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Monmouth Medical Center v. State Farm Indemnity Co.

Superior Court of New Jersey, Appellate Division

August 12, 2019

MONMOUTH MEDICAL CENTER, a/s/o MICHAEL ANNUCCI, Plaintiff-Respondent,
v.
STATE FARM INDEMNITY COMPANY, Defendant-Appellant. SAINT BARNABAS MEDICAL CENTER, a/s/o PAUL HAM, Plaintiff-Respondent,
v.
STATE FARM INDEMNITY COMPANY, Defendant-Appellant.

          Submitted December 17, 2018

          On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket Nos. L-2482-17 and L-0126-18.

          Gregory P. Helfrich & Associates, attorneys for appellant (Alison Leonard Schlein, on the briefs).

          Celentano Stadtmauer & Walentowicz LLP, attorneys for respondent Monmouth Medical Center (Steven Stadtmauer and Megan Elizabeth Verbos, on the brief).

          Celentano Stadtmauer & Walentowicz LLP, attorneys for respondent Saint Barnabas Medical Center (Kristen Ottomanelli, on the brief).

          Before Judges Messano, Gooden Brown and Rose.

          OPINION

          GOODEN BROWN, J.A.D.

         In these back-to-back appeals, which we consolidate for the purpose of issuing a single opinion, defendant State Farm Indemnity Company (State Farm) seeks our review of two Law Division orders that vacated decisions rendered by a dispute resolution professional (DRP) pursuant to the Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -30. Because N.J.S.A. 2A:23A-18(b) bars any "further appeal or review" of such trial court orders, we dismiss the appeals.

         In A-3004-17, the record reveals that Michael Annucci was injured in an automobile accident on June 21, 2013. As a result of the injuries sustained in the accident, on April 30, 2015, Annucci received out-patient hospital services, including surgical and ancillary support services, from Monmouth Medical Center (Monmouth). Following Annucci's discharge, Monmouth billed State Farm, Annucci's no-fault insurance carrier, for its services in the total amount of $21, 403.80. On the bill, Monmouth separately itemized its charges, line-byline, in accordance with the Medicare Claims Processing Manual.[1] Thus, Monmouth separately billed for the surgical services and the ancillary services, consisting of anesthesia, recovery room services, supplies, and drugs provided to Annucci.

         State Farm approved payment in the amount of $5707.80, representing Monmouth's line item charges for the surgical services only. In two separate Explanation of Benefits (EOB) statements, State Farm explained that it processed the bill in accordance with the New Jersey Hospital Outpatient Surgical Facility (HOSF) fee schedule, the Consumer Health Network (CHN) Preferred Provider Organization (PPO) contract, and the New Jersey medical fee schedule. According to State Farm, the ancillary services that were separately itemized on Monmouth's bill were integral to the surgical procedure, were bundled into the HOSF fee schedule facility rate, and were not permitted to be reimbursed separately in an HOSF setting.

         After Monmouth's internal appeal of the underpayment was rejected by State Farm, Monmouth demanded arbitration pursuant to the APDRA.[2]Following a hearing, on August 14, 2017, the assigned DRP issued an award denying Monmouth's claims. The DRP found that Monmouth was "not entitled to any further . . . medical expense benefits" and State Farm properly excluded the ancillary services billed separately by Monmouth. In the decision, relying on the regulations promulgated by the Department of Banking and Insurance (DOBI), the DRP initially acknowledged that it was "uncontroverted" that the unpaid ancillary services were, in fact, included in the list of covered services authorized in N.J.A.C. 11:3-29.5(a). Further, the DRP found "it noteworthy" that "the aggregate of the charges invoiced by [Monmouth did] not exceed the HOSF fee schedule rate assigned to the [applicable] primary procedure codes."

         However, according to the DRP, under N.J.A.C. 11:3-29.5(b), [3] the HOSF fee encompassed all the covered services, including the ancillary services, reimbursable for outpatient procedures "provided in [an] HOSF setting." Because N.J.A.C. 11:3-29.5(b) "precluded" reimbursement for separately billed "ancillary services provided in support of the primary surgical procedures[, ]" it "operate[d] as a regulatory preclusion" to any other billing methodology. Acknowledging the "conflict . . . between the preclusionary provisions" of N.J.A.C. 11:3-29.5(b) and "the Medicare billing requirements cited by [Monmouth, ]" the DRP explained that "DOBI [was] presumed to be aware of such Medicare billing requirements" and "could have permitted the invoicing of ancillary services in such instances." However, in the absence of "an appropriate exemption . . . inserted into N.J.A.C. 11:3-29.5(b) to permit the billing practices employed by [Monmouth]," the DRP concluded that "State regulations [took] precedence over the Medicare regulations."

         After Monmouth's application to the DRP for modification of the award was denied, Monmouth filed a verified complaint and order to show cause pursuant to N.J.S.A. 2A:23A-13(a) and Rule 4:67-1(a), seeking to vacate the award on the ground that the DRP violated N.J.S.A. 2A:23A-13(c)(3) and (c)(5). Specifically, in the complaint, Monmouth alleged the DRP "commit[ed] prejudicial errors when he imperfectly executed his power and erroneously applied law to the issues and facts presented." Monmouth sought a modified award, entering judgment against State Farm for $12, 535.02, together with attorneys' fees and costs.

         Following oral argument, on February 5, 2018, Judge David H. Ironson issued an order, vacating the arbitration award and entering a modified award in favor of Monmouth in the amount of $14, 107.23. The judge then confirmed the modified award in accordance with ...


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