The Rogak No-Fault Blog: 3 July 2012: ** Provider EUOs **
- DOCTOR'S BILLING IN BUFFALO AND NYC ON SAME DATES JUSTIFIES EUO DEMANDAmerican Arbitration AssociationNew York No-Fault Arbitration TribunalIn the Matter of the Arbitration between: Zenith Medical PC and Geico Ins. Co.AAA Case No. 412011061337AAA Assessment No. 17 991 35420 11Kent L. Benziger, Esq., arbitratorEdited by Lawrence N. RogakSummary of Issues in Dispute1) Whether the Applicant had a reasonable basis for an EUO of the physician/owner of amedical facility; and,2) Whether a verification request for the documents repeatedly filed onnumerous claims was excessive and overly burdensome.In this dispute, the Applicant/Medical Provider is seeking reimbursement for medicalservices. The basis of the Respondent's denial on both this and numerous others casesinvolving the same parties was the Applicant's failure to comply with a verification requestfor an examination under oath (hereinafter referred to as an EUO) of the physician owner ofthe medical facility . The Applicant contends that the EUO requests were improper and thatit also complied with the relevant portion of numerous overly burdensome documentrequests.As this arbitrator is deciding numerous cases involving these same issues, bothparties have stipulated that the all documents including verification requests, responses,affidavits as well as testimony and an examination under oath be applicable to all cases.In this particular case, the underlying claim is for evaluations, physical therapy treatment andEMG/NCV studies rendered from March 29, 2010 through August 4, 2010. However,Respondent has submitted evidence that the claim must be reduced by $1,127.17. TheApplicant billed $$656.81 for treatment from March 29, 2010 through April 21, 2010. TheRespondent has submitted proof that it paid $390.80 for the claim pursuant to PhysicalTherapy Ground Rule 11 in that the Applicant cannot bill for more eight units of modalitiesper day. Similarly, the Respondent reimbursed$$255.20 pursuant to fee schedule for a claimtotaling $440.36 for service from April 26, 2010 through May 3, 2010. The Respondent'sfee schedule contentions are correct. As a finding of fact, the Applicant has made a primafacie showing of necessity for the services through submission of the proper claim forms,and, therefore, the burden then switches to the Respondent to properly pay or deny the claim.Acupuncture Prime Care, P.C. v. State Farm Mutual Auto Ins. , 2007 N.Y. Slip Op.522273U (Dist. Ct. Nassau Co. 12/3/2007).Prior to discussing the substantive and procedural issues, the Respondent has also submittedproof that $2,323.53 remains on the insurance policy. Respondent also claims that sincethere is a prior pending lawsuit in State Court for $1,440.15 that this amount should also bededucted from the policy. However, Respondent's counsel has submitted no authority that apending claim must be applied to reduce the policy limits. Therefore, as a finding of fact, thepolicy limits are currently $3,233.53.Document Demands and EUO RequestsFollowing receipt of the claims, the Respondent served the following verification requests onthis and numerous other cases. One verification request was a document demand thatrequested the following:- Ownership records including certificate ofincorporation, receipts for filing, stock certificatesand stock ledger;- Income and expense records from time ofincorporation to present including: tax records andfinancial statements, bank statements and generalledgers, accounts receivables, all agreementsrelating to financing, accounts receivable;- List of individual who provided/supervised healthcare services for claim with identification ofprofessional licenses, practice specialty, (i.e. W-2,1099and business relationship with individual andZenith Medical;- List of days of week and hours that Dr. Williamsprovides or supervises services;- SOAP notes for patient with dates of service;- All documents, including schedules agreements,contracts, attachment or agenda relating to ZenithMedical and any individual that leases equipmentor provides management, consulting oradministrative or billing services and any paymentsmade;- List of locations where Zenith Medical P.C.renders services including a copy of all leaseagreements concerning the premises;- Make, model year and serial number of alldiagnostic equipment rendered to patients;- Agreements relating to purchase or lease ofdiagnostic equipment.The Respondent then submitted a verification request for an examination under oathaddressed to Zenith Medical, P.C. The request set forth the basis of the EUO:" you stated that Dr. Williams reviewed and signs off onevery visit performed by his nurse practitioners beforebilling. Your response in addition to Zenith's billing, callsinto question what services Dr. Conrad Williams is actuallyrendering himself in two different locations in two differentparts of the state on the same date. Geico is requesting thatDr. Conrad R. Williams appear for an examination underoath."The first examination was scheduled for October 27, 2010 at the offices of the Carrier's inhousecounsel in Woodbury, New York. The letter stated that the Applicant was to call nolater than seven days prior to this examination to confirm attendance. It also stated:"if that date, time and/or location are inconvenient, pleasecontact A.L. and we will reschedule the examination for adate and time as well as a location that is reasonablyconvenient for you."Through correspondence, Applicant objected and stated that Dr. Williams reviewed andsigned off on every visit performed by his nurse practitioners before billing. The claimsanalyst then replied that the response still called into question how Dr. Williams could be intwo different locations on the same date.Following the EUO requests in some of the cases there were objections by phone call orin writing from Applicant or Applicant's counsel. In all cases, the Respondent complied withthe proper procedures for Notice of the EUO including follow-up requests. 11 NYCRR.65.3.5. However, Dr. Williams was never produced for an EUO. Respondent then issued thefollowing denial:"You have failed to comply with your obligation to present a properproof of claim, as required under 11 N.Y.C.RR. § 65-1.1 by failing toprovide verification in the form of an examination under oath thatwe requested you to attend on 10/27/10 and 11/30/10 and failing toestablish, among other items your compliance with 11 N.Y.C.R.R.§65-3.11 and/or §65-3.16(a)(12). Therefore you have failed tosatisfy a condition of coverage, and your claim is denied. Unlessotherwise noted, all fees should be in accordance with the medical feeschedule as per the rules and regulations authorized by the State ofNew York, department of Insurance, 28 Amendment to RegulationNo. 83."Applicant then filed a Request for Arbitration Notice of Arbitration on July 28, 2011.Through this arbitration process the following additional discovery was exchanged.Applicant Counsel's AffidavitApplicant's counsel has submitted an affidavit. She contends that the Respondent filedextensive, overly burdensome document demands on all Zenith claims, many of which hadhad no relevance to the particular service rendered. For example, the Respondent woulddemand the make, model year and serial number of an MRI machine on claims for officevisits where no such equipment was used. Counsel's affidavit noted that theApplicant/Provider and counsel were barraged by the continuing receipt of hundreds ofunsigned "computer generated" demands similar to the one listed above that requested, inessence, all of the provider's records for corporate structure, finances, schedules, leases aswell as medical records and bills. Counsel objected to sending out the same voluminous andrepetitive responses on each case. Counsel stated she would write or call the adjustershandling the claims with these issues, but would make no progress and often be placed onhold. Counsel stated that she even submitted the demands and made complaints to the StateInsurance Department. Applicant's counsel eventually had a meeting with Jim Lyons atGeico who allegedly stated she could ignore the verification requests.Although Counsel effectively conveys the Carrier's alleged abuses of verification requests,her affidavit also relies on emotional arguments that are not based on reason and logic. Forexample, counsel contends: that: 1) the supervising physician has been targeted because he isan African American; 2) the supervising physician is "very well loved" by his patients,"works late into the evening", and that she (referring to counsel) always had "a good feelingabout him even though she had never met him". In addition, counsel claims she has been a"victim" of Carrier's verification requests. Counsel reliance on emotion rather than carefullegal analysis detracts from her arguments.SIU AffidavitThe Respondent has submitted an affidavit from an SIU investigator which makes thefollowing claims:"Specifically, the systemic nature in which Zenith had renderedtreatment and referred for testing to other PCs at the locationsuggests that patients are being referred for, and provided with,diagnostic testing and treatment pursuant to a fraudulent, predeterminedprotocol and without reference to themedical necessity of the treatment provided.Zenith is located in Buffalo NY. Dr. Williams also allegedly ownsand operates Targeee Medical Services PC ("Targee" which islocated at 460 Midland Avenue, Staten Island NY 10306. GEICOhas received billing form both Zenith and Targee for servicesallegedly rendered by Dr. Williams for the same dates of serviceon more than one occasion. Given the distance between the twofacilities (approximately 408 miles) this is questionable. Requeststo perform a site inspection of the Zenith location and an interviewof Williams were denied."Testimony- Yves Richard BlancFor these proceedings, Applicant produced Yves-Richard Blanc who is director of businessdevelopment and administrator for Zenith Medical, P.C. He was produced for testimonybefore this arbitrator as well on a separate day at the Buffalo offices of Respondent's counsel.In both instances, Respondent's counsel claimed that he did not know Mr. Blanc was goingto be produced. Mr. Blanc testified as to the structure of the medical entity as well as thenames and status of numerous employees and independent contractors. Respondent'scounsel inquired as to whether Dr. Williams saw every patient or reviewed the patient'srecords or charts before billing. Mr. Blanc initially referred to a letter where he noted thatevery visit performed by a nurse practitioner was reviewed by Dr. Williams before billing,but then testified:"It's not every visit because there are a number of visits being done.He reviews a lot of these notes. And because of the amount ofvisits that we do in the practice, I cannot be sure that he's reviewedevery single one of them."Mr. Blanc also testified that the director of accounts receivable reviews every office visitdone by both the nurse practitioner and Dr. Williams for fee schedule billing.AnalysisAfter a review of the voluminous submissions and contentions of counsel, the following twoissues are the heart of these cases. First, the Respondent/Carrier repeatedly submitted overlybroad and burdensome document requests that run counter to the goal of arbitration and theexpeditious, efficient and equitable resolution of such disputes. Secondly, theRespondent/Carrier had a reasonable basis for an EUO of Dr. Conrad Williams, and he wasnever produced.An arbitrator has equitable powers to promote the expeditious handling of verificationrequests with the goal of the prompt payment of legitimate claims. Nyack Hosp. v. GeneralMotors Acceptance Corp., 8 N.Y.3d 294, 300, 832 N.Y.S.2d 880, 884 (2007); Infinity HealthProducts, Ltd. v. Eveready Ins. Co., 67 A.D.3d 862, 890 N.Y.S.2d 545 (2d Dept. 2009).Pursuant to the No-Fault regulations pertaining to arbitration proceedings, verificationrequests can include both examinations under oath and document production on claims wherethere is a reasonable basis to suspect a Malella violation or other fraud. An arbitrator willultimately determine whether a specific verification requests was reasonable or overlyburdensome.Document DemandAs to the document demand as with any verification request, the purpose is to justify theclaim or obtain information necessary to properly review and process the claim. WestchesterMedical Center v. Travelers Property & Casualty Ins. Co., 2001 N.Y. Slip Op. 50082(U) at 3,2001 WL 1682931 (Sup. Ct. Nassau Co., Ralph P. Franco, J., Oct. 10, 2001). In thisinstance, the repeated service of the overly broad and burdensome document demand onalmost every claim filed by this provider was onerous and runs contrary to the Fair ClaimPractice Principles which include: 1) prompt and fair payment; 2) assisting in processing ofthe claim and not treating the Applicant as an adversary; and 3) only demanding verificationwhen practical. 11 NYCRR 65-3.2.As noted in Brownsville Advance Medical v. Country-Wide, 33 Misc.1236(a) (2011), theRespondent should first attempt to obtain readily accessible public records on pertinentissues. Further, the verification request must be relevant to the specific case. Clearly, thepolicy behind the No-Fault regulations is not served when the insurer repeatedly requests thesame verification especially when the material demanded such as licensing information or thestructure of the business entity has previously been provided or is readily obtainable frompublic web-sites or other sources. Medical Society of the State of New York, 100 N.Y.2d 8542003); Fair Price Medical Supply v. Travelers, 10 N.Y.3d 556 (2003).Further, a Carrier should have a common database or repository for basic provider information such aslicensing, structure and other relevant facts that are not claim specific. This informationshould be accessible to its personnel including claims analysts to prevent the needlessduplication of verification requests. In the event of continued filing of excessive andrepeated demands, and arbitrator has the equitable powers to find such request invalid andeven award sanctions if the Carrier has previously been provided said information. 11NYCRR 65-4.5 (o)(1).However, in fairness to Respondent in this case, much of the information as to the structureand operation of the Applicant Zenith Medical, P.C. was answered through the hearingtestimony and EUO of Mr. Blanc which occurred after the filing of the Request forArbitration.Examination Under OathTo verify a claim, an EUO can be scheduled as often "as may reasonably be required" withspecific objective justification. 11 NYCRR 65-1.1, 65-3.5(e). At the time of the EUO, Aninsurer is not required to provide the claimant with a copy of its internal guidelines forconducting an EUO or of its reasons for requesting an EUO. Progressive Northeastern Ins.Co. v. Manhattan Medical Imaging, 2009 N.Y. Slip Op. 31200(U) at 13, 2009 WL 1582471(Sup. Ct. New York Co., Louis B. York, J., May 29, 2009). However, to prevail at anarbitration proceeding, the Carrier has the burden of proof to justify the verification request.This involves stating "indicators" for requesting an EUO along with evidence fromindividuals with personal knowledge as to how the those indicators were met in the particularcase in other words why an EUO was appropriate under the circumstances. ProgressiveNortheastern Ins. Co. v. Arguelles Medical P.C., 2009 N.Y. Slip Op. 32353(U), 2009 WL3361691 (Sup. Ct. New York Co., Marcy S. Friedman, J., Oct. 9, 2009).To establish this reasonable basis, numerous cases and arbitration decisions have looked to affidavits fromclaims analysts or from the insurer's Special Investigation Unit (SIU). See: ProgressiveNortheastern Ins. Co. v. Arguelles Medical P.C., supra,; Westchester Medical Center v.Government Employees Ins. Co., 2009 N.Y. Slip Op. 30914(U), 2009 WL 1136785 (Sup. Ct.Nassau Co., Daniel R. Palmieri, J.,Apr. 17, 2009)Merit Acupuncture, P.C. v. LancerInsurance Company, AAA No. 412012018490 (5/8/12).In the instant case, the Carrier clearly had a reasonable or good faith basis for the EUO of Dr.Conrad Williams. This was provided through the initial correspondence accompanying theEUO request, the subsequent affidavit from the SIU unit, as well as the EUO of Mr. Blanc.The reasonable basis for the EUO were issues pertaining to Dr. Williams' ability to conductor supervise treatment from two locations as well as his billing practices.For whatever reason, Applicant's counsel has gone to great lengths to prevent the EUO ofDr. Williams. Counsel produced Mr. Blanc, director of business development/Administrator,on two occasions. Counsel has no authority for her contention that the Applicant or the partyserved with a specific EUO request has the first right to determine who to produce. Further,as a finding of fact, Mr. Blanc failed to adequately answer questions as to Dr. Williams'specific involvement in evaluations and supervision of nurse practitioners and recordreviews.Pursuant to 11 NYCRR 65.15(d)(a), a Respondent can request additional verification froman Applicant before acting on a claim. Section 11 NYCRR 65.15(g)(1)(i) finds that No-Faultbenefits are overdue only after the Insurer "receives verification of all relevant informationrequested". Further, in this instance, the carrier's verification request for an EUO wasproper and actually gave the Applicant the opportunity to reschedule the examination at adate, time and location that was reasonably convenient. Even if the Applicant/Providerbelieved the EUO was improper, Applicant or Applicant's counsel still had a duty tocommunicate with the insurer regarding the request. Dilon Medical Supply Corp. v.Travelers Insurance Co., 7 Misc 3d 927 (Civ. Ct. Kings Co. 2005).However, due to the sheer number of verification requests both for documents and the EUOsserved upon this Applicant/Provider by numerous claims analysts from Geico, this Carriercannot equitably contends that the Applicant's failure to comply with the EUO requests voidscoverage. As noted, the excessive number of repetitive document requests were, in largepart, overly burdensome and improper. This barrage of verification requests on numerousclaims all with different dates made compliance difficult, and violated the principles of theFair Claims Act. 11 NYCRR 65-3.2.However, as earlier noted, the EUO request for Dr. Williams was not improper. TheApplicant will be given a further opportunity for compliance due, in part, to the excessiveand burdensome document demand. In sum, the Respondent's denial as to the EUO shouldnot be upheld as a breach of a condition precedent for coverage when it acted with "uncleanhands" through its submission of improper document requests. 11 NYCRR 65-4.5 (o)(1);National Distillers & Chemical Corp. v Seyopp Corp., 17 N.Y.2d 12, 214 N.E.2d 361,(1966).This claim is, therefore, denied without prejudice. It is not ripe since the 30-dayperiod in which a no-fault insurer must pay or deny a claim has not commenced until there iscompliance with the relevant verification request the EUO of Dr. Williams. 11 NYCRR §65-3.8(a)(1); Complete Orthopedic Supplies, Inc. v. State Farm Ins. Co. 16 Misc.3d 996(Civil Ct., Queens Co.2007).Again, both parties must comply with the principles of the Fair Claims Act and communicateand work together for resolution of the claims. It is suggested that both parties designateindividuals to coordinate and expedite the scheduling and compliance with relevantverification requests. Further, any compliance with the EUO request as well as additionalrelevant verification requests will be deemed applicable to all pending cases.APPLICANT'S CLAIM IS DISMISSED WITHOUT PREJUDICE AS SAID CLAIM ISNOT RIPE FOR ARBITRATION DUE TO THE OUTSTANDING VERIFICATIONREQUEST FOR AN EXAMINATION UNDER OATH OF DR. CONRAD WILLIAMS.