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Russell v. Rutgers Casualty Insurance Co.

Decided: June 23, 1989.

ALICE RUSSELL AND RALPH RUSSELL, PLAINTIFFS-RESPONDENTS,
v.
RUTGERS CASUALTY INSURANCE COMPANY, DEFENDANT-APPELLANT



On appeal from the Superior Court of New Jersey, Law Division, Camden County.

Pressler, O'Brien and Scalera. The opinion of the court was delivered by O'Brien, J.A.D.

O'brien

At issue in this case is whether an insurance carrier providing personal injury protection benefits (PIP) to its insured is required to pay as a part of medical expenses a hospital bill computed pursuant to a diagnosis related group (DRG) as required by N.J.A.C. 8:31B-5.1. The trial judge ruled that the insurance company is required to pay the full hospital bill so computed and awarded counsel fees pursuant to R. 4:42-9(a)(6). The insurance company appeals, and we affirm.

Plaintiff Alice Russell (plaintiff) is insured for PIP benefits under an insurance policy issued by defendant Rutgers Casualty Insurance Company (Rutgers). On April 23, 1986 plaintiff sustained personal injuries in an automobile accident as a result of which medical and hospital expenses were incurred. All of those expenses have now been paid except for the total hospital bill, which has been only partially paid.*fn1

Plaintiff was admitted to Kennedy Memorial Hospital on April 23, 1986 and was discharged on April 27, 1986. The total hospital bill was $5,556.27, of which Rutgers paid $1,936.90 leaving a balance of $3,619.37.*fn2 The DRG assigned to plaintiff's case was 468 which corresponded with the rate that appeared on her bill. The amount paid by Rutgers represents the total charges for plaintiff's room and hospital services as itemized on the final bill, notwithstanding that the bill set forth a DRG amount due of $5,556.27.

Rutgers contends that an insurance carrier obliged to pay for hospital expenses under its PIP coverage is only obliged to pay the itemized charge for those expenses and not the DRG amount due. The trial judge disagreed, and so do we.

The Health Care Facilities Planning Act was enacted in 1971 "to provide for the protection and promotion of the health of the inhabitants of the State, promote the financial solvency of hospitals and similar health care facilities and contain the rising cost of health care services." See N.J.S.A. 26:2H-1 for the declaration of policy. The State Department of Health was designated as the sole agency for comprehensive health planning under the "National Health Planning and Resources Development Act of 1974 (Federal Law 93-641)," 42 U.S.C.A. ยง 300k et seq. Among the powers given to the Commissioner of the New Jersey Department of Health was to adopt and amend rules and regulations in accordance with the Administrative Procedure Act (N.J.S.A. 52:14B-1 et seq.) with the approval of a health care administration board. N.J.S.A. 26:2H-5b. Pursuant to that authority the Commissioner adopted diagnostic related groups, N.J.A.C. 8:31B-5.1 et seq., which represent categories of hospital in-patients with similar clinical characteristics who can be expected to consume similar amounts of hospital resources. The assignment of a patient to a DRG requires the following information:

1. Principal diagnosis;

2. Secondary diagnosis;

3. Principal and other procedures;

4. Age;

5. ...


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