Legislation would have exempted sponsor’s law client from hospital fee caps

By Darryl R. Isherwood and Max Pizarro

Late last year, as state officials sought to close a loophole that allowed Meadowlands Hospital in Secaucus to charge exorbitant fees for outpatient medical procedures, a prominent state lawmaker with direct ties to the hospital’s ownership sponsored legislation that would have exempted the medical center from a measure capping its charges.

Assemblyman and Democratic State Party Chairman John Wisniewski, an attorney who represented Meadowlands Hospital owner Richard Lipsky in a 2008 Bayonne land development deal, was among three sponsors of a bill that would have exempted hospitals from the state’s efforts to rein in fees for outpatient medical procedures performed under personal injury protection insurance (PIP).

A second lawmaker with ties to Lipsky, Republican Minority Leader Jon Bramnick, was a co-sponsor of the bill, which went nowhere.  Prior to last year, Bramnick leased space in a Scotch Plains office building he owns to Essex Pain Management, among several companies owned by Lipsky.

Both lawmakers deny that the proposed legislation was tied to Meadowlands, saying they were hoping to help hospitals statewide. But an auto insurance industry representative says no other hospital stood to benefit to the extent that the Secaucus-based medical center did.

In the months before and after the introduction of the bill, Wisniewski collected at least $70,000 in campaign contributions from Meadowlands Hospital owners and employees, Lipsky among them, as well as more than a dozen others with ties to the ownership group.  The donations began flowing into Wisniewski’s coffers on Aug. 2, one day after the Department of Banking and Insurance introduced the rule change that would have severely curtailed the fees charged by the hospital.

Bramnick received at least $13,000 in donations from Lipsky and others tied to the hospital or to the many businesses Lipsky owns.

Assemblyman Vincent Prieto, whose district includes Secaucus where the hospital is located, was the third sponsor in the lower chamber.  Prieto did not receive any money from Lipsky or his associates.

According to representatives of the auto insurance industry, the fee schedule pushed by the banking department was aimed at curbing rates like those charged by Meadowlands Hospital, which was known in the industry for billing insurance companies exorbitant rates for the outpatient PIP procedures.   In some cases, the hospital’s fees for auto accident victims were 3,000 percent higher than those charged by outpatient surgery centers.

The hospital received many of its referrals from various same-day surgery centers owned by Lipsky and others that perform more than 15,000 outpatient procedures per year. The referrals allowed Meadowlands to take advantage of the loophole that allowed the hospital to charge far in excess of what the surgical centers could charge.

Through a spokesman, Lipsky declined comment.

Reached Wednesday, Wisniewski said he did not help craft the bill to benefit only Meadowlands Hospital, but struggling hospitals statewide.

“I don’t believe we should be putting another roadblock up when hospitals are closing in this state,” Wisniewski said. “The Department (of Banking and Insurance) wanted to create a set of rules that reduced the amount any hospital charges for certain PIP service.

“I lost a hospital in my own district, in South Amboy,” the lawmaker added. “I have a lot of confidence in this policy decision to help hospitals.”

Wisniewski also denied the donations or his prior relationship with Lipsky had anything to do with the legislation.

“He was a client of mine, that’s how I first met him,” Wisniewski told PolitickerNJ.com. “God bless you if you think every campaign contribution is tied to some issue. It isn’t. You’re making a mountain out of a molehill.”

Bramnick too denied any ties between the legislation and his business relationship with Lipsky.

“I’m a personal injury lawyer,” said Bramnick. “I’m supportive of a lot of hospitals. Take a look at my record. I’ve had my battles with the Department of Insurance. We want to keep the hospitals afloat. We want victims of automobile accidents to get care and we want the hospitals to get reimbursed.”

But an auto insurance industry trade group disputes that other hospitals would have benefitted from the legislation, saying Meadowlands Hospital was one of if not the only hospital in the state charging the kinds of fees that had insurance companies livid.

“That bill was an attempt to paint a picture that all hospitals were going to suffer under the fee schedule, but it was our experience that most hospitals, if not all but Meadowlands, were accepting the fee schedule already in place for the ambulatory surgery centers,” said Deana Lykins, president of the Insurance Council of New Jersey.

Last year, Lykins reported that Meadowlands was charging as much as 3,000 percent more for some outpatient procedures than traditional ambulatory surgery centers, which already are subject to a fee schedule.  Among the exorbitant charges reported by Lykins were:

  • $90,000 for arthroscopic knee surgery.  A same-day surgery center may charge up to $3,000 for the same procedure. 
  • $67,715 for a steroid injection to an accident victim’s lower back.  A same-day surgery center may charge no more than $3,800 for the same procedure.
  • A plasma back injection costs $161,510 at Meadowlands Hospital.  The same procedure performed at a same day surgery center would cost $13,350.
At a September hearing on Meadowlands’ billing practices, a company offical told lawmakers that the charge did not represent what the hospital was actually paid for the procedures, saying they traditionally took in just 7 percent of the charge. But Lykins dipsuted those numbers, saying the hospital was understating its payment.

Lykins said her group had begged insurance officials to impose the fee schedule to curb the abuse.  But in the end the insurers didn’t receive the relief they’d hoped for as the banking department revised the rules to raise the originally proposed cap and removed some procedures from the fee schedule. 

Lipsky and company, along with dozens of spinal surgeons around the state, funneled thousands to several elected officials, including Wisniewski and Bramnick, which had some wondering if the revised rules were built on cash rather than common sense, a charge former Banking and Insurance Commissioner Tom Considine denied.

The new regulations will no doubt curb Meadowlands Hospital’s charges, but not to the extent insurers had hoped, Lykins said.

Despite his insistence that he did not craft the bill with Meadowlands Hospital in mind, Wisniewski admitted running into questions among colleagues in Trenton that he was covering for Lipsky when he tried to get support for the bill last year.

“I got a little frustrated pursuing it,” he said. “It proved a very difficult hurdle to move that bill. I did run into that question, ‘Why are you helping Meadowlands Hospital?’ But again, I think the policy helps hospitals generically.”

Lawmakers reintroduced the bill this year, now with Prieto and Assemblyman Albert Coutinho, (D-29), Newark, at the helm.  Wisniewski and Bramnick are no longer sponsors.

Legislation would have exempted sponsor’s law client from hospital fee caps