Garcia v. Health Net of New Jersey (Summary)

NEW JERSEY – CODEY LAW

Garcia v. Health Net of New Jersey, No. A-2430-07T3 (N.J. Super. Ct. App. Div. Oct. 5, 2009)

The New Jersey Superior Court affirmed a trial court decision to grant summary judgment to an ambulatory surgical center ("ASC") and its physician-owners after a health insurer alleged that, among other things, the ASC and its owners violated the "Codey Law," a New Jersey law prohibiting self-referrals by physicians. While the court acknowledged that an advisory opinion authored by the New Jersey State Board of Medical Examiners was inconsistent with the plain language of the Codey Law, it agreed with the trial court’s determination that the opinion provided the physician-owners with a reasonable basis to believe that the referrals of their patients to the ASC were lawful. The court also noted that even if the Codey Law barred the referrals, the ASC and its physician-owners did not submit insurance claims knowing that they were false and misleading.