Government Employees Insurance Co., et al., Respondents,v.Avanguard Medical Group, PLLC, Appellant.

Brief

N.Y.Feb 10, 2016

APL-2015-00130 Nassau County Clerk’s Index No. 16313/11 Appellate Division–Second Department Docket No. 2013-02277 Court of Appeals of the State of New York GOVERNMENT EMPLOYEES INSURANCE CO., GEICO INDEMNITY CO., GEICO GENERAL INSURANCE CO. and GEICO CASUALTY CO., Plaintiffs-Respondents, – against – AVANGUARD MEDICAL GROUP PLLC, Defendant-Appellant. BRIEF FOR DEFENDANT-APPELLANT IN RESPONSE TO AMICUS CURIAE NEW YORK STATE ASSOCIATION OF AMBULATORY SURGERY CENTERS, INC. CHARLES MICHAEL Of Counsel STEPTOE & JOHNSON LLP Appellate Counsel for Defendant- Appellant The Grace Building 1114 Avenue of the Americas New York, New York 10036 Tel.: (212) 506-3900 Fax: (212) 506-3950 Date Completed: January 28, 2016 TABLE OF CONTENTS INTRODUCTION ..................................................................................................... 1 DISCUSSION ............................................................................................................ 2 I. Avanguard Need Not Be Licensed or Regulated in Any Particular Way For Its Services to Fall Within the Broad Statutory Language For Reimbursement ................. 2 II. The Allegedly High Cost of Starting An ASC Is Unsupported and Irrelevant ............................................................... 6 III. Whether Office-Based Surgery Providers Must Pay An HCRA Surcharge is Irrelevant ................................................. 6 IV. The Lack of Medicare or Medicaid Reimbursement for Facility Fees is Irrelevant ................................................................ 7 V. The Court Should Give Zero Weight to Arguments Based on Protecting ASCs From Competition ................... 8 VI. The ASC Association’s Accusations of “Misrepresentations” in Avanguard’s Brief Are Themselves False ........................................ 9 CONCLUSION ........................................................................................................12 - ii - TABLE OF AUTHORITIES CASES Gov’t Employees Ins. Co. v. Avanguard Med. Grp., PLLC, 127 A.D.3d 60 (2d Dep’t 2015) ....................................................................... 4 Quality Med. Care, P.C. v. New York Cent. Mut. Fire Ins. Co., 907 N.Y.S.2d 440, 2010 WL 653907 (App. Term 2010)................................ 4 STATUTES N.Y. INS. LAW § 5102 ...................................................................................... passim N.Y. LLC LAW § 1203 ............................................................................................... 4 N.Y. PUB. HEALTH LAW § 230-d ............................................................................4, 5 RULES 11 NYCRR § 65-3.16................................................................................................. 3 OTHER AUTHORITIES BLACK’S LAW DICTIONARY (10th ed. 2014) .............................................................. 4 N.Y. Bill Jacket, 2007 S.B. 6052, Ch. 365 ................................................................ 5 The appellant (“Avanguard”) respectfully submits this brief in response to the amicus brief of the New York State Association of Ambulatory Surgery Centers, Inc. (the “ASC Association”). INTRODUCTION This appeal concerns a pure question of statutory interpretation, yet the ASC Association has filed a 37-page amicus brief that, stunningly, nowhere cites or quotes the statute in question. The brief instead focuses on irrelevant and erroneous arguments that the Court should reject. The legal question raised by this appeal is whether New York’s no-fault insurance laws allow accredited office-based surgery providers like Avanguard to recoup the expenses of car accident surgeries by charging “facility fees” that are separate from professional fees paid to the treating surgeon. The Second Department concluded that office-based surgery providers are never entitled to facility fees as a matter of law because the regulators have adopted “fee schedules,” which set the maximum allowed charge, addressed only to other types of medical providers, such as ambulatory surgery centers (“ASCs”). The central error in that decision was to overlook that the Insurance Law allows for reimbursement of “[a]ll necessary” medical expenses, regardless of the setting. N.Y. INS. LAW § 5102(a)(1). The regulators’ failure to establish a maximum charge for office-based surgery cannot mean that no charge is allowable - 2 - or otherwise rewrite the statute. The ASC Association’s brief essentially ignores this issue, and focuses almost entirely on the argument that office-based surgery providers cannot charge facility fees because they are not regulated or licensed in the same way as ASCs. The ASC Association does not explain whether or where a requirement along those lines exists. It does not. The ASC Association filed a substantially similar brief before the Second Department, which did not see fit to cite the brief or adopt its peculiar arguments. As before, the ASC Association has larded its papers with unsupported factual assertions of counsel (such as the alleged expense of setting up an ASC). For these reasons, and those discussed more fully below, the Court should reject the ASC Association’s arguments entirely. 1 DISCUSSION I. AVANGUARD NEED NOT BE LICENSED OR REGULATED IN ANY PARTICULAR WAY FOR ITS SERVICES TO FALL WITHIN THE BROAD STATUTORY LANGUAGE FOR REIMBURSEMENT The ASC Association argues at great length that accredited OBS providers are not “licensed” or “regulated” by New York State. (ASC Br. at 14-24.) According to the ASC Association, the office-based surgery law passed in 2007 1 One of the few changes from the ASC Association’s amicus brief before the Second Department is that the ASC Association has now added former Judge Ciparick, who recently joined its outside law firm, in the signature block as counsel. It is unseemly, to say the least, for the ASC Association to think that tacking her name on papers drafted in substance by others years ago would somehow make those papers more persuasive to the Court’s current members. - 3 - did not “elevate [office-based surgery] practices to some kind of new ‘facility’ status” or make them equivalent to “licensed” ASCs. (Id. at 21-24.) Critically missing from these arguments is any statute or other authority limiting no-fault reimbursement to medical providers that are licensed or regulated in any particular way, or that meet the ASC Association’s definition of a “facility.” There is none. (See Avanguard Br. 24-25.) To the contrary, reimbursement is required for “[a]ll necessary expenses” for “medical [or] surgical . . . services.” N.Y. INS. Law § 5102(a)(1). This statutory language is the crux of this appeal, but is not even cited anywhere in the ASC Association’s 37-page brief. To be sure, there is a regulation (which is likewise not cited anywhere in the ASC Association’s brief), prohibiting recovery for any service performed by a provider who “fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York.” 11 NYCRR § 65-3.16(a)(12). But that regulation does not require that a provider have any particular license to be eligible for reimbursement. By its terms, the regulation simply bars recovery if a provider is out of compliance with any licensing requirements that are “applicable” and “necessary” to perform the service. Id. Thus, for example, the reason that unlicensed acupuncturists cannot recover no-fault benefits is because “[o]nly someone properly licensed or certified may practice acupuncture in New York State.” Quality Med. Care, P.C. v. New York - 4 - Cent. Mut. Fire Ins. Co., 907 N.Y.S.2d 440, 2010 WL 653907, at *1 (App. Term 2010). Here, it is undisputed that Avanguard is accredited and fully authorized by law to provide the services at issue. The ASC Association cannot identify any “applicable” or “necessary” licensing requirement that Avanguard has not met. (GEICO, the respondent, has not raised this point at all, much less pointed to an applicable licensing requirement that Avanguard has failed to meet.) In any event, even if there were a precondition that Avanguard be “licensed” or “regulated” (and there is none), those terms accurately describe Avanguard. “Licensed” means “[h]aving official permission to do something,” BLACK’S LAW DICTIONARY (10th ed. 2014), and it is “not in dispute that Avanguard’s Brooklyn office is accredited as a setting for office-based surgery” under N.Y. PUB. HEALTH LAW § 230-d(3). Gov’t Employees Ins. Co. v. Avanguard Med. Grp., PLLC, 127 A.D.3d 60, 62 (2d Dep’t 2015). Avanguard is a PLLC, which by law must be owned and operated by licensed professionals, see N.Y. LLC LAW § 1203, and there is no dispute that the company is in compliance with that law, as well. As a result, Avanguard has “official permission” by law — that is, it is licensed — to provide office-based surgery services. That is why the Department of Health lists Avanguard on its website as among the State’s accredited providers. 2 2 See https://www.health.ny.gov/professionals/office-based_surgery/practices/ alphabetical_list.htm#ad - 5 - Avanguard is likewise “regulated” because, like all office-based surgery providers, it must obtain and maintain accreditation by agencies chosen by the Department of Health — which can use its selection powers to effectively impose all manner of requirements statewide. (The Medical Society of the State of New York and The Society of New York Office Based Surgery Facilities, Inc. have filed an amicus brief that shows in detail the onerous burdens of these accreditation requirements — which, it should be emphasized, are issued by the same accreditation agencies that accredit ASCs and which are substantially similar to the accreditation requirements for ASCs.) In addition, office-based surgery providers are required by law to make various reports to the Department of Health, which is broadly authorized to “make, adopt, promulgate and enforce such rules and regulations, as [the Department] may deem appropriate” relating to office-based surgery. N.Y. PUB. HEALTH LAW § 230-d(5). Consistent with these provisions, the statute’s legislative history is replete with references to fact that the law “regulates” office-based surgery providers. 3 The ASC Association’s contrary position cannot be taken seriously. 3 See N.Y. Bill Jacket, 2007 S.B. 6052, Ch. 365, at 5 (health committee chair’s memo describing bill as requiring that “office-based surgery be subject to a state regulatory mechanism”), 10 (introducer’s memorandum stating that the bill “will provide for oversight of OBS” by the Department of Health); 14 (Department of Health memo stating that the bill “updates New York’s regulatory structure”); 50 (Health Plan Association urging adoption because “having an appropriate regulatory scheme for office-based surgery” is “sufficiently important”). - 6 - II. THE ALLEGEDLY HIGH COST OF STARTING AN ASC IS UNSUPPORTED AND IRRELEVANT The ASC Association asks the Court to “understand” that it takes an investment of $2 million to $7.5 million to establish an ASC, which is supposedly much higher than the cost for opening an office-based surgery provider. (ASC Br. at 25-26.) But the ASC Association provides zero evidence for these statements. They are bare assertions of counsel that the Court should disregard. Even assuming the ASC Association had supplied evidence on these points, that would hardly justify the Second Department’s sweeping judgment that office-based surgery providers are never allowed to recover any fees as a matter of law. The cost differential, if any, can be addressed by judges and arbitrators establishing the extent to which particular fees are “necessary” for each provider. N.Y. INS. LAW § 5102(a)(1). III. WHETHER OFFICE-BASED SURGERY PROVIDERS MUST PAY AN HCRA SURCHARGE IS IRRELEVANT The ASC Association argues that, because the 1996 HCRA statute imposes a “surcharge” on ASCs but not office-based surgery providers, only ASCs should be permitted to charge facility fees. (ASC Br. at 27-30.) That conclusion hardly follows, however, because nothing in the HCRA amended the clear statutory language in the no-fault laws requiring reimbursement for “[a]ll necessary expenses” for “medical [or] surgical . . . services.” N.Y. INS. LAW § 5102(a)(1). In - 7 - addition, the HCRA surcharge law was passed 11 years before the office-based surgery law, and thus could not possibly reflect a legislative judgment that office-based surgery providers should somehow be exempt from no-fault reimbursement. (Avanguard Reply Br. at 10.) The legislature is free at any time to impose surcharges on office-based surgery if it sees fit. In any event, even assuming that ASCs must bear an additional cost compared to office-based surgery providers, the answer to that issue cannot possibly be to rewrite the no-fault laws so that office-based surgery providers are never entitled to any compensation. Instead, as discussed, arbitrators and judges are fully capable of awarding reimbursement in a way that accounts for differing expenses (including any surcharge obligations), just as they had been doing in the overwhelming majority of cases in the years before the Second Department’s ruling in February 2015. (See Avanguard. Br. at 22-23.) IV. THE LACK OF MEDICARE OR MEDICAID REIMBURSEMENT FOR FACILITY FEES IS IRRELEVANT The ASC Association highlights that Medicare and Medicaid do not currently reimburse office-based surgery providers for facility fees (ASC Br. at 24), but that observation is similarly irrelevant because nothing in the no-fault law conditions reimbursement of the expenses at issue on how those programs work. The ASC Association may be implying that the Medicare and Medicaid reimbursement policy casts doubt on the legitimacy of the expenses here, but it - 8 - actually shows the opposite. As the ASC Association concedes, the professional reimbursement for Medicare and Medicaid is higher for office-based surgery providers, precisely to cover the overhead expenses that ASCs (but not office- based surgery providers) recoup through facility fees under those programs. (ASC Br. at 32, 35; Avanguard Br. at 26 n.15.) Unlike with Medicare and Medicaid, however, the no-fault laws provide for identical professional reimbursement, regardless of where a procedure is performed. (Id. at 10.) Thus, if the Second Department’s decision is allowed to stand, doctors performing office-based surgery will be undercompensated in no-fault cases and will have little incentive to perform those procedures in a licensed office-based setting at all. They could perform the identical procedures in an ASC, and have the ASC incur (and receive reimbursement for) all the expenses. That nonsensical result is not the law. V. THE COURT SHOULD GIVE ZERO WEIGHT TO ARGUMENTS BASED ON PROTECTING ASCS FROM COMPETITION The ASC Association argues that ruling for Avanguard would “severely diminish the value of an ASC’s license” (ASC Br. at 30), but questions of statutory interpretation having nothing to do with protecting incumbent businesses from fair competition. In any event, regardless of the alleged economic harms that would befall ASCs, encouraging doctors to form licensed office-based surgery practices to compete with ASCs is greatly beneficial to the practice of medicine. Patients prefer the convenience of having procedures performed in the offices of their own - 9 - physicians, where studies have shown the procedures are just as safe and effective, rather than having to schedule separate appointments at an ASC. These are among the reasons why the Medical Society of the State of New York, representing approximately 30,000 licensed physicians in New York, is supporting Avanguard’s position in this case, not GEICO’s. (See Amicus Brief of The Medical Society of the State of New York and The Society of New York Office Based Surgery Facilities, Inc., at 14-17 (detailing effectiveness of, and patient satisfaction with, office-based surgery).) VI. THE ASC ASSOCIATION’S ACCUSATIONS OF “MISREPRESENTATIONS” IN AVANGUARD’S BRIEF ARE THEMSELVES FALSE The ASC Association charges Avanguard with making three misrepresentations to the Court, but each charge is baseless. First, the ASC Association repeats its charge that Avanguard should not refer to itself as “licensed” or “regulated” (ASC Br. at 30-33) but, as discussed above, those terms are perfectly applicable here. Second, the ASC Association claims that the Worker’s Compensation Board opined in a 2008 letter that facility fees are available only to ASCs, and faults Avanguard for saying that the regulators have not addressed the question one way or the other. (ASC Br. at 33.) But the cited letter, which is available as Exhibit D to GEICO’s opposition to Avanguard’s motion for leave to appeal, is quite plainly inapplicable. It simply makes the unremarkable point that only licensed - 10 - ambulatory surgery centers can recover, under the workers’ compensation laws, the facility fees referenced in certain regulations that are specific to ambulatory surgery centers — a category of fees Avanguard is not seeking here. In addition, the letter states on its face that it is “provided for informational purposes only” and that “No-Fault cases may be subject to differing interpretations.” (Avanguard Br. 26-27.) Tellingly, GEICO has not relied on this obviously inapplicable letter. To the extent there remains any doubt on this point, the Worker’s Compensation Board expressly stated this past October that it has no intention of opining on the question on this appeal — the question the ASC Association falsely contends was settled in 2008. (See Amicus Brief of The Medical Society of the State of New York and The Society of New York Office Based Surgery Facilities, Inc., Ex. E.) Finally, the ASC Association contends that professional fee reimbursements already fully cover the expenses that Avanguard seeks to recoup here, and faults Avanguard for arguing otherwise. (ASC Br. at 34-35.) But, as detailed at length in Avanguard’s merits reply brief, the professional fee schedules nowhere state that they cover the significant out-of-pocket expenses associated with particular surgeries, or with establishing or running an accredited office-based surgery environment. (Avanguard Reply Br. at 7-9.) The fact that the professional fee schedules occasionally specify discrete items that are included in the professional fee (such as radiology images) only confirms that, as a general matter, expenses are - 11 - not included. (Id.) In addition, the laws and regulations authorizing facility fees to hospitals and ASCs expressly state that they include expenses for nurses, drugs, equipment and other overhead — confirming that those costs cannot possibly be included already in the professional reimbursement component paid to individual surgeons. (Avanguard Reply Br. at 4-7.) And the fact that facility fees for ASCs vary from procedure to procedure (as opposed to being pegged to the startup or regulatory costs that supposedly distinguish an ASC from and OBS) is even further confirmation the expenses for a particular procedure are exactly what facility fees — not professional fees — are intended to cover. The ASC Association nowhere addresses this critical evidence, and instead states that “in the past, a surgeon in private practice who performed surgery in his/her office would bill and collect one professional fee,” and no facility fee (ASC Br. at 34) — as if to suggest that the fees at issue here are a newly-invented contrivance. The Court should give zero weight to the ASC’s argument on this point because, once again, it is based on a bare statement of counsel, without any citation to evidence. The Second Department terminated this litigation before any discovery was allowed, but discovery would show (assuming any is necessary) that office-based surgery providers have been billing and collecting facility fees from patients and private insurers, even outside the no-fault context, for years, and that it would be economically devastating to cut off this important revenue source. Consistent with these facts, the Department of Health's website acknowledges that the payment of facility fees "is a matter of negotiation between the insurer and the [office-based surgery] practice" (R. 290), as opposed to suggesting that facility fees are improper or prohibited. Simply put, facility fees are bona fide, legitimate charges that are separate from professional fees. They are therefore "necessary" under the no-fault laws and should be reimbursed. N.Y. INS. LAW§ 5102(a)(1). CONCLUSION For the stated reasons, the Court should reject the arguments presented by the ASC Association, and should hold that, in appropriate cases, office-based surgery providers may recover facility fees under the no-fault laws. Dated: New York, New York January 28, 2016 Respectfully submitted, By:~~ Charles Michael STEPTOE & JOHNSON LLP 1114 Avenue of the Americas New York, New York 10036 Tel: (212) 506-3900 Fax: (212) 506-3950 Counsel for Avanguard Medical Group, PLLC - 12-