Posted on 17 Aug 2009
The New Jersey Superior Court, Appellate Division has ruled in favor of the New Jersey Department of Banking and Insurance and will allow the new Personal Injury Protection (PIP) medical fee schedule to be implemented.
As part of an effort to reform New Jersey’s personal auto insurance system the department adopted a fee schedule in 2007 after working on the issue for more than two years. However, the New Jersey Medical Society filed suit asking the court to prevent the implementation of the fee schedule and since that time the issue has been tied up in court proceedings. The Property Casualty Insurers Association of America (PCI) was an intervening party supporting the department regarding Adoption of N.J.A.C. 11:3-29 By the State of New Jersey, Department of Banking and Insurance.
“This long awaited ruling will enable New Jersey to move forward with an important reform to the PIP reimbursement system which is expensive, inefficient and anti-consumer,” said Richard Stokes, counsel for PCI. “Implementation of the PIP medical fee schedule is an important component in controlling costs in New Jersey. While the state has made progress in addressing many of the conditions that contribute to higher auto insurance costs, medical care continue to be expensive. The new PIP medical fee schedule will put in place a system that is fairer and ultimately delivers cost savings.”
The Insurance Department used a very methodical process in developing the new PIP medical fee schedule. To try and find a fair balance, the department carefully examined what doctors are typically paid and set the new fees well above the prevailing rates. The new PIP medical fee schedule more than meets the statutory standards and was developed through an exacting process.
“Medical treatment for auto accident victims in New Jersey is generally higher than treatment for similar injuries caused by other events, thereby contributing to the high cost of auto insurance in the state,” said Stokes. “While the fee schedule remains very generous to medical providers, it will move the system forward with more effective cost controls than currently exist. The delay in implementing the fee schedule only benefited those who make an inflated fee off the current system and that comes at the expense of policyholders.”