The fee schedule defense: when the carrier says you billed too much, not too late.

A fee schedule defense says the amount billed exceeds what Insurance Law 5108 and the workers compensation schedules permit. For services rendered on or after April 1, 2013, a regulation is read to let that defense survive a late denial. Timeliness alone will not cure an overcharge. The fight moves to codes, ground rules, and proof.

What is the fee schedule defense in a New York no-fault case?

The fee schedule defense is the carrier’s position that the amount you billed exceeds the charge permitted for that service. Insurance Law 5108(a) caps charges at the amounts permissible under the schedules prepared and established by the chairman of the Workers’ Compensation Board. A charge above the cap is not owed, however sound the treatment was.

Section 5108(a) sets the cap and creates a narrow escape hatch: the cap does not apply where the insurer or an arbitrator determines that unusual procedures or unique circumstances justify the excess charge. The determination belongs to the insurer or the arbitrator. A provider does not create the exception by writing “unusual” on the bill.

Section 5108(b) directs the superintendent, after consulting the chairman and the commissioner of health, to promulgate implementing rules, including schedules for services the Board has not scheduled. That is where 11 NYCRR Part 68, Regulation 83, comes from.

Section 5108(c) does something people forget until it hurts. No provider may demand or request payment in addition to the charges authorized by the section. It also directs every insurer to report patterns of overcharging or excessive treatment to the commissioner of health within thirty days after learning of the pattern. The exposure is not only the gap between bill and allowance. It can be a referral.

Law: Insurance Law 5108(a), (b), (c); 11 NYCRR Part 68 (Regulation 83).

Does an untimely denial waive the carrier’s fee schedule defense?

An untimely denial does not waive a fee schedule defense for services rendered on or after April 1, 2013. 11 NYCRR 65-3.8(g)(1)(ii) provides that no payment is due, under any circumstances, for claimed medical service fees that exceed the charges permissible under Insurance Law 5108(a) and (b). Subdivision (g)(2) sets that effective date.

The background rule still bites. A carrier must pay or deny within thirty calendar days after it receives proof of the fact and amount of loss. That clock is tolled while a timely verification request goes unanswered. Blow it without a valid toll and the precludable defenses are gone.

Before the amendment, the fee schedule defense went down with the rest. The First Department held that it did not fit the narrow category of defenses that survive a late denial. Untimely denial, defense waived, and the carrier could not litigate the amount, although the provider still had to prove its own case.

The regulation was written to change that result. The operative words are “under any circumstances,” and courts applying the amendment have read them as written: a carrier that fails to deny within thirty days is still not precluded from arguing that the provider billed above the permissible amount.

Treat that as the prevailing rule, not a settled one. At least one court has held the subdivision void as beyond the Superintendent’s rulemaking authority, and the fight has played out mainly in the trial courts and the Appellate Terms.

Law: Insurance Law 5106(a); 11 NYCRR 65-3.5(b), 65-3.8(a)(1), (b), (g)(1)(ii), (g)(2).

Cases: Mercury Cas. Co. v Encare, Inc., 90 AD3d 475 (1st Dept 2011), lv denied 18 NY3d 810 (2012); Saddle Brook Surgicenter, LLC v All State Ins. Co., 48 Misc 3d 336 (Civ Ct, Bronx County 2015); Tyorkin v Garrison Prop. & Cas. Ins. Co., 2016 NY Slip Op 50846(U) (Civ Ct, Kings County 2016); Excel Surgery Ctr., LLC v Metropolitan Prop. & Cas. Ins. Co., 65 Misc 3d 149(A) (App Term, 2d Dept 2019); contra MUA Chiropractic Healthcare, PLLC v State Farm Mut. Auto. Ins. Co., 2019 NY Slip Op 29375 (Dist Ct, Suffolk County 2019).

Late is not the same as wrong. A carrier can blow the thirty days and still be right about the number.

Which no-fault defenses survive a late denial and which are waived?

Survival depends on the category of the defense and on the date of service. Fee amount defenses and policy exhaustion defenses are treated differently from medical necessity and late claim submission defenses. Sorting the carrier’s positions into the two columns is the first analytical step in any first-party no-fault case, and it is usually dispositive of strategy.

One more timing point cuts against the reflex of attacking the denial’s wording. For services rendered on or after April 1, 2013, a non-substantive technical or immaterial defect or omission in the NF-10 does not affect the denial’s validity. Skipping the form is a different problem. A reduction sent out on an explanation of review alone, with no approved denial form behind it, is not the same as a typographical flaw.

Law: 11 NYCRR 65-3.8(h); 65-3.8(c)(1).

What are ground rules and CPT coding fights really about?

Ground rules are the instructions built into the workers compensation medical fee schedule that tell you how a procedure code converts into a permitted charge. Coding fights are rarely about whether treatment happened. They are about which code fits, whether a second code is separately payable, and what documentation a by report code requires.

• Downcoding. The carrier reassigns the billed code to one with a lower value and pays at that rate.
• By report codes. Unlisted and by report codes carry no fixed value. The amount is built from a report. No report, no number.
• Multiple procedures. Ground rules reduce payment when several procedures are performed in one session. Whether the reduction applies is a rule question, not a medical one.
• Unbundling. The carrier says the components billed separately are already inside the primary code.
• Modifiers. A modifier can justify separate payment. It can also be the entire reason for the reduction.

These fights are genuinely triable. In one reported decision, the disputes were whether the carrier’s coder properly downcoded cupping from CPT 97799 to CPT 97039 and correctly assigned relative value units to a by report code. Issues of fact, summary judgment denied.

Case: Demas v State Farm Fire & Cas. Co., 2022 NY Slip Op 50250(U).

What happens when there is no fee schedule for the service billed?

Absence of a schedule is not a license to charge what the market bears. The Court of Appeals held that an accredited office-based surgery center is not entitled to a no-fault facility fee, because neither the Chair of the Workers’ Compensation Board nor the Superintendent placed office-based surgery facility fees in the schedules. The claim failed entirely.

That is the harshest version of the defense. The carrier is not arguing that you billed above a number. It is arguing that there is no number. The schedules define the universe of reimbursable charges, the service billed was outside them, and the charge was not payable. The default provision for unscheduled services, 11 NYCRR 68.5, did not rescue that claim.

Out-of-state services follow a separate path. Under 11 NYCRR 68.6, the permissible charge for a service performed outside New York State is the prevailing fee in the geographic location of the provider. The Appellate Term, First Department, held that where that jurisdiction has its own medical fee schedule, the carrier may rely on it to set the prevailing fee.

Case: Government Empls. Ins. Co. v Avanguard Med. Group, PLLC, 27 NY3d 22 (2016), affg 127 AD3d 60 (2d Dept 2015).

Case: Surgicare Surgical Assoc. v National Interstate Ins. Co., 50 Misc 3d 85 (App Term, 1st Dept 2015).

What must the carrier prove on summary judgment to win a fee schedule defense?

A carrier asserting a fee schedule defense on summary judgment must prove it. To establish that it paid in accordance with the fee schedule, the carrier must submit an affidavit from a no-fault or litigation examiner, or from a professional medical coder or biller, showing how the permissible amount was calculated. A conclusory reduction letter is not evidence.

I read the NF-3 claim forms, the NF-10 denial, and the fee schedule in force on the date of service before I read the complaint. I ask for the coder’s worksheet before I ask anyone what the carrier’s position is.

The affidavit has to connect four things: the code billed, the code the carrier applied, the ground rule that authorized the change, and the schedule value that produced the payment. Break any link and there is no prima facie showing. Where the carrier also asserts a precludable defense, it must prove timely mailing of the denial, ordinarily through an affidavit describing a standard office practice designed to ensure mailing.

Cases: Merrick Med., P.C. v A Cent. Ins. Co., 64 Misc 3d 142(A) (App Term, 2d Dept 2019); Oleg’s Acupuncture, P.C. v Hereford Ins. Co., 58 Misc 3d 151(A) (App Term, 2d Dept 2018); Renelique v American Tr. Ins. Co., 53 Misc 3d 141(A) (App Term, 2d Dept 2016).

On mailing: Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 (2d Dept 2001); St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 (2d Dept 2008).

What proof beats a fee schedule defense?

Defeating a fee schedule defense takes documents and a competing coding opinion, not indignation about the late denial. The provider’s prima facie case is proof that the prescribed statutory billing form was mailed and received and that payment is overdue. Once the carrier produces a coder’s affidavit, the answer has to meet it on the schedule’s own terms.

That showing is met where the claim was received and neither paid nor validly denied within thirty days. It is a threshold, not a verdict. Four responses earn their keep.

• A rebuttal coder affidavit. Same credentials, same schedule, different conclusion, with the ground rule identified by number.
• The underlying records. The operative report, the treatment notes, and the report supporting any by report code. A code is defended by its documentation.
• Scope. The regulation withholds payment for the claimed fees that exceed the permissible charges. On its face it addresses the excess, not automatically the entire line. Courts have not uniformly accepted that reading, so preserve the point rather than assume it.
• The 5108(a) exception. Unusual procedures or unique circumstances can justify an excess charge, but the statute assigns that call to the insurer or the arbitrator. Build the record for it rather than assuming it.

Cases: Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 (2015); Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 (2d Dept 2004).

What should you do first when a carrier says you billed too much?

The first move in a fee schedule dispute is to fix the date of service and pull the schedule that applied on that date. The date decides whether the carrier’s late denial is fatal to the defense, which ground rules apply, and whether the argument is about an amount or about whether any amount was payable at all.

Then, in order:

• Assemble the NF-3 forms as submitted, codes and modifiers exactly as billed.
• Get the NF-10 denial and the explanation of review, and date-stamp both against the thirty-day clock. Note whether an approved denial form issued at all.
• Check the verification correspondence before you call a denial late. An unanswered verification request moves the deadline.
• Sort the positions into precludable and non-precludable columns. Attack the precludable ones on timing, the fee schedule position on the merits.
• Retrieve the documentation behind every contested code, especially any by report code.
• Confirm a schedule exists for the service at all, and if the service was performed outside New York, identify the provider’s location and that jurisdiction’s schedule.
• Line up a coder before the summary judgment motion, not after it is served.

Do this in that order and the case stops being a dispute about who was late. It becomes a dispute about a number, which can be proved.