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Allstate Ins. Co. v. Orthopedic Evaluations

May 2, 1997

ALLSTATE INSURANCE CO., PLAINTIFF-RESPONDENT,
v.
ORTHOPEDIC EVALUATIONS, INC., DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Burlington County.

Approved for Publication May 6, 1997.

Before Judges Havey, Brochin and Kestin. The opinion of the court was delivered by Kestin, J.A.D.

The opinion of the court was delivered by: Kestin

The opinion of the court was delivered by

KESTIN, J.A.D.

This appeal presents the question whether a provider's compliance with the regulatory standards of the Board of Medical Examiners for diagnostic centers and medical screening and diagnostic testing services, N.J.A.C. 13:35-2.5, is required in order to qualify particular services for reimbursement under N.J.S.A. 39:6A-2, -4 and -5, provisions of the Automobile Reparation Reform Act (N.J.S.A. 39:6A-1 to -35) (the Act) governing personal injury protection (PIP) coverage. The case began with plaintiff's (Allstate) complaint for a declaratory judgment filed in Burlington County. Defendant (OEI) subsequently filed complaints in several other counties seeking related relief. The latter matters were transferred to Burlington County for consolidation with the declaratory judgment action.

OEI appeals from the trial court's orders disposing of the parties' respective motions for summary judgment as well as OEI's motions for other relief. In granting Allstate's motion seeking favorable Disposition of its claim for declaratory relief, the trial court held that the services rendered by OEI were not eligible for PIP reimbursement because they were furnished by an entity that did not meet the requirements of N.J.A.C. 13:35-2.5(a)3 for a "diagnostic center", or those of N.J.A.C. 13:35-2.5(b) for the medical screening or diagnostic testing performed. In addition to denying OEI's motion for summary judgment, the trial court also denied its motions for transfer of Allstate's cause of action to the Board of Medical Examiners, for transfer of OEI's counterclaim alleging bad faith adjustment of PIP claims to the Department of Insurance, for a preliminary injunction, and for pendente lite mandatory relief requiring payment of the PIP claims which were the subject matters of the consolidated actions.

OEI operates mobile testing services for evaluating orthopedic injuries. It maintains its testing equipment on a truck that is driven to physicians' offices on request. Three types of machines are involved: a dual inclinometer records the range of motion of the spine; an Arcon CX provides data concerning the comparative strengths or weaknesses of muscles in the upper body or cervical area; a B200 offers data for diagnosis of lower back/lumbar injuries. The tests are administered by a staff of exercise physiologists.

In an oral ruling, Judge Sweeney articulated his findings and reasons for granting Allstate's motion for summary judgment and denying OEI's:

I am entirely satisfied from everything that I have read in the filings by OEI that it is, in fact, a medical diagnostic testing service, that it renders reports, that some of its reports even go so far as to recommend various types of medical treatment. I am satisfied that since it is a medical diagnostic testing . . . service which is mobile in nature, that it must comply with NJAC 13:35-2.5(b) which provides . . . that it is a diagnostic testing procedure "conducted primarily for persons not receiving medical treatment from the testing entity." The facts in this case clearly bear that out. The claim has never been made by Allstate, nor is it made by OEI, that these mobile facilities render any type of medical treatment. But it goes on to say, that it "is nevertheless deemed to be a medical service," and, as such, "such a practice shall be owned and under the responsibility of one or more physicians, each of whom holds a plenary license from the State Board of Medical Examiners."

Here, from the testimony of Mr. Brettler, . . . he owns nothing but Mrs. Brettler owns in excess, I believe, of 95 percent of the stock but he acts as the spokesman, the president or whatever it is because in his words she is a woman and she doesn't have the credibility or can't be as assertive as he can and so he, in effect, runs the business. He says that he hired or that they are somehow in partial ownership of this company with Dr. Riviello, a doctor who is in the family practice in Harvey Cedars on Long Beach Island, New Jersey, who allegedly does something a few times a year with respect to personnel and some quality control. He is not, and can't be considered under any definition of the word ownership, in control of or dominion of being over this company. The boss, the person who operates it clearly is Mr. Brettler. I mean, he makes no bones about it, he runs the operation. Dr. Riviello is nothing more than a one percent shareholder for convenience and in an attempt to comply with the provisions of this code. I find as a fact that it does not comply because he does not have dominion and control, cannot make decisions for this company and apparently has not made decisions in the past.

The regulation goes on to say: "All such testing, irrespective of the stationary or mobile nature of the facility, shall be performed under the authority of a designated responsible physician who shall establish a protocol and a quality assurance program for the specific type of screening or study." I've read Dr. Riviello's certification, I am not satisfied by any stretch of the imagination that what he does complies with that provision. These tests are not made under the authority nor, are reports issued under the authority of, or interpreted by, any doctor whatsoever. In my opinion, the people doing the testing, who recommend forms of medical treatment, are practicing medicine in an unauthorized fashion.

The facts of the matter as found by Judge Sweeney are essentially undisputed. Although OEI contends that the trial court erred in granting Allstate's motion for summary judgment because genuine issues of material fact were in dispute, it isolates no such issues. *fn1 It argues, instead, that it is not required to comply with N.J.A.C. 13:35-2.5. This is an issue of law, subsumed in the question now before us. By way of a hedge, OEI also asserts that it "voluntarily complies" with the regulation. In this connection, it offers no reference to factual allegations beyond those found by the trial Judge, leaving us with the responsibility of determining only whether the facts as found by the trial court support the Conclusion it reached in respect of the compliance question. Analysis of the record discloses that the trial Judge faithfully discharged his responsibilities on the cross-motions for summary judgment when he based his Conclusions of law on undisputed facts. Brill v. Guardian Life Ins. Co., 142 N.J. 520, 540, 666 A.2d 146 (1995). He determined that the mode of organization and operation described in OEI's very own submissions did not meet regulatory standards to qualify it as a conforming diagnostic center or other provider of medical screening or diagnostic testing. That legal ruling was unquestionably correct.

The question we now address is whether OEI's lack of compliance with the standards promulgated by the Board of Medical Examiners disqualified the services rendered from eligibility for PIP reimbursement. No issue is raised whether the diagnostic tests performed by OEI categorically qualify for PIP coverage, see Thermographic Diagnostics, Inc. v. Allstate Ins. Co., 125 N.J. 491, 507-14, 593 A.2d 768 (1991), or whether the fees charged were reasonable, see id. at 514-18. The sole issue before us is the eligibility of such services for PIP reimbursement when rendered by OEI. Defendant would have us hold ...


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