New Jersey Healthcare Coalition v. Nj Dep't of Banking and Insurance
111 A.3d 716
N.J. Super. Ct. App. Div.2015Background
- Appeal from the New Jersey Department of Banking and Insurance challenging 2012 revised PIP regulations governing reimbursable procedures, provider/facility coverage, fee schedules, counsel fees at PIP arbitration, and related procedures. Appellants include provider groups and associations; insurers intervened in support of the Department.
- The statutory delegation at issue is N.J.S.A. 39:6A-4.6, authorizing regionally based fee schedules reflecting prevailing fees of 75% of practitioners; long-standing litigation history with multiple prior Appellate Division decisions interpreting the regulatory scheme.
- The Department adopted the rules after extensive public comment and issued nearly 100 pages of responses; most provisions became operative January 4, 2013 (some internal-appeal rules were delayed and not ripe).
- Appellants raised numerous challenges (fee-setting methodology, definition of "standard professional treatment protocols," limits on reimbursement in ambulatory surgical centers, acupuncture daily caps, assignment language, on-the-papers arbitrations, counsel-fee limits and payment mechanics, shortened appeal deadlines, lack of evidentiary support for premium-impact findings).
- The Appellate Division applied the deferential standard for agency rulemaking, upheld the rules as neither arbitrary nor beyond statutory authority, and emphasized the Department’s monitoring commitments and clarifications (e.g., on upward-adjustment of lodestar and direct counsel-fee payments).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fee-schedule methodology / rates | Department used improper data/methods; should use billed fees or different approach | Methodology (RBRVS, Fair Health, paid-fee data) is reasonable and supported; agency expertise controls | Upheld: methodology not arbitrary; agency may use paid-fee data and proprietary databases |
| Definition of "standard professional treatment protocols" | Definition too narrow (peer-reviewed evidence-only) and precludes legitimate clinical innovation | Narrow definition prevents manipulation via non‑peer-reviewed publications; consistent with statute | Upheld: definition within agency discretion and not inconsistent with precedent |
| Denial of reimbursement for certain procedures in ASCs | Unjustified restriction that limits patient access; arbitrary distinction vs. hospital outpatient settings | Followed Medicare safety-based distinctions; within regulatory authority to limit settings | Upheld: reasonable to follow Medicare standards; no competent evidence of patient harm in record |
| Acupuncture subject to daily fee cap | Arbitrary to bundle and cap acupuncture with other services | Statute authorizes bundled/single fees for commonly co‑provided services; exceptions exist for extraordinary cases | Upheld: bundling and cap permissible; exception and full pay for standalone acupuncture days preserved |
| Counsel-fee calculation and proportionality (Rendine) | Rule disallows upward adjustment of lodestar or improperly limits proportionality | Rule follows Rendine; Department clarifies upward adjustments may be made where warranted | Moot as clarified; rule valid when construed to allow upward adjustments and proportionality analysis consistent with statute |
| Direct payment of counsel fees to attorneys | Regulation precludes direct payments to providers' counsel | Department clarified payments to attorneys remain permitted and administrator directed to continue direct payments | Moot as clarified; direct-payment practice preserved |
| "On-the-papers" arbitration for small claims (<$1,000) and consent cases | Due process concerns; collateral estoppel risk; factual disputes may require testimony | Statute does not prohibit paper decision; saves costs and expedites small claims; parties may consent | Upheld for faciaIly permissible use; Department must monitor for improper routine use in fact‑dispute cases; collateral‑estoppel concerns not ripe |
| Rule on assignment of "duties" with benefits | Language permits insurers to impose burdensome duties/discovery on providers | Rule defines whom benefits/duties may be assigned to; does not expand discovery beyond law; duties mean ordinary provider obligations | Upheld as reasonably construed to permit but not require duty assignment; not intended to expand discovery beyond Selective |
Key Cases Cited
- Rendine v. Pantzer, 141 N.J. 292 (Sup. Ct. N.J.) (lodestar‑based counsel‑fee framework)
- Selective Ins. Co. of Am. v. Hudson East Pain Mgmt., 210 N.J. 597 (Sup. Ct. N.J.) (limits on burdensome discovery in PIP matters)
- In re Adoption of N.J.A.C. 11:3-29, 410 N.J. Super. 6 (App. Div.) (prior approval of methodology and use of RBRVS/proprietary data)
- Coalition for Quality Health Care v. N.J. Dep’t of Banking & Ins., 358 N.J. Super. 123 (App. Div.) (prior challenges to PIP rules)
- In re Comm’r’s Failure to Adopt 861 CPT Codes, 358 N.J. Super. 135 (App. Div.) (administrative deference in PIP rules)
- Coalition for Quality Health Care v. N.J. Dep’t of Banking & Ins., 348 N.J. Super. 272 (App. Div.) (agency authority to limit provider choice within statutory scheme)
- N.J. Coal. of Healthcare Prof’ls. Inc. v. N.J. Dep’t of Banking & Ins., 323 N.J. Super. 207 (App. Div.) (deference to agency policy choices in fee regulation)
- Thermographic Diagnostics, Inc. v. Allstate Ins. Co., 125 N.J. 491 (Sup. Ct. N.J.) (standard for validating new treatments)
- Szczepanski v. Newcomb Med. Ctr., Inc., 141 N.J. 346 (Sup. Ct. N.J.) (proportionality review in fee awards)
- Velli v. Rutgers Cas. Ins. Co., 257 N.J. Super. 308 (App. Div.) (awarding counsel fees when insurer forces litigant to respond to meritless objections)