On appeal from Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-193-09.
The opinion of the court was delivered by: Parrillo, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 14, 2010
Before Judges Parrillo, Yannotti and Espinosa.
At issue is whether, pursuant to the Uniform Declaratory Act, N.J.S.A. 2A:16-50 to -62, a private passenger automobile insurer providing personal injury protection (PIP) coverage may seek expansive discovery from assignee health service providers in its internal investigation of suspected insurance fraud. Relying on the PIP statute's discovery provision, N.J.S.A. 39:6A-13(g), and the cooperation clause of the insurance policies under which benefits were being sought, the trial court declined to dismiss the insurer's complaint and instead compelled the health service providers to disclose extensive information verifying their compliance with governing statutes and regulations and hence their eligibility for No Fault benefits as assignees of plaintiffs' insureds. Defendants appeal and we reverse.
Plaintiffs are Selective Insurance Company of America and several related entities (collectively Selective or plaintiff) that are licensed to write private passenger automobile insurance policies in New Jersey containing PIP coverage. Defendants are medical providers*fn1 that have submitted claims to plaintiff for payment of PIP benefits for healthcare services purportedly performed for plaintiff's insureds involved in motor vehicle accidents. Selective's insureds had executed Assignment of Benefits clauses giving defendants the contractual right to seek PIP reimbursement directly from Selective for the health care services rendered to the assignors-insureds. Consequently, defendants directly bill Selective and, if Selective agrees to defendants' billings, the matter is resolved with a business-to-business payment. If not, defendants may demand PIP arbitration pursuant to N.J.S.A. 39:6A-5.1(a), which provides:
Any dispute regarding the recovery of medical expense benefits or other benefits provided under personal injury protection coverage pursuant to [N.J.S.A. 39:6A-4] [N.J.S.A. 39:6A-3.1] or [N.J.S.A. 39:6A-3.3] arising out of the operation, ownership maintenance or use of an automobile may be submitted to dispute resolution on the initiative of any party to the dispute, as hereinafter provided. [N.J.S.A. 39:6A-5.1(a).]
According to Selective, having discovered common ownership and interlocking management among several of the defendant entities,*fn2 plaintiff also "observed a systematic and common treatment pattern among those of its insureds who [are] treated at the defendant medical providers." As illustrative of what it detected to be a pattern of referrals among defendant entities, Selective cited the experiences of three such patients. One of plaintiff's insureds, for example, had a consultation for pain management with Dr. Roman Kosiborod at Hudson East, and was then treated for spinal injections the next day at Essex Surgery by Dr. Kosiborod. Another of Selective's insureds had multiple consultations and treatments with the defendant entities. The patient had a pain management consultation at Essex Pain on September 14, 2005, which Dr. Lipsky claimed to perform in a subsequent letter to Selective. Dr. Lipsky's letter stated that he was referring the insured to Essex Surgery for spinal injections. However, the consultation was later billed by Dr. David Abend, at a different entity, Essex Surgery, instead of Dr. Lipsky. Dr. Lipsky later billed for the spinal injections referenced in his letter, at Essex Surgery.
Selective also perceived discrepancies in the underlying medical documentation. The Health Insurance Claim Form (HICF) includes a section for the physician to include either an Employer Identification Number (EIN) or Taxpayer Identification Number (TIN). On several of the forms, multiple providers, including Dr. Abend, Dr. Lipsky, and Dr. Kosiborod, billed Selective for Essex Surgery under their individual names but using the same EIN.
According to Selective, this billing practice, as well as the treatment patterns observed, raised questions concerning the inter-relationship among defendant medical providers and possible unlawful physician self-referrals to medical facilities in which the referring provider has a significant beneficial interest. See N.J.S.A. 45:9-22.5(a) (the Codey Law) ("A practitioner shall not . . . refer a patient to a health care service in which the practitioner, or the practitioner's immediate family, or the practitioner in combination with practitioner's immediate family has a significant beneficial interest. . . .")
Prompted by this suspicion, Selective requested additional, wide-ranging information from defendants about their corporate structure and ownership, and the identities of their employees. Specifically, Selective sought materials related to:
(1) ownership of defendant facilities;
(2) compliance with the Department of Health and Senior Services (DHSS) and Board of Medical Examiners (BME) regulations, requiring disclosure of the surgery center's medical director;
(3) identities and credentials of persons performing services at the facilities, including employees and independent contractors; and
(4) identities of any companies providing billing or management services to the defendants.
Plaintiff asserted that this information was necessary to evaluate whether defendants had complied with statutory and regulatory provisions regarding "self-referral and ...