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An appellate court in New Jersey has issued a decision that limits the personal injury protection (“PIP”) payments auto insurers must make to ambulatory surgical centers.

The Case

Claire Fiore's lower back was injured in a May 2014 accident involving an automobile. In November 2015, Ms. Fiore underwent a lumbar discectomy at the ambulatory surgical center (“ASC”) operated by Specialty Surgical Center of North Brunswick.

Following the procedure, Specialty Surgical sought $32,500 in reimbursement from Ms. Fiore's automobile insurer, New Jersey Manufacturers Insurance Company (“NJM”). Specialty Surgical sought reimbursement under Current Procedural Terminology (“CPT”) code 63030.

NJM, however, denied payment, asserting that “the CPT code charged by the facility – 63030 – had no reimbursement value for the ASC” on the personal injury protection (“PIP) fee schedule promulgated by the New Jersey Department of Banking and Insurance (the “Department's Fee Schedule”).

An arbitration panel found against NJM and an appellate panel affirmed an award of $25,500 in favor of Specialty Surgical.

NJM went to court, seeking to vacate the arbitration award on the ground that it resulted “from an erroneous and prejudicial application of the law to the facts.”

The trial court vacated the award, holding that Specialty Surgical “shall receive no reimbursement, of any kind[,] in connection with [ASC] fees for CPT code 63030” for the surgical procedure it performed on Ms. Fiore.

Specialty Surgical appealed. It argued that, on January 1, 2015, the Federal Center for Medicare and Medicaid Services (“CMS”) revised its approved procedures list and that among the newly-added procedures reimbursable to ASCs was CPT code 63030 – “lower back disk surgery.” Specialty Surgery contended that the Department's Fee Schedule should be interpreted in accordance with the CMS claims manual in effect on the date of Ms. Fiore's operation.

The Appellate Court's Decision

The appellate court affirmed.

The appellate court reasoned that ASCs should not receive reimbursement for CPT code 63030 procedures because the New Jersey Department of Banking and Insurance did not list any reimbursement in the ASC columns in the Department's Fee Schedule as it was originally proposed by the Department, but it only provided for reimbursement to physicians only. The omission of reimbursement to ASCs, the appellate court found, provided a “clear indication” of the Department's intent not to reimburse ASCs for CPT code 63030 procedures. (Although when proposed originally CPT code 63030 provided for reimbursement to doctors but not to ASCs, the Department subsequently removed code 63030 from the Department's Fee Schedule for doctors.)

The appellate court added that the fact that the CMS claims manual included the CPT code did “not result in the automatic amendment of the Fee Schedule.”

The appellate court concluded that it was the Department, not CMS, that amended the Department's Fee Schedule.

The case is New Jersey Manufacturers Ins. Co. v. Specialty Surgical Center of North Brunswick, Nos. A-0319-17T1, A-0388-17T1 (N.J. App. Div. Jan. 29, 2019). Attorneys involved include: Keith J. Roberts and Richard B. Robins argued the cause for appellant Specialty Surgical Center of North Brunswick (Brach Eichler, LLC, attorneys; Keith J. Roberts, of counsel and on the briefs; Richard B. Robins, on the briefs). Joseph A. Massood argued the cause for appellant Surgicare Surgical Associates of Fairlawn (Massood Law Group, LLC, attorneys; Joseph A. Massood, of counsel and on the briefs; Tara M. McCluskey, on the briefs). Gregory E. Peterson argued the cause for respondent (Dyer & Peterson, PC, attorneys; Gregory E. Peterson, on the brief). Susan Stryker argued the cause for amicus curiae Insurance Council of New Jersey and the Property Casualty Insurers Association of America (Bressler, Amery & Ross, PC, attorneys; Susan Stryker, of counsel and on the briefs; Michael J. Morris, on the briefs).

Steven A. Meyerowitz, Esq., is the Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the Founder and President of Meyerowitz Communications Inc. As FC&S Legal Director, Mr. Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Mr. Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.