Supreme Court Restrains Unlimited Requests by PIP Carriers
On July 18, 2012, the New Jersey Supreme Court imposed important limits on the information insurance carriers may request while investigating claims submitted by healthcare providers, holding that, in general, carriers may not ask for information relating to corporate structure.
In Selective Insurance Company of America v. Hudson East Pain Management, the carrier questioned certain claims submitted by the healthcare providers. Taking the approach all-too-familiar to providers in New Jersey, the carrier asked not only for records concerning the treatment of the patient, but also for documentation regarding the corporate structure of the providers themselves.
Carriers in New Jersey have been routinely asking for this information since the Allstate v. Orthopedic Evaluations decision in 1997. In that case, the Appellate Division held that a provider that is violating a rule or regulation relating to licensure – in that case a testing company was improperly owned by a layperson rather than by a doctor – is ineligible for reimbursement under the PIP statutes. In the intervening 15 years carriers have taken that ball and run far with it, looking for any infraction that might support a denial of claims.
The providers in this case refused to provide information regarding their corporate structures, and Selective sued them. The trial court held in favor of Selective, the Appellate Division held in favor of the providers, and the Supreme Court unanimously affirmed the decision of the Appellate Division.
The decision of the Court was based on the language of the insurance policy itself, language that is very typical. It provides that the individual insured – the patient – must “Cooperate with [Selective] in the investigation, settlement or defense of any claim or suit.” The Court reasoned that because the patient could not be obligated to provide information relating to the corporate structure of the providers, and because the providers had taken an assignment of the policy from the patient, the providers could not have any greater obligation than the patient.
The Court also dismissed concerns that its decision would interfere with the investigation of insurance fraud, stating that the existing statutory framework is sufficient.
Although the Supreme Court’s decision represents an enormous victory for healthcare providers in New Jersey and a welcome respite from burdensome requests from insurance carriers, the respite might be brief. First, the Court suggested that the result might be different if the carrier asked for legal relief other than a production of information. Second, insurance companies will probably seek to introduce legislation reversing the Supreme Court’s decision on a prospective basis.
But in the meantime, the rules of the game between providers and carriers have just been changed.
For a copy of the Supreme Court’s decision, or to discuss its application to your practice, please call a member of Flaster/Greenberg's Health Care Practice Group.