Opinion ID: 2544668
Heading Depth: 1
Heading Rank: 3

Heading: Validity of the PPO's Workers' Compensation Discount Under the LWCA

Text: The LWCA establishes a compromise in which employees and employers surrender certain advantages in exchange for others which are more valuable to both the parties and to society in general. 13 S. MALONE & H. ALSTON JOHNSON, III, LOUISIANA CIVIL LAW TREATISE: WORKERS' COMPENSATION LAW AND PRACTICE § 32, p. 35. The employer gives up the immunity he otherwise would enjoy in cases where he is not at fault, and the employee surrenders his former right to full damages and accepts a more modest claim for bare essentials, represented by compensation. Id. at 35-36. The LWCA also establishes a duty on employers to furnish all necessary medical and vocational rehabilitation expenses. La. R.S. 23:1203. The Act states, In every case coming under this Chapter, the employer shall furnish all necessary drugs, supplies, hospital care and services, medical and surgical treatment, and any non-medical treatment recognized by the laws of this state as legal ... La. R.S. 23:1203(A). Thus, employers have a duty to furnish all necessary medical care and treatment for the injured employee. The lower courts found and Agilus contends that the PPO agreement violates the express provisions of the LWCA. Specifically, Agilus submits the payment of an amount less than the LWCA reimbursement fee schedule when the health care provider has charged a greater amount violates the provisions of La. R.S. 23:1033, which states, No contract, rule, regulation or device whatsoever shall operate to relieve the employer, in whole or in part, from any liability created by this Chapter except as herein provided. The court of appeal agreed with Agilus, stating, this provision does not allow the employer to pay less than the scheduled amount if the provider charges that amount or more. Agilus, 32 So.3d at 1121. This argument is predicated on the meaning of the words charge and reimbursement in both the contract and the LWCA and the contention that La. R.S. 23:1203(B) commands the payment of either the actual charge listed on the bill or the reimbursement schedule amount. La. R.S. 23:1203(B) provides: The obligation of the employer to furnish such care, services, treatment, drugs, and supplies, whether in state or out of state, is limited to the reimbursement determined to be the mean of the usual and customary charges for such care, services, treatment, drugs, and supplies, as determined under the reimbursement schedule annually published pursuant to R.S. 23:1034.2 or the actual charge made for the service, whichever is less. According to Agilus, if a lesser amount is paid than what La. R.S. 23:1203(B) commands, then the employer is somehow lessening his liability in violation of La. R.S. 23:1033. Conversely, Liberty Mutual and Accor argue the parties were free to contract for the discounted payment rates and there are no statutory provisions in the LWCA that operate to prohibit these PPO discounts. Liberty Mutual and Accor specifically cite La. R.S. 23:1034.2(E), which states Nothing in the section shall prevent a health care provider from charging a fee for such care, services, treatment, drugs, or supplies that is less than the reimbursement established by the reimbursement schedule. A number of different courts have addressed this issue. In Central Louisiana Ambulatory Surgical Center, Inc. v. Payless Shoesource, Inc., the Third Circuit invalidated similar PPO discount provisions, holding that PPO discounts taken by employers for workers' compensation reimbursement are not authorized by the LWCA. 10-86 (La.App. 3 Cir. 7/28/10) 46 So.3d 689. The court reasoned since the LWCA is so highly regulated, if the legislature intended PPO contracts to fit within the workers' compensation scheme, they would have addressed PPO agreements in the Act. Id. at 695. The court further stated: the PPO contract by its very terms purports to reduce or relieve the employer's liability for workers' compensation medical payments from the full amount of the fee schedule to only eighty percent (80%) of the fee schedule. This contractual maneuver, however, flies in the face of the language and purpose of the Act. Id. at 695. Further, the court reasoned that the PPO contract discounts would erode the quality of care to injured workers by forcing more health care providers to accept fewer workers' compensation patients. Id. Judge Gremillion dissented in part agreeing with the overall result the court reached but disagreeing that PPO discount agreements violated the LWCA. Judge Gremillion cited La. R.S. 23:1034.2(E), noting nothing in the act prevents a provider from charging less than the fee schedule, and indicated: When a provider and an employer or workers' compensation insurer enter into a PPO contract, they are agreeing that the provider will only charge a certain amount for specific care, services, and treatment procedures. The fact that they might charge a patient who is not a member of the PPO a greater amount than an employee member does not render the PPO agreement invalid under the Workers' Compensation Act, nor does it render the employee's care substandard. Id. at 699 (Gremillion, J. dissenting). Judge Gremillion did agree with the majority that the PPO failed to comply with the notice requirements of La. R.S. 40:2203.1, and thus, the court properly ruled that the discount was invalid. [4] Recently, the Second Circuit Court of Appeal concurred with the Third Circuit's reasoning, finding application of the PPO discounts violate La. R.S 23:1033 and 23:1203(B). Musculoskeletal Institute of Louisiana, APMC v. McDonald's Corp., 45,629 (La.App. 2 Cir. 9/22/10), 48 So.3d 359. In that case, the Second Circuit stated, As to [defendant's] argument that the statutory language setting a maximum rate of reimbursement suggests that a lesser rate is permissible, we note that Musculoskeletal did not charge rates less than those set forth in the reimbursement schedule. Id. at 364. The court agreed with the Third Circuit that the LWCA prohibited any contracts that would operate to relieve an employer of liability created by the LWCA. Id. In a string of similar cases, the Federal District Court for the Western District of Louisiana came to the opposite conclusion and found the PPO agreements did not relieve the employer of any liability and were valid and enforceable contracts, citing La. R.S. 23:1034.2(E). See Liberty Mut. Ins. Co. v. Gunderson, No. 04-2405, 2006 WL 367700, at 4-5 (W.D.La. Feb.15, 2006) (Mem); Sentry Ins. v. Sw. La. Hosp. Ass'n, No. 06-570, 2007 WL 2572314, at 2-3 (W.D.La. Sep. 5, 2007) (Mem.); Am. Home Assur. Co. v. Shamieh, No. 06-519, 2007 WL 2572311, at 2-3 (W.D.La. Sep. 5, 2007); CCN Managed Care, Inc. v. Shamieh, No. 06-519, 2007 WL 2088302, at 12-13 (W.D.La. Jul. 20, 2007) (Mem.), aff'd in part, No. 09-30310, 2010 WL 1141634 (5th Cir. Mar. 18, 2010). Specifically, in Liberty Mut. Ins. Co. v. Gunderson, the court stated: In summary, the Court concludes that there are no prohibitions in the Louisiana Workers' Compensation laws that prevent a provider from agreeing to charge and receive discounted rates for the services they provide to occupationally ill or injured workers. No. 04-2405, at 5 (W.D.La.2006) (Mem.). We now turn to the statutes and PPO contract provisions in question.