New York State Court of Claims

New York State Court of Claims

ELECTRICAL MEDICAL v. THE STATE OF NEW YORK, #2000-014-106, Claim No. 95373


Synopsis


Damages awarded to the claimant for medical equipment provided to individuals covered by Workers' Compensation insurance issued by the State Insurance Fund.

Case Information

UID:
2000-014-106
Claimant(s):
ELECTRICAL MEDICAL SYSTEMS, INC.
Claimant short name:
ELECTRICAL MEDICAL
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :
The Court of Claims does not have jurisdiction over the State Insurance Fund as an entity distinct from the State of New York (see, Cardinal v State of New York, 304 NY 400, 404, Matter of James v State of New York, 90 AD2d 342, 343). Thus, the Court sua sponte has amended the claim's caption to reflect the proper defendant, and to delete the named State Insurance Fund.
Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
95373
Motion number(s):

Cross-motion number(s):

Judge:
S. Michael Nadel
Claimant's attorney:
Hersh, Ramsey & Berman, P.C.
Edward A. Berman, Esq.By: Anthony J. Golowski, II, Esq.
Defendant's attorney:
Eliot Spitzer, Attorney GeneralBy: Cassandra Mullen, Esq., Assistant Attorney General
Third-party defendant's attorney:

Signature date:
July 12, 2000
City:
New York
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

The claimant was in the business of providing durable medical equipment. This claim involves a dispute over the amount of reimbursement by the State Insurance Fund, for medical equipment which was provided by the claimant to patients in connection with Workers' Compensation injury cases. The claimant seeks to recover the balance of the full amounts sought as payment for items provided during 1996. The items of medical equipment in question are "TENS units," and packages of electrodes which are used in connection with the TENS unit.

Michael Golowski, the owner and principal of the claimant corporation, testified that he had been in the medical supply business for 10 years, and that he had formed the claimant corporation to do business in New York State. He testified that he[1]
purchased the TENS units for $350 each, and the packages of electrodes for $17 each. He testified that it was his understanding, based upon an arbitration decision to which he was a party, but which did not involve the State Insurance Fund, and which was not introduced into evidence, that he was entitled to receive as reimbursement 150% of his cost of each item. He requested only $495 for each TENS unit, less than 150% of his cost, based upon his further understanding that for amounts less than $500, prior authorization from the State Insurance Fund was not necessary. See, Exhibit 1. He requested $26.25 for each package of electrodes, slightly more than150% of his cost. Mr. Golowski also testified that the amounts he requested were based upon the fact that prior to 1996, the State Insurance Fund had, on some number of occasions, reimbursed another corporation of which he was owner and principal, for the same items in the full amounts he had requested.
From the evidence introduced by both the claimant and the defendant, it is not in dispute that during the first three months of 1996, the claimant sought reimbursement for 10 TENS units. In each instance the claimant requested $495. He was paid nothing for 3 of the units.[2]
In May, he received a payment for 1 of the units in the amount of $200. In June, he received separate payments for 4 of the units in the amount of $200 each. In July, he received a payment for one of the units in the amount of $200. In August, he received a payment in the amount of $495, upon resubmitting (in July), a request which had previously been submitted in January. In July and September, the claimant sought reimbursement for 2 TENS units. In February 1997, he received separate payments for those two units in the amounts of $200 and $89.
In each of the 9 instances where he was reimbursed for the TENS unit, he subsequently sought reimbursement for packages of electrodes. He sought reimbursement at the rate of $26.25 per package. In May, he was reimbursed for 5 packages at the rate of $17.80 per package. In June, he was reimbursed for 22 packages at the rate of $15 per package, and for 5 packages at the rate of $18.75 per package. In July, he was reimbursed for 13 packages at the rate of $26.25 per package,[3]
and for 9 packages at the rate of $15 per package. In August he was reimbursed for 4 packages at the rate of $26.25 per package. In January 1997, he was reimbursed for 5 packages at the rate of $26.25 per package. In March 1997, he was reimbursed for 8 packages at the rate of $12.95. Thus, of the 71 packages for which he was reimbursed, he was paid at the rate he requested ($26.25) for 22 of them; he was paid at the rate of $18.75 for 5; he was paid at the rate of $17.80 for 5; he was paid at the rate of $15 for 31; and he was paid at the rate of $12.95 for 8.
No explanation for the different amounts paid to the claimant appears in the many documents introduced into evidence. Upon the record, the first time the claimant was informed of the basis for the amounts he was paid, was in April 1996, when he was notified by letter dated April 26, 1996, in connection with a TENS unit which had been returned (
see, footnote 4, supra), that no payment would be made because there had been no prior authorization "and the price exceeds the usual and customary fee." Exhibits 35 and BBB. From the record, it does not appear that it was until January 1997 that he was specifically notified that the "usual and customary fees received" for a TENS unit was $200, and for a package of electrodes was $15. Exhibits 37, 38, 39, N and JJ (letters dated January 17, 1997). In addition, as noted, supra, he was reimbursed on many occasions, after the April letter, without prior authorization.
While documents in evidence include notations to the effect that the State Insurance Fund would no longer honor bills from the claimant as of some time in May or June of 1996 (Exhibits 19 and W), no evidence was offered to establish that the claimant was notified,[4]
and it is clear that he received reimbursement after that time.
Whatever the basis for the claimant's understanding that he was entitled to be paid 150% of his cost, his reliance was misplaced. It is clear from what appears to be the first page of the "New York State Fee Schedule," introduced into evidence as Exhibit B, that reimbursement for durable medical equipment "is limited to the lower of - the acquisition cost (by invoice to the Provider) plus 50%, or - the usual and customary charge to the general public." The applicability of the Fee Schedule to the equipment involved in this claim is not disputed, although the correct reimbursement amount is very much at issue.

It appears to be the defendant's position that all of the payments were, in accordance with the Fee Schedule, based upon the usual and customary charge for the items, which was $200 for a TENS unit and $15 for a package of electrodes. But documentary evidence establishes that the claimant was paid 3 different amounts for a TENS unit, including $495 in August (despite the fact that he had been informed in April that $495 exceeded the usual and customary fee). The record is also clear that he was paid 5 different rates for the packages of electrodes, including $26.25 for 30% of them. There is no evidence that there was any attempt to recoup any of these, or other, payments, despite the fact that they exceeded the usual and customary fee, as stated in the 1997 letters. Indeed, on the one occasion when the record indicates he resubmitted a request (Exhibit 11), he received the full amounts he requested for the TENS unit and for 9 packages of electrodes.

The defendant's disparate payments over a period of nearly a year, and its failure, during that time, to specifically inform the claimant of the amount of reimbursement to which he was entitled, and the basis for it, undermines any confidence in any assertion as to the usual and customary charge for these items, independent proof of which was not adduced. On the record before the Court, there is insufficient evidence that the usual and customary charge is what the State Insurance Fund, belatedly, said it is. The testimony of the defendant's witness, Louis Vassallo, an Associate Claims Examiner at the State Insurance Fund, did not address this issue. His testimony was primarily limited to the introduction of a number of documents.

Upon the evidence presented, it also appears to be the defendant's position that the claimant should not have been paid at all because he did not obtain prior authorization. Yet he was reimbursed on a number of occasions, without prior authorization. It also appears to be the defendant's position that the claimant was not paid the amounts he requested because, in the absence of better proof of the cost of the items to the claimant, there was no way of knowing how much he paid for them. Yet he was reimbursed, at varying rates, without such acceptable proof.

The claimant seeks to hold the defendant liable for the amounts not paid, as a breach of contract, or, in the alternative, on a theory of unjust enrichment. There is insufficient evidence to support the conclusion that there was an express agreement between the parties. While the State Insurance Fund paid the full amount requested on a number of occasions, it also paid lesser amounts during the same period of time.

Court of Claims Act §9(2) gives this Court jurisdiction to determine claims "for the breach of contract, express or implied". This includes contracts "implied in fact", based upon the conduct of the parties or "implied in law" or "quasi contract", such as claims for money had and received or for unjust enrichment.
Parsa v State of New York, 64 NY2d 143, 148. There is insufficient evidence in the record to support a contract implied in fact, which "rests upon the conduct of the parties and not their verbal or written words." Id. On the facts presented, there is no evidence of an implied promise by the defendant to pay the amounts the claimant sought. "[A] promise may be implied when a court may justifiably infer that the promise would have been explicitly made, had attention been drawn to it [citation omitted]." Maas v Cornell University, 94 NY2d 87, 94.
Nor does the evidence presented support a theory of money had and received, which "is an obligation which the law creates in the absence of agreement when one party possesses money that in equity and good conscience he ought not to retain and that belongs to another (
Miller v Schloss, 218 NY 400, 406-407)." Id., at 148.
The evidence does, however, support a finding of liability on a theory of implied contract, or quasi-contract, "a legal obligation imposed in order to prevent a party's unjust enrichment."
Cyberchron Corp. v Calldata Systems Development, Inc., 831 F Supp 94, 110.
It is not disputed that in those instances in which the claimant was reimbursed for some amount,[5]
that it was on the basis of documentary submissions (which were received in evidence), which apparently satisfied the defendant that the goods were medically necessary and had been provided.
The claimant has established that equipment was provided and accepted for the benefit of the State Insurance Fund's insureds, and that he expected to receive compensation.
Moors v Hall, 143 AD2d 336, 337-338. It remains to determine the reasonable value of the equipment provided. There is insufficient support in the record to accept the claimant's position as to their value, although, as noted, supra, it was accepted on some occasions by the defendant. The claimant testified that he paid $350 for each TENS unit, and that in his dealings with other insurance companies, he was paid $360, $453.50, $495 and $525. From notations on some exhibits, it appears that the State Insurance Fund reimbursed other providers in the amounts of $159, $125 and $40 (Exhibits 35, F and ZZ). It reimbursed the claimant on one occasion in the amount of $89. According to a statement which appears in Exhibit S, a State Insurance Fund internal memorandum dated December 2, 1996, it appears that a computer program listed the "suggested retail price" of a TENS unit as $495.
The claimant testified that he paid $17 for each package of electrodes. The only other evidence as to their value was the 5 different rates paid by the State Insurance Fund.

In the absence of definitive evidence that there was an established rate for each of the items involved, whether as interpreted by the claimant, or applied by the State Insurance Fund, or otherwise, based upon the evidence the Court finds that the reasonable value of the goods provided was the cost to the claimant: $350 for a TENS unit and $17 for a package of electrodes. Based upon the documentary evidence pertaining to equipment provided to 9 patients, as set forth,
infra, damages have been calculated as the difference between the total amount the claimant received, and the total value, as determined by the Court, supra, of the equipment which was provided.
The evidence is unrebutted that in the following 8 instances, the claimant provided a TENS unit and 9 packages of electrodes, and was reimbursed less than $503 ($350 for the TENS unit and $17 for each package of electrodes):
Patient Exhibits Amount Reimbursed Damages
Bean 2, J 251.80 251.20
Velez 4, 17, BB,CC, DD 283.00 220.00
Smith 5 -0- 503.00
Lopez 6, 38, GG, HH, II, JJ, KK 350.00 153.00
Guerra 7, 37, M, N, O 335.00 168.00
Glendura 9, 18, TT, UU, VV, WW 335.00 168.00
Schara 12, 19, 39 335.00 168.00
Zoldak 13, 20, 40, U, V, W, X, Y, Z, AA 331.25 171.75

In one instance, the evidence is unrebutted that the claimant provided a TENS unit and 4 packages of electrodes, and was reimbursed less than $418 ($350 for the TENS unit and $17 for each package of electrodes): Patient: Angelo; Exhibits 3, P, Q, S, T; Amount reimbursed: $251.80; Damages: $166.20.

In accordance with the foregoing, the claimant is entitled to damages in the amount of $1969.15, plus statutory interest from June 1, 1996.[6]

LET JUDGMENT BE ENTERED ACCORDINGLY.


July 12, 2000
New York, New York

HON. S. MICHAEL NADEL
Judge of the Court of Claims




[1]References hereafter to the claimant are to Mr. Golowski.
[2] In 2 of those instances, the evidence indicates that the TENS unit was returned by the patient. See, Exhibits 8, 35, XX, YY, ZZ, AAA (Soto), and Exhibits 10, 31, 32 (Orlando).
[3]Including 4 packages, according to a notation on Defendant's Exhibit AAA, for which payment was made in error, since the TENS unit had been returned by the patient.
[4]Exhibit 41, a State Insurance Fund internal memorandum, dated November 19, 1997, includes the statement: "Bills from Electric Medical Systems were honored up to the 05/09/96 date as they were notified."
[5]With the exception noted in footnote 4, supra.
[6]The claimant submitted his requests for reimbursement over a ten month period from January through October 1996. June 1, 1996 is selected as a "single reasonable intermediate date." CPLR 5001(b).