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by Daniel J. Schulte
MDA Legal Counsel
Published in the June 2005 issue of the Journal

Two of my columns last year dealt with billing issues raised when a no-fault automobile insurer is the payor. This would be the case any time you are treating injuries sustained by your patient in an automobile accident and the patient has no applicable dental insurance.

To review, the rules applicable when seeking payment for your services from a no-fault automobile insurer are as follows:

First, you may charge a "reasonable" fee for the services you provide. Second, the fee you charge cannot exceed the amount you "customarily" charge for providing the services to patients that have no applicable insurance coverage. Third, if the no-fault automobile insurer does not pay your fee in full you can either:

  • demand the information supporting the no-fault automobile insurer’s decision that your fee was not either "reasonable" or that the fee exceed the amount you "customarily" charge;
  • sue the no-fault automobile insurer for the balance, claiming that the fee is both reasonable and customary; or
  • bill the patient directly for the balance.

In my August 2004 column I reported on a case then pending in the Michigan Supreme Court (Advocacy Organization for Patient and Providers vs. Auto Club Insurance Association, et al.). At issue in that case was whether no-fault automobile insurers could deny as "unreasonable" a health care provider’s fee solely because (based on the no-fault automobile insurers internal data) the fee exceeded the fee charged by 80 percent of similar health care provider’s fees for the same service — even though the fee rejected as unreasonable was what that health care provider customarily charges for the same service to patients without any applicable insurance coverage. In other words, can a no-fault automobile insurer deny a fee as "unreasonable," even though it is "customary"?

On March 8, 2005 the Michigan Supreme Court ruled in favor of the no-fault automobile insurers. They allowed the 15 no-fault automobile insurers named as defendants in the case to employ this "80 percent test" to deny portions of fees being claimed due by various health care providers. This is so even though the fees claimed did not exceed what the health care providers customarily charged their patients without insurance.

This changes the rules noted above slightly. No-fault automobile insurers will certainly use the decision in the Advocacy Organization for Patients and Providers case as a reason for imposing the "80 percent test" and other criteria to reject health care providers’ claims for fees on the basis that they are not reasonable. This decision eliminates your ability to sue the no-fault automobile insurer for the amount of your fee not paid.

However, it does not eliminate your ability to: (1) demand and contest the accuracy of the data on which the no-fault automobile insurer’s determination was made; or (2) bill the patient directly for the amount of your fee rejected. All is not lost, assuming you can collect this amount from the patient directly.

Since this decision comes from the Michigan Supreme Court, it establishes binding precedent in Michigan. This means that — judicially — there is nothing that can be done. However, legislatively, much could be done, including amending the applicable provisions of Michigan’s No-Fault Act to reverse the effect of this decision.

Send questions for publication to "Dentistry and the Law," MDA Journal, 230 N. Washington Square, Suite 208, Lansing, MI 48933-1312. Names of letter-writers remain confidential.

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