Case Name: Perry A. EAGLE, M.D. v. Welby O. SNYDER, Jr., and Betty E. Snyder, Appellants; BUTLER & PAUL ASSOCIATES v. Welby O. SNYDER, Jr., and Betty E. Snyder, Appellants
Court: Superior Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1992-01-21
Citations: 412 Pa. Super. 557
Docket Number: Nos. 379 and 380
Parties: Perry A. EAGLE, M.D. v. Welby O. SNYDER, Jr., and Betty E. Snyder, Appellants. BUTLER & PAUL ASSOCIATES v. Welby O. SNYDER, Jr., and Betty E. Snyder, Appellants.
Judges: Before OLSZEWSKI, BECK and TAMILIA, JJ.
Reporter: Pennsylvania Superior Court Reports
Volume: 412
Pages: 557–577

Head Matter:
604 A.2d 253
Perry A. EAGLE, M.D. v. Welby O. SNYDER, Jr., and Betty E. Snyder, Appellants. BUTLER & PAUL ASSOCIATES v. Welby O. SNYDER, Jr., and Betty E. Snyder, Appellants.
Superior Court of Pennsylvania.
Argued Jan. 23, 1991.
Filed Jan. 21, 1992.
Reargument Denied March 30, 1992.
Robert J. Brown, York, for appellants.
Charles B. Calkins, York, for Eagle, appellee.
Douglas P. France, York, for Butler & Associates, appellee.
Before OLSZEWSKI, BECK and TAMILIA, JJ.

Opinion:
TAMILIA, Judge:
This consolidated appeal is based on the claims of appellee physicians for fees for professional services resulting from surgery performed on Welby O. Snyder, Jr. The claims were first presented to arbitrators who found in favor of each appellee physician. The arbitration awards were appealed and pursuant to a petition for consolidation the cases were heard by the trial court as a consolidated action without a jury. Following a decision in favor of appellees and denial of post-trial motions, appeals were taken to this Court.
This case arose out of a surgical procedure performed on February 20, 1986 by Dr. Ivan Butler, a neurosurgeon, and Dr. Perry A. Eagle, an orthopedic surgeon, who together performed an anterior cervical diskectomy with cervical fusion on the neck of Mr. Snyder. There had been no prior discussion or agreement concerning the charges for the surgery. This procedure was successful and subsequently both Dr. Eagle and Dr. Butler of Butler & Paul Associates, submitted bills to Mr. Snyder who, in turn, submitted them to his employer, Caterpillar Tractor Company, which is self-insured, for payment of hospital and medical expenses.
Butler & Paul Associates' bill was in the amount of $2,915 and it indicated that Dr. Butler had performed a procedure classified under the Physicians Current Procedural Terminology (C.P.T.) as "22555," defined as "anterior cervical diskectomy and fusion." Shortly thereafter, Dr. Eagle submitted a bill for $2,000 for a procedure designated as "22615" under the C.P.T., defined as "anterior cervical fusion C-4,5 using allografts." It was determined by Caterpillar that Dr. Butler had billed for the wrong procedure and should have billed for a C.P.T. procedure "63075", defined as a "diskectomy, cervical, anterior single space without fusion." Caterpillar then paid Butler & Paul Associates the sum of $1,995 and Dr. Eagle $950.
The central issue proposed by the appellant is the failure of the court to give weight to appellant's expert Dr. Heartenstein concerning the probative value of his testimony. The court gave Dr. Heartenstein's testimony no weight as it concluded his evaluation of the reasonableness of medical fees was based on what was customary and reasonable in other areas, that is the fees charged for similar operations in up to 90 areas throughout the country. The court determined that the correct statement of Pennsylvania law, as espoused in Husik v. Lever, 95 Pa.Super. 258 (1928), is what the services are ordinarily worth in the community. While this is a correct statement of the law it must also be interpreted in relation to the realities of medical practice in the 1980's and 90's, which are extremely different than in 1928 when Husik was decided. Additionally, it appears appellees are the sole source for performance of this procedure in York County, thereby severely limiting a reasonable appraisal of a fair price to charge for the procedure.
Two modern realities exist that require a broader consideration than a mere community standard in determining reasonable fees. The first is medical insurance and private and governmental providers which have entered the market place and which to some degree regulate medical costs which have grown faster than prices in any other area of our economy. A vehicle to provide standardization of procedures and the concomitant prices charged for them is the C.P.T. While the trial court ignored this coding, both Drs. Butler and Eagle used the code in billing appellants for their services. The trial court ignores the importance of the code and determines billing duplication or errors in coding is irrelevant to the outcome of this case. This cannot be so when insurance carriers such as Blue Cross, Blue Shield and government providers such as Medicare rely on these pricing standards to provide payment for their insureds.
The second reality in recent times is the dispersal of surgical and diagnostic services. Insured persons now select their doctor or hospital according to expertise, reputation and specialities developed in different areas. It is now routine for people to seek treatment outside the community or area in which they live or receive insurance coverage. The community standard in the place of residence where coverage was obtained cannot be applied if the service is provided in a different location. To acknowledge that pricing and reimbursement may occur at different locations is to require a broader pricing concept than community standards moving toward a more uniform regional or national standard. For this reason, C.P.T. standards should be admissible here.
The record establishes Dr. Butler's group is the only group in York County which furnishes neurological medical services. It is, therefore, arguable that its charges alone should not be the base upon which community standards are established, since, in a sense, the price is dictated under those circumstances by monopolistic forces. Caterpillar, which insures appellant as a self-insured employer, has two thousand employees in the York Plant. As such, its Medical Director of Group Insurance for Caterpillar, Dr. Heartenstein, supervises payment for medical and hospital expenses to 60,000 Caterpillar employees, nationwide, includ ing the employees in York. His testimony is relevant as to the going rate for this surgery in the York area as well as other areas throughout the country. The error was in permitting Drs. Butler and Eagle's billings to establish the community worth by their own billing, without requiring them to establish billings in the immediate surrounding areas. Billing by the doctors' clerks cannot establish the community rate, which was what occurred here. If the billing was done in a metropolitan area such as Philadelphia (where Husilc was decided) or Allegheny County, there would, without question, be a broad enough base for determining a community standard existed without looking outside the community. In this situation, however, the area of York and surrounding counties would provide a more reliable and equitable base than York itself, where only one practice exists. Instead of looking to Baltimore, as appellees indicated, because of its distance and differing economic, geographic and demographic compositions which is not comparable to the "community" of York, a more reasonable approach would have been to look to Cumberland, Dauphin and Lancaster counties which border upon York and have similar demographics and economic bases, so that the market would be more compatible with that of York. The testimony of Dr. Heartenstein was not irrelevant as it applied to area standards and it established the fees charged by Drs. Butler and Eagle were the highest fees charged in any area in the country by more than 30 per cent and the practice of "bundling" or double billing in this case was partly responsible for the excessive charge. Ignoring the C.P.T. coding, as did the trial court, also permitted critical evidence of miscoding by Dr. Butler to be ignored. Dr. Henderson, whose testimony also was ignored by the trial court, testified the procedure employed by Dr. Butler should have been designated a "63075" (cervical diskectomy) instead of a "22555" procedure which was coded on the bill by his clerk. Dr. Butler conceded his billing was in error but the fee of $2,990 would have been and should have been the same. Dr. Butler also stated he does not know what other physicians charge as the usual and cus tomary fees for those services in York County. Dr. Eagle billed $2,200 for a "22555" procedure. In essence, both doctors billed for a fusion procedure. Once it was determined what part of the total surgery each doctor performed, payment according to area standards was disbursed. Caterpillar allowed Dr. Butler $1,995 and Dr. Eagle $950. According to established guidelines under C.P.T. coding and to avoid bundling (separate billing on a single operation which divides the operation into different parts and charges separately for the two) the coding provides for modifiers. A modifier is a number "62" in this case, to indicate a second surgeon is involved in the surgical procedure as a result of which the second surgeon's fee is billed at either 50 per cent or 75 per cent.
For the above reasons this case cannot be resolved simply on the basis of "community worth" when the practice of medicine, particularly surgical procedures, spills over arbitrarily established community boundaries. This is particularly true when the number of practitioners of a particular procedure have no peers in the immediate community to establish other than a monopolist price. See McKeehan Estate, 358 Pa. 548, 57 A.2d 907 (1948), and Fougeray v. Pflieger, 314 Pa. 65, 170 A. 257 (1934). Under these circumstances a fair price cannot be the market price as there is no market price in York for this service other than that supplied by appellees. The approach suggested by appellants to establish an area price in the absence of a community worth has great logic and credibility and the expert testimony provided by appellants should have been given proper weight for the probative value it contained. While the trial court in fact permitted Dr. Heartenstein's testimony to be placed on the record, by ignoring the testimony and giving it no weight, the effect was the same as not to admit it at all. Refusing to admit expert testimony which is proper and essential to a party's case is error which requires a new trial. Bob Wark's Arco, Inc. v. Commonwealth of Pennsylvania, et al., 71 Pa.Cmwlth.Court 644, 455 A.2d 770 (1983).
While Husik remains the law, it cannot be so narrowly construed to a county locale and such a limited practice in light of today's standards as is done by the trial court.
While it may be argued that Pfeiffer v. Dyer, 295 Pa. 306, 145 A. 284 (1929), in the past has allowed flexibility in billing to permit doctors to exercise discretion in charging higher fees to those who are wealthier to counterbalance free services or diminished payment from those who do not have the financial resources to pay the full fee, it has little application to this case or modern practice. Because of the advent of medical insurance and Medicare as mentioned above, and also due to the different perception of doctors concerning the practice of medicine, the rationale employed in Pfeiffer is far more difficult to sustain. The specific facts of Pfeiffer show it is not applicable here. The court there justified the doctor's fee on humanitarian considerations after making the following observation:
Pressed on cross-examination to state his customary fee for such an operation as that here involved, he said that in over twenty years' experience in surgery he had performed the operation six times, three times for nothing, and in explanation added that over half of his professional work was done for charity.
Id., 295 Pa. at 310, 145 A. at 285. No facts were developed in this case to show compensatory adjustments were made in the fees claimed to account for charity by Drs. Butler and Eagle.
A major crisis exists in medical care in our society because 30 per cent of our population cannot afford it and, therefore, cannot obtain even minimal services. People are turned away from hospitals because they cannot afford treatment and provisions for payment must be made in advance, in most cases, before doctors will provide treatment. The fees charged in this case are not subject to any humanitarian credit as appellants are not wealthy and the self-insured employer is committed to reasonable standardized payments even if appellees had established a charitable basis for the higher fees.
In view of our holding on the issue relating to the admission of Dr. Heartenstein's expert testimony, the other issues proposed by appellants need not be discussed. The judgment is, therefore, vacated and the case remanded for the purpose of having the trial court give proper weight to appellant's expert witness testimony and to rule accordingly thereafter.
Jurisdiction relinquished.
BECK, J., files dissenting opinion.