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
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.
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
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,
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 (
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
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,
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
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
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
, 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
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,
It is not disputed that in those instances in which the claimant was reimbursed
for some amount,
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
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
, 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
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
, damages have been calculated as the difference between the total
amount the claimant received, and the total value, as determined by the Court,
, 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):