27 N.Y.3d 125 (2016)

Under New York’s No-Fault Law, insurance carriers are not required to reimburse office-based surgery (OBS) centers for facility fees, as these fees are not explicitly included in the authorized fee schedules for medical services.

Summary

Avanguard Medical Group, an office-based surgery (OBS) center, sought reimbursement from GEICO for facility fees under New York’s No-Fault Law. GEICO denied the fees, arguing they were not reimbursable under the law. The New York Court of Appeals sided with GEICO, ruling that the No-Fault Law’s fee schedules, which do not include OBS facility fees, govern reimbursement. The court found no statutory basis to compel reimbursement for these fees, emphasizing that the legislature intended to control costs through specific fee schedules. The court rejected Avanguard’s arguments that facility fees are a “necessary expense” and must be reimbursed, as the controlling statute specifically limits reimbursement to services expressly covered in the fee schedules.

Facts

Avanguard Medical Group, an accredited OBS center, billed for surgical procedures performed on patients covered by the No-Fault Law. Avanguard charged separately for professional services (billed through Metropolitan Medical & Surgical P.C.) and for OBS facility fees. GEICO, the no-fault insurance carrier, paid for the professional fees but refused to reimburse Avanguard for the facility fees, which the center claimed covered the use of its physical location, equipment, and support staff. GEICO then sued for a declaratory judgment that it was not legally obligated to reimburse Avanguard for these OBS facility fees.

Procedural History

The Supreme Court denied GEICO’s motion for summary judgment. The Appellate Division, Second Department, reversed and granted GEICO’s motion, declaring that GEICO was not required to reimburse Avanguard for the facility fees. The Court of Appeals granted leave to appeal from the Appellate Division’s order.

Issue(s)

1. Whether the Insurance Law § 5102 requires no-fault insurance carriers to reimburse OBS centers for facility fees.

Holding

1. No, because the statute limits reimbursement to fees specified in the established fee schedules, which do not include OBS facility fees.

Court’s Reasoning

The court emphasized that the No-Fault Law aims to contain costs by implementing statutory ceilings and regulatory fee schedules for services. Insurance Law § 5102(a)(1) defines “basic economic loss” and identifies the reimbursable services. However, this section is subject to limitations outlined in § 5108, which authorizes fee schedules. The court found no express authorization for facility fee reimbursement for OBS centers in these schedules, unlike the provisions for hospitals and ambulatory surgery centers (ASCs). The court rejected Avanguard’s argument that the absence of specific exclusion meant the fees were covered. The court clarified that the lack of a fee schedule for OBS facility fees meant they were not reimbursable. The court referenced the legal framework requiring insurers to report overcharging, further illustrating the law’s cost-containment intent. The court stated, “…the legislature sought to cap payments and impose uniform fee rates in accordance with the regulatory schedules.” Moreover, the court noted that the fee schedules did cover fees for hospitals and ASCs, which are subject to extensive regulations under Public Health Law, unlike OBS centers.

Practical Implications

This case provides clarity on the scope of reimbursement under New York’s No-Fault Law. It establishes that OBS centers cannot collect facility fees unless specifically authorized by applicable fee schedules. Attorneys representing medical providers should advise clients to structure billing practices in compliance with the existing fee schedules. Insurance companies are not required to reimburse for fees that are not explicitly included. This case highlights the importance of understanding the interplay between statutory provisions and regulatory guidelines when analyzing healthcare reimbursement claims. The decision reinforces the legislative intent to control healthcare costs through fixed fees and detailed regulations.