United States District Court, D. New Jersey
HONORABLE TONIANNE J. BONGIOVANNI UNITED STATES MAGISTRATE
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
BACKGROUND AND PROCEDURAL HISTORY
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).
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).
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)).
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 ¶¶
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
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
(Amended Complaint, Ex. G at 1-2).
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)).
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)).
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).
THE PARTIES' ARGUMENTS
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. ...