In a recent Massachusetts medical provider fee lawsuit which challenged an insurer’s reimbursement of a non-contracted provider at “usual, customary and reasonable” (“UCR”) rates, an appellate court held that the Ingenix 80th percentile provider payment data introduced by the insurer constituted neither “usual and customary” nor “fair and reasonable” reimbursement to this medical provider. This ruling rejected the Ingenix 80th percentile provider billing and payment data for two chiropractic CPT codes because the evidence presented at trial did not establish the “accuracy and reliability” of the underlying data to satisfy the business records exception to the hearsay rule. Of note, this decision notes Ingenix compiled the provider payment data in good faith as a regular business practice in the ordinary course of business. This decision also implicitly recognizes the broader notion that insurers may reimburse noncontracted medical providers at accurate and reliable UCR rates.

When any medical payer or insurer is legally challenged for applying a UCR database to reimburse medical providers at “fair and reasonable” rates, a payer should consider doing the following: (1) ascertain the identity and number of insurers and providers from whom the underlying UCR data was gathered; (2) determine whether the data was comprehensively provided as a regular business practice in the ordinary course of business, such as regular reporting to a regulatory entity; (3) determine the quantitative extent, if any, to which any data involved “contracted” providers; (4) document the last internal quality control audit date by the entity that gathered and compiled the underlying data; and (5) seek a removal of any written disclaimers, and if possible obtain an affirmative approval, of the accuracy of the underlying information and data summaries. Finally, also consider that some jurisdictions may also permit the introduction of UCR evidence through qualified expert witness opinion testimony.

The Massachusetts Appellate Division Decision

In late January 2008, the appellate division of a Massachusetts State District Court vacated a trial court judgment in favor of Liberty Mutual Insurance Company (“Liberty Mutual”), and remanded for a new trial in favor of Dr. Michael Davekos, a chiropractic medical provider (“Chiropractor”)1. When the Chiropractor submitted his billed charges to Liberty Mutual for the initial exam and 47 medically necessary manual treatments of a patient injured while riding in a Liberty Mutual insured’s vehicle, Liberty Mutual sought to instead pay a “fair and reasonable” amount. The Chiropractor filed suit to recover “billed charges” under Massachusetts’ Personal Injury Protection statute G.L. c. 90, § 34M and G.L. c. 93A, § 1, and alleged “unfair and deceptive practices” under state law.

This appellate court vacated the judgment because Liberty Mutual introduced Ingenix statistical data, graphs, and summaries to show the “reasonable” charges for treatments by the Chiropractor. Citing the applicable state hearsay and business records exception statutes, this decision held that the Ingenix data should have been inadmissible because there was “nothing in the record to establish the accuracy or reliability of Ingenix’s raw data, and thus its statistical extrapolations….” This opinion adds that “apart from any hearsay objection, a significant portion of the Ingenix data introduced by Liberty [Mutual] could have been excluded on the basis of relevance.” The decision explains how the Ingenix data “did not constitute evidence of the dollar amount of the usual and customary charges in [the Chiropractor’s] area for the services he provided, much less proof of what could be considered fair and reasonable charges for those services.”

Ingenix - A Nationwide Health Care Information Company

Well known in the health care and insurance industries and as this decision notes, Ingenix is a nationwide health care information company that sells customized fee analyzers to medical providers, health care insurers and automobile insurance companies. Here, the “customized analysis or medical module” that Liberty Mutual purchased from Ingenix was intended to chart provider billing and payment data regarding any AMA CPT code for a geographic area. Ingenix groups the bills in a given area and applies a proprietary relative value to each CPT code. Ingenix then ascertains the most common, high, low, 80th and 50th percentile charges. Here, Liberty Mutual introduced Ingenix statistical summaries and graphs of billing patterns that Ingenix derived from its CPT code referenced database. A Liberty Mutual employee testified that the Ingenix 80th percentile fee constituted reasonable reimbursement for chiropractic medical services.

Likewise, to show his billed charges were fair and reasonable, the Chiropractor testified his medical records and medical bills were based in part on what other local chiropractors charged for the same services. The trial court, however, excluded the basis for the Chiropractor’s testimony – his reading of FEE FACTS (an industry publication) and his review of comparative charges of other local chiropractors and his discussions with them.

Reasons Why “Usual and Customary” Payment Data Was Inadmissible

This decision lists six reasons, most of which are correctable, why Liberty Mutual failed to show the reliability of the Ingenix data, to satisfy the business records exception:

  1. Ingenix relied on a “voluntary data contribution program,” including unknown numbers of unidentified health care providers, instead of collecting its own billing and payment data, so Liberty Mutual could not verify its accuracy.
  2. The Ingenix witness could not validate the accuracy of each participating insurer’s data regarding the number and amount of CPT code billings submitted. The witness knew Ingenix conducted audits, but did not know the last audit date. 
  3. This Ingenix data had a printed disclaimer stating it was only for information purposes, disclaiming any endorsement, approval or recommendation.
  4. Although this Ingenix data listed the medical CPT code, bill amount, service date, and zip code, it did not identify all the providers, the number of providers for any given CPT code, or identify which bills were passed on to Ingenix.
  5. Ingenix could not testify whether any of the billing data it compiled already included usual, customary, or contract rates between providers and insurers.
  6. The data that Liberty Mutual compared to the Chiropractor’s charges lacked the requisite indicia of “reliability to be admissible,” and did not meet the “business record exception for scientific studies containing primarily factual data.” While the data summaries qualified as Ingenix’s business records, the underlying medical provider data gathered by Ingenix was inadmissible hearsay. Here, Liberty Mutual did not show that the “data volunteers” submitted the data to Ingenix as a normal business practice. Without a “business duty to accurately report” the data, Ingenix was “at the mercy” of its participating insurers.

Raised but not discussed in this decision is the Chiropractor’s allegation of “unfair and deceptive practices.” Although many states have “unfair or deceptive business practice” statutes as well as common law remedies, few published cases address the propriety of payers using UCR provider billing and payment data to reimburse non-contracted providers. Nonetheless, this decision implicitly accepts UCR as a permissible billing and payment standard for non-contracted providers, as long as the underlying data for the UCR summaries meet the business records exception.


Evidentiary foundations are challenging but not insoluble for the admission of Ingenix or other types of UCR billing and payment evidence in non-contracted provider reimbursement litigation. Attention to detail is paramount to provide a factual basis for the source and integrity of the underlying data, as well as the way it was gathered, compiled and summarized. This data needs to be comprehensive, reliable and accurate.

Trial and appellate courts nationwide have two options when faced with “close calls” regarding the business records exception, when the quality of the personal knowledge foundation is below average, but not completely absent. Some courts exclude the evidence when the personal knowledge foundation is weak; other courts admit the evidence and state that the weak personal knowledge “goes to the weight.” By vacating the trial judgment – and remanding rather than reversing – this decision has leveled the playing field for retrial, providing Liberty Mutual an opportunity to present more informed witness testimony to demonstrate the reliability of the underlying UCR data.