Court of Appeals Overturns Decision on No-Fault "Facility Fee"

As per a recent article posted to, the New York Court of Appeals, the highest Court in the land, has recently decided that no-fault automobile insurers do not have to pay a facility fee for any procedures performed at a physician’s private practice.

For those not in-the-know, a physician operating out of a licensed hospital or ambulatory surgery center (ASC) who treats a patient that was injured in an automobile accident is permitted, by law, to bill a “professional” fee for that physician’s services. The same law also allows the facility to bill a “technical” or “facility” fee in exchange for their providing of the equipment, premises, and staff necessary in order to properly treat that patient.

However, private practices who are not licensed by the State Department of Health (DOH) have also been trying to collect these same fees from No-Fault carriers, arguing that they are just as entitled to receive these fees as a result of the demand that they be “accredited” by privately held, DOH-approved accreditation agencies. They also argue that charging just a “professional fee” alone does not adequately cover all of their practices’ expenses.

GEICO, however, believed this practice to be “double-dipping” and filed suit against Avanguard Medical Group LLC, one of these private practices, seeking a judgment that would free them from having to pay Avanguard their demanded facility fee. While GEICO’s motion for summary judgment was initially denied by the Supreme Court, the Appellate Division overturned the Supreme Court’s Decision on appeal and granted the motion, deciding instead that GEICO was not required to pay Avanguard’s facility fee.

As expected, Avanguard appealed, however the Court of Appeals affirmed the Appellate Division’s Decision, finding that New York State’s Department of Financial Services’ no-fault fee schedule permits the reimbursement of services performed at a private practice, but that limits facility fee payments to licensed hospitals and ASCs. The Court also firmly established the difference between private practices and licensed hospitals/ASCs and the rights that are - and that should be - afforded to both institutions.

Importantly, the Court also found that private practices are not licensed nor regulated by the DOH and, as a result, are prohibited from using such terms as “facility,” “center,” or “clinic” in their practices’ names.


Incidentally, the issue of the “facility fee” has actually been festering for quite some time, and some insurers will flat-out reject paying anyone’s “facility fee,” while others will pay all or a portion of it.