No-Fault medical claims are generally paid in accordance with the New York Worker's Compensation Fee Schedule. See Ins. Law §5108; 11 NYCRR 68.1. In the addition to the general Fee Schedule, there are separate Fee Schedules for chiropractors, podiatrists, dentists and psychologists. "If a fee schedule has been adopted for a licensed health provider, the fee for services provided shall be the fee adopted or established for that licensed health provider …" 11 NYCRR 68.1(b)(3).

With respect to acupuncture services, the New York State Department of Insurance (the predecessor to the current Department of Financial Services, or DFS) opined: "Medically necessary acupuncture services that are rendered by a New York licensed acupuncturist are covered expenses eligible for reimbursement under No-Fault pursuant to Section 5102(a)(1) of the Insurance Law." Ops Gen Counsel NY Ins. Dept. No. 04-01-01. While both the general Fee Schedule and the Chiropractic Fee Schedule currently in effect for no-fault claims contain reimbursement codes for acupuncture services performed by medical doctors and chiropractors certified to perform acupuncture, there is no fee schedule specifically applicable to licensed acupuncturists. The No-Fault Regulations provide, in relevant part, that if the Superintendent of Insurance (now DFS) "has not adopted or established a fee schedule applicable to the provider, then the permissible charge for such service shall be the prevailing fee in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent." 11 NYCRR 68.5(b).

In Great Wall Acupuncture v. GEICO Gen. Ins. Co., 16 Misc.3d 23 (App Term 2d, 11th & 13th Jud. Dists. 2007), the plaintiff, a licensed acupuncturist, billed for its services at the rate of $90 per session, which it claimed was within the range of the prevailing fees in the geographical area, pursuant to §68.5(b) of the No-Fault Regulations. The defendant insurer partially paid the claim at a reduced rate of $29.30 per session, which it argued was consistent with the reimbursable rate payable to licensed chiropractors. In support of its defense, the defendant cited the Department of Insurance General Counsel opinion (Ops Gen Counsel NY Ins. Dept. No. 04-10-03), which states:

While a licensed acupuncturist may bill a No-Fault insurer for services rendered at a fee based upon the prevailing rate charged by other licensed acupuncturists in the same geographic area, such billed fees may be reduced by insurers to those fees established in existing fee schedules for similar procedures reimbursable at fee rates in existing fee schedules, pursuant to section 68.5(b) in Department Regulation 83 … Under Section 68.5(b), were a No-Fault insurer to review and equate services provided by a licensed acupuncturist as similar to acupuncture services provided by doctors or chiropractors, and such rate is less than the prevailing regional fee rate, it would be consistent with the regulation for an insurer to limit the reimbursable fee for necessary services provided by a licensed acupuncturist to the rates established for doctors and chiropractors performing a similar service.

The court agreed with the defendant insurer and noted, "based upon a comparison of the training and experience of licensed acupuncturists, physicians and chiropractors who perform acupuncture services, it [the insurer] was reducing the fee for the acupuncture services provided by plaintiff to the rates already adopted or established for chiropractors performing a similar service, in accordance with the provisions of 11 NYCRR 68.5 (b). We note that even though the fee schedules for acupuncture services performed by chiropractors are lower than the fee schedules for such services performed by physicians, the Department of Insurance did not give any guidance as to which particular fee schedule should be applied to a licensed acupuncturist in any particular instance, although the Department was aware of this differential."

Since this decision, most every court and no-fault arbitrator has followed the rationale of Great Wall and held that reimbursement for acupuncture performed by a licensed acupuncturist is at the chiropractic rate. In fact, in a 2013 decision from the Civil Court, Kings County, the court, in a petition to vacate an arbitration award that awarded a licensed acupuncturist at the higher medical doctor rate, rather than at the lower chiropractic rate, held that Great Wall was "well settled law," vacated the award and directed that the arbitrator calculate fees in accordance with the chiropractic fee schedule. Allstate Ins. Co. v. Natural Healing Acupuncture, P.C., 975 N.Y.S.2d 364 (NY Civ. Ct., Kings Cty. 2013); see also Jing Luo Acupuncture, P.C. v. NY City Transit Authority, 60 Misc.3d 136(A) (App. Term 2d Dept. 2018) ("We have held, as a matter of law, that the workers' compensation fee schedule for acupuncture services performed by chiropractors is the appropriate fee schedule for insurers to use to determine the amount which a licensed acupuncturist is entitled to receive for acupuncture services (see Great Wall Acupuncture, P.C. v. Geico Ins. Co …"); Charles Deng Acupuncture, P.C. v. State Farm Mutual Automobile Ins. Co., 64 Misc.3d 131(A) (App. Term 2d Dept. 2019); Akita Medical Acupuncture, P.C. v. Clarendon Ins. Co., 41 Misc.3d 134 (App. Term 1st Dept. 2013).

A recent decision from the First Department appears to challenge this long-standing, "well settled law" that reimbursement to licensed acupuncturists be at the lower chiropractic rate. In Global Liberty Ins. Co. of N.Y. v. Acupuncture Now, P.C., 178 A.D.3d 512 1st Dept. 2019), the insurer sought a judicial declaration that the licensed acupuncturist is entitled to payment, if at all, only at the lower chiropractic rate, and further sought to enjoin the acupuncturist from claiming payment in any arbitration or litigation at the higher physician rate. In support of its motion for summary judgment, the insurer cited, inter alia, the Insurance Department opinion letter and case law discussed above and argued that as a matter of law, it was entitled to its declaration. The lower court denied the motion and the Appellate Division affirmed, holding:

Plaintiffs [the insurer] did not proffer admissible evidence sufficient to make a prima facie showing of entitlement to judgment on the issue as a matter of law … Plaintiffs rely on a 2004 informal opinion letter of the former Insurance Department, but that letter did not resolve the issue. It allows insurers to pay "the rates established for doctors and chiropractors," instead of a higher "prevailing fee in the geographic location of the provider," so long as there is a review "for consistency with [the] charges permissible for similar procedures" under either fee schedule (Ops Gen Counsel NY Ins. Dept. No. 04-10-03; see 11 NYCRR 68.5 [b]). The opinion letter "did not give any guidance as to which particular fee schedule should be applied to a licensed acupuncturist in any particular instance, although the Department was aware" that "the fee schedules for acupuncture services performed by chiropractors are lower than the fee schedules for such services performed by physicians" (Great Wall Acupuncture v. GEICO Gen. Ins. Co. … While courts have held that "an insurer may use the workers' compensation fee schedule for acupuncture services performed by chiropractors to determine the amount which a licensed acupuncturist is entitled to receive" (Great Wall Acupuncture, P.C. v. Geico Ins. Co., 26 Misc.3d 23, 24 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009] [emphasis added]; see also Akita Med. Acupuncture, P.C. v. Clarendon Ins. Co. … such holdings do not foreclose the use of the physician fee schedule in all cases … Further, plaintiffs did not "proffer sufficient evidence to establish as a matter of law that the claims were improperly billed or were in excess of the amount permitted by the fee schedule"

Thus, notwithstanding Great Wall and its progeny, it may not necessarily be "well settled law" that a licensed acupuncturist is limited to reimbursement under the chiropractic fee schedule. In a footnote, the court in Global Liberty Ins. Co. of N.Y. v. Acupuncture Now called on the Superintendent of Insurance to consider adopting a fee schedule for licensed acupuncturists. That, in fact, has been done, and the new Fee Schedule, which specifically addresses licensed acupuncturists, will take effect for No-Fault cases in October 2020.

Cupping and the '8-Unit Rule'

The recent Civil Court decision in Ancient & Modern Acupuncture, P.C. v. MVAIC, 66 Misc.3d 1207(A) (NY City Civ. Ct., NY Cty. 2020), provides review of another attempt to apply the Chiropractic Fee Schedule to licensed acupuncturists. In that case, the licensed acupuncturist performed and billed for cupping, the therapeutic technique in which small cups are placed on the skin to create suction. The patient also presumably received treatment from a chiropractor the same days she received acupuncture treatment. The defendant applied Ground Rule 3 of the physical medicine section of the Chiropractic Fee Schedule, also known as the "8-Unit Rule," to limit the reimbursement to the medical provider.

Ground Rule 3 provides: "When multiple physical medicine procedures and/or modalities are performed on the same day, reimbursement is limited to 8.0 RVUs (relative value units) or the amount billed, whichever is less." The ground rule lists 22 physical medicine billing codes (for services performed by chiropractors) that are subject to this ground rule. Those codes include an unlisted therapeutic procedure that was used to bill for the cupping services in Ancient & Modern Acupuncture.

The issue before the court was "whether defendant's reductions based on the 8-Unit Rule of the Chiropractic Workers' Compensation Fee schedule were properly applied to the cupping services performed by a licensed acupuncturist." The court held the 8-Unit Rule was not properly applied. The rationale was as follows:

While carriers are permitted to refer to the chiropractic fee schedule for the rates of reimbursement for licensed acupuncturists (Great Wall Acupuncture v. GEICO General Insurance Company 16 Misc.3d 23), the Appellate Division, First Department has held that " …. such holdings do not foreclose the use of the physician fee schedule in all cases (Global Liberty Insurance Co. Of New York v. North Shore Family Chiropractic, PC, 2019 NY Slip Op. 08942).

There is no authority or case law that authorizes carriers to apply the ground rules of the Chiropractic Fee Schedule to licensed acupuncturists.

The purpose of the Ground Rule would appear to be to limit the number of the same type of procedures that are reimbursable to a patient on the same day. This rationale would not therefore limit the patient's rights to receive acupuncture treatment on the same day the patient receives chiropractic treatment. Acupuncture has been recognized as a separate and distinct modality from chiropractic treatment (Universal Acupuncture Pain Services, P.C. v. Lumbermens Mutual Casualty Co. 195 Misc.2d 352).

The authority allowing for the chiropractic fee schedule to be used exists because the superintendent has not adopted a fee schedule applicable to licensed acupuncturists, not because the services performed by the professional is the same or overlap.

Thus, the court distinguished the permissive application of the chiropractic rate for licensed acupuncturists from the application of the Chiropractic Fee Schedule's 8-Unit Rule, and recognized that as chiropractic and acupuncture are separate and distinct forms of treatment, the performance and billing for chiropractic treatment would not preclude billing for the treatment performed by the licensed acupuncturist.

Regulation That Overturned the Preclusion Rule

Historically, appellate courts have consistently held that a fee schedule defense is precluded if not raised in a timely denial. See, e.g., Westchester Med. Ctr. v. American Tr. Ins. Co., 17 A.D.3d 581 (2d Dept. 2005); P.L.P. Acupuncture, P.C. v. Travelers Indem. Co., 19 Misc.3d 126(A) (App. Term 1st Dept. 2008) ("Nor may defendants now assert a defense of excessive fees, inasmuch as they failed to establish the issuance of timely denials of the claims"). Likewise, the defense that the billed-for services were not rendered has also been determined to be subject to the preclusion rule. See Fair Price Med. Supply Corp. v. Travelers Indem. Co., 10 N.Y.3d 556 (2008).

Then, in 2013, the DFS enacted §65-3.8(g)(1) of the No-Fault Regulations (11 NYCRR 65-3.8(g)(1)), which provides:

(g) (1) Proof of the fact and amount of loss sustained pursuant to Insurance Law section 5106(a) shall not be deemed supplied by an applicant to an insurer and no payment shall be due for such claimed medical services under any circumstances:

(i) when the claimed medical services were not provided to an injured party; or

(ii) for those claimed medical services fees that exceed the charges permissible pursuant to Insurance Law sections 5108(a) and (b) and the regulations promulgated thereunder for services rendered by medical providers.

Clearly, the purpose of this regulation was to permit insurers to raise the fee schedule and services-not-performed defenses even in those instances where the insurers did not raise these defenses in timely denials. The DFS accomplished this goal by administratively overturning the preclusion rule for those defenses.

Recently, in the matter of MUA Chiropractic Healthcare, PLLC v. State Farm Mut. Auto. Ins. Co., 2019 NY Slip Op 29375 (Dist. Ct. of Suff. Cty. 2019), the court had occasion to decide on a constitutional challenge to this regulation. In that case the insurer failed to timely deny the plaintiff's claim, but, relying on §65-3.8(g)(1)(ii), nevertheless raised a fee schedule defense in its motion for summary judgment and in opposition to the plaintiff's cross-motion. The plaintiff challenged the constitutionality of that section as being inconsistent with the express dictates of the New York Insurance Law and therefore, violative of Article 3, §1 of the New York Constitution.

Article 3, §1 of the New York Constitution vests legislative power in the Senate and Assembly. Insurance Law 5106(a) provides: "Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid within thirty days after such proof is supplied."

The court in MUA Chiropractic Healthcare held:

This Legislative statute establishes the legal doctrine that defenses to claims not raised within 30 days after receipt of a no fault claim are precluded. The preclusion rule has been consistently recognized and enforced by the Court of Appeals … In 2013 the NYS Insurance Commissioner, under his rule making power, promulgated regulation 65-3.8 which purports to remove fee schedule defenses from the statutory "preclusion doctrine". An administrative agency's rule making power is limited and may not circumvent or be contrary to the legislature's determination. See NYS Const. Art. 3, Sec 1, Nicholas v. Kahn, 47 NY2d 24 (NY1979). Such inconsistent regulations are "pre-empted" by statutory dictate. See gen., Boreali v. Axelrod, 71 NY2d 1 (NY1987). Removing the fee schedule defense from the statutory preclusion rule via regulation is an unconstitutional overreach, and shall be disregarded by this Court as being invalid and in contravention of the historical statutory thirty-day time period given to defendants to pay or deny claims (or be subject to preclusion).

In other words, as the court determined that the preclusion rule was legislated and part of the statute (Ins. Law 5106), under the separation-of-powers doctrine, only the legislature could reverse or otherwise modify the rule in its statute. Therefore, the DFS, an executive branch agency, did not have the authority to administratively override the legislative statute with its regulation.

David M. Barshay is a member of Sanders Barshay Grossman in Garden City. Steven J. Neuwirth, a member of the firm, assisted in the preparation of this article.