By Daniel J. Schulte, J.D.
MDA Legal Counsel
Published in the May 2004 issue of the Journal
Dear Dan Schulte: I recently treated a patient for injuries suffered in an automobile accident. This patient has no dental insurance. At the patient’s request, I submitted my bill to her no-fault insurance company. The insurance company paid only a part of my bill. The unpaid balance was rejected by the insurance company. The reason stated for the rejection was that my fee exceeded a reasonable and customary fee for the services I provided.
Can the insurance company refuse to pay a portion of my bill without my consent? Can I balance bill the patient and collect what I am owed from her?
Answer: This no-fault insurer is required by Michigan’s No-Fault Act to pay to or for the benefit of your patient all the reasonably necessary charges incurred by her as a result of the injuries she sustained in the motor vehicle accident. The amount the insurance company is required to reimburse you is limited to a “reasonable” fee for the services you provided. This reasonable fee cannot exceed the amount you “customarily” charge for these services in cases involving patients who do not have any applicable insurance coverage.
This insurance company is taking the position that your fee exceeds a reasonable fee and/or is in excess of the fee customarily charged for the services provided in cases not involving insurance. The first thing you should do is demand from the insurance company the information supporting its determination. This may be in the form of fee surveys, or the insurance company’s actual historical payment records covering similar services provided by dentists in your geographic area. In any case, you need to know on what data the insurance company’s determination was based. When you have this data, you will be in a position to dispute the fee reduction.
If the insurance company refuses to provide the information or the information it provides is unsatisfactory, there are two ways you can proceed to collect the balance of what you are owed.
First, you could sue the insurance company directly. In two important 2002 Michigan Court of Appeals decisions, the Court held that health care providers were “claimants” under Michigan’s No-Fault Act. These cases confirmed that health care providers have the right to sue no-fault insurers directly, rather than obtaining the cooperation of their patients to pursue additional benefits. In addition, these cases confirm that health care providers can seek other remedies available under the No-Fault Act. These remedies include interest on the unpaid fee if the insurance company is found to have unreasonably delayed or denied payment, and reimbursement of the attorney fees incurred by the health care provider in pursing collection of the unpaid fees.
Your other option would be to balance-bill and pursue collection directly against the patient. No-Fault insurers have at times sent notices to patients who have been balanced billed telling them that the balance billing is illegal. However, there is no basis under the No-Fault Act for such a statement. Prior to filing suit against a patient to collect the amount balance-billed, you should know that Michigan’s insurance commissioner has ruled that the insurance company has an obligation to defend and indemnify the patient. This means that the insurance company will provide legal counsel to the patient, cover the cost incurred by the patient to defend your claim, and pay the amount of any judgment that is rendered in your favor against the patient. This puts you in the awkward position of pursuing a lawsuit against your patient to prove that your fee was reasonable and customary, even though it was the insurance company and not your patient that made this determination.
Send questions for publication to Dan Schulte, Journal of the Michigan Dental Association, 230 N. Washington Square, Suite 208, Lansing, MI 48933-1392. Names of letter-writers remain confidential.