Thermographic Diagnostics, Inc. v. Allstate Ins. Co.

Decision Date05 August 1991
Citation593 A.2d 768,125 N.J. 491
Parties, 60 USLW 2131 THERMOGRAPHIC DIAGNOSTICS, INC., A New Jersey Corporation, Plaintiff-Respondent and Cross-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellant and Cross-Respondent. THERMOGRAPHIC DIAGNOSTICS, INC., A New Jersey Corporation, Plaintiff-Respondent and Cross-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and New Jersey Automobile Full Insurance Underwriting Association, Defendants-Appellants and Cross-Respondents.
CourtNew Jersey Supreme Court

Andrew T. Berry, Newark, and William T. Barker, Chicago, Ill., a member of the Illinois bar, for defendants-appellants and cross-respondents (McCarter & English, Newark, and Green, Lundgren & Ryan, Haddonfield, attorneys; Andrew T. Berry, Newark, Peter P. Green, Haddonfield, and Jerry P. Sattin, on the briefs) Newark.

Michael J. Waldman, for respondent and plaintiff-cross-appellant (Ferrara & Waldman, attorneys) Cherry Hill.

The opinion of the Court was delivered by

STEIN, J.

Thermography is a relatively new diagnostic procedure that measures infrared energy emitted by the skin in order to ascertain the presence of significant temperature differences between corresponding areas of opposite sides of the body. Its proponents contend that thermography is useful in the diagnosis of selected neurological and musculoskeletal conditions. The critical issue raised by this appeal is whether thermography is sufficiently established as a valid diagnostic procedure to render it compensable as a reasonable and necessary medical expense pursuant to the personal injury protection (PIP) coverage provisions of the New Jersey Automobile Reparation Reform Act, L.1972, c. 70. (No Fault Act or Act). See N.J.S.A. 39:6A-2(e), -4(a). A collateral issue concerns the reasonableness of the fees charged for thermographic examinations and readings, an issue of particular significance because of evidence in the record that some physicians who frequently refer patients for thermographic procedures derive a financial gain by participating indirectly in the fees charged for the examination.

After a six-week trial in 1986, in the course of which the parties presented expert testimony favoring and denouncing thermography, the Law Division held that thermographic expenses were compensable under the No Fault Act. 219 N.J.Super. 208, 530 A.2d 56 (1987). Concluding that the evidence adduced at trial demonstrated that "neuromuscular thermography is sufficiently supported by credible expert testimony to have medical value," id. at 221, 530 A.2d 56, the Law Division held that the cost of thermography examinations was a necessary expense "if the treating physician orders a thermographic test based upon the physician's sincere belief that the procedure will further the diagnosis and treatment of [the] patient." Id. at 227-28, 530 A.2d 56. The court noted, however, that the reasonableness of the physician's belief in any given case was reviewable, particularly "where it can be shown that [thermographic] tests not warranted by the circumstances are ordered." Id. at 228, 530 A.2d 56. The Law Division also held reasonable the fees charged for thermographic examinations, concluding that they were within the range customarily charged for such services within the community. Id. at 230, 530 A.2d 56. Finally, in a post-trial proceeding subsequent to the filing of its opinion, the Law Division denied plaintiff's application for counsel fees.

The Appellate Division affirmed the trial court's determination that the charges for thermographic examinations can be compensable medical expenses under the No Fault Act. 241 N.J.Super. 88, 574 A.2d 485 (1990). The Appellate Division declined to follow the "customary charge" standard in determining the reasonableness of those costs. The court reasoned that the high cost of thermographic examinations in relation to the price of thermographic equipment and the financial interest in thermography fees on the part of some of the referring physicians rendered that standard inappropriate. It remanded the issue of the reasonableness of the charges for redetermination by the trial court. Id. at 92, 574 A.2d 485.

We granted defendants' petition for certification, 122 N.J. 338, 585 A.2d 353 (1990), addressing whether and under what circumstances thermographic examinations constitute a necessary medical expense under the No Fault Act, as well as plaintiff's petition for certification, ibid., challenging the Appellate Division's remand to redetermine the reasonableness of the thermographic charges and its affirmance of the Law Division's denial of plaintiff's application for counsel fees.

I

Plaintiff, Thermographic Diagnostics, Inc. (TDI), is engaged in the business of performing thermographic examinations at two New Jersey facilities. TDI instituted separate actions, which were consolidated before trial, against Allstate Insurance Company (Allstate) and State Farm Mutual Insurance Company (State Farm), as assignees of approximately 300 automobile insurance policyholders of Allstate and State Farm. Those insureds had been involved in automobile accidents and had been referred by their respective physicians to TDI for thermographic studies. The insureds submitted TDI's fees for the thermograms to Allstate and State Farm. Both companies refused payment, contending that thermography is an experimental procedure not generally accepted within the medical profession and hence not a necessary medical expense compensable under the Act. Defendants also contended that even if thermography was determined to be a reimbursable procedure under the Act, the amounts charged by plaintiff for thermographic examinations were excessive and unreasonable and should be adjusted by the court. The trial court permitted the pleadings to be amended during trial to name the New Jersey Automobile Full Insurance Underwriting Association (NJAFIUA) as a defendant, because NJAFIUA would be obligated to pay some of the claims asserted by TDI.

--A--

We need not recapitulate the extensive trial testimony by plaintiff's experts detailing how thermograms are administered and why they are useful in the diagnosis of certain conditions, nor need we set forth in detail the criticisms of thermography outlined at length by defendants' experts. We offer some general observations, however, about the expert testimony presented at trial. Neither plaintiff's nor defendants' experts presented compelling evidence to resolve the underlying scientific debate about the usefulness of thermography. For the most part, plaintiff's experts were highly-qualified physicians who were actively engaged in providing thermographic examinations, generally deriving substantial income from a financial interest in an entity that owned thermographic equipment and administered examinations. Although the testimony of those experts was clear and comprehensive with respect to the medical value of thermography as a diagnostic tool, their personal interest detracted from the objectivity of their testimony.

In general, defendants' experts fell into two categories. Some were unfamiliar with thermography but provided expert testimony faulting the scientific basis for its effective use. That testimony was generally well presented but quite inconclusive. Substantively, their testimony fell short of discrediting the underlying premise of thermography--that sensory nerve damage will affect blood flow and skin temperature in the affected area. Although highly-qualified physicians, those experts were also unpersuasive because they lacked the research and scientific credentials that would have imparted greater weight and credibility to their opinions. Three of defendants' experts had engaged in studies designed to test the effectiveness of thermography. Two experts compared thermographic readings of examinations of both normal and diseased patients, concluding that thermography was virtually useless in the diagnosis of sciatica. Another expert collaborated in a study designed to test whether relief of back pain by local anesthesia would produce thermographic changes, concluding that thermography would not detect pain relief. Those studies, however, were subjected to various criticisms and appeared to be unpersuasive on the general question of thermography's value as a collateral diagnostic tool. Defendants also produced Dr. Jan Stolwijk, Chairman of the Department of Epidemiology and Public Health at the Yale University School of Medicine and an expert in skin temperature. Dr. Stolwijk testified that he had used infrared thermography to measure skin temperature, acknowledging that the human body was bilaterally symmetrical with respect to skin temperature and that blood flow was a critical factor affecting skin temperature. He was skeptical about whether the preparation period prior to a thermographic examination was adequate to offset external factors that could affect the accuracy of the examination, but his testimony did not substantially discredit thermography as a useful diagnostic procedure.

The Law Division's opinion includes a concise description of thermography, and a summary of the testimony of one of plaintiff's experts, Dr. Joseph Uricchio, explaining the theoretical physiological basis for its usefulness as a diagnostic procedure:

Thermography is a relatively new diagnostic tool. Its scientific basis was developed in space and agricultural research. Thermogram means literally a picture of heat. In preparation for a thermographic examination, an individual must follow a strict protocol which eliminates conditions that might affect skin temperature, and just before the pictures are taken the skin is equilibrated with a room temperature of 68 [degrees] to 74 [degrees] Fahrenheit. Thermography is the measure of the infrared radiation from the skin surface of the human body by a scanner. A control unit then converts these emissions into...

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