What Are a Social Worker’s Obligations Under the New Jersey Administrative Code When an Insurance Company Demands to Conduct an Audit of Patient Records?

By Eric Marcy, Esq.

Under New Jersey Law Health Care Insurance, Carriers (“Carrier(s)”) have specific, defined, and limited authority to have access to a licensed Social Worker’s records involving services paid through the Carrier’s Health Insurance Plan. Such access is not unlimited and sometimes an investigator on behalf of the Carrier will show up at the Social Worker’s office and demand to see the complete files identified by the investigator. Typically, such investigations are triggered by either complaints from patients regarding service or billing or a Carrier’s suspicions of fraud based upon claims filed. Out of Network Providers, with a large patient base, are potential subjects of audits due to the volume of business and costs incurred by the carrier. It is not unheard of that a Carrier might use the opportunity of an audit to encourage a Provider to become an in-network Provider during the audit process.

A.  Audits by Insurance Carriers

There are limits to what information a Carrier is permitted to access in a patient’s file. Blanket requests to see an entire patient file is improper. Social Workers provide counseling of very personal information that may become part of the Provider’s patient file. This is especially true of those trained in and use psychotherapy. Diligent protection of the very personal information that may be contained in a Provider’s file is required by law and a Provider should never be cowed into producing records by an investigator without first carefully reviewing the file and the records to be produced.

Typically audit demands may contain a statement that medical records of subscribers are to be made available for review and or copying/photograph, at the carrier’s request, based on the “disclosure of information” provision found in the insurance Carrier’s contract with their Subscriber. Such provisions do not entitle a Carrier unlimited access to the patient’s file. When a carrier makes such a demand based upon purported provisions of a contract, that the Provider is not a party and is not entitled to absolute access.  The proper response should be that such a demand is overbroad and violates administrative code regulations regarding disclosure of information to Carriers. Moreover, without the identification of specific patients, receipt of appropriate releases, the Provider should not provide a Carrier with unlimited access to highly confidential patient files based upon a representation that the Carrier’s policies permit such access.

The Carrier may assert that it does not have to provide the patient list prior to the audit. The Carrier may assert that it will present the patient list at the time of the review of the complete files to ensure the “integrity” of the audit. Inherent in such a statement is the inference that if a list is provided in advance that the Provider may commit fraud and alter the records. Aside from being offensive, such a demand is overbroad and violates administrative code regulations regarding disclosure of information to Carriers.

 B. Records Required to be Maintained by Social Workers

Social Worker’s under the New Jersey Administrative Code are required by law to maintain the following records:

 13:44G–12.1 Preparation and maintenance of client records

 (a) A social worker shall prepare and maintain for each client a contemporaneous, permanent client record that accurately reflects the client contact with the social worker whether in an office, hospital or other treatment, evaluation or consultation setting.

 (b) A social worker shall include at least the following information in the client record: 

  1. The client name (on each page of the record), address and telephone number; 
  2. The location and dates of all treatment, evaluation or consultation settings; 
  3. The identity of each Provider of treatment, evaluation or consultation and the supervisor, if any; 
  4. The presenting situation; 
  5. Significant social history; 
  6. Past and current medications, when appropriate; 
  7. A social work assessment, unless a separate record is kept; 
  8. A treatment or service plan; 
  9. Progress notes for each session; 
    i.  A social worker may dictate progress and session notes for later transcription provided the transcription is dated and identified as preliminary pending the social worker’s final review and approval; 
  10. Information regarding referrals to other professionals and reports and records provided by other professionals; and 
  11. Fees charged and paid unless a separate financial record is kept.

(c) A social worker providing clinical services shall include in the client record the following information, in addition to the information required pursuant to (a) above: 

  1. Significant medical and psychosocial history; 
  2. A diagnostic assessment; and 
  3. Prognosis. 

(d) The social worker shall periodically review and update the treatment or service plan. 

(e) The social worker shall retain the permanent client record for at least seven years from the date of the last entry, unless otherwise provided by law, or in the case of a minor, until age 25. 
     1.  This requirement shall not apply to a social worker in an agency setting where it is not the policy of the agency to allow the social worker to maintain control over the retention of client records. 

N.J. Admin. Code § 13:44G-12.1. Failure to properly maintain such records may expose the Provider to action by the Carrier in regard to reimbursement for services rendered and possibly a referral to the State Board of Social Worker Examiners, the licensing Board, for possible investigation and action.

C. A Provider’s Obligation to Maintain Confidentiality

 A Social Worker’s obligations to maintain confidentiality are clearly defined and exceptions are set forth in N.J. Admin Code § 13:44G–12.3 Confidentiality: 

(a) A social worker shall preserve the confidentiality of information obtained from a client in the course of performing social work services for the client, including after the death of a client, except in the following circumstances. 

  1. Disclosure is required by Federal or state law or regulation. 
  2. Disclosure is required by the Board or the Office of the Attorney General during the course of an investigation. 
  3. Disclosure is required by a court of competent jurisdiction pursuant to a judge’s order. 
  4. The client would present a clear and present danger to the health or safety of an individual if the social worker fails to disclose the information. 
  5. The social worker is a party defendant to a civil, criminal or disciplinary action arising from the social work services provided, in which case a waiver of the privilege accorded by this section shall be limited to that action. 
  6. The patient or client is a defendant in a criminal proceeding and the use of the privilege would violate the defendant’s right to a compulsory process or the right to present testimony and witnesses on that person’s behalf. 
  7. The patient or client agrees to waive the privilege accorded by this section. In circumstances when more than one person in a family is receiving social work services, each family member who is at least 14 years of age or older must agree to the waiver. Absent a waiver of each family member, a social worker shall not disclose any information received from any family member. 

(b) A social worker shall establish and maintain a procedure to protect the client record from access by unauthorized persons. 

(c) The social worker shall establish procedures for maintaining the confidentiality of client records in the event of the social worker’s relocation, retirement or death and shall establish reasonable procedures to assure the preservation of client records in accordance with the time frame set forth in N.J.A.C. 13:44G–12.1(e) in the event of the social worker’s separation from a group practice. 

N.J. Admin. Code § 13:44G-12.3, emphasis added. If a Provider has a concern as to its obligations in maintaining confidentiality or producing records to a Carrier the first course of action should be to consult with counsel for an opinion as to how best to proceed and comply with the law.

D.  The Extent of a Carrier’s Lawful Access to Patient Information and the Limits of Such Access

The governing provision for a Carrier’s access to patients’ files is found in the New Jersey Administrative Code, N.J.A.C. exercise rights under this section. An authorized representative may be the client’s attorney or an agent of a third party payor. N.J. Admin. Code § 13:44G-12.4, Release of Client Record, which in pertinent part provides:

(a) For purposes of this section, “authorized representative” means, but is not limited to, a person designated by the client or a court to with whom the client has a contract, which provides that the third-party payor be given access to records to assess a claim for monetary damages or reimbursement… [section omitted].

  • The client’s health insurance carrier. Only the following basic information shall be provided. The information provided shall be marked “Confidential” and forwarded to the attention of a specific individual if identified by the client or authorized representative. 
    i.   The client’s name, age, sex, address, educational status, identifying number within the insurance program, date of onset of difficulty, date of initial consultation, dates, and character of sessions (individual or group) and fees; 
    ii.   Diagnostic information, defined as therapeutic characterizations of the type found in the current version of the DSM or in another professionally recognized diagnostic manual;
    iii.  Status of the client (voluntary or involuntary; inpatient or outpatient);
    iv.  The reason for continuing social work services, limited to an assessment of the client’s current level of functioning and level of distress. Each aspect shall be described as “none,” or by the term mild, moderate, severe or extreme; and
    v.   Prognosis, limited to an estimate of the minimal time during which treatment might continue. . . . [sections omitted].

(h)This section shall not apply to a social worker in an agency setting who does not, by agency policy, have control over or authority to release client records.

N.J. Admin. Code § 13:44G-12.4, emphasis added.

E. Conclusion 

A Carrier’s assertion that it has authority to access a patient’s complete Provider file is not authorized under the New Jersey Administrative Code. Whenever a Carrier makes a demand for access to patient files the response should be that the Carrier will receive complete cooperation, subject to the Provider’s complying with its confidentiality obligations under New Jersey law.

If there is any concern, whatsoever, that the Provider has failed to maintain records in accordance with the regulations or that there are other issues, such as incorrect billing, the Provider should immediately retain counsel and have counsel respond to the request and be directly involved in the review and production of records.  In fact, prior to submitting to any audit or producing any records, a Provider would be well served to seek the advice of counsel.

Unless the Provider has received a proper waiver by a patient for all patient records, prior to providing any documents to a Carrier, the Provider has the obligation to review the patient’s file and redact confidential information that exceeds the scope of the authority the Carrier has for access to patient records under the New Jersey Administrative Code. If the Carrier claims that the patient has signed some general waiver or that it is permitted complete access as set forth in in its policy documents, the safest practice would be to first confirm with the client regarding the scope of information that the client is authorizing for production, prior to the production of the complete record. While a Provider will have the obligation to cooperate and comply with a Carrier’s authority to obtain certain identified patient information, the Provider has the obligation to maintain confidentiality as required by law. 

This review is based upon the New Jersey Administrative Code and does not address confidentiality and potential audit issues under Federal Law, Health Insurance Portability and Accountability Act of 1996, Pub.L. 104-191, effective April 14, 2003, (“HIPAA”). A discussion of the Federal requirements for the maintenance and confidentiality of health records and the implications for audits by insurance companies is beyond the scope of this brief blog/article.

Eric Marcy, Esq. has represented licensed professionals before a variety of licensing boards. If you have any concerns regarding your professional license, if you believe that a complaint or investigation may commence, or if you are served with a notice of formal administrative action, contact Somerville professional license defense lawyer Eric Marcy, Esq. who is Of Counsel to Lyons & Associates, P.C. You can call 908-581-2388 (cell) or 908-575-9777 (office) or you may email him at [email protected]. Our offices are located in Somerville and Morristown, New Jersey, and we proudly serve clients throughout New Jersey, including but not limited to Somerset County, Morris County, Middlesex County, Union County, Essex County, Bergen County, Hunterdon County, Warren County, Sussex County, Passaic County, and Monmouth County.


N.J. Admin. Code § 13:44G-12.1, Preparation and maintenance of client records
N.J. Admin. Code § 13:44G-12.3, Confidentiality
N.J. Admin. Code § 13:44G-12.4, Release of Client Record

Health Insurance Portability and Accountability Act of 1996, Pub.L. 104-191, effective April 14, 2003, (“HIPAA”)

Smith v. Am. Home Prod. Corp. Wyeth-Ayerst Pharm., 372 N.J. Super. 105, 123–26, 855 A.2d 608, 619–21 (Law. Div. 2003)