Selective Insurance Company of America v. Hudson East Pain Management, 2010 N.J. 597 (2012)

A health care provider who received assignment of PIP benefits from an insured is not obligated to furnish to the insurer information with respect to the provider's ownership structure, billing practices and regulatory compliance.

In this New Jersey Supreme Court action, the court affirmed, on different grounds, the Appellate Division's determination in Selective Ins. Co. of Am. V. Hudson E. Pain Mgmt., 416 N.J. Super. 418 (App. Div. 2010). The Court held that an insurance carrier cannot compel a medical provider claiming PIP benefits as the assignee of an insured to provide the carrier with information pertaining to the provider's ownership structure, billing practices and regulatory compliance via the "cooperation clause" of the policy of insurance. The Court noted that it is fundamental that the rights of an assignee (provider) can rise no higher than the rights of the assignor (individual insured). If an assignee can have no rights greater than his assignor, it must follow that an assignee can have no greater duties than his assignor. An individual insured's duty to cooperate is limited to cooperation with the "investigation, settlement or defenses" of a claim and, thus, is not inclusive of providing the carrier with information pertaining to the ownership structure, billing practices and/or regulatory compliance history of his medical providers. Therefore, the Court reasoned, as a provider (assignee) can have no greater duties than the insured (assignor), the provider, like the insured, cannot be compelled to supply the corporate, billing and compliance documentation requested. Notably, despite the above, the Court did "stress the limited nature of [its] holding in this matter." It continued, "[w]e are not to be understood as sanctioning attempts to hamper legitimate efforts to root out instances of fraudulent conduct. Nor should we be understood as restricting insurers' reasonable attempts to comply with their statutory obligations [under the New Jersey Insurance Fraud Prevention act, N.J.S.A. 17:33A-1, et seq.]."

Case Law Alert - 4th Qtr 2012