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Neurosurgical Associates of NJ, P.C. v. Aetna Insurance Co.

United States District Court, D. New Jersey

August 1, 2017




         This matter has been opened to the Court upon motion by Plaintiff Neurosurgical Associates of NJ, P.C. (“NANJ”) seeking an Order compelling discovery from Defendant Aetna Insurance Company (“Aetna”). [Docket Entry No. 39]. Aetna opposes NANJ's motion to compel. The Court has fully reviewed all arguments raised in support of and in opposition to NANJ's motion and considers same without oral argument pursuant to L.Civ.R. 78.1(b). For the reasons that follow, NANJ's' motion to compel is GRANTED in part.


         On June 17, 2014, NANJ filed this case asserting a claim for benefits under a plan governed by ERISA, 29 U.S.C. § 1132(a)(1)(B), and that Aetna failed to provide it with a full and fair review under ERISA, 29 U.S.C. § 1132(a)(3) and 1133. NANJ's claims arise from services provided by Dr. Jonathan Lustgarten, M.D.F.A.C.S. and Dr. Ty J. Olson, M.D.F.A.C.S., both of whom were employed by NANJ, to M.M. on February 21, 2012 at Monmouth Medical Center. Specifically, Dr. Lustgarten, who was assisted by Dr. Olson, performed a craniectomy on M.M. Based on the neurological services rendered to M.M., on May 3, 2012, NANJ filed a claim with Aetna seeking payment totaling $122, 714.00 (the “M.M. claim”). (See NANJ Br. at 3 (citing Amended Complaint ¶ 26); Docket Entry No. 39-1).

         NANJ's physicians are “non-participating” / “out-of-network” providers of service under the terms of the health insurance policies issued and maintained by Aetna. Therefore, they are not “obligated to accept a pre-determined contract rate from Aetna” (Id. (citing Amended Complaint ¶ 2)), but “can charge any amount for their services.” (Aetna Opp. Br. at 4 (citing Baker Cert., Ex. A at AETNA0052); Docket Entry No. 40). According to M.M.'s 2011 “Benefits Summary, ” out-of-network providers, such as NANJ, will be paid for services “less than or equal to the Aetna recognized charge[, ]” which is the lower of either the out-of-network's normal charge or the charge Aetna “determines to be appropriate based on factors such as the cost of providing the same or similar service or supply and the manner in which charges for the service or supply are made, billed or coded.” (Id.) For outpatient surgical services, M.M.'s plan with Aetna provided for 50% coinsurance. (Id. at AETNA0063).

         On June 6, 2012, Aetna sent an “Explanation of Benefits” (“EOB”) to NANJ regarding the M.M. claim. (See NANJ Br. at 3 (citing Amended Complaint ¶ 29)). As detailed in the EOB, Aetna paid $692.69 in connection with the services provided by Dr. Lustgarten to M.M. and $180.36 in connection with Dr. Olson's services. (Id. (citing Amended Complaint ¶¶ 30-31)). The EOBs indicated that with respect to the services rendered by Dr. Lustgarten, AETNA paid “50% of the reasonable and customary rate due to multiple procedures performed on the same date of service” and that certain charges for the services provided exceeded the “recognized charges . . . for the same service.” (Id. at 4 (citing Amended Complaint ¶¶ 32-33)). Further, with respect to the services provided by Dr. Olson, the EOBs indicated that “the charge for the assistant surgeon, co-surgeon, or surgical team is not covered under the member's plan” and that “[t]he covered medical expense is based on . . . recognized charge . . . as well as an adjustment of procedure codes or application of multiple procedure percentage allowances.” (Id. (citing Amended Complaint ¶¶ 34-35)).

         After receiving the EOBs, NANJ states that it contacted Aetna via telephone on June 18, 2012 to file an initial administrative appeal and was informed on July 9, 2012 that this initial administrative appeal was denied. (Id. at 5 (citing Amended Complaint ¶¶ 36-37)). NANJ maintains that it wrote Aetna on August 30, 2012 to inform Aetna that its initial denial was made without a formal letter and to request that Aetna provide certain information in support of its denial of NANJ's initial appeal. (Id. citing (Amended Complaint ¶ 38)). Specifically, NANJ maintains that in the August 30, 2012 letter, it informed Aetna that it had had a previous verbal communication with Aetna's Medical Director in which NANJ confirmed that its claims regarding the services provided to M.M. “had been denied due to Aetna's determination that the services rendered by Drs. Lustgarten and Olson were not incurred due to a ‘medical necessity.'” (Id. (citing Amended Complaint ¶ 39)). NANJ says that in the August 30, 2012 letter, it also disputed Aetna's claim that the services provided to M.M. were medically necessary, noting that if that were true Aetna would not have made any payment regarding its claim. (Id. citing Amended Complaint ¶ 40)). NANJ also advised Aetna of certain mistakes Aetna made when processing the claims made with regard to Dr. Lustgarten, informed Aetna that it failed to consider all information provided by NANJ and asked that its claim for services provided to M.M. be set for a secondary appeal. (Id. (citing Amended Complaint ¶¶ 41-42)).

         In correspondence dated September 27, 2012, Aetna denied NANJ's initial appeal, asserting that “allowances are based on the Aetna Market Fee Schedule (AMFS).” (Id. at 5-6 (citing Amended Complaint ¶ 43)). Further, in a letter dated October 2, 2012, Aetna notified NANJ that it was in the process of completing its secondary appeal, and that the payments for the M.M. claim “were based on Reasonable and Customary (R&C).” (Id. at 6 (citing Amended Complaint ¶ 45)). NANJ, however, maintains that, contrary to what was represented in the October 2, 2012 letter, during a telephone call on October 16, 2012, Aetna advised NANJ that “the M.M. Claim was paid at the ‘correct Aetna market fee[.]'” (Id. (citing Amended Complaint ¶ 45)).

         On November 8, 2012, Aetna reaffirmed the denial of NANJ's claims submitted in connection with the craniectomy performed on M.M., denying NANJ's secondary appeal. (Id. (citing Amended Complaint ¶ 46)). In the November 8, 2012 letter, Aetna informed NANJ:

We have performed a full and final investigation of the above listed claim(s) . . . Based on our review of all available information, including our policy concerning payment to nonparticipating providers, your written request and claim form, and any additional information you have submitted, we are not modifying our prior determination.
To determine the payment amount when a provider does not participate with Aetna and the plan does not define the applicable allowed amount, our responsibility is to pay a fair amount for your services.
Our nonparticipating fee schedule was developed using the industry standard of the Centers for Medicare and Medicaid Services (CMS) Resources Based Relative Value Scale (RBRVS) (the “Medicare allowable amount”), plus a premium, to provide a fair level of reimbursement for nonparticipating providers and still protect our members and plan sponsors from incurring unpredictable medical expenses. We chose a RBRVS payment methodology because it is based on the resource costs (physician work, practice expense and professional liability insurance) required to perform each service.

(Amended Complaint, Ex. G at 1-2).

         On November 16, 2012, NANJ responded to Aetna's November 8, 2012 correspondence, challenging Aetna's determinations with respect to the M.M. claim. In same, NANJ noted that Aetna's November 8, 2012 letter, which indicated that the M.M. claim was processed using the CMS RBRVS contradicted Aetna's October 2, 2012 correspondence, which indicated that payment was based on Reasonable and Customary R&C. (NANJ Br. at 7 (citing Amended Complaint ¶ 48)).

         Given the outcome of its secondary appeal and the reasoning behind it, NANJ requested an external review regarding claims associated with Dr. Olson's provision of services to M.M. (Id. (citing Amended Complaint ¶ 49). MCMC conducted same. “On June 27, 2013, MCMC issued a Decision Notification with regard to the external review of Dr. Olson's claim” in which “Aetna's denial of claims for services rendered by Dr. Olson on behalf of M.M.” was upheld. (Id. (citing Amended Complaint ¶ 50)).

         In light of the “seemingly contradictory explanations” Aetna has provided with respect to the denial of NANJ's claims for the services provided to M.M., NANJ filed the instant motion to compel, seeking discovery outside of the administrative record. (Id. at 7). NANJ contends that additional discovery is warranted “based upon Aetna's arbitrary and inconsistent denial of the subject claim.” (Id. at 8).



         While NANJ recognizes that in cases such as this, which are governed by ERISA, discovery is generally limited to the administrative record, it notes that discovery will nevertheless be expanded beyond the administrative record where there is evidence of procedural irregularities, “a conflict of interest, bias, or inconsistent decision making[.]” (Id. at 8 (quoting Delso v. Trustees of Ret. Plan for Hourly Employees of Merck & Co., No. CIV. 04-3009 (AET), 2006 WL 3000199, at *2 (D.N.J. Oct. ...

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