New Jersey hospital loses $850K billing dispute

Alia Paavola -

The New Jersey Supreme Court on Dec. 22 ruled against Cooper University Hospital in Camden, N.J., over a $850,000 billing dispute. 

The lawsuit centered on reimbursement for patient Dale Mecouch's roughly two-month stay at the facility, which resulted from complications related to an 1977 automobile accident that left him paralyzed from the waist down.

Cooper University Hospital in 2016 billed the patient's auto insurer, Selective Insurance Company of America, asking for more than $850,000 for medical services rendered to Mr. Mecouch. 

Instead of paying the $850,000 bill, Selective Insurance directed the hospital to seek reimbursement from Medicare, as Mr. Mecouch was a Medicare enrollee at the time of treatment. The hospital then billed Medicare and received less than $85,000 for the services rendered to Mr. Mecouch. Selective Insurance later agreed to reimburse Cooper University Hospital for Mr. Mecouch's copayments and deductibles. 

However, Cooper University Hospital filed a lawsuit against Selective Insurance, seeking the full $850,000 for his care and arguing that the nation's Medicare law allows hospitals to bill auto insurers in similar cases. 

A trial court granted summary judgment in favor of Cooper University Hospital, ruling that Selective Insurance owed the hospital the cost of the patient's care minus the amount covered by Medicare. The ruling was then appealed, and the appellate court ruled in favor of Selective Insurance. 

The New Jersey Supreme Court upheld the appellate court's decision, which ruled that Cooper University Hospital must bill Medicare instead of the auto insurer because he was enrolled in Medicare at the time of the treatment. Additionally, the high court noted that hospitals can bill auto insurers for these cases, but not when the accident occured before Dec. 5, 1980.

"Because Mecouch was a Medicare enrollee in 2016, Cooper — a Medicare provider — was required to bill and accept payment from Medicare, which promptly covered Mecouch's medical expenses in accordance with its fee schedule," the New Jersey Supreme Court said. "Cooper could not seek payment from Selective other than for reimbursement of the Medicare copayments and deductibles."

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