There have been a number of Workers’ Compensation cases in Pennsylvania recently dealing with the interplay between the Utilization Review and Fee Review systems. As you know, the Utilization Review process is designed to evaluate for reasonableness & necessity of treatment. On the other hand, the Fee Review process is aimed at determining amount and timeliness of payment due. Often times, our defenses in a Fee Review case include that the treatment rendered was not causally related to the work injury and, as a result, it is not payable under the WC Act. Recently, however, the Commonwealth Court has handed down some decisions that seem to mandate challenging the reasonableness & necessity of medical bills in the Utilization Review forum in order to challenge causal relationship between the treatment and the work injury in the Fee Review forum. Sound counterintuitive? We think so too.
First is the case of Workers First Pharmacy Services, LLC v. Bureau of Workers’ Compensation Review Hearing Office, 225 A.3d 613 (Pa. Cmwlth. 2020). That case involved medications supplied to Claimant by Workers First Pharmacy, filling prescriptions issued by the Claimant’s physician including a compound pain cream. The employer denied payment for the compound pain cream based upon the lack of causation alleging that the “diagnosis is inconsistent with the procedure.” In response, the Pharmacy filed an Application for Fee Review. It should be noted that Claimant’s injury was accepted initially as a medical only Notice of Temporary Compensation Payable (NTCP) as a right shoulder strain. Claimant filed an unrelated Petition for Penalties and the Defendant filed a Termination Petition alleging Claimant had fully recovered from the work injury. Claimant then filed a Review Petition on the description of injury to include AC joint separation and a clavicular avulsion fracture. The parties eventually resolved the underlying work injury. As a part of the Compromise & Release Agreement, the employer agreed to pay Claimant $15,000.00 to resolve any future medical or wage loss claims and to pay any medical bills incurred prior to the date of the Compromise & Release hearing related to the accepted injury in the form of a right shoulder strain per the Compromise & Release Agreement. The C&R was approved on August 25, 2017.
Simultaneously, the Pharmacy’s Application for Fee Review was filed on August 25, 2017. The Fee Review Office (the BWC’s initial administrative level prior to having a hearing) determined that the employer was obligated to pay the pharmacy for the prescription in the amount of $4,455.00 (the initial amount sought was $4,869.99) plus interest from July 6, 2017. In response, the employer filed a de novo Hearing Request seeking an appeal before a Fee Review Hearing Officer, alleging that the compound cream had never been adjudicated as related to the work injury and, as a result, the provider pharmacy’s Application for Fee Review was premature. The pharmacy’s defense was that the employer should have sought Utilization Review if it believed that the compound cream was not related to the work injury. The pharmacy further argued that dismissing their Application for Fee Review would leave it without a remedy and violate their constitutional due process rights.
The Fee Review Hearing Officer held that the pharmacy’s Application for Fee Review was premature since liability for the compound cream was not established either by the employer’s acceptance when they issued the medical only NTCP or a WC Judge’s Decision & Order. The Fee Review Hearing Officer vacated the Fee Review Office’s determination. Thereafter, the pharmacy appealed to the PA Commonwealth Court.
The PA Commonwealth Court reversed and ordered payment to the pharmacy, finding that the employer had not first requested Utilization Review, which was fatal to the employer’s arguments on the Fee Review. The Court cited Crozer Chester Medical Center v. Department of Labor and Industry, Bureau of Workers’ Compensation Health Care Services Review Division, 22 A.3d 189 (Pa 2011) which held that the employer may question liability for a particular treatment by filing a petition to change the description of work injury on the medical only NTCP or by seeking a Utilization Review of the reasonableness & necessity of treatment offered for an accepted work injury. The employer in the Workers First Pharmacy case did neither. The Court construed that if the cream was prescribed for a non-work related injury, then it would necessarily not be reasonable or necessary for treatment of the accepted work injury. As a result, the Court appears to subsume that the Utilization Review Process can determine the causal relationship of the treatment and the accepted work-injury when, as we know, it is explicitly prohibited from doing so. The Court stated that the employer’s denial for “diagnosis is inconsistent with the procedure” is just another way of saying that the compound cream was not reasonable or necessary for treating Claimant’s work injury. The Court outlined the three times when an Application for Fee Review is deemed premature:
- Where the insurer denies liability for the alleged work injury.
- Where the insurer has filed a request for Utilization Review.
- Where the 30-day period the insurer is allowed for payment of a provider’s invoice has not yet lapsed. They noted the hearing office erred because none of the exceptions noted above applied. 34 PA Code Sec. 127.255.
In a footnote, the Court does acknowledge that per the Bureau’s WC Regulations, the Utilization Review process does not determine causal relationship between the treatment and the work injury. 34 PA Code Sec. 127.406 (B)(1). They found that section (B)(1) conflicted with 34 PA Code 127.406 (A), that mandates the URO to decide the reasonableness & necessity of the treatment. They note “that the treatment may be reasonable for a non-work related injury is beyond the scope of utilization review”, which may be the purpose of 34 PA Code 127.406 (B)(1). The Court ultimately found that the work injury was accepted and the sole question became whether the compound cream was reasonable & necessary for the treatment of the accepted work injury. That is an issue for Utilization Review, which was not filed. The Court did not address the issue of whether the Fee Review Hearing Officer’s dismissal of the employer’s appeal for a de novo Hearing Request violated the Pharmacy’s due process rights.
In the more recent case of Omni Pharmacy Services, LLC vs. Bureau of Workers’ Compensation Fee Review Hearing Office, 241 A. 3d 1273 (PA Cmwlth, 2020), the employer attempted to distinguish the case from the Workers First Pharmacy case because, although the injury was accepted, there was no Compromise & Release Agreement in place relative to the payment of medical bills. Once again, the pharmacy dispensed compound pain creams, which were denied by the employer. The pharmacy filed multiple Applications for Fee Review. Thereafter the Fee Review Office found in favor of the pharmacy and ordered payment. The employer filed three de novo Hearing Requests seeking appeals of the determinations, which were all consolidated before one Fee Review Hearing Officer. The employer asked the Hearing Officer to divest itself of jurisdiction arguing that only a Workers’ Compensation Judge has the subject matter jurisdiction to rule on the issue of causation. The Hearing Officer dismissed employer’s de novo Hearing Requests indicating it lacked subject matter jurisdiction and vacated the Fee Review Office’s determinations. The pharmacy Petitioned for Review by the Commonwealth Court. The Court acknowledged that a Fee Review proceeding is not the mechanism for establishing the scope of the work-related injury. However, the Court again pointed to section 34 PA Code 127.225 in outlining the three circumstances under which an Application for Fee Review would be premature and found that none of the exceptions applied. The Court essentially found that once liability for an injury is accepted, the causation issue can be decided via the Utilization Review Process because, as was stated in Workers First Pharmacy, “if the compound cream was prescribed for a non-work related injury of [the Claimant], A Fortiori it is not reasonable or necessary treatment of [the] accepted work injury.”
Taking these two cases together, it appears that once an employer accepts liability for a work related injury, in order to dispute the causal relationship between the treatment provided and the accepted work injury, the Defendant would have to file a Utilization Review. Of course, that is immediately contradictory insofar as the WC Regulations related to the Utilization Review process specifically outlined that UROs may not decide the causal relationship between the treatment under review and the employee’s work-related injury. 34 PA Code 127.406.
The PA Supreme Court denied the Defendant’s request for Review in the Omni case. As a result, the PA Commonwealth Court’s holding as outlined is currently the law of the land.
This puts the Defendant/Employer in a quandary. If medical bills for treatment were submitted to the Defendant/Employer that they allege are unrelated to the work injury, then as per the holding in the Omni case, the Defendant would then have to request Utilization Review. However, the URO is forbidden from addressing causal relationship. As a result, the Defendant/Employer would have to receive the Utilization Review Determination, and then challenge that before a Judge and/or file a Petition to Review Compensation Benefits affirmatively alleging that the treatment at issue is unrelated. The Defendant/Employer would likely need an IME to evaluate the causal relationship, otherwise they run the risk of being assessed Quantum Meruit unreasonable contest fees.
As a practical matter, it appears that the Court is inappropriately conflating the assessment of whether treatment is reasonable & necessary via a UR, with the finding as to whether the medical treatment is causally related to the accepted work injury. In our opinion, that is an issue more appropriately left to the Pennsylvania Legislature for they would have to add the component of assessment of the causal relationship to the Utilization Review process. It is unclear what the timeline of processes would have to be if an Application for Fee Review was received first. Would the Defendant then have to file the UR and/or Review Petition immediately? Would those filings serve to hold the pending Application for Fee Review in abeyance pending outcome of the UR and any subsequent petitions?
WHERE TO GO FROM HERE?
These cases only complicate the procedural issues surrounding the processing of bills on PA WC claims. There are many issues to consider before deciding to jump into the process of filing URs, getting IMEs, and/or filing Review Petitions to challenge the causal relationship between treatment and the work injury. What is the cost of the treatment? Is the treatment ongoing (like prescriptions) or a one-time event (like a single injection)? Would it cost more to litigate the issue and win than it would be to pay for the bills in the first place?
Given the recently conjured complexity on this issue based on the above decisions, how to proceed in any given case will be largely based on the specific facts of that case
If you have any questions about this article, please contact Colleen Price at firstname.lastname@example.org or feel free to reach out to our PA WC team at email@example.com to discuss the details of your case and potential ways to handle these issues.