New York Law Journal 2/2008

The No-Fault Medical Necessity Defense: A Sisyphean Task

By: Jason A. Moroff and Michael C. Rosenberger

 

The Task of Sisyphus

In Greek mythology, Sisyphus, due to his hubristic belief that his cleverness surpassed that of Zeus, was given the eternal punishment of having to roll a stone up a steep hill, only for it to tumble back to the ground when he approached the top of the hill.   Similarly, no-fault insurers that deny claims based upon a lack of medical necessity and proceed to trial are often guilty of the same hubris and must contend with their own Sisyphean task.

The Ascent Begins

Once its defense is deemed preserved in a timely denial of claim form a defendant in a no fault matter has arrived at the most daunting aspect of its case as it possesses “both the burden of production and the burden of persuasion with respect to the medical necessity of the treatment or testing for which payment is sought.”  See, Bajaj v. Progressive Ins. Co., 14 Misc.3d 1202(A) (N.Y. City Civ. Ct. 2006). The quantum of proof necessary to meet defendant’s burden – at the bare minimum – is to “establish a factual basis and medical rationale for the lack of medical necessity of plaintiff’s services.” Id; Seealso, A.B. Medical Services, P.L.L.C. v. New York Central Mutual Fire Ins. Co., 7 Misc.3d 1018(A) (N.Y.City Civ. Ct. 2005).

A defendant will fail to meet its burden if the medical rationale of its peer review is not supported by evidence of “generally accepted medical practices.” See, Bajaj v. Progressive Ins. Co., 14 Misc.3d 1202(A) (N.Y. City Civ. Ct. 2006); Seealso, S.Z. Medical, P.C. v. Country-Wide Ins. Co., 12 Misc.3d 52 (App. Term 2nd and 11th Jud. Dists. 2006); Nir v. Allstate, 7 Misc.3d 544 (N.Y. City Civ. Ct. 2005); A.R. Medical Art, P.C. v. State Farm Mutual Automobile Ins. Co., 11 Misc.3d 1057(A) (N.Y. City Civ. Ct. 2006).  The rationale in requiring a defendant to come forward with more than mere specious and conclusory opinions of hired experts is well reasoned and requires experts to fully substantiate their opinions with sound medical rationales. See, All-Boro Medical Supplies, Inc. v. Progressive Northeastern Ins. Co., 2007 N.Y. Slip. Op. 27458) (N.Y. City Civ. Ct. 2007).

Franklin Delano Roosevelt once said: “There are as many opinions as there are experts.”  Clearly, these words ring true today in the context of no-fault litigation as insurers consistently deny no-fault claims based upon the opinion of so-called “independent” medical experts.  These opinions are almost always unsupported by any “cogent medical rationale” and standing alone are worthless. Id.  Indeed, merely asserting the services at issue were “not medically necessary” based upon the unfounded opinion of a medical expert does not establish a defendant’s defense by a fair preponderance of the evidence if the expert is unable to “substantiate his or her opinion with admissible proof that their proposed course of treatment is the established standard of medical practice or procedure as related to the injuries complained of by plaintiff’s [assignor],” and therefore, the treating provider deviated from such practices when it rendered the services at issue. James M. Ligouri Physician, P.C. v. State Farm Mut. Auto Ins. Co., 15 Misc.3d 1103(A) (N.Y. Dist. Ct. 2007).

To the contrary, the contention by many medical experts hired to testify on behalf of insurance carriers at trial is that the services were not medically necessary because “that is not how they would do it in their practice.” Moreover, many experts will concede that their testimony “is merely their opinion and that other doctors would disagree.” However, if other doctors would disagree with defendant’s expert it is impractical for a defendant to contend that plaintiff deviated from “generally accepted” standards. Clearly, disagreement reflects, at best, a split in the medical community.  Therefore, under such circumstances it is impossible for a defendant to demonstrate the services at issue were not medically necessary by a preponderance of the evidence. See generally, Richardson on Evidence, §3-206 (Farrell, 11th Ed. 1995).

Since the burden will not shift back to plaintiff, rebuttal testimony is not necessary in order to prevail. Therefore, a defendant’s contention that it is entitled to dismissal because the “credible” testimony of its medical expert at trial was unrebutted is unavailing as “the opinion of the insurer’s expert, standing alone is insufficient to carry the insurer’s burden of proving that the services were not medically necessary” at trial.  Nir v. Allstate, 7 Misc.3d 544 (N.Y. City Civ. Ct. 2005); A.R. Medical Art, P.C. v. State Farm Mutual Automobile Ins. Co., 11 Misc.3d 1057(A) (N.Y. City Civ. Ct. 2006).

Defendant’s medical necessity defense is riddled with jagged edges and pitfalls that must be charily scaled in order to ultimately reach the zenith of its medical necessity defense and prevail at trial.  However, does a no-fault defendant have a way to avoid its high burden at trial by moving for summary judgment?

Burdens Abound

Recently, in A Khodadadi Radiology v. NY Central Mutual Ins. Co., 16 Misc.3d 131(A) (App. Term 2nd and 11th Jud. Dists. 2007), the Appellate Term held that a no-fault defendant may be entitled to summary judgment “if not precluded . . . by proof in admissible form establishing that the health benefits were not medically necessary,” if plaintiff fails to rebut such evidence.  Unfortunately, due to the brevity of the decision it is difficult to gauge the level of admissible evidence necessary for a defendant to obtain summary judgment.

Apparently, many well-settled principles of law are either not being raised or are being overlooked by the courts in no-fault litigation.  While this is likely due to a complacent plaintiff’s no-fault bar or an overextension of the purpose of no-fault litigation, the “venerable rules of evidence should not be casually discarded to accommodate convenience and speed in the gathering and presentation of facts or evidence.” See, Wagman v. Bradshaw, 292 A.D.2d 84 (2nd Dept. 2002).  This maxim should apply in all areas of the law, including no-fault without exception.   

In the context of a motion for summary judgment, it is the burden of the moving party to proffer “sufficient evidence in admissible form” demonstrating the absence of any material issues of fact.  Seegenerally, Alvarez v. Prospect Hospital, 68 N.Y.2d 320 (1986). Therefore, it is incumbent upon a defendant to proffer a peer review in admissible form before it can even be considered by the court.[1]  Indeed, a defendant’s failure to present a peer review in admissible form should immediately end the courts inquiry and result in the denial of the motion for summary judgment.[2]

Generally, any business record may be admitted into evidence pursuant to C.P.L.R. §4518 if an individual familiar with the practices and procedures of the business can demonstrate: 1) the document is made in the regular and ordinary course of business; 2) it is the regular and ordinary course of such business to make the document; and 3) the document was created at the time of the event, or within a reasonable time thereafter. Seegenerally, C.P.L.R. §4518;Seealso, Richardson on Evidence §8-303 (Farrell, 11th Ed. 1995).

However, the Appellate Division has added additional elements for records kept and maintained by medical professionals. Medical documents kept and maintained in the regular and ordinary course of business that satisfy the foundational elements of C.P.L.R. §4518 will nevertheless be deemed inadmissible unless: 1) The medical report being offered into evidence is part of the systematic day-to-day business entries of a medical professional; and 2) the report is germane to the treatment and diagnosis of a patient. Seegenerally, Wilson v. Bodian, 130 A.D.2d 221 (2nd Dept. 1987); Hefte v. Bellin, 137 A.D.2d 406 (2nd Dept. 1988);Komar v. Showers, 227 A.D.2d 135 (1st Dept. 1996); Progressive Northeastern Ins. Co. v. Randazzo, 24 A.D.3d 560 (2nd Dept. 2005); Bronstein-Becher v. Becher, 25 A.D.3d 796 (2ndDept. 2006). [3]  Moreover, documents that contain a doctor’s opinion or expert proof are not admissible as business records. See, Bronstein-Becher v. Becher, 25 A.D.3d 796 (2nd Dept. 2006).  As shall be fully elucidated infra, a peer review or Independent Medical Examination (hereinafter referred to as “IME”) report offered in support of a defendant’s motion for summary judgment is inadmissible hearsay.

It is beyond cavil, a peer review or IME report is a document that contains out of court statements – that when offered for their truth – constitute inadmissible hearsay, unless the report falls within an exception to the hearsay rule.  Seegenerally, Wilson v. Bodian, 130 A.D.2d 221 (2nd Dept. 1987); Hefte v. Bellin, 137 A.D.2d 406 (2nd Dept. 1988).  The initial inquiry in making such determination is not whether the document satisfies the elements of  C.P.L.R. §4518, but rather hinges upon the category of medical record a peer review or IME report falls within. Wilson v. Bodian, 130 A.D.2d 221 (2ndDept. 1987)

The three categories of medical records are: 1) hospital records; 2) physicians’ office records; and 3) physicians’ medical reports. Id.  The category in which peer review and IME reports fall within shall determine their admissibility under the business records exception to the hearsay rule. Id. at 229. Accordingly, each report shall be discussed in turn in order to make an accurate determination.

The admissibility of “hospital records” has been specifically set forth by the Legislature pursuant to C.P.L.R. §4518(c), and must be distinguished from other medical office records.Id.  “Hospital records” are generally admissible as “it is the business of a hospital’s staff to diagnose and treat its patients’ ailments.”  Therefore, “entries made in a hospital record relevant to diagnosis and treatment qualify for admission as prima facie evidence of the facts contained in the record.” Id. at 229 (Emphasis added.).  Based on the foregoing, it is clear that peer reviews and IME reports do not fall within this category.

The Appellate Division has consistently held that physicians’ office records are similar to hospital records as “it is the business duty of a physician to diagnose and treat a patient’s illness.” Seegenerally, Wilson v. Bodian, 130 A.D.2d 221 (2nd Dept. 1987); Seealso, McClure v. Baier’s Automotive Serv. Center, 126 A.D.2d 610 (2nd Dept. 1987); Hefte v. Bellin, 137 A.D.2d 406 (2nd Dept. 1988); Komar v. Showers, 227 A.D.2d 135 (1st Dept. 1996); Progressive Northeastern Ins. Co. v. Randazzo, 24 A.D.3d 560 (2nd Dept. 2005); Bronstein-Becher v. Becher, 25 A.D.3d 796 (2nd Dept. 2006). Therefore, only “entries in the office record germane to diagnosis and treatment are admissible [in evidence], including medical opinions and conclusions.” Wilson,supra at 231.

Contrarily, physicians’ medical reports have been defined as documents that are not germane to “treatment and diagnosis” and are not “the systematic, routine, day-by-day type of records envisioned by the business records exception.” Wilson v. Bodian, 130 A.D.2d 221 (2nd Dept. 1987); Bronstein-Becher v. Becher, 25 A.D.3d 796 (2nd Dept. 2006).  Similarly, physicians’ medical reports that contain a doctor’s opinion and expert proof do not fall within the business records exception. Bronstein-Becher, supra at 797.

Based upon the definitions and relevant cases discussed supra, it is clear that peer reviews and IME reports are not physicians’ office records, but rather inadmissible physicians’ medicalreports.  Peer reviews and IME reports do not contain information germane to the treatment and diagnosis of a patient. To the contrary, the purpose of peer reviews and IME reports is not to assist in diagnosis and treatment, but rather to assert an expert opinion as to the propriety of another medical provider’s diagnosis and treatment of a patient.  Peer reviews and IME reports are not the “systematic, routine, day-by-day type of records envisioned by the business records exception to the hearsay rule.”  Id. at 229-230.

Finally, an individual testifying as an expert should be “possessed of the requisite skill, training, education, knowledge of experience from which it can be assumed that the information imparted or the opinion rendered is reliable.”  Seegenerally, Richardson on Evidence, §7-304 (Farrell, 11th Ed. 1995); Seealso, Mattot v. Ward, 48 N.Y.2d 455 (1979). An expert’s opinion shall not be admissible as evidence at trial, or in a motion for summary judgment if the proponent of such testimony fails to demonstrate the expert is “qualified as an expert in an area relevant to the subject concerning which they are called to testify.”  Id.  Indeed, merely stating that an individual is an “expert” in an attorney affirmation without providing any additional proof as to their “knowledge, experience, training or education” directly related to the subject matter at issue will be insufficient to qualify such individual as an expert, and should be sufficient grounds to deny a motion for summary judgment.  Seegenerally¸ Rosen v. Loft, 16 A.D.3d 480 (2nd Dept. 2005); Hofmann v. Toys “R” US-NY Limited Partnership, 272 A.D.2d 296 (2nd Dept. 2000); LaMarque v. North Shore University Hospital, 227 A.D.2d 594 (2nd Dept. 1996);Daum v. Auburn Memorial Hospital, 198 A.D.2d 899 (4thDept. 1993).

Conclusion

 A defendant may never reach the apex before its medical necessity defense falls like Sisyphus’ stone. Rather than pragmatically settle a matter an insurer will pay a medical “expert” more than the value of a claim to defend against payment resulting in a task that is just as daunting as the task of Sisyphus.



[1] The argument against the admissibility of peer review reports was first presented two years ago. However, in light of recent decisions, it is imperative that the plaintiff’s bar becomes reacquainted with such arguments in order to dispel the mythical no-fault exception to the hearsay rule. For a detailed treatment on the issue,  See, Barshay, David M. and Rizzo, Angelo F. “Peer Reviews in No-Fault Litigation: Is there a “No-Fault Exception” to the Hearsay Rule.” TheSuffolk Lawyer. pp. 26-27.  (May 2005).

[2] Similarly, if a plaintiff were to rely upon a letter of medical necessity to rebut an insurer’s medical necessity defense the same burdens would apply

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