IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Workers First Pharmacy : 

Services, LLC, :

Petitioner :

:

v. : No. 1619 C.D. 2018

: Argued: June 3, 2019

Bureau of Workers’ :

Compensation Fee Review Hearing :

Office (Cincinnati Insurance :

Company), :

Respondent :

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge

HONORABLE ROBERT SIMPSON, Judge

HONORABLE ELLEN CEISLER, Judge

OPINION 

BY PRESIDENT JUDGE LEAVITT FILED: August 7, 2019

Workers First Pharmacy Services, LLC, (Pharmacy) petitions for 

review of an adjudication of the Bureau of Workers’ Compensation, Fee Review 

Hearing Office (Hearing Office) that vacated three fee review determinations by the 

Bureau’s Medical Fee Review Section. In a Compromise and Release (C&R) 

Agreement between Miguel Martinez (Claimant) and American Business Support 

(Employer), Employer denied that Claimant suffered a work injury but, nevertheless,

agreed to compensate Claimant. The Hearing Office concluded it lacked jurisdiction

over Pharmacy’s fee review applications because Employer did not accept liability 

for the work injury in the C&R Agreement. Pharmacy argues that Employer cannot 

use a C&R Agreement to deprive Pharmacy of payment for medical services it 

provided to Claimant. We vacate and remand.
2

Background

On May 16, 2017, Claimant filed a claim petition pursuant to the 

Workers’ Compensation Act (Act),1alleging that he suffered a work injury to his 

head, neck, back and left shoulder. Specifically, Claimant alleged that on November 

12, 2016, while moving a cabinet, his hand truck got caught in carpeting causing the 

cabinet to fall on him. On January 16, 2017, Employer filed a notice of workers’ 

compensation denial with the Bureau of Workers’ Compensation, stating Claimant 

did not suffer a work injury. 

On May 15, 2017, Gerald E. Dworkin, D.O., of the Pain and Spine 

Treatment Center, prescribed Claimant several medications, only two of which are 

relevant here. On May 17, 2017, Pharmacy dispensed 177.2 units of Lidocaine 5 

percent Ointment, for which it billed Employer, by its insurer Cincinnati Insurance 

Company (Insurer), $1,909.95, and 300 units of Diclofenac 1.5 percent Topical 

Solution, for which it billed Insurer $3,249.99. On June 8, 2017, Pharmacy 

dispensed 177.2 units of Lidocaine 5 percent Ointment and billed Employer

$1,909.95. On June 19, 2017, Pharmacy dispensed 300 units of Diclofenac 1.5 

percent Topical Solution, for which it billed Employer $3,249.99. 

Employer denied payment on all three invoices for the stated reason 

that Claimant did not sustain a work injury. In response, Pharmacy filed three fee 

review applications. The Medical Fee Review Section denied Pharmacy’s 

applications regarding the May 17 and June 19 invoices as premature because 

Employer had contested liability for the alleged work injury. Regarding the June 8 

invoice, the Medical Fee Review Section found that Employer owed Pharmacy 

 

1 Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2710.
3

$1,650 (110 percent of the average wholesale price), plus interest for an untimely 

payment.2

Employer requested a hearing to contest all three fee review 

determinations even though it had only received an adverse determination regarding 

the June 8 invoice. Employer argued that the Medical Fee Review Section lacked 

jurisdiction over Pharmacy’s fee review applications because Employer had no 

liability for Claimant’s injuries. 

At a January 17, 2018, hearing before the Hearing Office, the parties 

agreed that Employer had denied liability for Claimant’s injuries. They also agreed

that a hearing was scheduled before the Workers Compensation Judge (WCJ) on 

February 21, 2018, and there was a possibility of settlement. The Hearing Office 

continued the fee review contest in light of the scheduled WCJ hearing. 

On February 21, 2018, Employer and Claimant presented a C&R 

Agreement to the WCJ. Therein, Employer agreed to pay Claimant $37,500 in 

settlement of “his workers’ compensation claim for past, present, and/or future 

indemnity and future health care benefits/medical benefits[.]” C&R, ¶19; 

Reproduced Record at 22a (R.R. __). Paragraphs 10 and 10(r) of the C&R 

Agreement stated, in pertinent part:

This is a resolution of a disputed claim. The mere fact that the 

parties are entering into this resolution should not be construed 

by Claimant, this Court or any other person or entity that 

[Employer] is in any manner legally obligated for any of the 

payments being made pursuant to this [C&R] Agreement. To the 

contrary, [Employer] vigorously denies and disputes any and all 

allegations that have been made by the Claimant in any of the 

Claimant’s Petitions.

 

2

It appears Insurer failed to respond to the claim related to the June 8 invoice.
4

***

Concerning past medical expenses, all parties acknowledge that 

there are past unpaid healthcare expenses. These include, but are 

not limited to, Jeanes Hospital, Temple University Physicians 

ER, Disston Chiropractic, Temple Family Practice and Dr. 

Dworkin. As part and parcel of this settlement, Claimant is 

responsible for any past healthcare bills, medical bills, 

prescription drug bills or health related matters with limited 

exception. Both parties also acknowledge that there are 

outstanding bills from [Pharmacy] for topical creams. This is a 

denied claim. Nevertheless, [Pharmacy] filed for reimbursement 

of its bill through the Fee Review system. In short, the 

outstanding bills for topical cream are currently being reviewed 

and litigated through the Fee Review system. Those limited 

outstanding bills are separate, distinct, and are not part of this 

otherwise global resolution for any and all past, present and 

future wages together with past, present and future medical. 

That is, and by way of clarification, the Fee Review for 

[Pharmacy] (attached is a request for hearing to contest the Fee 

Review Determination as Exhibit “C”) shall continue. The 

instant [C&R] Agreement does not resolve that issue nor will the 

Claimant be responsible for any payments to [Pharmacy] 

pursuant to the separate Fee Review litigation. Nevertheless, 

with that limited exception, the instant settlement for a gross 

lump sum of $37,500.00 resolves any and all past, present or 

future wages together with any other past, present or future 

healthcare bills, medical bills, prescription drug bills including 

but not limited to the referenced provider set forth above. Under 

no circumstances will [Employer] be responsible for any other 

past, present or future healthcare bills (again with the limited 

exception of the pending Fee Review matter attached as Exhibit 

“C”). That matter shall continue litigation and is not being 

resolved by this [C&R] Agreement. However, [Employer] is not 

responsible for any past outstanding bills from Jeanes Hospital, 

Temple University, Disston Chiropractic, Temple Family 

Practice, Dr. Dworkin and any others again with the limited 

exception set forth herein.

C&R, ¶¶10 and 10(r); R.R. 21a, 24a (emphasis added).
5

At the hearing on the C&R Agreement, Claimant testified that 

Employer had agreed to settle without accepting liability for his injuries. Claimant 

agreed that he would be responsible for any outstanding medical expenses, except 

for those related to Pharmacy’s fee review applications. Employer’s counsel 

questioned Claimant as follows:

Q. Just a few questions. Your attorney was very thorough. 

With respect to the fee review, there’s a fee review currently 

open [with Pharmacy]. You understand whatever the fee review 

determination eventually comes down with, zero dollars owed, 

$1,000 owed, what have you, it’s going to have nothing to do 

with you; do you understand that?

A. Okay

Q. Is that okay with you?

A. Yes

Q. So, if it’s deemed that [Insurer] owes an amount of money, 

that that will be paid for and you won’t be liable for it; do you 

understand that?

A. Yes.

Q. In addition, if the fee review determines that [Insurer] owes 

zero dollars, you still won’t be liable for it because [Pharmacy] 

won’t be able to bill you directly; do you understand that?

A. Yes.

Notes of Testimony, 2/21/2018, at 10-11 (N.T. __); R.R. 145a-46a. The WCJ 

approved the C&R Agreement on February 23, 2018. 

On March 1, 2018, Employer sent Pharmacy a letter stating that because

Employer had not accepted liability for Claimant’s injury in the C&R Agreement, 

there was no reason to move forward with the fee review proceeding. In response, 
6

Pharmacy filed requests for admissions from Employer’s counsel and sought to call 

counsel as a witness at the next hearing before the Hearing Office.

On May 24, 2018, the Hearing Office held a conference with the parties. 

At the conclusion, the parties were advised that the matter would be decided on the 

evidence submitted by the parties, which included the C&R Agreement. 

On November 15, 2018, the Hearing Office issued the adjudication on 

appeal here. The adjudication vacated the three determinations of the Medical Fee 

Review Section and held that Pharmacy’s fee review applications were premature. 

The adjudication explained that Employer had denied liability for the work injury 

when Claimant filed his claim petition and continued to deny liability in the C&R 

Agreement. Because Employer had not been adjudicated liable for the work injury, 

the Hearing Office lacked jurisdiction over the fee review contest. 

Appeal

Pharmacy petitioned for this Court’s review of the Hearing Office’s 

adjudication.

3 Pharmacy asserts its due process4

rights were violated because the 

C&R Agreement was used to relieve both Employer and Claimant from liability to 

 

3 Our review in medical fee review cases determines whether constitutional rights were violated, 

whether an error of law was committed, or whether the necessary findings of fact were supported 

by substantial evidence. Pittsburgh Mercy Health System v. Bureau of Workers’ Compensation, 

Fee Review Hearing Office (U.S. Steel Corp.), 980 A.2d 181, 184 n.4 (Pa. Cmwlth. 2009). 

Regarding questions of law, our scope of review is plenary and our standard of review is de novo. 

Sedgwick Claims Management Services, Inc., v. Bureau of Workers’ Compensation, Fee Review 

Hearing Office (Piszel and Bucks County Pain Center), 185 A.3d 429, 433 n.2 (Pa. Cmwlth. 2018).

4 The Due Process Clause of the Fourteenth Amendment states as follows:

No State shall make or enforce any law which shall abridge the privileges or 

immunities of citizens of the United States; nor shall any State deprive any person 

of life, liberty, or property, without due process of law; nor deny to any person 

within its jurisdiction the equal protection of the laws.

U.S. CONST. amend. XIV, §1. The Pennsylvania Constitution also provides this protection. PA.

CONST. art. I, §9.
7

Pharmacy. Pharmacy argues that by agreeing to release Claimant from any liability 

to Pharmacy, Employer made itself subject to and bound by the fee review process. 

Applicable Law

Under Section 306(f.1)(7) of the Act, a claimant has no liability for 

medical expenses incurred for treatment of a work injury; it states as follows:

A provider shall not hold an employe liable for costs related to 

care or service rendered in connection with a compensable injury 

under this act. A provider shall not bill or otherwise attempt to 

recover from the employe the difference between the provider’s 

charge and the amount paid by the employer or the insurer.

77 P.S. §531(7). The employer must pay a provider for treatment of a work injury, 

and the provider may not seek the difference between its charge and the amount paid 

by the employer. 

In Nickel v. Workers’ Compensation Appeal Board (Agway Agronomy), 

959 A.2d 498, 503 (Pa. Cmwlth. 2008), this Court considered the impact of a C&R 

agreement upon a claimant’s medical compensation claim. This Court explained that 

an employer may deny liability for a work injury in a C&R agreement but voluntarily 

agree to pay the claimant’s medical expenses. In such a case, the employer cannot 

thereafter contest a fee review determination based on its denial of liability for the 

work injury. Id. 

Nickel also addressed the narrow scope of a fee review proceeding as 

follows:

[T]he fee review process presupposes that liability has been 

established, either by voluntary acceptance by the employer or a 

determination by a WCJ. Neither the Act nor the medical cost 

containment regulations provide any authority for a fee review 

officer to decide the issue of liability in a fee review proceeding. 

The Department’s regulations, at 34 Pa. Code § 127.255(1), state 
8

that an application for fee review filed by a provider is premature 

and will be returned if “[t]he insurer denies liability for the 

alleged work injury.” The issue for the fee review officer is the 

“amount and timeliness of the payment made by an insurer.” 34 

Pa. Code §127.251.

Id. 

Accordingly where a C&R agreement establishes an employer’s 

“responsibility” for medical bills, a fee review application is not “premature on the 

ground that liability had not yet been established or accepted.” Id. (emphasis in 

original).5 We explained as follows:

In the case of a C & R agreement where the employer denies 

liability, but nevertheless agrees to remain responsible for 

[c]laimant’s reasonable and necessary medical expenses, the 

[Hearing Office] may proceed so long as the parties agree that 

the bills are related to the work injury. In other words, in this 

scenario, the only issue is the amount of the bill; the [hearing] 

officer is not called upon to make credibility determinations or 

legal judgments with regard to an insurer’s liability for a 

particular injury or treatment. In that circumstance, the employer 

agrees, in compromise, to pay the medical bills irrespective of 

liability, i.e., [e]mployer’s responsibility for the medical bills is 

assumed.

Id. 

In Armour Pharmacy v. Bureau of Workers’ Compensation Fee Review 

Hearing Office (National Fire Insurance Company of Hartford), 192 A.3d 304 (Pa. 

Cmwlth. 2018), this Court again addressed the interplay of a C&R agreement and a 

fee review proceeding. In that case, a utilization review organization determined 

 

5 Nickel was not a fee review case. There, the claimant filed a penalty petition based on the 

employer’s failure to pay outstanding medical bills in accordance with the C&R agreement. 

Ultimately, penalties were not awarded because the medical provider had accepted reimbursement 

from the claimant’s secondary insurer, the Department of Public Welfare. 
9

that a compound medical cream prescribed to the claimant was reasonable and 

necessary to treat his accepted work injury. Armour Pharmacy dispensed the cream 

and, after the employer refused to pay for it, filed a fee review application. The 

Medical Fee Review Section determined that the employer was liable. The employer

appealed and, while the appeal was pending, the claimant and the employer entered 

into a C&R agreement. Pursuant to the agreement, the employer accepted liability 

for all past medical expenses incurred, with the exception of the compound medical 

cream dispensed by Armour Pharmacy. The C&R agreement also stated that the 

claimant was not liable to reimburse Armour Pharmacy.

The Hearing Office held that the C&R agreement divested it of 

jurisdiction. Further, because the C&R agreement extinguished the employer’s 

liability for the compound medical cream, the Hearing Office vacated the fee

determinations that directed the employer to pay Armour Pharmacy. 

This Court vacated the adjudication of the Hearing Office and

remanded for a hearing on the employer’s challenge to the Medical Fee Review 

Section’s fee determinations. We held that “[a] C&R agreement, to which a provider

is not a party, cannot be used to deprive a provider of the review procedures and 

excuse the employer from paying the provider.” Armour Pharmacy, 192 A.3d at 

312. “To hold otherwise would eviscerate Section 301(f.1)(5) and (6) of the Act and 

violate the due process of law guaranteed to providers.” Armour Pharmacy, 192 

A.3d at 312.

6

 

 

6 The Act establishes specific procedures for resolving disputes between a provider and an 

employer regarding payment for a claimant’s medical treatment. Section 301(f.1)(5) of the Act

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 
10

Analysis

As noted, a claimant is not responsible for the cost of treatment of workrelated injuries. Section 306(f.1)(7) of the Act, 77 P.S. §531(7). Here, Employer 

promised Claimant that he would not be liable for Pharmacy’s bills, regardless of 

the outcome of the litigation on the fee determinations. As established in Armour 

Pharmacy, 192 A.3d at 312, the parties to a C&R agreement cannot use the 

 

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 [D]epartment [of Labor and 

Industry] 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 same profession and having the same or similar 

specialty as that of the provider of the treatment under review. 

Organizations not authorized by the department may not engage in 

such utilization review.

77 P.S. §531(6)(i) (emphasis added).
11

agreement to release themselves from liability to a provider who did not participate 

in the agreement.

Employer argues Armour Pharmacy is distinguishable because in that 

case the employer had accepted liability for the work injury. Here, by contrast,

Employer did not accept liability for the work injury in the C&R Agreement. 

However, Nickel has established that an employer can deny liability for a work injury

but nevertheless accept responsibility for medical expenses for that contested injury. 

Notwithstanding its position that there has not been a work injury, the question, then,

is whether Employer has accepted “responsibility” for Pharmacy’s invoice. We

conclude that it has. 

The C&R Agreement states that litigation of Pharmacy’s bills would 

continue in the fee review system and that Claimant would not be responsible for 

any payments to Pharmacy resulting from that litigation. C&R ¶10(r); R.R. 24a. At 

the hearing before the WCJ, Employer’s counsel related to Claimant:

Q. Just a few questions. Your attorney was very thorough. 

With respect to the fee review, there’s a fee review currently 

open [with Pharmacy]. You understand whatever the fee review 

determination eventually comes down with, zero dollars owed, 

$1,000 owed, what have you, it’s going to have nothing to do 

with you; do you understand that?

A. Okay

Q. Is that okay with you?

A. Yes

Q. So, if it’s deemed that [Insurer] owes an amount of money, 

that that will be paid for and you won’t be liable for it; do you 

understand that?

A. Yes.
12

Q. In addition, if the fee review determines that [Insurer] owes 

zero dollars, you still won’t be liable for it because [Pharmacy] 

won’t be able to bill you directly; do you understand that?

A. Yes.

N.T. 10-11; R.R. 145a-46a. 

In sum, Employer accepted full liability for the debt to Pharmacy. 

Employer’s counsel told Claimant that even if Employer was found not liable, 

Pharmacy could not hold Claimant responsible for the debt. Stated otherwise, 

Employer accepted “responsibility” for the debt to Pharmacy when it released 

Claimant from any obligation to pay Pharmacy in the C&R Agreement. 

Accordingly, the Hearing Office has jurisdiction to decide the three fee review 

contests.

Conclusion

For all the above reasons, the order of the Hearing Office is vacated and 

the matter is remanded to the Hearing Office for a hearing on the merits of the three 

fee review contests.

 _____________________________________

 MARY HANNAH LEAVITT, President Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Workers First Pharmacy : 

Services, LLC, :

Petitioner :

:

v. : No. 1619 C.D. 2018

:

Bureau of Workers’ :

Compensation Fee Review Hearing :

Office (Cincinnati Insurance :

Company), :

Respondent :

O R D E R

AND NOW, this 7th day of August, 2019, the order of the Bureau of 

Workers’ Compensation Fee Review Hearing Office (Hearing Office), dated 

November 14, 2018, is VACATED and the matter is REMANDED to the Hearing 

Office in accordance with the attached opinion.

Jurisdiction relinquished. 

 ______________________________________

 MARY HANNAH LEAVITT, President Judge