Court Opinion

ID: 2790191
Source: CourtListenerOpinion
Date Created: 2015-03-31 14:04:55.991172+00
Date Added: 2024-06-11T11:28:53.430839
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                  APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-1038-12T2
                                                 A-1445-12T2
                                                 A-1636-12T2
                                                 A-1792-12T2

NEW JERSEY HEALTHCARE COALITION,
ALLIANCE FOR QUALITY CARE, INC.,
NEW JERSEY ASSOCIATION OF                  APPROVED FOR PUBLICATION
AMBULATORY SURGERY CENTERS, NEW                 March 31, 2015
JERSEY ASSOCIATION OF OSTEOPATHIC
PHYSICIANS AND SURGEONS, NORTH                APPELLATE DIVISION
JERSEY ORTHOPAEDIC SOCIETY,
ATLANTIC ORTHOPEDIC ASSOCIATES, LLC,
and NEW JERSEY STATE SOCIETY
OF ANESTHESIOLOGISTS,

     Appellants,

v.

NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,

     Respondent.
____________________________________

NEW JERSEY COALITION FOR QUALITY
HEALTHCARE,

     Appellant,

v.

NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,

     Respondent.
____________________________________
NEW JERSEY ASSOCIATION FOR JUSTICE,

     Appellant,

v.

NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,

     Respondent.
____________________________________

UNITED ACUPUNCTURE SOCIETY OF NEW
JERSEY,

     Appellant,

v.

NEW JERSEY DEPARTMENT OF BANKING
AND INSURANCE,

     Respondent.
____________________________________

         Argued October 28, 2014 – Decided March 31, 2015

         Before Judges Reisner, Haas and Higbee.

         On appeal from the Department of Banking and
         Insurance.

         Keith J. Roberts argued the cause for
         appellants in A-1038-12 (Brach Eichler,
         attorneys; Mark E. Manigan, Mr. Roberts and
         John D. Fanburg, of counsel; Mr. Roberts and
         Richard B. Robins, on the brief).

         A. Ross Pearlson argued the cause for
         appellant New Jersey Coalition for Quality
         Healthcare in A-1445-12 (Wolff & Samson,
         attorneys; Mr. Pearlson, on the brief).

         Gerald H. Baker and Daniel E. Rosner argued
         the   cause   for   appellant    New    Jersey
         Association for Justice in A-1636-12 (Scott G.

                               2                            A-1038-12
         Leonard, President, attorney; Mr. Baker and
         Mr. Rosner, on the brief).

         Shay S. Deshpande argued the cause for
         appellant United Acupuncture Society of New
         Jersey in A-1792-12 (Zwerling & Deshpande,
         attorneys; Mr. Deshpande, of counsel and on
         the brief; David J. Zwerling, on the brief).

         Daniel J. Kelly, Deputy Attorney General,
         argued the cause for respondent New Jersey
         Department of Banking and Insurance (John J.
         Hoffman, Acting Attorney General, attorney;
         Melissa   H.   Raksa,   Assistant   Attorney
         General, of counsel; Mr. Kelly, on the
         brief).

         Susan    Stryker   argued   the    cause   for
         intervenors Insurance Council of New Jersey
         and The Property Casualty Insurers Association
         of   America    (Bressler,   Amery   &   Ross,
         attorneys; Ms. Stryker, of counsel and on
         the brief).

         Anthony J. Murgatroyd argued the cause for
         amicus   curiae   New    Jersey   State   Bar
         Association (Sharon A. Balsamo, Counsel &
         Director of Legal Affairs, attorney; Kevin P.
         McCann, of counsel and on the brief; Mr.
         Murgatroyd, on the brief).

         The opinion of the court was delivered by

REISNER, P.J.A.D.

    This appeal is the latest battle in a long-running conflict

between health care providers and other interested parties, and

the Department of Banking and Insurance (the Department), over

the Department's personal injury protection (PIP) regulations.

                               3                          A-1038-12
In   this   dispute,   appellants1    challenge   the   Department's   2012

revised     PIP   regulations        addressing   reimbursable    medical

procedures and the facilities in which they can be performed,

the fees health care providers can charge for those procedures,

counsel fees that may be awarded at PIP arbitration, and other

related issues.    See 44 N.J.R. 2652(c) (Nov. 5, 2012).2

1
  Appellants are New Jersey Healthcare Coalition, Alliance for
Quality Care, Inc., New Jersey Association of Ambulatory Surgery
Centers, New Jersey Association of Osteopathic Physicians and
Surgeons, North Jersey Orthopaedic Society, Atlantic Orthopedic
Associates,   LLC,    and   New    Jersey   State    Society  of
Anesthesiologists (A-1038-12); New Jersey Coalition for Quality
Healthcare (A-1445-12); New Jersey Association for Justice (A-
1636-12); and United Acupuncture Society of New Jersey (A-1792-
12).   The New Jersey State Bar Association filed an amicus
curiae brief supporting appellants.     The Insurance Council of
New Jersey and the Property Casualty Insurers Association of
America intervened in support of the Department.
2
  The Department adopted new rules to be codified as N.J.A.C.
11:3-4.7A, 4.7B, 29.5, and N.J.A.C. 11:3-29 Appendix, Exhibits 1
through 7; adopted amendments to N.J.A.C. 11:3-4.2, 4.4, 4.7,
4.8, 4.9, 5.2, 5.4, 5.5, 5.6, 5.12, and 29.1 through 29.4, and
repealed N.J.A.C. 11:3-29 Appendix, Exhibits 1 through 7.     As
further discussed in this opinion, the Department delayed the
effective date of N.J.A.C. 11:3-4.7B pending contemplated
further amendments.   The adoption of the remaining provisions
followed an extensive public process that started with an August
1, 2011 rule proposal.      After receiving and responding to
numerous public comments, the Department published proposed rule
changes, which were subject to another exhaustive round of
public comments, to which the Department responded in detail.
The current rules were adopted on November 5, 2012, and with the
exception of subsection 4.7B and an amendment not germane to
these appeals, became operative on January 4, 2013.    Both this
court and the Supreme Court denied appellants' application for a
stay pending appeal.

                                       4                           A-1038-12
      The litigants, and this court, have plowed the same ground

several times in the course of successive challenges to the

Department's     original       and    revised           regulations.           The      most

enduring subject of dispute has been N.J.S.A. 39:6A-4.6, which

authorizes the Department to adopt, for providers of medical

care under the PIP statute, medical fee schedules "on a regional

basis," that "incorporate the reasonable and prevailing fees of

75% of the practitioners within the region."

      The legislative scheme, its history and purpose, and the

regulatory background, have been reviewed at length in our prior

opinions and need not be repeated in detail here.                         See, e.g., In

re Adoption of N.J.A.C. 11:3-29, 410 N.J. Super. 6 (App. Div.),

certif. denied, 200 N.J. 506 (2009); Coal. for Quality Health

Care v. N.J. Dep't of Banking & Ins., 358 N.J. Super. 123 (App.

Div. 2003) (Coalition III); In re Comm'r's Failure to Adopt 861

CPT   Codes,   358    N.J.    Super.    135       (App.    Div.    2003);       Coal.     for

Quality Health Care v. N.J. Dep't of Banking & Ins., 348 N.J.

Super. 272 (App. Div.), certif. denied, 174 N.J. 194 (2002)

(Coalition II); N.J. Coal. of Healthcare Prof'ls. Inc. v. N.J.

Dep't   of   Banking      &   Ins.,    323       N.J.    Super.    207    (App.       Div.),

certif. denied, 162 N.J. 485-86 (1999) (Coalition I).                            From the

beginning, we have made clear that it is not our role to second-

guess    the     Department's          policy           choices     concerning            the

implementation       of   the   legislative             scheme    aimed    at    reducing

                                             5                                        A-1038-12
insurance costs while expediting medical treatment for accident

victims.    See Coalition I, supra, 323 N.J. Super. at 269.                    We

find no basis to do so here, and we affirm the Department's

adoption of the challenged regulations.3

                                        I

      Our standard of review on this appeal is well-understood

and   limited.      "Administrative         regulations      are   accorded      a

presumption of validity."         N.J. State League of Municipalities

v. Dep't of Cmty. Affairs, 158 N.J. 211, 222 (1999).                        That

deference "stems from the recognition that agencies have the

specialized      expertise    necessary     to   enact    regulations   dealing

with technical matters and are 'particularly well equipped to

read and understand the massive documents and to evaluate the

factual    and    technical    issues     that   .   .   .   rulemaking    would

invite.'"     Ibid. (quoting Bergen Pines Cnty. Hosp. v. N.J. Dep't

of Human Servs., 96 N.J. 456, 474 (1984)).

      As we stated in a prior case involving this same regulatory

scheme:

3
  Although, as will be discussed infra, many of appellants'
arguments were raised and rejected in our prior opinions, and
hence warrant more summary treatment here, we publish this
opinion because PIP reimbursement is a matter of general public
importance. Moreover, we anticipate that the disputes addressed
here will be the subject of periodic future appeals, and it is
important to memorialize in a published opinion the Department's
clarification of the regulations, as later noted in this
opinion. See R. 1:36-2(d)(6).

                                        6                                 A-1038-12
                Administrative regulations are entitled
           to    a    presumption   of   validity    and
           reasonableness.    In re Protest of Coastal
           Permit Program Rules, 354 N.J. Super. 293,
           329 (App. Div. 2002).      We will generally
           defer to an agency's determination, and our
           deference is a function of our courts'
           recognition that "an agency's specialized
           expertise renders it particularly well-
           equipped to understand the issues and enact
           the appropriate regulations pertaining to
           the technical matters within its area." Id.
           at 330. "Particularly in the insurance
           field, the expertise and judgment of the
           Commissioner may be allowed great weight."
           In re Commissioner's Failure to Adopt 861
           CPT Codes, supra, 358 N.J. Super. at 149.
           We    will    overturn   an    administrative
           determination only if it was arbitrary,
           capricious, unreasonable or violated express
           or implied legislative policies. Ibid. The
           party challenging the agency action bears
           the burden of overcoming the presumption of
           validity and reasonableness. Ibid.

           [In re adoption of N.J.A.C. 11:3-29, supra,
           410 N.J. Super. at 24-25.]

    "'An   agency's   interpretation     of    its     own   rule   is     owed

considerable   deference   because    the     agency    that   drafted       and

promulgated the rule should know the meaning of that rule.'"                  In

re Freshwater Wetlands Gen. Permit No. 16, 379 N.J. Super. 331,

341-42 (App. Div. 2005) (quoting Essex Cnty. Bd. of Tax'n v.

Twp. of Caldwell, 21 N.J. Tax 188, 197 (App. Div.), certif.

denied, 176 N.J. 426 (2003)).        In light of agency expertise, we

"must give great deference to an agency's interpretation and

implementation of its rules enforcing the statutes for which it

is responsible."   In re Freshwater Wetlands Prot. Act Rules, 180

                                 7                                       A-1038-12
N.J. 478, 488-89 (2004).                However, an agency may not issue a

regulation       that    is    outside       "'the    fair    contemplation             of   the

delegation of the enabling statute,'" N.J. State League, supra,

158 N.J. at 222 (quoting N.J. Guild of Hearing Aid Dispensers v.

Long,     75    N.J.    544,     561-62       (1978)),       or    that       is    otherwise

"inconsistent          with     legislative          mandate."          Id.        at   222-23

(citations omitted).

     We        will     reject       challenges        that       "are        fundamentally

disagreements         with    the    policies      expressed       in     [the      governing

statutory scheme] and its implementing regulations."                                Coalition

I,   supra,      323    N.J.        Super.    at     269.         As    we    observed        in

adjudicating a prior challenge to the Department's regulations:

"Under our system of government, these policy choices are made

by the Legislature and implemented by the Executive.                                We review

the regulations to determine their legality, not to participate

in the policy debate."              Ibid. (citations omitted).

                                             II

     On    this       appeal,       appellants       have    raised       a    plethora       of

issues, which can be summarized as follows4:

               I. THE DEPARTMENT EXCEEDED ITS AUTHORITY IN
               SETTING NEW FEE SCHEDULES FOR PROVIDERS AND
               AMBULATORY SURGICAL CENTERS.

4
  The following list does not precisely track the point headings
in each appellant's brief, but rather is intended as a synopsis
of the multiple, often overlapping, issues they raised.

                                              8                                         A-1038-12
           II.   THE DEPARTMENT EXCEEDED ITS AUTHORITY
           OR   ACTED   ARBITRARILY   IN   CHANGING   THE
           DEFINITION   OF   A   "STANDARD   PROFESSIONAL
           TREATMENT PROTOCOL."

           III. THE DEPARTMENT ACTED ARBITRARILY IN
           ENDING   PIP  REIMBURSEMENT   TO   AMBULATORY
           SURGICAL CENTERS FOR CERTAIN PROCEDURES.

           IV.   THE DEPARTMENT ACTED ARBITRARILY BY
           MAKING ACUPUNCTURE PROCEDURES SUBJECT TO THE
           DAILY FEE CAP.

           V.    THE DEPARTMENT EXCEEDED ITS AUTHORITY
           BY ALLOWING INSURERS TO ASSIGN DUTIES TO
           PROVIDERS INSTEAD OF JUST ASSIGNING BENEFITS
           TO THEM.

           VI.   THE DEPARTMENT VIOLATED DUE PROCESS BY
           REQUIRING PIP ARBITRATIONS TO BE "ON-THE-
           PAPERS" FOR DISPUTES VALUED BELOW $1000.

           VII. THE DEPARTMENT EXCEEDED ITS AUTHORITY
           BY LIMITING PIP ARBITRATION ATTORNEY FEE
           AWARDS.

           VIII. THE DEPARTMENT ACTED ARBITRARILY BY
           REQUIRING INSURERS TO PAY ARBITRATION AWARDS
           OF ATTORNEY FEES TO THE PROVIDER RATHER THAN
           DIRECTLY TO THE ATTORNEY.

           IX.   THE DEPARTMENT EXCEEDED ITS AUTHORITY
           OR ACTED ARBITRARILY BY SETTING APPEAL
           DEADLINES SHORTER THAN THOSE SPECIFIED BY
           STATUTE.

           X.    THE REGULATIONS ARE INVALID BECAUSE
           THE DEPARTMENT DID NOT PRODUCE EVIDENCE TO
           SUPPORT ITS ASSERTION THAT INCREASED PIP
           COSTS   WERE  CAUSING UPWARD  PRESSURE  ON
           INSURANCE PREMIUMS.

    Before turning to those issues, we deem it appropriate to

address   the   proper   scope   of   this   appeal.   In   addition   to

challenging regulations that have been adopted and have taken

                                      9                          A-1038-12
effect, appellants appeal from Department regulations concerning

internal appeals which are to be pursued prior to a demand for

PIP arbitration (issue IX above).           The effective date of those

regulations   has    been    postponed,    in     contemplation         of   further

amendments.   See 43 N.J.R. 1640-42 (proposed Aug. 1, 2011) (to

be codified at N.J.A.C. 11:3-4.7B).5            Because the regulations may

be amended before they take effect, the issues raised here are

not ripe and we decline to adjudicate them.

     Having   reviewed      the   record    in    light     of    the    remaining

issues, we conclude that the regulations do not represent an

abuse of discretion, are sufficiently supported by the record,

and on this facial challenge, are not inconsistent with the

Department's governing statute.

     The   majority    of     appellants'        issues   are     a     rehash     of

contentions   we    have    considered    and    rejected    in    prior     cases.

Most of the arguments represent a difference of view over policy

choices the Legislature has entrusted the Department to make.

Virtually all of the arguments were included in comments the

parties submitted to the Department and were exhaustively and

5
   At the time this appeal was argued, the Department was
considering amending the regulations by November 2014.       The
agency has again extended the regulations' operative date, until
November 5, 2015, to "afford the Department additional time to
consult with insurers and providers on necessary amendments to
these rules, as was referenced in the notice of adoption."    46
N.J.R. 2159(a) (Nov. 3, 2014).

                                     10                                       A-1038-12
convincingly addressed by the Department, comment by comment, in

its    nearly    100      pages   of   responses         accompanying      the     rule

adoption.       See 44 N.J.R. 2652(c).               Except as further discussed

herein, appellants' arguments are without sufficient merit to

warrant discussion in a written opinion.                 R. 2:11-3(e)(1)(E).

       While we find no merit in appellants' contentions overall,

it is important to note certain clarifications by the Department

which narrow the scope of the issues before us and will be

important in the future application of these regulations.                             In

that    context,       we    briefly      address       the    challenge     to      the

regulations      concerning       counsel      fee    awards.      N.J.A.C.       11:3-

5.6(e)(1), (2).        The rule essentially adopts the classic rubric

set forth by the Supreme Court in Rendine v. Pantzer, 141 N.J.

292,   334-44     (1995).6        However,      appellants       argue   that,     read

literally, the rule departs from Rendine in that it would not

allow an upward adjustment of the lodestar, as opposed to a

downward adjustment.            In its brief the Department advised us

that it construes the regulation as also allowing an upward

adjustment      in   an     appropriate     case;      the    Department's   counsel

confirmed that position at oral argument of this appeal.

6
  The lodestar calculation under the rule is also keyed to Rule
1.5 of the Rules of Professional Conduct. N.J.A.C. 11:3-
5.6(e)(1).

                                          11                                     A-1038-12
      In light of the Department's clarification, we deem that

aspect of the appeal to be moot and, as so construed, the rules

concerning calculation of the fees passes legal muster.                          Because

the statute, N.J.S.A. 39:6A-5.2(g), specifically provides that

"[f]ees     shall     be   determined        to    be    reasonable      if    they    are

consonant with the amount of the award," appellants' challenge

to   the   proportionality           analysis     aspect      of   the   fee    rule   is

without merit.        See also Szczepanski v. Newcomb Med. Ctr., Inc.,

141 N.J. 346, 366 (1995) ("The trial court's responsibility to

review carefully the lodestar fee request is heightened in cases

in which the fee requested is disproportionate to the damages

recovered.").         Of course, if an insurer wrongfully refuses to

pay a small claim and forces the insured or the provider to

respond to multiple meritless objections, we do not construe the

regulation      as    precluding      the    dispute      resolution     professional

(DRP) from awarding the claimant a counsel fee that reflects the

time required to respond to the issues raised.                           See Velli v.

Rutgers Cas. Ins. Co., 257 N.J. Super. 308, 310 (App. Div.),

certif. denied, 130 N.J. 597 (1992).

      Finally, because the regulation requires the DRP to set

forth a written analysis of all factors pertaining to the fee

award,     it   should     be    relatively       easy   to   discern     whether,      in

practice,       the   rule      is   being    applied      consistently        with    the

principles set forth in Rendine and in the PIP statute.                                See

                                             12                                   A-1038-12
N.J.A.C. 11:3-5.6(d), (e). No further discussion on this point

is warranted.         R. 2:11-3(e)(1)(E).

       Appellants          also       contend         that       another           section      of     the

regulations          concerning           counsel          fees,        N.J.A.C.          11:3-5.6(f),

improperly precludes direct payments of counsel fees to medical

providers'       attorneys.                In        its       brief,    the        Department         has

clarified that the rules do not preclude a DRP from ordering the

payment of fees directly to a medical provider's attorney.                                              In

fact, the Department's brief advised us that it has "directed

the administrator of the PIP arbitration system to notify users

of the system that payments for attorneys' fees will continue to

be     processed          with           direct       payment           to     the        attorneys."

Consequently,             we        conclude          that        the        issue,        which        is

understandably important to the attorneys who handle PIP cases,

is moot.

       Appellants          also       challenge            N.J.A.C.          11:3-4.9(a),            which

provides that "an insured may only assign benefits and duties

under   the     policy         to    a    provider         of    service       benefits."            They

contend       that        by        referring             to     "duties,"           this        section

impermissibly         requires           the    assignment          of       duties       as    well   as

benefits to a medical provider.                            They posit that the regulation

will    allow    insurers           and    DRPs       to       impose    burdensome            discovery

requirements         on     medical         providers.             In        its    brief,       and    as

confirmed       by    its      counsel          at    oral       argument,          the    Department

                                                     13                                           A-1038-12
clarified that the rule is aimed at defining the persons to whom

an insured may make an assignment, and explained that the rule

permits but does not require the assignment of duties as well as

benefits.     That is a reasonable construction of the regulation.

       More importantly, the Department states that the rule does

not "address[] the scope of discovery in a PIP arbitration" and

is not intended to circumvent the holding in Selective Insurance

Co. of America v. Hudson East Pain Management, 210 N.J. 597, 607

(2012).      According   to    the   Department,           a    provider's    "duties"

would consist of obligations already imposed by law on health

care providers in PIP cases, such as providing patient medical

records to document the medical services for which reimbursement

is being sought.      See N.J.S.A. 39:6A-13(b); Coalition II, supra,

348 N.J. Super. at 318-19.           The Department agreed that the rule

would not permit the kind of wide-ranging, burdensome discovery

of which the Court clearly disapproved in Selective, supra, 210

N.J.   at    609.    That     position         is   also       consistent     with   the

Department's responses to comments when it adopted the rule.

See    44   N.J.R.   2685-86.        We    agree      that,       as   thus    narrowly

construed, the rule passes muster.                   Appellants' arguments on

that point warrant no further discussion.                  R. 2:11-3(e)(1)(E).

       An additional issue, which appellants have raised, is that

the new regulations will result in accident victims being unable

to obtain medical care.         They claim, for example, that patients

                                          14                                     A-1038-12
will be unable to find treatment providers, will be prohibited

from obtaining the types of medical care they need, or will

incur greater expense due to obtaining treatment at hospitals

rather than free-standing medical facilities.                      It is undisputed

that there is, in this record, no legally competent evidence to

support those claims.

      However,   the    Department        has    committed       to   monitoring     the

implementation     of       the    new   regulations       to    determine      whether

accident    victims     are       experiencing    any     such   negative    effects.

That is a critically important commitment, because one of the

central purposes of the PIP statute is to ensure that accident

victims receive prompt medical care.                 See Selective, supra, 210

N.J. at 609.     The Department has represented to this court that,

as part of its monitoring process, it will accept and consider

evidence     submitted        by     appellants      on    those      issues.        The

Department has also represented that appellants have the option

of   petitioning      the     Department       for   rulemaking,       seeking     rule

amendments that would address any such negative impacts if they

occur.     In that process, they would also have the opportunity to

create an evidentiary record to support their claims.                       We expect

the Department to honor those commitments, and we decline to

further address appellants' arguments on this point due to the

lack of an evidentiary record.

                                          15                                     A-1038-12
       Next we address appellants' arguments concerning the way

the Department calculated reimbursement rates.                        In a nutshell,

we find no basis to conclude that the Department's methodology

was    arbitrary   or   capricious.            The   Department's       responses      to

comments are persuasive to us in explaining its methodology.

Moreover, the competing expert reports submitted on behalf of

appellants   and    the     insurance     industry      demonstrate       that     well-

qualified experts can disagree on the appropriate methods to

calculate the rates.            To cite one example, appellants' expert

opined that the Department should have relied on physicians'

billed fees.       However, the insurance companies' expert cogently

explained that physicians' billed fees, as opposed to the fees

they    actually    accept      in   payment,        are     often      inflated      and

therefore    are   an   unreliable      foundation         on   which    to     set   PIP

reimbursement rates.         We have repeatedly upheld the use of paid

fees,    versus    billed    fees,   in    setting      the     PIP     reimbursement

rates, and the issue requires no further discussion.                          See In re

Adoption of N.J.A.C. 11:3-29, supra, 410 N.J. Super. at 38-39;

Coalition III, supra, 358 N.J. Super. at 126-29.

       In setting the rates, the Department used a combination of

sources,    including     the    Resource       Based      Relative     Value    System

(RBRVS) used to set federal Medicare reimbursement rates, and a

proprietary database obtained from the Fair Health organization,

an entity whose data appellants' expert, Mr. Weiss, actually

                                          16                                     A-1038-12
lauded as reliable.7              See 44 N.J.R. 2690-91, 2703.             We previously

approved the Department's consideration of the federal Medicare

RBRVS    in    setting       reimbursement         rates.        In   re    Adoption       of

N.J.A.C. 11:3-29, supra, 410 N.J. Super. at 32-36.                             Moreover,

the PIP statute specifically authorizes the Department to use

proprietary databases in setting rates.                        N.J.S.A. 39:6A-4.6(a);

In re Adoption of N.J.A.C. 11:3-29, supra, 410 N.J. Super. at

15.

       Absent     a    clear       showing    of     arbitrariness,        which   is    not

present here, the Department, not this court, is authorized to

choose the rate-setting methods.                      See Coalition I, supra, 323

N.J.     Super.       at    269.       We     find     no     basis   to    disturb      the

Department's chosen methodology or the resulting reimbursement

rates.

       Appellants          also     challenge        the     Department's     regulation

denying       reimbursement          for     certain        procedures     performed      in

ambulatory         surgery          centers          (ASCs),      while       permitting

reimbursement for those procedures if performed in a hospital

outpatient      surgery       facility.         N.J.A.C.       11:3-29.4(e)(3).          The

Department        relied       on    federal       Medicare      rules,      which      deny

reimbursement based on the federal government's conclusion that

7
 Consistent with our opinion in In re Adoption of N.J.A.C. 11:3-
29, supra, 410 N.J. Super. at 43, the Department did not use the
Ingenix database in formulating the current regulations.

                                              17                                     A-1038-12
performing those procedures in ASCs is unsafe for patients.                            44

N.J.R. 383-84, 394 (Feb. 21, 2012).                  We cannot conclude that the

Department's decision to follow Medicare's policy was arbitrary.

Nor, as previously noted, is there legally competent evidence in

this record that the regulation will have a negative impact on

patients.8         Contrary to appellants' contentions, the Department

has authority to limit individual PIP beneficiaries' choices in

selecting medical providers, where those limits are justified

"within      the    broad     regulatory       authority       the    Legislature      has

granted" to the agency.            Coalition II, supra, 348 N.J. Super. at

309; see also Coalition I, supra, 323 N.J. Super. at 236-39.

       We    likewise     find     nothing     arbitrary        in    the   Department's

decision     to     include    acupuncture         services     in    the   schedule   of

treatment codes subject to a daily maximum fee allowed.                            As we

have   previously         noted,    In   re    Adoption        of    N.J.A.C.   11:3-29,

supra,      410    N.J.   Super.    at   15,       the   PIP   statute      specifically

authorizes that approach for bundled services:

8
  We note that after virtually every major amendment to the
regulations, appellants have warned of dire consequences for
accident victims, whom they allege would be stripped of access
to medical treatment by virtue of regulatory restrictions. Yet,
the reported opinions do not reflect that they have documented
the occurrence of those consequences.    See In re Adoption of
N.J.A.C. 11:3-29, supra, 410 N.J. Super. at 26 n.4 (noting that
appellants could file "as-applied" challenges to the regulations
"as experience with the new rates develops"); Coalition III,
supra, 358 N.J. Super. at 135 (concluding that "appellants' dire
predictions are purely speculative and unsupported by any
evidence").

                                              18                                  A-1038-12
           The fee schedule may . . . establish the use
           of a single fee, rather than an unbundled
           fee, for a group of services if those
           services are commonly provided together. In
           the case of multiple procedures performed
           simultaneously,    the  fee   schedule   and
           regulations promulgated pursuant thereto may
           also provide for a standard fee for a
           primary     procedure,   and    proportional
           reductions in the cost of the additional
           procedures.

           [N.J.S.A. 39:6A-4.6(b).]

       The Department adopted that approach based on its finding

that acupuncture is commonly performed in chiropractic offices

and physical therapy facilities and is provided together with

other procedures whose codes are on the daily maximum list.                       See

43 N.J.R. 1646 (Aug. 1, 2011); 44 N.J.R. 2705-07.                          We find

nothing arbitrary in limiting the fees that will be paid for

bundled services provided to the same patient on the same day.

See Coalition III, supra, 358 N.J. Super. at 132-33.                   Moreover,

as the Department also notes, the regulation allows an exception

when   "the   severity   or      extent    of    the    injury   is    such     that

extraordinary    time      and     effort       is     needed    for   effective

treatment."     N.J.A.C.      11:3-29.4(m).          Examples    include    severe

brain injury and non-soft-tissue injuries to more than one part

of the body.    Ibid.      Furthermore, if a patient visits a stand-

alone acupuncture office and only receives acupuncture services

on a particular day, nothing in the regulation prevents the

                                      19                                      A-1038-12
acupuncturist           from     being   paid      the    full    daily     maximum     fee.

Ibid.; 44 N.J.R. 2706.

      Subject        to    the    Department's       commitment        to    monitor      the

effect    of      the     regulation,      we      find    nothing     unauthorized        or

improper in the regulation permitting DRP organizations to adopt

rules providing for "on-the-papers" PIP arbitrations where all

parties consent or where there is no further medical treatment

at   issue     and      the    amount    in     controversy       is   $1000     or    less.

N.J.A.C. 11:3-5.2 (defining "on-the-papers proceeding"); see 43

N.J.R. 1642, 1650-51.               There appears to be no dispute that few

DRP hearings currently involve oral testimony.                              See 44 N.J.R.

2688.     Further, the enabling statute, N.J.S.A. 39:6A-5.1, does

not, on its face, preclude arbitration decisions rendered on the

basis of an exchange of paper submissions, and conducting paper

reviews      in    cases       involving      de   minimis       claims     is   certainly

consistent with the statute's overall purpose to reduce costs

and expedite the decision of claims.                      Nonetheless, we expect the

Department, as part of its monitoring function noted earlier, to

consider information from appellants and the DRP organization as

to whether on-the-papers proceedings are being routinely held in

                                              20                                      A-1038-12
cases where there are disputed issues of material fact which

testimony would ordinarily be required to resolve.9

       We    reject   appellants'         argument        that      the    Department

unreasonably defined "standard professional treatment protocols"

as      "evidence-based        clinical           guidelines/practice/treatment

published in peer-reviewed journals."                    See N.J.A.C. 11:3-4.2.

To    put   the   issue   in   context,      to    be    reimbursable,      treatment

rendered to a patient must be medically necessary.                         One factor

in determining medical necessity is whether a treatment is "the

most appropriate level of service that is in accordance with . .

. standard professional treatment protocols."                    N.J.A.C. 11:3-4.2

(defining     "medical     necessity").           This    language        tracks   the

statutory definition of "medically necessary," N.J.S.A. 39:6A-

2(m).    Subsection (m) also authorizes the Department to determine

the    standard    professional     treatment           protocols    that    it    will

recognize or designate.         Ibid.

9
  Appellants speculate that a decision resulting from a mandatory
on-the-papers arbitration might have a collateral estoppel
effect   in   "subsequent  proceedings  which   are  of   greater
magnitude." The issue is not ripe for decision here. However,
we note that appellants rely on a case in which the plaintiff
cited "no limitation on her opportunity to present evidence or
otherwise to be heard in the PIP arbitration," Habick v. Liberty
Mut. Fire Ins. Co., 320 N.J. Super. 244, 262 (App. Div.),
certif. denied, 161 N.J. 149 (1999), and a case in which the
parties voluntarily submitted their issues for decision on the
papers.   Kozlowski v. Smith, 193 N.J. Super. 672, 674-75 (App.
Div. 1984).

                                        21                                     A-1038-12
      The     Department     cogently          explained         that     providing         a

regulatory     definition         of     "standard         professional        treatment

protocols" was a response to prior attempts by some providers to

manipulate the PIP system, by arranging for their colleagues to

publish articles in non-peer-reviewed journals, advocating the

use of certain procedures based only on anecdotal evidence.                                In

turn, the providers would then cite those articles in support of

their applications for reimbursement for those procedures.10                              See

43 N.J.R. 1640.        We find no abuse of the Department's discretion

in adopting its definition of a standard professional treatment

protocol.

      Appellants' reliance on Thermographic Diagnostics, Inc. v.

Allstate Insurance Co., 125 N.J. 491 (1991), is misplaced.                                 In

addressing     new    treatments       for    which     reimbursement          is   sought

under   the    PIP    statute,     the    Court      stated:      "The     use      of    the

treatment,     procedure,    or        service      must    be    warranted         by    the

circumstances and its medical value must be verified by credible

and   reliable       evidence."         Id.    at   512.         We     find   that       the

challenged     regulation    is    not       facially      inconsistent        with      that

standard.

10
  As the insurance intervenors note, providers have an economic
incentive to use new medical tests or treatments that are not
covered by the Department's existing CPT codes, which set dollar
limits for the coded procedures.

                                          22                                         A-1038-12
    Appellants'   remaining   arguments   are   without   sufficient

merit to warrant discussion in a written opinion.          R. 2:11-

3(e)(1)(E).

    Affirmed.

                                23                            A-1038-12