By Steven I. Kern and Daniel G. Giaquinto*

Why don’t insurers pay medical claims for services rendered to patients of auto accidents without costly arbitration? Why do they continue to pay these claims even though they get beaten time after time, and nearly always have to pay attorneys’ fees in addition to the physician’s bill? Are the insurance companies stupid and the lawyers handling physicians’ PIP arbitration claims brilliant? OR, is there some other explanation?

Last month a once prominent New Jersey physiatrist was sentenced to three years in State prison for insurance fraud. The case against him, as the case against many other physicians who experienced a similar fate, was built on the back of hundreds of hours of examinations under oath involving large numbers of patients with less than perfect memories.

He was just the latest in a series of physicians caught up in a massive campaign by insurance companies, and federal state and local prosecutors to detect and prosecute health care fraud. Physicians and others who may be too aggressive in their diagnosis or treatment of accident victims can expect to raise the suspicions of the health care insurance industry.

Physicians all too frequently take comfort in winning PIP arbitration after PIP arbitration, convinced that the attorney handling their cases is not only getting them the money they deserve, but demonstrating time after time that their practices are immune from attack by insurance company sleuths and government prosecutors. Doctor, beware, you may be winning the battles but about to lose the war.

Insurance companies have big budgets and great patience. They build their cases carefully, step by step, using highly skilled attorneys to find patterns of questionable practices. Success after success in the PIP arbitration process does not insulate the physician from civil or criminal charges of fraud.

While the physician may be convinced that his lawyer is protecting his interests, because claim after claim is being won before an arbitrator, the reality is that, from the perspective of the insurance companies, these arbitrations may prove to be the impetus to launching a fraud investigation. It is a large financial investment with the potential for even larger rewards for the insurance companies.

Any physician required to submit to arbitration to obtain reimbursement must ask himself why the insurance company is willing to expend money on an arbitration process it will almost assuredly lose, time after time after time. The answer should be evident, but all too often it gets lost in the false security of the win. The repetitive denial of claims occurs because the insurance company suspects unnecessary treatment and/or testing, or other fraudulent conduct. Examinations under oath of your patients, and potentially of you under the assignment of patient rights in the PIP arbitration process, can produce evidence to initiate, and ultimately to perfect, an investigation or prosecution of health care fraud. These actions can ultimately destroy all that you have built.

For example, insurance lawyers often question patients concerning the number of visits and the symptoms they complained of on each visit. They may also ask the patient for a description of the individual providing care or to describe any discomfort during an EMG or other procedure. If physical therapy was administered, questioning may include the amount of time spent on each modality, how often each modality was provided and how the patient felt following treatment. When a patient’s recollection of dates, symptoms or the description of the person providing care differ from the patient record, the insurance company lawyers may well say nothing, but they store that information away for another day.

Once the insurance company lawyers have sufficient numbers of discrepancies, they may bring a complaint against the physician seeking to stay all future arbitrations until these discrepancies are resolved – even though they lost those individual cases where the discrepancies first arose. They may also claim that the physician has engaged in fraud and seek reimbursement of fees already paid, punitive damages and other relief.

These cases may also be brought in parallel with law enforcement authorities, such as the New Jersey Office of Insurance Fraud Prosecutor, and with attorneys assigned to the State Board of Medical Examiners. This creates the opportunity for the perfect storm. A complaint by an insurance company which ties up future payments and wreaks havoc with cash flow, a concomitant investigation by the Insurance Fraud Prosecutor which may require expenditure of large amounts of funds to defend, and a demand by the State Board of Medical Examiners for information which may force the physician to decide between losing a Fifth Amendment privilege and cooperating with the Board in an effort to clear his name, is far more than most practices can withstand.

Even if the physician is more than able to defend against each discrepancy, few physicians have the resources to take on the insurance companies, the Insurance Fraud Prosecutor and the Board of Medical Examiners at the same time.

How to avoid being placed in this position? The easy – but unacceptable – answer is to simply stop filing fee arbitrations. Certainly physicians are entitled to be paid for their services and there is no reason for a physician to be bullied into not seeking payment for which he or she is entitled.

A PIP arbitration cannot be treated as a collections case!. The attorney handling it must not be focused solely on collecting money. He or she must be equally focused on protecting the physician’s long term interest. The attorney handling your fee arbitration must be intimately familiar with all aspects of healthcare law and not lose sight of the big picture.

If there is any doubt about it, just look at the qualifications of the lawyers representing the insurance companies. These are veteran lawyers, dedicated to protecting their company from fraud, who make their living finding and taking full advantage of flaws in a physician’s practice. They are experts in healthcare and in insurance law.

If something arises during the examination under oath which could be problematic, attempts should be made to rehabilitate the recollection or testimony. If that is not successful, supplemental information should be provided to the insurance company’s attorney to demonstrate why the witness’s recollection was inaccurate. It does not matter that the discrepancy is minor, or that it will play no part in the award of fees by the arbitrator. Each discrepancy not effectively countered could become part of the foundation of a case against the physician. Some cases may be built entirely upon seemingly minor discrepancies.

In cases of repetitive denial of claims, an examination of the physician’s practice and patient charts should be conducted by an expert working in conjunction with the physician’s attorney to determine the quality of the claims and whether an adjustment in practice is in order. Counsel may also reach out to the insurance company’s legal department to determine the problem from the company’s perspective, and attempt to allay their concerns or negotiate a resolution.

Again, the point is that winning PIP arbitrations will not insure long term success, and in fact could portend a problematic future for the practice. Counsel must not lose sight of this. The fact is that the physician’s career is at stake.

*Steven I. Kern and Daniel G. Giaquinto are attorneys with the healthcare law firm of Kern Augustine Conroy & Schoppmann, P.C., with offices in New Jersey, New York, Pennsylvania and Chicago. Mr. Kern is a nationally recognized expert on Healthcare law, an Editorial Consultant to Medical Economics Magazine, a Member of the Editorial Board of New Jersey Lawyer, and former New Jersey Deputy Attorney General assigned to the State Board of Medical Examiners. Mr. Giaquinto heads the White Collar Crime Unit of Kern Augustine. Before joining Kern Augustine Mr. Giaquinto was the Mercer County Prosecutor and then the Assistant Attorney General/Director of State Police Affairs for the State of New Jersey. He is also an Army Colonel and the Staff Judge Advocate, New Jersey National Guard. .