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LLC v. Bureau of Workers' Compensation Fee Review Hearing Office

Commonwealth Court of Pennsylvania

January 16, 2020

Workers' First Pharmacy Services, LLC, Petitioner
v.
Bureau of Workers' Compensation Fee Review Hearing Office (Gallagher Bassett Services), Respondent

          Argued: November 12, 2019

          BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge, HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

          OPINION

          MARY HANNAH LEAVITT, PRESIDENT JUDGE

         Workers' 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), [1] 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.

         Background

         On December 18, 2016, Claimant sustained a shoulder injury while working for Employer. Pursuant to the Workers' Compensation Act, [2] 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.

         On 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.

         In the 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.

         At that 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.

         On 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.

         The 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 premature.

         The Hearing Office vacated the Medical Fee Review Section's fee determination and dismissed Employer's request for a hearing on the fee determination.

         Issues

         Pharmacy has petitioned for this Court's review. On appeal, it raises two issues.[3] 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 Claimant.[4]

         This 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 II].

         Order of Commonwealth Court, 6/14/2019.

         In its 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.

         Workers' Compensation Act

         The Act 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 decision.

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 ...

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