Insurance Fee Schedule Used as an Affirmative Defense

Submitting claims to insurance agencies can be complex as there are fee schedules and set services which are covered. One recent case involved fee schedules and payment of claims. Ms. Kenia Perez was a patient at East Coast Acupuncture (ECA) during August, September, and October 2013. After ECA submitted claims for Ms. Perez for treatments received, the defendant, Hereford Insurance Company, recalculated the amount of the claims based on their fee schedule. Afterwards, ECA brought suit to recover the amount of claims left unpaid by Hereford.

East Coast Acupuncture, P.C. v. Hereford Ins. Co.

2016 NY Slip Op 26042

Submitting claims to insurance agencies can be complex as there are fee schedules and set services which are covered. One recent case involved fee schedules and payment of claims.

Ms. Kenia Perez was a patient at East Coast Acupuncture (ECA) during August, September, and October 2013. After ECA submitted claims for Ms. Perez for treatments received, the defendant, Hereford Insurance Company, recalculated the amount of the claims based on their fee schedule. Afterwards, ECA brought suit to recover the amount of claims left unpaid by Hereford.

The court discussed 11 NYCRR 65-3.8(g)(1), which states that payment is not mandated for services exceeding the permissible amount as outlined in Insurance Law sections 5108(a) and (b). Hereford argued that this section of the statute, which was an amendment to an earlier provision, clearly demonstrates what proof the plaintiff must show to prove it billed within the fee schedule. Hereford argued that ECA had not met the basic elements of the case, and that the court should dismiss the suit. The court, on the other hand, decided that Hereford’s objection to the overbilling issue was not to be asserted to demonstrate why the case should be dismissed before the merits were heard, but that it was actually an affirmative defense.

The court then went on to analyze whether the overdue rule for claims, stating that after 30 days of the insurer’s receipt of the claim, it is overdue, would prevent the defendant from asserting the overbilling affirmative defense. The court decided that the medical provider does not have additional duties after submitting the claim, and that the burden falls on the insurer to make sure the claim adheres to the set fee schedule. Therefore, the court held that Hereford may use the affirmative defense of overbilling above the fee schedule whether it is within 30 days of receipt of the claim or not.

After determining that Hereford could use the defense that ECA billed above the fee schedule amount, Hereford submitted an affidavit of a certified medical coder and biller, employed as a Fee Schedule Team Leader. She stated that ECA was paid pursuant to the fee schedule for services rendered. Without any evidence to contradict her testimony, the court dismissed the claim.

To read the full case, click here.