OGC Op. No. 09-05-01

The Office of General Counsel issued the following opinion on May 15, 2009, representing the position of the New York Insurance Department.

Re: Limit on Charges by Providers of Health Services Under the No-Fault Law

Questions Presented:

1. May a provider of health services bill a patient and/or the patient’s health insurer for treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because available coverage for basic economic loss has been exhausted?

2. May a provider of health services bill a patient and/or the patient’s health insurer for treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because of a policy exclusion, including driving while intoxicated?

Conclusion:

1. No. Pursuant to N.Y. Insurance Law § 5108(a) (McKinney 2000), a provider of health services may not bill a patient and/or the patient’s health insurer for treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because available coverage for basic economic loss has been exhausted.

2. No. A medical provider may not bill a patient and/or the patient’s health insurer treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because of a policy exclusion, such as driving while intoxicated. The provider of health services is limited to billing at the no-fault rates established pursuant to Insurance Law § 5108 for any treatment of injuries arising out of the automobile accident which are covered under the no-fault law.

Facts:

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

Analysis:

1. Exhaustion of Basic Economic Loss

Article 51 of the New York Insurance Law (“the no-fault law”) is a mechanism through which individuals who are injured in automobile accidents may receive prompt compensation for resulting basic economic loss. The no-fault law was enacted as a broad social reparations system to speed compensation to injured persons and contain the costs associated with automobile accidents, by limiting the fees that providers of health services can charge, and by reimbursing all injured persons for “basic economic loss” incurred. Insurance Law § 5102(a) 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.

Thus, a person injured in a motor vehicle accident may recover up to $50,000 under the no-fault law for basic economic loss.

(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.)

Thus, unless a treatment involves an unusual procedure or unique circumstances to justify charges above those provided in the fee schedule, see §§ 68.4 and 68.7 of N.Y. Comp. Codes R. & Regs. tit. 11 (Regulation 83), a provider of health services must adhere to the no-fault fee schedules established in accordance with Insurance Law § 5108 for any treatment provided to a person injured in an automobile accident under the no-fault law. Once no-fault benefits are exhausted, the fee schedule limitations continue to apply to charges for health services provided under the criteria for basic economic loss, so long as the accident giving rise to the injuries is within the scope of the no-fault law. See OGC Opinion No. 08-07-28 (July 30, 2008).

2. Excluded Claims

While one purpose of the no-fault law is to provide compensation to persons injured in motor vehicle accidents without regard to fault, there are instances in which persons covered by the no-fault law may not recover first-party benefits. Specifically, Insurance Law § 5103(b) creates permissible exclusions for any person who:

(1) Intentionally causes his own injury.

(2) Is injured as a result of operating a motor vehicle while in an intoxicated condition or while his ability to operate such vehicle is impaired by the use of a drug within the meaning of section eleven hundred ninety-two of the vehicle and traffic law.

(3) Is injured while he is: (i) committing an act which would constitute a felony, or seeking to avoid lawful apprehension or arrest by a law enforcement officer, or (ii) operating a motor vehicle in a race or speed test, or (iii) operating or occupying a motor vehicle known to him to be stolen, or (iv) operating or occupying any motor vehicle owned by such injured person with respect to which the coverage required by subsection (a) hereof is not in effect, or (v) a pedestrian, through being struck by any motor vehicle owned by such injured pedestrian with respect to which the coverage required by subsection (a) hereof is not in effect, or (vi) repairing, servicing or otherwise maintaining a motor vehicle if such conduct is within the course of a business of repairing, servicing or otherwise maintaining a motor vehicle and the injury occurs on the business premises.

Thus, persons who are injured as a result of conduct that comes within these statutory exclusions are not necessarily legally entitled to recover first-party benefits from the no-fault insurer.

Insurance Law § 5103(b) permits insurers to exclude injured persons from recovery of first-party benefits in certain circumstances, but it does not alter the limitation on charges by providers of health services imposed by Insurance Law § 5108, where such patients must be treated for injuries resulting from accidents covered by the no-fault law. Accordingly, such health providers may not bill insurers at rates that exceed the applicable fee schedules set forth in Insurance Law § 5108.