New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

OGC Op. No. 08-07-28

The Office of General Counsel issued the following opinion on July 30, 2008, representing the position of the New York Insurance Department.

Re: No-Fault Medical Fees After Exhaustion of Benefits

Questions Presented:

1. May a health care provider, which has accepted a no-fault assignment of benefits from a patient, bill that patient directly when his or her no-fault benefits have been exhausted?

2. When the patient has exhausted all available no-fault benefits for reimbursement, must the health care provider continue to bill at no-fault fee schedule rates?

Conclusions:

1. When a patient’s available no-fault benefits are exhausted, the assignment of those benefits for health services rendered is no longer effective, as there are no other benefits available under the applicable policy. Whether the health care provider is thereafter able to bill the patient is dependent upon whether any other health services coverage is available and, if so, the contractual arrangement that the provider has with the patient and/or the insurer providing the other health services coverage. In the absence of any other available coverage after exhaustion of the no-fault benefits, there is no impediment to the health care provider’s ability to bill the patient directly.

2. Payment of fees for services rendered after the exhaustion of no-fault benefits are still subject to the fee schedule limitations established pursuant to N.Y. Ins. Law § 5108 (McKinney 2000).

Facts:

The inquiry is of a general nature, without reference to particular facts.

Analysis:

The “no-fault law,” Article 51 of the Insurance Law is a mechanism through which individuals who are injured in automobile accidents may receive prompt compensation for resulting economic losses. Insurance Law § 5102(a) (McKinney 2000) defines “basic economic loss” as follows:

(a) “Basic economic loss” means, up to fifty thousand dollars per person of the following combined items, subject to the limitations of section five thousand one hundred eight of this article:

(1) All necessary expenses incurred for: (i) medical, hospital…surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services; (ii) psychiatric, physical and occupational therapy and rehabilitation; (iii) any non-medical remedial care and treatment rendered in accordance with a religious method of healing recognized by the laws of this state; and (iv) any other professional health services; all without limitation as to time, provided that within one year after the date of the accident causing the injury it is ascertainable that further expenses may be incurred as a result of the injury. For the purpose of determining basic economic loss, the expenses incurred under this paragraph shall be in accordance with the limitations of section five thousand one hundred eight of this article.

Section 65-3.11(b)(2) of N.Y. Comp. Codes R. & Regs. tit. 11, Part 65-3 (2005) (Regulation 68-C) governs the assignment of no-fault benefits from an eligible injured person (“the assignor”) to a health service provider (“the assignee”). That provision reads as follows:

In order for a health care provider…to receive direct payment from the insurer, the health care provider…must submit to the insurer:

(2) a properly executed assignment on:

(i) the prescribed verification of treatment by attending physician or other provider of service form (NYS form NF-3); or

(iii) the prescribed no-fault assignment of benefits form (NYS form NF-AOB) contained in Appendix 13…

NYS forms NF-3 and NF-AOB contain the specific language of the assignment:

ASSIGNMENT OF NO-FAULT BENEFITS:

I HEREBY ASSIGN TO THE HEALTH CARE PROVIDER INDICATED BELOW ALL RIGHTS, PRIVILEGES AND REMEDIES TO PAYMENT FOR HEALTH CARE SERVICES PROVIDED BY THE ASSIGNEE TO WHICH I AM ENTITLED UNDER ARTICLE 51 (THE NO-FAULT STATUTE ) OF THE INSURANCE LAW. THE ASSIGNEE HEREBY CERTIFIES THAT THEY HAVE NOT RECEIVED ANY PAYMENT FROM OR ON BEHALF OF THE ASSIGNOR AND SHALL NOT PURSUE PAYMENT DIRECTLY FROM THE ASSIGNOR FOR SERVICES PROVIDED BY SAID ASSIGNEE FOR INJURIES SUSTAINED DUE TO THE MOTOR VEHICLE ACCIDENT, NOT WITHSTANDING ANY OTHER AGREEMENT TO THE CONTRARY. THIS AGREEMENT MAY BE REVOKED BY THE ASSIGNEE WHEN BENEFITS ARE NOT PAYABLE BASED ON THE ASSIGNOR’S LACK OF COVERAGE AND/OR VIOLATIONS OF A POLICY CONDITION DUE TO THE ACTIONS OR CONDUCT OF THE ASSIGNOR. (Emphasis added.)

The assignment language of Regulation 68-C, NYS form NF-3 and NYS form NF-AOB thus limits the recovery by the assignee health care provider to the amount of available benefits covering reimbursable services under Article 51 and the applicable no-fault policy.

The prescribed assignment of benefits pertains only to recovery for treatment of injuries arising from a motor vehicle accident as covered under Insurance Law § 5102, in an amount up to the $50,000 basic economic loss limit for no-fault coverage. The assignment also applies to recovery under any no-fault benefits available under any coverage beyond basic economic loss, such as additional personal injury protection coverage (“APIP”), which provides additional benefits above basic economic loss, as provided by 11 N.Y.C.R.R. § 65-1.3 (Regulation 68), as well as optional basic economic loss coverage (“OBEL”), through which the patient may have previously purchased additional basic economic loss benefits in the amount of $25,000, as specified in Insurance Law § 5102(a)(5). A health care provider who accepts an assignment of benefits is limited to reimbursement for benefits available to the assignor, in both the scope of coverage and the amount of benefits reimbursable. And having accepted the assignment, the assignee may not bill the patient directly for any services rendered, under the terms of the prescribed assignment language, which fall under “basic economic loss” and additional non-basic economic loss (APIP).

Upon exhaustion of the amount of no-fault benefits available to the assignor (i.e., $50,000 or more if the assignor has additional OBEL coverage), the assignment is no longer effective. At that point the patient must rely on any other available insurance coverage, and the provider’s ability to bill the patient directly will depend on the contractual arrangement that the provider has with that patient’s subsequent insurer, if in fact there is other insurance coverage. If the patient has no other form of insurance, the provider may bill the patient directly once no-fault benefits are exhausted, as the patient is now an uninsured person.

However, a provider must bill in accordance with the fee schedules set forth in Insurance Law § 5108. That provision states:

(a) The charges for services specified in paragraph one of subsection (a) of section five thousand one hundred two of this article and any further health service charges which are incurred as a result of the injury and which are in excess of the basic economic loss, shall not exceed the charges permissible under the schedules prepared and established by the chairman of the workers’ compensation board for industrial accidents, except where the insurer or arbitrator determines that unusual procedures or unique circumstances justify the excess charge. (Emphasis added.)

(b) The superintendent, after consulting with the chairman of the workers’ compensation board and the commissioner of health, shall promulgate the rules and regulations implementing and coordinating the provisions of this article and the workers’ compensation law with respect to charges for professional health services specified in paragraph one of subsection (a) of section five thousand one hundred two of this article, including the establishment of schedules for all such services for which schedules have not been prepared and established by the chairman of the worker’s compensation board.

(c) No provider of health services specified in paragraph one of subsection (a) of section five thousand one hundred two of this article may demand or request any payment in addition to the charges authorized pursuant to this section. Every insurer shall report to the commissioner of health any patterns of overcharging, excessive treatment or any other improper actions by a health provider within thirty days after such insurer has knowledge of such pattern. (Emphasis added.)

Even when a provider bills the patient directly, the fee schedule limitations of Insurance Law § 5108 continue to apply. Thus, charges for services provided under the criteria for basic economic loss, and all subsequent charges arising out of that same injury after the exhaustion of no-fault benefits, must conform to the fee schedules established pursuant to Insurance Law § 5108.1

For further information, you may contact Principal Attorney Lawrence M. Fuchsberg at the New York City office.

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1 While there are certain exceptions, see 11 N.Y.C.R.R. §§ 68.4, 68.7, none is discussed in detail here.