Argued: November 12, 2019
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge,
HONORABLE CHRISTINE FIZZANO CANNON, Judge, HONORABLE BONNIE
BRIGANCE LEADBETTER, Senior Judge
HANNAH LEAVITT, PRESIDENT JUDGE
First Pharmacy Services, LLC, (Pharmacy) petitions for review
of an adjudication of the Bureau of Workers' Compensation
(Bureau), Fee Review Hearing Office (Hearing Office) that
vacated a determination of the Bureau's Medical Fee
Review Section. At issue is Pharmacy's invoice for a
compound cream that it dispensed to Adriana Lozano (Claimant)
for treatment of a work injury, which Claimant's
employer, Bayada Home Health Care, Inc. (Employer),
refused to pay. When the Medical Fee Review Section ordered
Employer to pay Pharmacy's invoice, Employer appealed.
The Hearing Office held that Pharmacy's fee review
petition was premature; vacated the determination of the
Medical Fee Review Section on Pharmacy's petition; and
dismissed Employer's appeal of the directive to pay
Pharmacy's invoice for the compound cream. Before this
Court, Pharmacy asserts that the Hearing Office erred and has
left it without a forum to challenge Employer's refusal
to reimburse it for the compound cream it dispensed to
Claimant, and this deprives Pharmacy of due process. We
vacate and remand.
December 18, 2016, Claimant sustained a shoulder injury while
working for Employer. Pursuant to the Workers'
Compensation Act,  Employer issued a medical-only Notice of
Temporary Compensation Payable (NTCP), accepting the work
injury as a right shoulder strain. On June 16, 2017, Samuel
Grodofsky, M.D., prescribed Claimant a compound cream,
i.e., Diclofenac 1.5% Topical Solution, for
application to the "affected area 2-4 times
daily[.]" Reproduced Record at 13a (R.R. __). On June
21, 2017, Pharmacy dispensed the compound cream to Claimant
and billed Employer $4, 869.99. Employer denied payment for
the stated reason that the "diagnosis is inconsistent
with the procedure." R.R. 11a.
August 25, 2017, Pharmacy filed a fee review application.
Pharmacy submitted a "Health Insurance Claim Form"
reporting Claimant's address and insurance information.
R.R. 9a. It also documented that Claimant received the
compound cream on June 21, 2017, and the cost was $4, 869.99.
Additionally, Pharmacy submitted a copy of Dr.
Grodofsky's prescription for the compound cream.
meantime, Claimant and Employer pursued litigation related to
Claimant's work injury. On May 23, 2017, Claimant filed a
penalty petition, alleging that Employer had violated the Act
by unilaterally stopping Claimant's benefits as of
January 4, 2017. On June 30, 2017, Employer filed a
termination petition, alleging that Claimant had fully
recovered from her work injury. On July 18, 2017, Claimant
filed a review petition seeking to amend the description of
her injury in the NTCP to include an acromioclavicular joint
separation and a clavicular avulsion fracture. These
petitions were assigned to a Workers' Compensation Judge
(WCJ), who scheduled a hearing for August 23, 2017.
scheduled hearing, the parties requested the WCJ to approve
their Compromise and Release (C & R) Agreement, by which
Employer agreed to pay Claimant $15, 000 to resolve any
future medical or wage loss claims and any medical bills
incurred prior to the date of the hearing that were related
to the accepted work injury, which the C & R Agreement
described as a "right shoulder strain." R.R. 34a.
The WCJ approved the C & R Agreement on August 25, 2017.
October 12, 2017, the Bureau's Medical Fee Review Section
acted upon Pharmacy's fee review petition that had been
filed on August 25, 2017, the same day the WCJ approved the C
& R Agreement. The Medical Fee Review Section held that
Employer was obligated to reimburse Pharmacy $4, 455 plus
interest from July 6, 2017. Employer requested a de
novo hearing to contest the fee determination, arguing
that the compound cream dispensed by Pharmacy had never been
adjudicated as related to Claimant's work injury and,
thus, Pharmacy's fee review application was premature.
Pharmacy responded that Employer should have sought
utilization review if it believed that the compound cream it
dispensed was not related to Claimant's work injury.
Dismissing Pharmacy's fee review application would leave
it without a remedy and violate due process.
Hearing Office found that Employer denied payment because of
Employer's "belief that the bill for the [compound
cream] is not related to the work injury." Adjudication,
6/7/2018, at 4, Finding of Fact No. 13; R.R. 108a. The
Hearing Office cited Claimant's testimony from the C
& R hearing that it was her understanding that the C
& R Agreement obligated Employer to pay only those
medical bills "related" to the work injury.
Id., Finding of Fact No. 14(a); R.R. 108a. However,
there was no statement in the C & R Agreement that the
compound cream dispensed by Pharmacy related to
Claimant's work injury. Concluding that liability for the
compound cream had to be established either by Employer's
acceptance or a determination by a WCJ, the Hearing Office
determined that Pharmacy's fee review petition was
Hearing Office vacated the Medical Fee Review Section's
fee determination and dismissed Employer's request for a
hearing on the fee determination.
has petitioned for this Court's review. On appeal, it
raises two issues. First, it asserts that the Hearing Office
erred in dismissing Employer's request for a de
novo hearing on the merits of the Medical Fee Review
Section's determination that Employer had to pay
Pharmacy's invoice. Pharmacy contends that its fee
petition was not premature in light of the fact that Employer
did not request utilization review of the treatment. Second,
it argues that it violates due process not to provide
Pharmacy a mechanism for challenging Employer's refusal
to reimburse it for compound cream it dispensed to
Court directed the parties to file supplemental briefs to
address recent developments in the law with respect to the
fee review process. The Court's order stated as follows:
[T]he parties are directed to file supplemental briefs in the
above-captioned matter addressing the applicability of
Armour Pharmacy v. Bureau of Workers' Compensation
Fee Review Hearing Office (Wegmans Food Markets, Inc.),
206 A.3d 660 (Pa. Cmwlth. 2019) [Armour Pharmacy
of Commonwealth Court, 6/14/2019.
supplemental brief, Pharmacy argues that Armour Pharmacy
II established that the Hearing Office may address the
threshold question of whether the compound cream dispensed by
Pharmacy was, in fact, related to the accepted work injury. A
contrary ruling would violate due process. Alternatively,
Pharmacy argues that Employer had to file a utilization
review petition if it believed that the compound cream
Pharmacy dispensed to Claimant did not "relate to"
the accepted work injury.
requires employers to make prompt payment on provider
invoices for reasonable and necessary medical treatment of a
claimant's work injury, and it establishes procedures for
resolving disputes between a provider and an employer about
whether the treatment actually meets that standard.
Specifically, Section 301(f.1)(5) states:
The employer or insurer shall make payment and providers
shall submit bills and records in accordance with the
provisions of this section. All payments to providers for
treatment provided pursuant to this act shall be made within
thirty (30) days of receipt of such bills and records unless
the employer or insurer disputes the reasonableness or
necessity of the treatment provided pursuant to paragraph
(6). The nonpayment to providers within thirty (30) days
for treatment for which a bill and records have been
submitted shall only apply to that particular treatment or
portion thereof in dispute; payment must be made timely for
any treatment or portion thereof not in dispute. 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
thirty (30) days following notification of a disputed
treatment or ninety (90) days following the original billing
date of treatment. If the insurer disputes the reasonableness
and necessity of the treatment pursuant to paragraph (6), the
period for filing an application for fee review shall be
tolled as long as the insurer has the right to suspend
payment to the provider pursuant to the provisions of this
paragraph. Within thirty (30) days of the filing of such an
application, the department shall render an administrative
77 P.S. §531(5) (emphasis added). "Paragraph
6" states, in relevant part, as follows:
[D]isputes as to reasonableness or necessity of treatment
by a health care provider shall be resolved in accordance
with the following provisions:
(i) The reasonableness or necessity of all treatment provided
by a health care provider under this act may be subject to
prospective, concurrent or retrospective utilization review
at the request of an employe, employer or insurer. The
department shall authorize utilization review organizations
to perform utilization review under this act. Utilization
review of all treatment rendered by a health care provider
shall be performed by a provider licensed in the ...