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November 17, 2014


Argued October 15, 2014 Decided

Before Judges Reisner, Koblitz and Haas.

On appeal from the Superior Court of New Jersey, Chancery Division, Mercer County, Docket No. C-76-11.

R. Bruce Crelin, argued the cause for appellant (Kern, Augustine, Conroy & Schoppmann, P.C., attorneys; Robert J. Conroy, of counsel and on the brief; Mr. Crelin, on the brief).

Andrew O. Bunn, argued the cause for respondent (DLA Piper, LLP, attorneys; Mr. Bunn, of counsel and on the brief; Joanna Sykes-Saavedra, on the brief).


This litigation concerns a dispute between an association of medical providers and a health insurer over the insurer's decision to stop providing coverage for extracorporeal shock wave therapy (EWST), a treatment used for chronic plantar fasciitis. Plaintiff New Jersey Podiatric Medical Society, Inc. (NJPMS or plaintiff) appeals from an October 11, 2013 order dismissing its complaint against defendant Horizon Blue Cross Blue Shield of New Jersey (Horizon or defendant) on summary judgment, and denying plaintiff's cross-motion for summary judgment. Having reviewed the record in light of the applicable legal standard, we affirm.


NJPMS is a non-profit corporation whose members are podiatrists. Horizon is a health service corporation, organized under N.J.S.A. 17:48E-1 to -68, and a health insurance provider. Horizon is an independent company and a member of the Blue Cross Blue Shield Association (the BCBS Association), a national federation of independent Blue Cross Blue Shield companies.

On October, 26, 2010, effective December 18, 2010, Horizon announced that it was re-categorizing extracorporeal shock wave therapy (ESWT) for chronic plantar fasciitis from "medically necessary" to "investigational." As a result, Horizon would no longer provide coverage for ESWT as a treatment for plantar fasciitis.

Plaintiff filed suit, claiming that ESWT was not an investigational or experimental therapy and that Horizon acted arbitrarily in deciding to stop covering the procedure. Plaintiff also asserted that in refusing to cover ESWT, Horizon was unlawfully discriminating between urologists and podiatrists, because Horizon continued to cover the use of shock wave therapy to treat kidney stones. See N.J.S.A. 17:48E-12. Lastly, plaintiff claimed that Horizon was violating the Unfair Claims Settlement Practices Act, N.J.S.A.17B:30-13.1(c) and (d).

The trial court granted defendant summary judgment, finding that Horizon had a contractual right to change its coverage policies; there was a "reasonable basis" for Horizon's decision that ESWT was investigational, even if plaintiff disagreed with that decision; and Horizon's decision was not arbitrary or capricious. Hence, the court reasoned that plaintiff could not establish a breach of the duty of good faith and fair dealing. Rather, the parties simply had a policy disagreement over the efficacy of this particular medical treatment, and that did not provide legal grounds for relief. After reviewing the record, we agree.


To put our decision in context, it is helpful to have some background concerning the parties' relationship, and a synopsis of the undisputed evidence presented on the summary judgment motions. The relationship between a medical provider, such as a podiatrist, and Horizon is governed by a Specialty Provider Agreement. These agreements are regulated under the New Jersey Health Services Corporation Act, N.J.S.A. 17:48E-1 to -68, and copies must be provided to the Commissioner of the Department of Banking and Insurance. N.J.S.A. 17:48E-10(a). A medical provider has the right to terminate the agreement at any time, upon thirty days' written notice to the health services corporation. N.J.S.A. 17:48E-10(a)(2).

As an example, the parties provided the Specialty Provider Agreement between Horizon and plaintiff's president, Dr. James C. Ricketti. The agreement incorporates by reference Horizon's provider manual, which sets out Horizon's coverage policies, and states that the medical provider "acknowledge[s] that such policies, rules and procedures may be revised from time to time." The agreement also gives providers the right to terminate the agreement with advance written notice to Horizon.

Horizon publishes a policy manual, which gives medical providers information regarding the administration of Horizon's plan benefits. According to the policy manual, a treatment is considered investigational when it fails to meet any one of these criteria: (1) the technology, if any, must be approved by the appropriate federal agency; (2) there is sufficient evidence in peer-reviewed scientific literature to assess the effectiveness of the treatment; (3) the treatment results in measurable improvement in the health outcome and the therapeutic benefits outweigh the risks; (4) the treatment is as safe and effective as any established modality; and (5) the treatment demonstrates effectiveness when applied outside of the investigative research setting. When the treatment meets all the criteria, it can be considered medically necessary. The policy manual also establishes standards concerning the evidence Horizon considers in making these decisions. That evidence includes peer-reviewed scientific literature, clinical trials and studies, and the opinions of medical providers.

Deposition testimony established that Horizon conducts annual reviews of its existing policies. When that process reveals something of note regarding the policy under review, that information is shared with Horizon's Clinical Policy Working Group for further review. According to Horizon's Medical Coordinator, the Clinical Policy Working Group analyzes information and evidence regarding the policy under review and later presents that information, and any recommendations for policy changes, to Horizon's Clinical Policy Committee.

According to the policy manual, the Clinical Policy Committee provides medical expertise in developing Horizon's medical policies. The Committee reviews the information from the Working Group, requests additional information if necessary, and ultimately votes to approve or disapprove the policy amendment. After a policy is adopted, it is posted on Horizon's website, where physicians and physician groups are invited to comment and provide Horizon with additional information.

According to the policy manual, the Clinical Policy Committee, in reviewing policies, considers the safety, effectiveness, risks and benefits of the treatment, as well as any applicable laws or regulations. In determining effectiveness, the Committee considers materials developed by the BCBS Association, performs independent research of the scientific literature and clinical guidelines, consults with practicing physicians in the field, and gathers information from any appropriate governmental agency. Some of the materials provided by the BCBS Association are developed by its Technology Evaluation Center (TEC), which according to the BCBS Association's website, compiles "comprehensive evaluation[s] of the clinical effectiveness and appropriateness of a given medical procedure, device, or drug."1

The policy at issue in this case is the reclassification of high-energy extracorporeal shock wave therapy (ESWT or HE-ESWT) for the treatment of chronic plantar fasciitis from "medically necessary," i.e., covered, to "experimental/investigational," i.e., not covered. Plantar fasciitis is characterized by pain in the plantar fascia, which is located on the heel of the foot. ESWT can be used in either low-energy or high-energy protocols to treat plantar fasciitis. ESWT involves the use of shock waves directed from outside the body to the area to be treated (the heel, in this case).

On February 23, 2001, Horizon issued its original policy with respect to the use of ESWT to treat chronic plantar fasciitis, classifying it as "investigational." Effective October 26, 2001, Horizon reversed its position and classified ESWT as "medically necessary" as long as certain criteria were met for chronic plantar fasciitis. In 2002 and 2003 the policy was reviewed four times with little or no revision. In June 2004, the policy was revised to reflect the distinction between high-energy and low-energy ESWT, the former remaining "medically necessary" and the latter being classified as "investigational." The policy was reviewed once a year from 2005 to 2008, with minor or no revision. Then on October 26, 2010, Horizon changed its classification of high-energy ESWT treatment from "medically necessary" to "investigational."2 The policy was reviewed in August 2011 with no revision.

There is no dispute that, in changing the policy at issue, Horizon followed its internal procedures. The Committee considered peer-reviewed medical literature, TEC assessments and coverage policies of other Blue Cross Blue Shield providers. In total, Horizon considered fifty-seven references, mostly studies published in medical journals, in addition to TEC assessments and FDA policies. Notably, TEC assessments conducted in 2003 and 2004 analyzed five clinical trials and concluded that ESWT for plantar fasciitis was "investigational." The Committee, in adopting the new policy, outlined its opinions on those five trials, concluding that the trials found no benefit from ESWT treatment or that any benefit reported from ESWT treatment as compared to the control group was statistically insignificant. The Committee concluded that ESWT for the treatment of chronic plantar fasciitis was "investigational."

Plaintiff's expert, Dr. John P. Furia, reached a different conclusion. After an extensive review of medical literature, he opined that ESWT was an effective treatment for chronic plantar fasciitis. Dr. Furia also criticized the studies on which Horizon relied. While Dr. Furia admitted on cross-examination that medical professionals can analyze the same body of studies and arrive at different interpretations, he insisted that the medical literature demonstrated that ESWT is an effective treatment for chronic plantar fasciitis.

Horizon's expert, Dr. William R. Jarvis, reported not on the issue of whether ESWT is an effective treatment for plantar fasciitis, but rather on the issue of whether "[f]rom a medical policy development perspective," Horizon's decision was arbitrary and capricious. After reviewing the sources identified by both Horizon and Dr. Furia, Dr. Jarvis opined that Horizon had reached a reasonable conclusion after "an extensive review of all the evidence on the efficacy of HE-ESWT for the treatment of CPF [chronic plantar faciitis]." In reaching that conclusion, Dr. Jarvis explained that the studies supporting the use of ESWT had weaknesses that would justify a conclusion that those studies were unconvincing.

At his deposition, defendant's president, Dr. Ricketti, admitted that he had no reason to believe Horizon did not consider the fifty-seven studies and sources listed in the Committee report. However, he believed there were other relevant sources that Horizon did not consider.



Before turning to the issues presented on this appeal, we briefly note what is not before us. The parties have not raised or briefed the issue of plaintiff's standing, and therefore we do not address the issue. See Medical Soc'y of N.J. v. AmeriHealth HMO, Inc., 376 N.J. Super. 48, 55-56 (App. Div. 2005). The question of primary jurisdiction is likewise not before us. Horizon initially raised primary jurisdiction in the Law Division, and the Assignment Judge invited the Department of Banking and Insurance to submit a brief addressing that issue.3 The Department confirmed that, pursuant to N.J.S.A. 17:48E-10(e), it had jurisdiction to resolve disputes between a health services corporation and its contracting medical providers. However, the Department asserted that its jurisdiction was "primary" only in matters implicating its special expertise, which did not include the complex medical issue presented here. The Department further stated that even if it had primary jurisdiction over this dispute, it would decline to exercise that jurisdiction.

The Department also noted that by statute and agency regulations, individual patients and, with the patients' consent, their health care providers, can challenge a health insurer's decision to deny benefits based on a determination that a medical procedure is experimental or investigational. See N.J.S.A. 26:2S-11, -12; N.J.A.C. 11:24A-1.2. Such individual appeals are submitted to independent utilization review organizations (IUROs), which contract with the Department to adjudicate those disputes with the assistance of medical experts in the applicable specialty. N.J.A.C. 11:24A-3.6(g). In deciding this case, we emphasize that our opinion does not address Horizon's legal obligations to its insureds, and is in no way binding upon individual patients or providers participating in appeals before IUROs.


Our review of a trial court's summary judgment decision is de novo, employing the Brill4 standard. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We determine whether there are material facts in dispute and, if not, whether the undisputed facts, viewed favorably to the non-moving party, entitle the moving party to judgment as a matter of law. Agurto v. Guhr, 381 N.J. Super. 519, 525 (App. Div. 2005). The parties agree that this case was properly decided on summary judgment. Indeed, in its reply brief, plaintiff admits that "the material facts in this case are essentially uncontroverted." The issue is whether, as a matter of law, the uncontroverted facts entitle defendant to judgment.

Having reviewed the record, we agree with the trial court that defendant was entitled to summary judgment. We also conclude that plaintiff's appellate arguments are insubstantial and thus warrant relatively little discussion. See R. 2:11-3(e)(1)(E).

At the heart of plaintiff's case is a fundamental weakness. On this appeal, as in the trial court, plaintiff does not identify any provision of its members' contracts with Horizon that requires Horizon to follow any specific policy or procedure in deciding which medical treatments Horizon will cover. In fact, a specific contract provision states that Horizon can change its policies, rules and procedures "from time to time." In return, providers have the right to terminate their contracts on notice to Horizon. Nor does plaintiff identify any contract provision that requires Horizon to cover this particular medical procedure.

In the absence of a contract provision supporting its claim, plaintiff argues that, because Horizon is the state's only "health service corporation" established pursuant to N.J.S.A. 17:48E-1 to -68, it has a legally enforceable obligation to follow certain procedures in deciding what medical services it will cover. But plaintiff does not cite any case or specific statutory provision that imposes such an obligation. Nor does plaintiff cite any statutory provision that requires Horizon to cover ESWT.5

As in the trial court, plaintiff argues that Horizon violated its duty of good faith and fair dealing in deciding not to cover this medical procedure.6 See Sons of Thunder, Inc. v. Borden, 148 N.J. 396, 420-21 (1997). Putting aside whether plaintiff properly pled that claim, a violation of the duty of good faith and fair dealing requires a showing of malice or bad faith. See Wilson v. Amerada Hess Corp., 168 N.J. 236, 249-51 (2001). However, plaintiff fails to identify any malice or bad faith reason for the change in policy. Plaintiff does not, for example, contend that Horizon was trying to drive the podiatrists out of business or steer its insureds to other types of medical providers. See Wilson, supra, 168 N.J. at 252.

Plaintiff speculates that the policy change may have been undertaken in response to a call from the national BCBS organization for a high level of uniformity in the types of medical procedures its members would cover. In that regard, there is no dispute that Horizon was unusual in covering ESWT; the BCBS insurers in most other states did not cover the procedure, because they deemed it investigational. There is no dispute that Horizon went through an exhaustive review process in determining that ESWT was investigational. The fact that medical experts might disagree as to the conclusion Horizon reached does not render its decision a breach of the duty of good faith and fair dealing with respect to its Specialty Provider Agreements.

Plaintiff's additional argument that Horizon unlawfully discriminates between podiatrists and urologists because Horizon covers the use of a procedure involving shock waves to treat kidney stones but will not pay for ESWR to treat plantar fasciitis is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

On this record, summary judgment was properly granted because the undisputed facts entitled defendant to judgment as a matter of law.


1 In 2007, the BCBS Association began an initiative promoting consistency and centralization among its member groups, with a goal of 85% consistency among its members in terms of the coverage provided. Horizon was noted as having the least consistent plan. Part of the initiative included expanding central research (TEC) and centralized vetting of policies. The results of an internal September 2009 survey found that the BCBS Association's goal of 85% consistency had been met. That occurred before Horizon's 2010 policy change concerning ESWT.

2 To be clear, only high-energy ESWT was reclassified as "investigational" because low-energy ESWT had been classified as "investigational" since 2004. Because it is the reclassification of HE-ESWT at issue, all references to ESWT refer to HE-ESWT unless otherwise noted.

3 After the Department submitted its brief, Horizon withdrew its primary jurisdiction claim.

4 Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

5 By contrast, health insurers are required by law to provide coverage for certain other procedures, such as mammograms and Pap tests. See N.J.S.A. 17:48E-35.4; N.J.S.A. 17:48E-35.12.

6 Plaintiff concedes that Count Three of its complaint, invoking the Unfair Claims Settlement Practices Act, N.J.S.A. 17B:30-13.1(c) and (d), does not state a separate cause of action, but supports its claim of a violation of the duty of good faith and fair dealing. This point essentially repeats plaintiff's "good faith and fair dealing" arguments and is without sufficient merit to warrant separate discussion. R. 2:11-3(e)(1)(E).