One of the unusual features in New Jersey workers’ compensation law is that medical providers cannot bring collection law suits in civil court against injured workers or against employers, insurance carriers, joint insurance funds or their third party administrators. If a medical provider has a dispute regarding the adequacy of payment in a workers’ compensation case, the provider must bring that claim in the Division of Workers’ Compensation. Most medical providers have written contracts that specify how much they will be paid depending on the type of procedure and medical code, but disputes still happen fairly frequently when emergency care occurs and there is no contract covering that service, or when a Judge of Compensation orders treatment with a provider that is not under contract with the employer or joint insurance fund.
There are many thousands of medical provider claims pending in the Division of Workers’ compensation, fast approaching 10% of all claims in the Division. Resolving such disputes is problematic in New Jersey because our state is one of the few that has no medical fee schedule. Unlike our neighbors in Pennsylvania and New York which have medical fee schedules covering just about every possible medical service, New Jersey continues to set payments on a case by case basis for what is “reasonable and customary.” That determination often depends on where the medical procedure takes place in New Jersey. A customary charge in Cape May could be quite different than in Hackensack.
When there is no contract with the medical provider, the employer relies on its insurance carrier to determine what is reasonable and customary. The insurance carrier will generally reprice the medical charges to what it believes is the appropriate level. For instance, a typical two-level spinal fusion procedure done over two to three hours in Paramus, New Jersey may be billed at $150,000 by the physician, but the bill may be repriced to $50,000 and paid at that level. If the provider is not under contract and disagrees with the reimbursement amount, the provider can cash the check and then retain counsel to file a Medical Provider Claim Petition in the Division seeking the difference.
One of the consequences in not having a fee schedule in New Jersey is that hundreds, perhaps even thousands of New York and Pennsylvania doctors have decided to forge contractual relationships with surgical centers in New Jersey without necessarily moving to New Jersey.
On a daily basis there are scores of surgeries that take place in New Jersey where the injured worker lives in New York, works in New York and gets injured in New York. The medical treatment before the surgery occurs in New York, but when it comes to the surgical procedure, the surgery suddenly gets steered to New Jersey.
What happens next is that the employer’s workers’ compensation carrier or third party administrator pays the medical procedure under the New York fee schedule, which amount represents often a small percentage of what would be paid in New Jersey. The medical provider cashes that payment but then turns around and files a medical provider claim petition in New Jersey. Using the example above of a spinal fusion, the New York fee schedule may reimburse at $15,000 for the fusion surgery, but the medical provider claim petition will seek the difference of $135,000 by filing in New Jersey.
Here is the important legal issue: does the State of New Jersey have jurisdiction over the many hundreds of medical provider claims being filed here by New York doctors to avoid the New York fee schedule where the only contact with New Jersey is the location of the surgical procedure?
We finally received an answer to this question on October 7, 2020. In Anesthesia Associates of Morristown, P.A. v. Weinstein Supply Corp., Nos. A-5033-18T4, A-5718-18T4 (App. Div. October 7, 2020), two Medical Claim Petition applications involving similar facts were heard back to back by the Appellate Division. That is the level above the Division of Workers’ Compensation. The first case pertained to an application filed by Anesthesia Associates of Morristown, Pennsylvania, hereinafter (AAM) where an employee was injured in 1998 in the State of Pennsylvania. The employee was a resident of Pennsylvania and his employer was based in Pennsylvania. A claim was filed with the Pennsylvania Bureau of Workers’ Compensation. All connections were with Pennsylvania, except that petitioner had a medical procedure in New Jersey. AAM submitted its charges of $12,992 under the Pennsylvania fee schedule and got paid $1,070.31. AAM then filed an MCP application in New Jersey seeking the balance. Liberty Mutual, the carrier for Weinstein Supply, took the position that there was no jurisdiction in New Jersey over this MCP application.
The other case which was argued on the same day involved Surgicare of Jersey City v. Waldbaum’s. In this case, all contacts were in the State of New York instead of Pennsylvania. The injured worker resided in New York, worked in New York and was injured in New York. The worker filed a claim in New York against Stop & Shop, the employer, which was one and the same as Waldbaum’s of Montvale, N.J. On March 6, 2017, the New York Workers’ Compensation Board determined that surgery was necessary in the underlying workers’ compensation case. The employee then underwent surgery at Surgicare of Jersey City’s facility in Jersey City. Surgicare billed $252,900 but received payment of $20,085.28 through the New York Workers’ Compensation Board. Surgicare then filed an MCP application in New Jersey seeking payment for the difference of $232,815!
In both cases the Judges of Compensation found that virtually all material connections in the underlying workers’ compensation cases were in Pennsylvania or New York, other than the location of the medical procedure in New Jersey. The judges held that if New Jersey has no jurisdiction over the injured worker’s case, then the state can have no jurisdiction over the medical provider’s claim. The cases were dismissed and the medical providers appealed.
The Appellate Division agreed with the Judge of Compensation and held that there are six factors to consider in jurisdictional disputes:
- Place where the injury occurred;
- Place of making the contract;
- Place where the employment relation exists or is carried out;
- Place where the industry is localized;
- Place where the employee resides; or
- Place whose statute the parties expressly adopted by contract
The Court concluded:
Applying these considerations to the two cases before us, we agree with the two judges of compensation that there was no cognizable claim for a work-related injury in either case. Therefore, the Division did not have jurisdiction over AAM’s or SJC’s claims and they were appropriately dismissed, substantially for the reasons expressed by the two judges of compensation.
This decision is not a reported appellate division case, but New Jersey compensation judges will be following it and dismissing the hundreds, if not thousands, of similar cases in the Division. The medical providers have apparently decided to appeal to the Supreme Court of New Jersey. The undersigned will keep the GSMJIF posted if the Supreme Court agrees to hear this case.
By: John H. Geaney, Esq.
Capehart Scatchard