Appeals Court Rules Against New Jersey Provider Claims

On October 7, 2020, the New Jersey Appellate court issued a decision affecting Medical Provider Claims. The Court ruled that unless the New Jersey’s Division of Workers’ Compensation has jurisdiction over the underlying claim for a compensable work-related injury, it does not have jurisdiction over a Medical Provider Claim for payment. The court also ruled that the injured employee’s residency in New Jersey alone is an insufficient basis to confer jurisdiction on the Division for extraterritorial workplace injuries.

Practical Effect

This decision impacts all Medical Provider Claims filed in New Jersey where the injured worker received medical or surgical treatment in New Jersey related to a New York, Pennsylvania, or any other state’s workers’ compensation law and then the provider made a claim for fee reimbursement at New jersey’s “usual and customary” rate. These types of claims are very common as medical providers in “fee schedule” states like Pennsylvania or New York often instruct their patients to receive medical care in New Jersey so that the provider can charge the insurance carrier under New Jersey’s lucrative “usual and customary” medical fee approach (New Jersey has no medical fee schedule for workers’ compensation claims).

Example: New York Claimant Getting Care in New Jersey. Provider Brings Claim for Reimbursement.

In a common example, the injured worker resides in New Jersey but works in New York. The injured worker is injured in New York. The worker seeks workers compensation benefits, and chooses to have care in New Jersey. The New Jersey medical provider then demands payment for medical services at the “usual and customary rate” in New Jersey, instead of the New York fee schedule. The “usual and customary” demands of the medical provider are routinely 8- to 12-times the costs for the same care under the New York fee schedule. Often, the insurance carrier will reimburse the New Jersey medical provider at the New York Medical Fee Schedule rates (again, usually a small fraction of the demanded payment under New Jersey’s “usual and customary” scheme).  The New Jersey medical provider will then file an action, called a “Application for Medical Provider Reimbursement” (or more commonly a “Medical Provider Claim”) demanding that the difference between what was paid (the New York Fee Schedule amount) and the “usual and customary amount” (often multiples larger) before the New Jersey Division of Workers’ Compensation.

The insurance carrier should file a Motion to Dismiss for Lack of Jurisdiction.  Based on the recent court decision (decided October 7, 2020, and applicable to all pending Medical provider Claims) the Workers’ Compensation Court should dismiss these claim petitions.

What Happens Next: Applying New York’s Fee Schedule

Effective April1, 2019, the Workers’ Compensation Board changed the Medical Fee Schedule in effect for medical payer reimbursement in New York workers’ compensation claims. This will have a significant impact on the many Medical Provider Claims filed by New Jersey doctors and medical providers seeking reimbursement for services rendered to New York workers’ compensation claimants where the Jersey provider is demanding reimbursement at a much higher (“usual and customary”) rate than would be allowed under New York’s fee schedules.

The Changes to the Fee Schedule.

Changes to General Ground Rule 16 govern reimbursement for out-of-state treatment. The Rule now provides that a claimant who lives in New York State may treat with a qualified or Board authorized out-of-state medical provider when such treatment confirms to the Workers’ Compensation law and Regulations, the MTG’s and the Medical Fee Schedule. Payment shall be made to the medical provider as set forth herein and using the regional conversion factor for the zip code where the claimant resides.

How are Fee Schedule Reimbursements Determined?

Simple. The methodology for calculating medical reimbursement fees remains unchanged. Fee schedules are both region and activity-specific. To calculate a fee for a particular procedure:

• Identify the appropriate conversion factor, which is listed within the respective Ground Rules document. There is a conversion factor for each geographic region and general type of medical service provided (e.g., surgery, radiology, etc.). For example, in the Medical Ground Rules document, you’ll find the conversion factor table on page 12.
• Once you have the conversion factor you need, find the CPT code for the specific type of service you want to look up.
• For each CPT code, there is a Relative Value Unit (RVU) listed.
• Multiply the RVU by the conversion factor to calculate the fee for that service.

The Takeaway.

It is clear that Medical provider Claims filed in New Jersey where the Division of Workers’ Compensation does not have jurisdiction over the underlying workplace injury should be dismissed. The medical providers remain entitled to the Fee Schedule payments due under the jurisdictional state’s statutory scheme. The New York Workers’ Compensation Medical fee Schedules now specifically address how providers who render treatment to New York residents out-of-state should be reimbursed. This means that a qualified out-of-state medical provider should be reimbursed (paid) at the rate applicable in the region where the claimant resides (in New York). The Board has continuing jurisdiction to resolve disputes between medical providers and insurers for out-of-state medical care and now has set forth a bright-line rule for how those providers will be reimbursed.