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Should Courts Referee No-Fault Referrals? Part 2
By: Damin J. Toell, Esq.

FOR THE DEFENSE

Should Courts Referee No-Fault Referrals?
On the Propriety of Medical Necessity Defenses
Against Certain No-Fault Medical Providers.

PART 2

By: Damin J. Toell, Esq.
Bruno, Gerbino & Soriano, LLP
Melville, New York


The following article continues an exploration of the issue of whether automobile insurance carriers should be able to defend no-fault claims on the basis of a lack of medical necessity when the treating provider never independently examined a patient. This situation presents itself most often in the case of MRIs, where a medical office performs and analyzes an MRI on the basis of a referral from another doctor, and the doctor who performed the MRI never examined the patient previously. Often, MRI offices contend that they should not have their claims denied on the basis of a lack of medical necessity because they merely accepted a referral from another doctor.

The first part of this article examined the recent Appellate Term, Second Department holding in West Tremont Med. Diagnostic, P.C. v Geico Ins. Co., 2006 NYSlipOp 51871(U) (2006), in which the Court held that carriers may, indeed, assert the defense of a lack of medical necessity against MRI providers.

Part II - Long Is. Radiology v. Allstate Ins. Co.

While the Appellate Term has now resolved the matter for the time being as far as the Civil Courts of the City of New York are concerned, the holding in West Tremont is in conflict with a Supreme Court, Nassau County decision earlier this year. See Long Is. Radiology v Allstate Ins. Co., 2006 NY Slip Op 51090(U) (Sup. Ct., Nassau Cty., 2006). Long Is. Radiology is now under appeal to the Appellate Division, Second Department.

It should be noted that in Long Is. Radiology, Justice Thomas P. Phelan made explicit his understanding that West Tremont was then under appeal. Moreover, West Tremont is not binding authority upon the Supreme Court, the latter being a court of original jurisdiction, and likewise cannot bind the App. Div. on appeal. See, e.g., Westchester Med. Ctr. v. Liberty Mut. Ins. Co., 2006 NY Slip Op 50382U (Sup. Ct., Nassau Cty., 2006). Nevertheless, the Appellate Division is now faced with an issue that has received conflicting treatment by multiple venues.

In his decision, Justice Phelan explains the background of the case as follows:

Plaintiff is a radiology office that performs MRI testing for persons involved in motor vehicle accidents and allegedly eligible for no-fault benefits. MRI testing is done pursuant to a prescription issued by the injured person\'s independent treating physician. For payment plaintiff receives an assignment of no-fault benefits from the injured person, and submits claims directly to one of the defendants. Defendants deny numerous claims for payment on the ground of an alleged \"lack of medical necessity.\"

On this motion defendants argue that in the context of the no-fault statute and the regulations thereunder, \"medical necessity\" is a prerequisite for payment. They conclude therefore, that they have every right to deny plaintiffs\' claims on the ground of \"lack of medical necessity.\" This Court agrees with defendants\' argument, but not their conclusion. 2006 NY Slip Op 51090(U).

The final sentence is not as hopeful for the carriers as it might appear. Although it was found that carriers could, indeed, defend the claims on the basis of a lack of necessity, it was held that they cannot do so against the radiology facilities directly. Instead, \"[a]n insurer who can prove that a radiology test is unnecessary or duplicative, should be able to challenge through subrogation the treating physician or medical provider who prescribed the test.\" Id.

The Supreme Court based its holding upon the following rationale:

It is this Court\'s opinion that the results in West Tremont and Omega Diagnostic [8 Misc. 3d 715 (Civ. Ct., Kings Cty., 2005)] comport with the underlying intent of the no-fault statute, that claims be processed quickly and efficiently, and that economic losses be fully compensated. As noted in West Tremont, there is no statutory or regulatory pre-approval requirement for radiology tests requested by treating physicians in no-fault cases. Furthermore it makes no sense to argue \"lack of medical necessity\" against radiologists, because they do not assess medical necessity. Radiologists neither examine the no-fault patient, nor render a pre-test diagnosis. Any diagnostic opinion is based on the radiological test. To require radiologists to render a pre-test diagnosis would cause significant delay in treating the injured.

Under this rationale, if a no-fault patient (who we will assume is a layperson with no medical training) paid for her medical treatment out-of-pocket and then submitted timely and proper claims thereafter seeking reimbursement for same, a carrier could never defend on the basis of a lack of medical necessity. One can imagine the formulation of the argument: it makes no sense to argue \"lack of medical necessity\" against lay patients, because they do not assess medical necessity; that\'s why they go to doctors in the first place. This is an absurd conclusion that cannot stand without taking the entirety of the no-fault scheme down with it.

It also seems that the Supreme Court would give an ultimate finding that would, if implemented, presumably double the amount of litigation in certain massive categories of no-fault claims while, as a predicate, recognizing that \"[t]he court system is inundated with no-fault claims litigation.\" Id. If the Long Is. Radiology decision became the rule, the court system would then be inundated with both no-fault claims litigation and subrogation claims litigation.

It obviously remains to be seen as to whether Long Is. Radiology can withstand appeal. To the extent that West Tremont is a factor, it should serve as a succinctly damning argument in favor of reversal. The Appellate Term said it all when they noted that \"[i]f [a] defense may be asserted against the eligible injured person, it follows that it may be asserted against the provider as well.\" 2006 NYSlipOp 51871(U). Vague appeals to the underlying goals of no-fault, which could easily be molded to reach any conclusion under the sun, pale in comparison to the actual law.

No-fault radiology providers crying foul merely rings hollow. By contrast, does a no-fault fact pattern get any more sensitive than the following?

On August 31, 2000, Aferdita Suljovic, a passenger in a vehicle operated by her husband, was injured when her husband intentionally caused the vehicle to go over an embankment while he exited the driver\'s side of the vehicle. Mr. Suljovic was indicted, inter alia, for attempted murder and ultimately pleaded guilty to assault in the second degree. [ ]

Mrs. Suljovic was hospitalized at Westchester Medical Center (hereinafter WMC). As her assignee, WMC sought to recover no-fault benefits from the defendant, Mr. Suljovic\'s automobile insurer, for the services it rendered. The defendant issued a denial of coverage on the grounds, insofar as relevant to this appeal, that the occurrence was not an \"accident\" within the meaning of the no-fault endorsement in the policy and that Mrs. Suljovic\'s injuries did not arise out of the \"use or operation\" of a motor vehicle. Westchester Med. Ctr. v. Travelers Prop. Cas. Ins. Co., 309 A.D.2d 927, 928 (2d Dep\'t, 2003).

The claimant, Mrs. Suljovic, was almost murdered in a horrific manner and the hospital did the very thing hospitals are supposed to do. To be sure, the hospital had no part in the attempted murder, and it was required to render care. Even with such heavy sympathies in its favor, the hospital lost out in the Appellate Division’s holding. As they noted, \"[t]he assault, committed through the use of a vehicle, was an intentional act, not an accident. Consequently, the...cause of action should have been dismissed.\" Id. The ability of a no-fault claimant or her assignees to assess a potential defense their claims has no relationship to the properness of a carrier employing such defenses. If the claims do not qualify, and the carrier has proven such in accordance with the applicable laws for generally proving defense, that is the end of the judicial inquiry.

No-fault is not and should not be merely a panhandling exercise where money gets tossed around for perceived equitable reasons. It is based upon a contract, the terms of which are promulgated by the government. The contract has provisions, and those provisions are to be followed and enforced by the judiciary. The contract does not provide reimbursement for unnecessary services. The contract does not get changed around depending on whether those provisions would be somehow unkind to an assignee of one of the parties thereto. Is this a revelatory stance? I think not, given decisions such as Westchester Med. Ctr. v. Travelers. And while the Appellate Term, 2d Dep\'t is no stranger to such wholesale no-fault contract re-writing, recent decisions such as West Tremont appear to reverse that trend, or at least provide some balance. Regardless of which party one is representing in a no-fault suit, is strict adherence to the laws and regulations really that bad of an idea?

MRI facilities giving a no-fault patient three MRIs within one week after an accident are hardly in a more sympathetic position than Mrs. Suljovic and Westchester Medical Center. To hold that medical necessity defenses should be unavailable as against such MRI facilities due to unfairness is simply untenable in light of the result in Westchester Med. Ctr. and innumerable similar Appellate Division holdings. Hopefully, when considering Long Is. Radiology, the Appellate Division will pay close attention to their own prior holdings.

Editors Note: Damin J. Toell is a graduate of Cardozo School of Law and an associate at Bruno, Gerbino & Soriano, LLP, located in Melville, New York.

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