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Geaney: Appellate Division Rules Against Medical Providers in Jurisdictional Dispute

  • State: New Jersey

An important decision came down Wednesday on an issue that concerns practitioners, employers, carriers and third-party administrators.

John H. Geaney

John H. Geaney

The decision is the first appellate-level opinion on a long-running dispute over jurisdiction in certain MCP cases filed by medical providers in New Jersey. The decision is likely to affect hundreds of pending cases with similar facts in the New Jersey Division of Workers’ Compensation.

In Anesthesia Associates of Morristown, P.A. v. Weinstein Supply Corp., two medical claim petition applications involving similar facts were heard back to back by the Appellate Division. The first case pertained to an application filed by Anesthesia Associates of Morristown, Pennsylvania, hereinafter (AAM).

The case involved an employee who was injured in 1998 in the state of Pennsylvania. The employee was a resident of Pennsylvania and his employer was based in Pennsylvania. A claim was filed with the Pennsylvania Bureau of Workers’ Compensation.

All connections were with Pennsylvania, except that petitioner had a medical procedure in New Jersey. AAM submitted its charges of $12,992 under the Pennsylvania fee schedule and was paid $1,070.31. 

AAM then filed an MCP application in New Jersey seeking the balance. Liberty Mutual, the carrier for Weinstein Supply, took the position that there was no jurisdiction in New Jersey over the MCP application.

The judge of compensation dismissed the MCP application and ruled that the underlying workers’ compensation case needs to be compensable under New Jersey law for jurisdiction over the MCP application. In this case, the judge concluded there were insufficient contacts in the state of New Jersey with respect to the underlying compensation claim.

The other case, which was argued on the same day, involved Surgicare of Jersey City v. Waldbaum’s. In this case, the facts were identical except that virtually all contacts were in the state of New York instead of Pennsylvania. The injured worker resided in New York, worked in New York and was injured in New York. The worker filed a claim in New York against Stop & Shop, the employer, which was treated as one and the same as Waldbaum’s of Montvale, New Jersey.

On March 6, 2017, the New York Workers’ Compensation Board determined that surgery was necessary in the underlying workers’ compensation case. The employee then underwent surgery at Surgicare of Jersey City’s facility in Jersey City. Surgicare billed $252,900 but received payment of $20,085.28 through the New York Workers’ Compensation Board. 

Like Pennsylvania, New York has a fee schedule. Surgicare then filed an MCP application in New Jersey to obtain the balance of its original charges of $252,900. 

The judge of compensation found that virtually all material connections in the underlying workers’ compensation case were in New York, other than a one-day procedure in Jersey City. The judge, therefore, dismissed the MCP application. 

The Appellate Division adopted in both cases the reasoning of both judges. The court first acknowledged that the New Jersey Legislature amended N.J.S.A. 34:15-15 in 2012 to grant exclusive jurisdiction to the New Jersey Division of Workers’ Compensation for any disputed medical charge arising from any claim for compensation for work related accident or illness.

The Appellate Division went on to embrace the six factors that courts must consider in deciding jurisdiction set forth in Larson’s Workers’ Compensation Law: 

  • Place where the injury occurred.
  • Place of making the contract.
  • Place where the employment relationship exists or is carried out.
  • Place where the industry is localized.
  • Place where the employee resides.
  • Place whose statute the parties expressly adopted by contract.

The Appellate Division agreed with both judges of compensation that the 2012 amendment did not apply to MPC applications in matters where the division did not have jurisdiction over an employee’s underlying compensation claim. The court concluded:

Applying these considerations to the two cases before us, we agree with the two judges of compensation that there was no cognizable claim for a work-related injury in either case. Therefore, the division did not have jurisdiction over AAM’s or SJC’s claims and they were appropriately dismissed, substantially for the reasons expressed by the two judges of compensation.

The Appellate Division gave short shrift to the argument of the medical providers that the employers were in breach of contract:

“Suffice it to say that their contentions based on an alleged breach of contract are unsupported by any evidence of an agreement between either of them and the injured employees’ employers.” 

These two cases are the first Appellate Division decisions directly on point in MCP jurisdictional disputes. The case is currently unreported but its logic is unassailable.

The losing medical providers could still seek certification from the Supreme Court. We will keep readers posted.

John H. Geaney is an attorney, executive committee member and shareholder with Capehart Scatchard, a defense law firm in New Jersey. This post appears with permission from Geaney's New Jersey Workers' Comp Blog.

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