On July 2, 2008, the New Jersey Appellate Division affirmed a trial court order for judgment that declared that Healthcare Integrated Services, Inc. ('HIS') violated the New Jersey Insurance Fraud Prevention Act by billing Liberty Mutual Insurance Company for MRI testing that was illegally rendered. The trial court awarded damages in favor of Liberty Mutual in the amount of $1.8 million. See, Liberty Mutual Insurance Company v. Healthcare and Related Services, Inc., Superior Court of New Jersey, Appellate Division Docket number A-5599-04 T3, (Dec'd. July 2, 1998).
Liberty Mutual Insurance Company had filed a Complaint against HIS and its officers, directors, and employees in which it alleged, in part, that the defendants owned and/or operated a number of MRI facilities located in New Jersey and that the facilities were operated illegally in that they did not possess a required ambulatory care facility license issued by the New Jersey Department of Health and Senior Services ('DHSS') and/or were not owned and under the control of plenarily licensed medical doctors. Defendants contended that the MRI facilities were actually private medical practices that were not required to possess an ambulatory care facility license. Based upon the evidence presented by Liberty Mutual on its summary judgment motion, the trial court found that 'HIS … violated the Fraud Act by the failure to obtain licenses, the illegal operation included HIS's exercise and control over the various [professional service] corporations, creating entities where they had an interest disguised as consulting or management agreements, making medical decisions, hiring and firing medical personnel, backdating agreements and filing claims containing false or misleading information that they were duly licensed and operating in compliance with the Corporate Practice of Medicine Doctrine in a legal manner.” N.J.S.A. 17:33A-4a(1) & a(3). See Allstate Insurance Company v. OEI, 300 N.J. 510 (App. Div. 1997). HIS also was found to have conspired with the other entities to obtain PIP payments when none were entitled. Liberty Mutual Insurance Company v. Healthcare Integrated Services, Superior Court of New Jersey, Law Division, Morris County Docket No. MRS-L-2189-01 (Dec'd. on March 18, 2005). Slip op. at *39. The trial court found that the operation, ownership and control of the MRI facilities violated N.J.A.C. 13:35-2.5, and its successor regulation N.J.A.C. 13:35-2.6, which required MRI facilities which are not licensed by the DHSS to be owned and under the control of plenarily licensed medical doctors.
In a terse opinion, the Appellate Division affirmed for the reasons stated in the trial court's opinion.
The Appellate Division's summary disposition of HIS' appeal confirmed that, in New Jersey, medical services must be rendered in accordance with governing laws and regulations in order to qualify for payment and that a medical provider violates the Insurance Fraud Prevention Act by billing for services which are not so rendered.
Thomas O. Mulvihill, Editor-in-Chief of this newsletter, contributed this month's case brief.
On July 2, 2008, the New Jersey Appellate Division affirmed a trial court order for judgment that declared that Healthcare Integrated Services, Inc. ('HIS') violated the New Jersey Insurance Fraud Prevention Act by billing Liberty Mutual Insurance Company for MRI testing that was illegally rendered. The trial court awarded damages in favor of Liberty Mutual in the amount of $1.8 million. See, Liberty Mutual Insurance Company v. Healthcare and Related Services, Inc., Superior Court of New Jersey, Appellate Division Docket number A-5599-04 T3, (Dec'd. July 2, 1998).
Liberty Mutual Insurance Company had filed a Complaint against HIS and its officers, directors, and employees in which it alleged, in part, that the defendants owned and/or operated a number of MRI facilities located in New Jersey and that the facilities were operated illegally in that they did not possess a required ambulatory care facility license issued by the New Jersey Department of Health and Senior Services ('DHSS') and/or were not owned and under the control of plenarily licensed medical doctors. Defendants contended that the MRI facilities were actually private medical practices that were not required to possess an ambulatory care facility license. Based upon the evidence presented by Liberty Mutual on its summary judgment motion, the trial court found that 'HIS … violated the Fraud Act by the failure to obtain licenses, the illegal operation included HIS's exercise and control over the various [professional service] corporations, creating entities where they had an interest disguised as consulting or management agreements, making medical decisions, hiring and firing medical personnel, backdating agreements and filing claims containing false or misleading information that they were duly licensed and operating in compliance with the Corporate Practice of Medicine Doctrine in a legal manner.” N.J.S.A. 17:33A-4a(1) & a(3). See Allstate Insurance Company v. OEI , 300 N.J. 510 (App. Div. 1997). HIS also was found to have conspired with the other entities to obtain PIP payments when none were entitled. Liberty Mutual Insurance Company v. Healthcare Integrated Services, Superior Court of New Jersey, Law Division, Morris County Docket No. MRS-L-2189-01 (Dec'd. on March 18, 2005). Slip op. at *39. The trial court found that the operation, ownership and control of the MRI facilities violated N.J.A.C. 13:35-2.5, and its successor regulation N.J.A.C. 13:35-2.6, which required MRI facilities which are not licensed by the DHSS to be owned and under the control of plenarily licensed medical doctors.
In a terse opinion, the Appellate Division affirmed for the reasons stated in the trial court's opinion.
The Appellate Division's summary disposition of HIS' appeal confirmed that, in New Jersey, medical services must be rendered in accordance with governing laws and regulations in order to qualify for payment and that a medical provider violates the Insurance Fraud Prevention Act by billing for services which are not so rendered.
Thomas O. Mulvihill, Editor-in-Chief of this newsletter, contributed this month's case brief.
