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Brentwood Pain & Rehabilitation Services, P.C. v. Allstate Insurance Co.

September 14, 2007


The opinion of the court was delivered by: Chin, D.J.


Since 1896, x-ray technology has enabled doctors to "see" inside patients' bodies without the risk of surgery. More recently, physicians have employed other imaging technologies, including Magnetic Resonance Imaging ("MRI"), to examine patients' brains, muscles, and organs without a scalpel or the risks of anesthesia and infection.

X-ray and MRI technology are both similar and different. In an x-ray, the image is produced by passing electrons through the body and onto film or a fluorescent light. The ultimate image, which is essentially a shadow of the body, shows the densest material, bone, as white, and soft tissues --muscle, fat, and skin -- as gray or black. In MRI, a strong magnetic field first aligns protons in the body, a pulse of radio waves then mis-aligns them, and the image is produced by picking up the radio signal emitted by the protons realigning. Soft tissues produce a bright image, while bones appear black. X-rays take minutes to perform, while an MRI can take an hour or more. On the other hand, both are diagnostic procedures that produce images of internal parts of the body, and both fall under the branch of medicine termed radiology.

In this case, the issue presented is whether MRIs are covered by regulations that limit the fees that can be charged under the New York no-fault auto insurance law when multiple body parts are imaged in one session. The New York State Workers' Compensation Board ("WCB"), the New York State Department of Insurance ("DOI"), and the defendants in this case (numerous insurance companies ("Insurers")) would apply the same fee limitations to MRIs as are applied to x-rays under the WCB schedule of medical fees, and adopted by DOI under New York's no-fault statute. Plaintiffs Brentwood Pain & Rehabilitation Services, P.C., Hempstead Pain & Medical Services, P.C., and Signature Health Center, LLC (together, "Providers") contend that limiting the reimbursement of MRI in this way is improper and violates the terms of the insurance contracts between the parties.

Providers move to certify this case as a class action, with themselves as class representatives for all New York MRI service providers similarly situated. Insurers oppose class certification and move for summary judgment, contending that Providers' claim must be dismissed in light of interpretations of the relevant regulations by DOI and WCB. In response to Insurers' motion, Providers cross-moved for summary judgment in their favor.

For the reasons that follow, Insurers' motion for summary judgment is granted, Providers' cross-motion for summary judgment is denied, and Providers' motion for class certification is denied as moot.


The facts are largely undisputed; rather, the parties disagree as to the effect of the prior state court decision rendered in this case, the weight to be afforded certain letters from DOI and WCB, and ultimately the legal interpretation of the applicable regulations.

A. Facts

Providers perform MRIs on individuals injured in car accidents and therefore are eligible for payment of benefits, by assignment, under New York's "No-Fault" insurance law. (Compl. ¶ 4).

Radiology, which includes MRIs and x-rays (see The Merck Manual of Diagnosis & Therapy 2715-17 (Mark H. Beers, MD et al. eds., 18th ed. 2006) (hereinafter "Merck Manual"),*fn1 is "a branch of medicine concerned with the use of radiant energy (as X rays) or radioactive material in the diagnosis and treatment of disease," and "the science of radioactive substances and high energy radiations." Merriam-Webster's Collegiate Dictionary 961 (10th ed. 1993) (hereinafter "Merriam Webster"). (See Quadrino Decl. Ex. E (Hamet Aff.) ¶ 4 ("[T]he . . . field of Radiology . . . include[s] x-rays, MRIs, sonograms, ultrasound, and xerioradiography.")). "Radiologic tests can provide images of almost any organ, system, or part of the body in a noninvasive way so that diagnoses can be made and treatment planned or monitored frequently without the need for the patient to undergo exploratory surgery." The American Medical Association Encyclopedia of Medicine 848 (Charles B. Clayman, MD ed. 1989) (hereinafter "AMA Encyclopedia").

MRI is "a noninvasive diagnostic technique that produces computerized images of internal body tissues and is based on nuclear magnetic resonance of atoms within the body induced by the application of radio waves." Merriam Webster, at 698. MRI "provides high quality cross-sectional images of organs and structures within the body without X rays or other radiation." AMA Encyclopedia, at 699.

During an MRI, "the patient lies inside a massive, hollow, cylindrical magnet and is exposed to short bursts of a powerful magnetic field." Id. The magnetic field lines up the nuclei of the hydrogen atoms in the patient's body. Id. A strong pulse of radio waves is then emitted, which knocks the nuclei out of alignment; as the nuclei fall back into alignment they produce a detectable radio signal. Id.; see Merck Manual, at 2716. "Magnetic coils in the [MRI] machine detect these signals and a computer changes them into an image based on the strength of signal produced by different types of tissue"; soft tissues produce a bright image, while hard tissues, such as bone, appear black. AMA Encyclopedia, at 699-700. "MRI is preferred . . . when soft-tissue contrast resolution is important -- e.g., to evaluate intracranial, spinal, or spinal cord abnormalities or to evaluate suspected musculoskeletal tumors, inflammation, trauma, or internal joint derangement." Merck Manual, at 2716-17.

An x-ray is any of the electromagnetic radiations of the same nature as visible radiation but having an extremely short wavelength . . . that is produced by bombarding a metallic target with fast electrons in vacuum or by transition of atoms to lower energy states and that has the properties of ionizing a gas upon passage through it, of penetrating various thicknesses of all solids, of producing secondary radiations by impinging on material bodies, of acting on photographic films and plates as light does, and of causing fluorescent screens to emit light.

Merriam Webster, at 1364. "X rays can be used to produce images of bones, organs, and internal tissues. Low doses of X rays are passed through the tissues and cast images -- essentially shadows -- onto film or a fluorescent screen." AMA Encyclopedia, at 1083.

Each of the body's tissues absorbs X rays in a predictable way. Bones are dense and contain calcium; they absorb X rays well. Soft tissues -- skin, fat, blood, and muscle -- absorb X rays to a lesser extent. Thus, when an arm, for example, is placed in the path of an X ray beam, the X rays pass readily through the soft tissues but penetrate the bones much less easily. The arm casts a shadow on film or a fluorescent screen, with the bone appearing white and the soft tissues dark gray.


B. New York's No-Fault Insurance Statutory Scheme

New York enacted the Comprehensive Automobile Insurance Reparations Act (the "No-Fault Law") to promote expedient resolution of injury claims, limit costs for consumers, and reduce the need for litigation. Long Island Radiology v. Allstate Ins. Co., 830 N.Y.S.2d 192, 193-94 (2d Dep't 2007); 1973 N.Y. Sess. Laws page no. 2335 (McKinney) (Governor's Mem.). No-Fault insurance is mandatory as part of every vehicle owner's liability insurance policy in New York state. N.Y. Ins. Law § 5103 (McKinney 2006); see DeUrbaez v. Lumbermen's Mut. Cas. Co., 68 N.Y.2d 930, 932 (1986).

The No-Fault Law provides for prompt payment of "basic economic losses" up to $50,000 per person (subject to certain limitations), and limits litigation to cases involving serious injury. Long Island Radiology, 830 N.Y.S.2d at 194. "Basic economic losses" include "[a]ll necessary expenses incurred for" payment of "medical, hospital, surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services."

N.Y. Ins. Law § 5102. The No-Fault Law does not specifically mention MRI. Id. The definition of "basic economic losses" does not explicitly cover the expense of MRI. Id. Nonetheless, in practice, Insurers have provided coverage for the cost of MRI.

Under the No-Fault Law and its implementing rules and regulations, health care service providers can be assigned first party benefits and receive payment directly from insurance companies. N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.11 (2006).

Additionally, the No-Fault Law limits the amount providers can charge for services under the No-Fault scheme. It provides as follows:

(a) The charges for services . . . and any further health service charges which are incurred as a result of the injury and which are in excess of basic economic loss shall not exceed the charges permissible under the schedules prepared and established by the chairman of the [WCB] for industrial accidents, except where the insurer or arbitrator determines that unusual procedures or unique circumstances justify the excess charge.

(b) The superintendent, after consulting with the chairman of the [WCB] and the commissioner of health, shall promulgate rules and regulations implementing and coordinating the provisions of this article and the workers' compensation law with respect to charges for the professional health services specified in paragraph one of subsection (a) of section five thousand one hundred two of this article, including the establishment of schedules for all such services for which schedules have not been prepared and established by the chairman of the [WCB].

N.Y. Ins. Law § 5108. Subsection (c) mandates reporting of suspected incidents of fraud: "Every insurer shall report to the commissioner of health any patterns of overcharging, excessive treatment or other improper actions by a health provider within thirty days after such insurer has knowledge of such pattern." Id.

WCB has created a fee schedule (the "WCB Fee Schedule") that includes, inter alia, the relative values assigned to radiological services and applicable payment rules (the "Ground Rules") for radiology procedures, including x-ray and MRI. (See Feltoon Cert. Ex. A ("WCB Fee Schedule")).*fn2 The WCB Fee Schedule has been adopted by DOI. (See Feltoon Cert. Exs. B, H).

1. WCB Fee Schedule

Chapter five of the WCB Fee Schedule is titled "radiology" and is devoted to all radiological procedures. The chapter includes the Ground Rules and fee codes ("CPT codes") for all radiological services. (WCB Fee Schedule 1). The introduction to chapter five states that the definitions and rules contained therein "pertain[] to radiology (including nuclear medicine and diagnostic ultrasound)." (Id.).

a. The Ground Rules

The Ground Rules are titled "Radiology Ground Rules." (Id.). Ground Rule 1 states that "[c]onsultations and referrals for diagnostic and therapeutic radiology are to be done only by specialists." (Id.).

Ground Rule 3 is titled "Multiple Diagnostic X-Ray Procedures." (Id.). It does not explicitly refer to MRI. (See id.). This Rule provides in pertinent part: The following adjustments apply:

(a) For two contiguous parts, the charge shall be the greater fee plus 50 percent of the lesser fee.

(b) For two remote parts, the charge shall be the greater fee plus 75 percent of the lesser fee. Bilateral procedures are considered remote parts.

(c) For three or more parts, whether contiguous or remote, the charge shall be the greatest fee plus 75 percent of the ...

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