Opinion
No. 1449 C.D. 2013
07-16-2014
West Branch Area School District, Petitioner v. Workers' Compensation Appeal Board (Smith), Respondent
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE LEADBETTER
Employer West Branch Area School District petitions for review from the order of the Workers' Compensation Appeal Board, which granted Claimant Ellen Smith's review medical petition and ordered Employer to pay the subrogation lien of Claimant's private health insurer, Highmark. After review, we affirm.
The underlying facts have been stipulated to and, therefore, are not in dispute. Claimant sustained a work-related back injury, which Employer accepted pursuant to a Notice of Compensation Payable. Due to symptoms associated with her back, Claimant had a trial spinal cord stimulator implanted in October 2010, and a permanent spinal cord stimulator implanted in December 2010. The medical provider that rendered the treatment initially billed Employer's workers' compensation insurer, AmeriHealth, in the amount of $34,040 for its services. AmeriHealth denied payment on the ground that the treatment was not causally related to the work injury. Following that denial, the medical provider submitted the same bill to Highmark, who then paid the medical provider $32,297 in February 2011.
Unaware of Highmark's payment, AmeriHealth reversed its decision and paid the medical provider $1,591.15 on March 31, 2011. Approximately one month later, Claimant filed medical review and penalty petitions regarding the spinal cord stimulator procedures, contending that they were causally related to the work injury and Employer had failed to pay for them. Employer answered the petitions, generally denying that it had failed to pay for medical bills causally related to the accepted work injury and specifically denying that the treatment at issue was causally related to the work injury. At some point, the medical provider notified Highmark that it had been paid the aforesaid sum by AmeriHealth and Highmark "charged back" the entire amount it had paid to the medical provider. Stipulation of Facts, ¶ 13. The charge back occurred on or before May 14, 2011. Id. at ¶ 14. Thereafter, on September 3, 2011, Highmark again paid the medical provider for the procedures at issue in the amount of $22,126. Highmark, through Health Care Recoveries, then pursued a subrogation claim against AmeriHealth, seeking repayment of the monies it paid to the medical provider for Claimant's treatment.
While not stipulated to, the parties seem to agree that this significantly lower amount was due to a coding error on the bill.
In resolving the Claimant's petitions, the workers' compensation judge (WCJ) concluded that AmeriHealth was not required to reimburse Highmark for its payment, noting that Highmark's "payment was not in satisfaction of any liability which AmeriHealth had to [the medical provider] under the Workers' Compensation Act because AmeriHealth had already paid the medical provider what they believed to be the proper amount to satisfy their billing code and the medical provider has never filed for a fee review . . . ." WCJ's Decision at 2, Finding of Fact No. 8. Notably, Employer did not take the position before the WCJ that the treatment at issue was not necessitated by the work-related injury.
The Board reversed on appeal. In doing so, it concluded that since Highmark paid the medical provider as a result of AmeriHealth's failure to properly pay the entire amount, Highmark was entitled to reimbursement for the amount it paid from AmeriHealth, the party ultimately liable for payment. The Board further concluded that inasmuch as the right to subrogation is an equitable doctrine, which places the ultimate burden of a debt on the party responsible for its payment, the medical provider's failure to seek fee review was irrelevant and did not relieve AmeriHealth of its obligation to reimburse Highmark for the amount of its payment for treatment of the work-related injury. This appeal followed.
On appeal, Employer contends that the Board erred in applying general principles of equity, contending that it met its obligation under the Act with its payment and the medical provider, if dissatisfied with the amount of the payment, was required to seek fee review to dispute the amount it was paid. Employer maintains that the Board's decision undermines the cost containment provisions of the Act, ignores the mandatory fee review process and provides health insurers with an unfettered right to subrogation without challenge from the workers' compensation carrier, even in those situations where the carrier has satisfied its obligation under the Act and paid the medical provider. Finally, noting that Highmark took a risk in paying the medical provider after the provider had already received a payment from AmeriHealth, Employer seems to suggest that Highmark must bear the consequences of its action and remain liable for the payment: "when Respondent paid in 'addition to' Petitioner, rather than 'instead of' Petitioner, it gave up its right to subrogate." Petitioner's Brief at 21.
Workers' Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1 - 1041.4; 2501 - 2708.
We note that the cost containment provisions, limiting the amount that a medical provider may bill for treatment of a work-related injury, are set forth in Section 306(f.1)(3), 77 P.S. § 531(3).
Section 306(f.1)(5) provides, in pertinent part, that: "A provider who has submitted the reports and bills required by this section and who disputes the amount or timeliness of the payment from the employer or insurer shall file an application for fee review with the department no more than [30] days following notification of a disputed treatment or [90] days following the original billing date of treatment." 77 P.S. § 531(5).
Prior to discussing Employer's appellate arguments, it is helpful to set forth the relevant statutory provisions/regulations involved. It is well settled that an employer is financially liable for a claimant's medical treatment if the treatment is causally related to the work-related injury. Crozer Chester Med. Ctr. v. Dep't of Labor & Indus., Bur. of Workers' Comp., 22 A.3d 189, 194 (Pa. 2011); Section 306(f.1)(1)(i), 77 P.S. § 531(1)(i) (providing in part that employer shall provide payment for reasonable surgical and medical services provided by physicians and other health care providers). Once an injury is determined to be work-related, an employer is required to pay for a claimant's medical treatment within specified time limits unless the employer disputes the reasonableness or necessity of the treatment (in which case a timely request for utilization review is required). Crozer Chester Med. Ctr., 22 A.3d at 195; Section 306(f.1)(5),(6), 77 P.S. § 531(5),(6). Pursuant to Section 306(f.1)(3), a medical provider's fees for services are generally capped at 113% of the Medicare reimbursement rate for a comparable service. See also 34 Pa. Code Chapter 127 (cost containment regulations); 34 Pa. Code § 127.101(a) (providing for reimbursement at 113% of Medicare reimbursement rate). If the employer has accepted liability for a particular treatment, the medical provider may challenge the amount or timeliness of the employer's payment through the fee review process. Section 306(f.1)(5); Crozer Chester Med. Ctr., 22 A.3d at 195. However, an application for fee review is inappropriate and will be rejected if, among other things, liability for the injury has been denied or utilization review for the treatment has been sought. 34 Pa. Code § 127.255. Fee review is also inappropriate if liability for a particular medical treatment has been denied. Nickel v. Workers' Comp. Appeal Bd. (Agway Agronomy), 959 A.2d 498, 503 (Pa. Cmwlth. 2008). Cf. Crozer Chester Med. Ctr., 22 A.3d at 195 (discussing manner in which liability for particular treatment may be challenged and when fee review inappropriate).
Section 306(f.1) of the Act, 77 P.S. § 531, provides for, inter alia, the provision of and payment for medical services.
An application for fee review is properly denied if untimely filed. Thomas Jefferson Univ. Hosp. v. Bureau of Workers' Comp Med. Fee Review Office, 794 A.2d 933, 936 (Pa. Cmwlth. 2002). --------
The Act also provides for the right of subrogation for third party payors who paid the claimant or his/her medical providers for a work-related disability or medical expense on the basis that the disability or injury was not initially deemed to be compensable under the Act. Specifically, Section 319 of the Act provides in relevant part:
Where an employe has received payments for the disability or medical expense resulting from an injury in the course of his employment paid by the employer or an insurance company on the basis that the injury and disability were not compensable under this act in the event of an agreement or award for that injury the employer or insurance company who made the payments shall be subrogated out of the agreement or award to the amount so paid, if the right to subrogation is agreed to by the parties or is established at the time of hearing before the referee or the board.77 P.S. § 671. In Furnival State Machinery v. Workers' Compensation Appeal Board (Slye), 757 A.2d 433 (Pa. Cmwlth. 2000), this court examined a private health insurer's right to subrogation under Section 319 following its full payment of medical expenses following the employer's denial of coverage. The employer ultimately accepted the claimant's injury as work-related and agreed to reimburse the claimant's private health insurer for the amount allowed under Section 306(f.1)(3), which was less than the insurer had paid. Following suit to recover the balance of its payment, the matter was litigated in the workers' compensation arena and eventually appealed to this court. In addressing whether the insurer's subrogation interest was limited by the fee caps in Section 306(f.1)(3), this court opined:
We agree with [the workers' compensation insurance carrier] that the purpose and spirit of [the cost containment] provisions are best furthered by limiting subrogation under Section 319 to the amounts specified in Section 306(f.1)(3). Nevertheless, we cannot agree that the purposes of Section 306(f.1)(3), however salutary they may be, control the outcome in this case, in the face of specific language to the contrary in Section 319.
[Carrier's] primary argument is that the third-party health insurer should be found to "stand in the shoes" of the claimant. Since a [claimant] is only entitled to receive medical treatment for a work-related injury pursuant to the [Act], an insurance carrier should only recover through subrogation what the workers' compensation claimant is entitled to receive in payment.
However, the cost containment provisions of Section 306(f.1)(3) do not limit what a claimant may recover, nor limit the medical payment obligation of employers and their compensation carriers. By its terms that section limits only what a medical provider may charge when it is to be compensated by an employer under the Act. Here, the provider did not submit its charges for payment pursuant to the terms of the Act, but pursuant to a contract of insurance unconnected with the Workers' Compensation system. In that situation, the insurance contract controls the charges for which medical providers may be compensated, not Section 306(f.1)(3).FN3 . . . [Section 319] specifically provides that the payor shall be subrogated "in the amount so paid."
Id. at 436 (footnote and emphasis in original).FN3 We emphasize that providers are not free to coverage-shop under the terms of the Act. The full reimbursement provision of Section 319 applies only where the provider must submit its charges to the third party payor because the employer or its Workers' Compensation carrier has refused to pay for treatment on the ground that the injury is not compensable.
Furnival is instructive. First, it informs that the cost containment provisions set forth in Section 306(f.1)(3) are applicable to providers only and do not limit a third-party payor's right to reimbursement under Section 319. Second, and more importantly, it emphasizes the express language of Section 319, that the right of reimbursement provided therein exists only when payment was made because the workers' compensation carrier denied coverage on the ground that the injury was not compensable. Necessarily, this right to reimbursement also exists when the workers' compensation carrier denies payment for specific treatment on the ground that it is not causally related to the work injury.
Reviewing the totality of the circumstances, we conclude that Employer must reimburse Highmark the amount it paid for Claimant's back procedures. While it is undisputed that AmeriHealth made a payment to the medical provider, the payment was under an incorrect billing code, made in an amount that bore no relation to the services rendered and, approximately one month later, in the context of a medical review petition alleging that Employer failed to pay for the subject procedures, Employer specifically denied that the expenses associated with the spinal cord stimulators were causally related to the accepted work injury. Thus, in light of Employer's woefully inadequate payment under an incorrect billing code followed by an express denial of liability for the subject procedures, we conclude that Highmark's subsequent payment for medical expenses ultimately accepted as work-related, entitles Highmark to reimbursement under Section 319. Reimbursement of Highmark not only fits within the confines of Section 319, but also serves the equitable principles of the underlying doctrine, allocating a debt paid from the funds of one entity to the entity primarily liable for the obligation. See generally Anderson v. Bor. of Greenville, 273 A.2d 512, 514 (Pa. 1971).
In reaching this conclusion, we reject Employer's suggestion that our result allows health care providers to avoid the cost containment provisions of the Act or seek subrogation when it is not appropriate. Our result today is dictated solely by the facts of this case - payment by Highmark after an unexplained payment by the Employer of a small fraction of the medical bill followed by a (second) formal denial of liability.
The Board's order is affirmed.
/s/_________
BONNIE BRIGANCE LEADBETTER,
Judge ORDER
AND NOW, this 16th day of July, 2014, the order of the Workers' Compensation Appeal Board in the above-captioned matter is hereby AFFIRMED.
/s/_________
BONNIE BRIGANCE LEADBETTER,
Judge