investigating the claim, and submitting detailed legal briefs on the issue strengthen the workers’ compensation carrier’s defenses, oftentimes HIMP-1 claims come down to a simple determination of “who blinks first.” Calling the health insurer’s bluff on illegitimate claims for reimbursement is one of the primary means of leveraging a favorable settlement, and failing such a settlement, a multifaceted defense is the best way to push for a favorable finding at arbitration. It is important to keep in mind that, if the carrier has provided proof of its liability under the NYS fee schedules along with its objection (typically done via bill review reports), the NYS fee schedule liability represents the carrier’s “worst-case scenario” at arbitration. This is yet another reason to aggressively push baseless HIMP-1 claims to arbitration.

As part of our comprehensive defense of workers’ compensation carriers, Lois Law Firm LLC can help you defend against HIMP-1 reimbursement requests. Commencing aggressive discovery and investigation immediately is vital to developing valid defenses and preparing a strong case for arbitration. In New York, the workers’ compensation carrier’s exposure does not begin and end with the compensability of a workers’ compensation claim, and a full-service defense firm with intimate familiarity of the Workers’ Compensation Law is in the best position to help carriers mitigate their exposure.

Continue reading Health Insurance Matching Program (HIMP-1) Defense at LOIS

Risk Transfer: New Jersey Supreme Court Affirms Carrier-Friendly Subrogation Decision

In a decision helpful to New Jersey’s workers’ compensation insurers, on May 12, 2020 the New Jersey Supreme Court found that a workers’ compensation carrier seeking risk transfer actually has greater rights as subrogee than the petitioner-subrogor possesses in motor-vehicle accident cases.

Facts from the Supreme Court Decision

A New Jersey Transit Corporation employee, David Mercogliano, sustained injuries in a motor vehicle accident while in the course of his employment. As a result, New Jersey Transit became obligated to pay workers’ compensation benefits. The petitioner was covered under standard automobile insurance policy, which included coverage for PIP benefits. Pursuant to the right of subrogation afforded to workers’ compensation carriers under NJSA 34:15-40 (“Section 40”), New Jersey Transit filed a complaint against the defendants seeking to recoup amounts paid in workers’ compensation benefits. The defendants raised the affirmative defense of the claim being barred pursuant to New Jersey’s Automobile Insurance Cost Reduction Act (“AICRA”).

The Defenses Raised

The affirmative defense invoked by the defendants arises from something called the “verbal threshold” in New Jersey. The verbal threshold is also known as the “limitation on lawsuit” option for automobile insurance policies. In an effort to reduce insurance premiums and to provide some docket relief for trivial motor vehicle accident cases, New Jersey adopted AICRA. Essentially, the plaintiff’s own automobile insurance policy affects the plaintiff’s right to sue the defendants in exchange for lower premiums. The defendants can invoke the verbal threshold affirmative defense based on what coverage the plaintiff possesses. The verbal threshold bars suits for noneconomic damages (i.e., pain and suffering) unless the plaintiff has one or more of six qualifying injuries/conditions:

  1. Death
  2. Dismemberment
  3. Significant disfigurement or scarring
  4. Displaced fractures
  5. Loss of a fetus
  6. Permanent injury other than scarring or disfigurement (this is the “catch-all” and the most litigated)

The permanent injury (#6 above) must be within a reasonable degree of medical probability. In the statute, it is defined as when a body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment. This is where most cases, particular those involving soft tissue injuries, are won and lost. The plaintiff must within 60 days of the defendant’s answer provide a certification from a physician under penalty of perjury based on, and referring to, objective clinical evidence. New Jersey Model Jury Charge 5.33 provides that there must be a preponderance of the evidence and a permanent injury via objective, credible medical evidence. The verbal threshold can be invoked by the defendants as an affirmative defense and can form the basis for a motion for summary judgment.

In New Jersey Transit Corp. a/s/o Mercogliano, the defendants made the argument that the petitioner’s suit was barred by the verbal threshold, and they prevailed on this argument at the trial level. However, the Appellate Division ultimately reversed the decision on the basis that New Jersey Transit’s pursuit of reimbursement was not for noneconomic loss, but rather for economic damages in the form of lost wages and medical expenses. New Jersey Tr. Corp. v Sanchez, 457 NJ Super 98, 197 A3d 1158 (App. Div. 2018). Citing to Lambert v. Travelers Indemnity Co. of America, 447 N.J. Super. 61 (App. Div. 2016), the Appellate Division held that the carrier’s right of subrogation arises under the Workers’ Compensation Law, which is separate and distinct from the policies of AICRA. Therefore, New Jersey Transit, as the employer, was permitted to pursue the claim even though the petitioner’s own suit would be barred, in theory. The carrier is evidently entitled to reimbursement from the tortfeasors even though the employee would not be able to recover medical expenses and wage loss from their own automobile insurer or noneconomic damages from tortfeasors. This would seem to be contrary to the concept of subrogation in that the carrier is being afforded a cause of action that the worker themselves could not bring. Unsurprisingly, appeal was taken to the New Jersey Supreme Court by the defendants and the Supreme Court granted certification.

The Supreme Court Ruling

In a decision reached on May 12, 2020, split 3-3 between the New Jersey Justices of the Supreme Court, the Appellate Division decision was affirmed. A copy of the decision can be found here.

The Supreme Court found no conflict between AICRA and the New Jersey Workers’ Compensation Law, noting that the pursuit of lost wages and medical benefits in a workers’ compensation claim arises under the Workers’ Compensation Law, not AICRA, as the primary source of recovery. The Supreme Court concluded that the petitioner had suffered economic damages in the form of lost wages and medical treatment, and that New Jersey Transit Corp., as the employer, was permitted to seek reimbursement via subrogation pursuant to Section 40, notwithstanding AICRA and the verbal threshold.

Why This Is Helpful to Workers’ Compensation Carriers

Practically, this decision represents an uncommon boon for workers’ compensation carriers. This is a rare instance where the carrier actually has greater rights as subrogee than the petitioner-subrogor possesses. Whereas the petitioner’s claim would have been barred by the verbal threshold based on his election for the limitation on lawsuit option in his automobile insurance policy, the employer’s action as subrogee survived summary judgment and, in the view of the New Jersey Supreme Court, should be allowed to continue. The practical implication of this ruling is that the carrier should liberally pursue reimbursement via subrogation pursuant to Section 40 in New Jersey motor vehicle accident cases. One of the most powerful defenses afforded to defendants in such actions does not hamper the carrier’s ability to prosecute the claim, even where the petitioner would have no cause of action. Therefore, there is little harm, and potentially substantial upside, in filing a subrogated civil complaint on behalf of the carrier in a New Jersey Superior Court in cases where liability of the defendants (and the adverse carrier thereby) seems clear. This should permit recovery via subrogation in cases where, previously, there was no opportunity for reimbursement because the petitioner’s own action would be barred by the verbal threshold based on their injuries.

Continue reading Risk Transfer: New Jersey Supreme Court Affirms Carrier-Friendly Subrogation Decision

Risk Transfer: The Carrier’s Overlooked and Underutilized Secret Weapon

Every workers’ compensation defense attorney worth their salt is well familiar with the standard tactics for pushing claims toward resolution and mitigating exposure. There are a finite number of tools at the carrier’s disposal:

  • denying claims and raising defenses;
  • conducting a proper investigation (site inspections, security camera video, witness statements, background checks, employee personnel files, social media usage reports, ISO claim searches, police reports and FOIL requests, etc.) and surveillance of the injured worker;
  • obtaining independent medical examinations (“IME”) and functional capacity evaluations (“FCE”) for issues such as need for treatment and medical necessity, temporary disability, work capacity and restrictions, permanent disability, etc.;
  • raising fraud;
  • litigating claims (injured worker and witness testimony, depositions of doctors, appeals and summations, discovery and disclosure including subpoenas and interrogatories, etc.); and
  • pushing prompt settlement to cut off ongoing exposure.

However, there is one area of insurance defense that a startling number of trial attorneys demonstrate a lack of familiarity with: risk transfer.

Continue reading Risk Transfer: The Carrier’s Overlooked and Underutilized Secret Weapon

No Double Recovery: Don’t Accept “One Third Each”

When seeking reimbursement on behalf of a carrier or employer under New York Workers’ Compensation Law Section 29 (“Section 29”) or N.J.S.A. 34:15-40 (“Section 40”) a particular scenario arises all too frequently: one of the other parties asking that the reimbursement right be reduced by equal measure against all parties; the “one-third, one-thirds one-third” offer. The carrier does not have to accept this reimbursement offer and in many cases should not!

At the most simplified level there are three prospective recipients of any settlement value in a civil case that involves a Section 29 or Section 40 lien: the claimant/petitioner, the third-party plaintiff’s attorney and the employer or workers’ compensation carrier. In this basic three-party structure, an even split of the settlement proceeds in to thirds would seem to make logical sense. In fact, the third-party plaintiff’s attorney will frequently assert that this is the “norm,” and that this is how “every case” ultimately resolves. They will also usually proffer some rationale as to why the Section 29 or Section 40 lien should be compromised, typically regarding issues with liability and allegedly poor chances of success at trial. Essentially, their argument is that some reimbursement is better than no reimbursement, and therefore the lien should be compromised to induce the claimant/petitioner’s consent to settlement. When it comes to such arguments, however, it is vital to keep in mind the legislative intent behind Section 29 and Section 40 and the protection the courts give that intent.

Continue reading No Double Recovery: Don’t Accept “One Third Each”

Properly Calculating Your Section 40 Reimbursement in New Jersey

N.J.S.A. 34:15-40 (“Section 40”) grants a right of reimbursement to workers’ compensation carriers. This reimbursement is to the extent of benefits paid to an injured worker should that injured worker file a third-party civil suit against the responsible tortfeasor. See N.J.S.A. 34:15-40. The limitations on this recovery are set forth in subsections (b) and (c) of Section 40, which both provide that any third-party recovery is reduced by the employee’s “expenses of suit” and the attorney’s fee. Subsection (e) goes on to define “expenses of suit” as an amount not to exceed $750.00 and the attorney’s fee as an amount not to exceed 1/3rd of the ultimate settlement proceeds.

While the language of the statute is plain on its face, there is confusion regarding the precise application of the aforementioned reductions. For instance, it is common knowledge that, in a typical civil suit settlement, disbursements come “off the top” of the settlement proceeds. Disbursements are, by their very nature, not part of the amount to be divided amongst the intended recipients. By way of illustration, assume a civil case settles for $100,000.00 and there are exactly $10,000.00 in disbursements. Under such a structure, the plaintiff’s attorney would receive $30,000.00 as their fee and the plaintiff would receive the remaining $60,000.00.  Continue reading Properly Calculating Your Section 40 Reimbursement in New Jersey

Is there a $50,000.00 “Carve-Out” to a Workers’ Compensation Section 29 Lien When the Underlying Accident Occurs Outside the State of New York?

When an accident occurs outside the State of New York the $50,000.00 “carve-out” under New York Insurance Law §§ 5102 and 5104 does not apply to a Workers’ Compensation Law Section 29 lien.

The seminal case setting forth this bright-line rule is McHenry v. State Ins. Fund, 236 A.D.2d 89, 666 N.Y.S.2d 221 (3rd Dept. 1997). The Court in McHenry held that “absent an express statutory provision, a workers’ compensation carrier has the ‘inviolable’ right to a lien against the proceeds of ‘any recovery obtained by a compensation claimant in a third-party action.” Id. at 90-91 (citing Matter of Granger v. Urda, 44 N.Y.2d 91, 96 (1978)). The Court further stated that by the express terms of Insurance Law § 5104 itself the statute applies only to injuries stemming from the negligent operation of a motor vehicle in the State of New York. Id. at 91. Insurance Law § 5104(a) is not given “extraterritorial effect” even in situations where all parties are New York residents and the accident merely occurred in another state. Id. (citing Morgan v. Bisorni, 100 A.D.2d 956, 475 N.Y.S.2d 98 (1984)).

Subsequent decisions have likewise enforced this ruling even though the peripheral facts of the case may differ. (See discussion below of Ofori v. Green, 74 A.D.3d 474, 901 N.Y.S.2d 835 (1st Dept. 2010)). Continue reading Is there a $50,000.00 “Carve-Out” to a Workers’ Compensation Section 29 Lien When the Underlying Accident Occurs Outside the State of New York?