Fitting Fees & Elite Medical Supply - Unpacking Lessons Learned

In 2019, a significant investigation sent shockwaves through the world of chiropractic care in New York. The New York State Workers' Compensation Board (WCB) launched a probe into several chiropractors suspected of accepting flat-rate fitting fees from the DME Provider Elite Medical Supply (“Elite”). This investigation would have far-reaching consequences, reshaping the landscape of authorized medical care providers for injured workers in the state.

Elite Medical Supply and the Service Agreements

Elite found itself under scrutiny when it was discovered that the company had established "Service Agreements" with various chiropractors. These agreements outlined a controversial practice: Elite was paying these chiropractors fixed, flat-rate fitting fees in exchange for prescribing the company's Durable Medical Equipment (DME). This raised questions about whether the chiropractors were acting in the best interests of their patients or motivated by financial incentives from Elite.

WCB's Investigation and Legal Framework

The investigation led by the WCB delved into these arrangements, guided by Workers' Compensation Law §13-d. This section empowers the chair of the WCB to remove providers from the list of authorized medical care providers if they engage in certain prohibited activities, including receiving fees related to medical supplies. Specifically, subsection (g) of this law bars providers from receiving or participating in fee division, transference, assignment, rebating, splitting, or refunding concerning the sale, rental, supplying, or furnishing of medical supplies in connection with medical care provided under the Workers' Compensation Law.

The Fallout: Chiropractors Removed from List of Authorized Providers

The consequences were swift and impactful. Based on the findings of the investigation, several chiropractors were either removed from the list of authorized providers or denied renewal of their authorization to render care to injured workers. The heart of the matter lay in whether these chiropractors had been involved in activities prohibited by WCL §13-d(2)(g) and were disqualified as a result.

Legal Challenges and Their Outcomes

Two of these chiropractors chose to challenge the WCB's administrative sanctions through litigation. However, their legal battles were ultimately unsuccessful. Their cases shed light on the depth of the investigation and the rationale behind the WCB's actions.

• Dr. Marc Lawrence Habif's Case

  In Matter of Marc Lawrence Habif v New York State Workers’ Compensation Board, Dr. Habif's petition to renew his authorization to treat workers' compensation patients was denied. The court affirmed the denial, stating that the WCB’s determination that Dr. Habif was receiving impermissible kickbacks from Elite in exchange for prescribing its DME was rational and not arbitrary since the Board relied on the fact that Dr. Habif exclusively prescribed DME from Elite and received over 200 separate payments from the company.

• Dr. David Marlin Levi's Case

  In Matter of David Marlin Levi v New York State Workers’ Compensation Board, Dr. Levi's petition to remain an authorized provider to workers' compensation claimants was denied. The WCB found Dr. Levi in violation of multiple sections of Workers' Compensation Law, including those that prohibit providers from receiving direct payments from third parties. The court upheld the WCB's decision, emphasizing that providers must only receive payment for services rendered to a workers' compensation claimant from the claimant's employer or the employer's insurance carrier, as per Workers' Compensation Law §13-f.

The Consequences of a Misinterpretation

According to the arguments made in their cases, both chiropractors, Dr. Marc Lawrence Habif and Dr. David Marlin Levi accepted the fitting fees believing that they were not subject to the provisions of Workers' Compensation Law (WCL) § 13-d that prohibited physicians from receiving any payment for referrals. They argued that the statute, which used the term "physician," did not apply to them because the definition specifically referred to medical doctors (M.D.s). This belief was based on the understanding that the statute's language only covered M.D.s and not chiropractors.

This interpretation changed, however, when the legislature amended the wording to "provider" effective January 1, 2021, broadening the scope of those subject to the law. Though the court agreed that (WCL) § 13-d did not apply to chiropractors at the time in question, such payments were prohibited elsewhere in the law throughout the relevant time period (see Workers’ Compensation Law §§ 13–f [1] ; 13–l [4], [10][g]; 8 NYCRR 29.1 [b][3]).

In conclusion, the Elite Medical Supply investigation serves as a poignant reminder of the importance of transparency and ethical practices in the medical field, especially in contexts involving workers' compensation. It underscores the severe consequences that can result from practices that, even under the mistaken belief that they are legal, can run afoul of the law and regulations designed to protect the interests of injured workers and ensure the integrity of the healthcare system.