Court Opinion

ID: 4520998
Source: CourtListenerOpinion
Date Created: 2020-03-31 15:27:20.92705+00
Date Added: 2024-06-11T12:02:47.410212
License: Public Domain

COURT OF APPEALS OF VIRGINIA

              Present: Judges Petty, Russell and Malveaux
              Argued at Norfolk, Virginia
UNPUBLISHED

              CITY OF NEWPORT NEWS

              v.     Record No. 1315-19-1

              PENINSULA NEUROSURGICAL                                          MEMORANDUM OPINION* BY
               ASSOCIATES, INC.                                               JUDGE WESLEY G. RUSSELL, JR.
                                                                                    MARCH 31, 2020
              PENINSULA NEUROSURGICAL
               ASSOCIATES, INC.

              v.     Record No. 1382-19-1

              CITY OF NEWPORT NEWS

                            FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION

                               Adonica Baine, Senior Assistant City Attorney, for City of Newport
                               News.

                               Philip J. Geib (Philip J. Geib, P.C., on briefs), for Peninsula
                               Neurosurgical Associates, Inc.

                     In this consolidated appeal, the City of Newport News (the City) challenges a decision of

              the Workers’ Compensation Commission (Commission) awarding Peninsula Neurosurgical

              Associates, Inc. (Neurosurgical Associates) payments for medical treatment it provided to June

              Seals1 (claimant) pursuant to a previous award of the Commission. The City specifically

              contends the Commission erred in excluding certain evidence and in finding that Neurosurgical

              Associates’ application for payment was not barred by the doctrine of laches. Neurosurgical

                     *
                         Pursuant to Code § 17.1-413, this opinion is not designated for publication.
                     1
                      Seals, the claimant in the underlying workers’ compensation claim, was given notice
              when the matter was filed, but did not file a brief or otherwise participate in this matter.
Associates appeals the Commission’s denial of its request for attorney’s fees. Finding no

reversible error, we affirm the judgment of the Commission in its entirety.

                                          BACKGROUND

       In April 1995, claimant suffered a compensable injury to her back while she was working

as a cardiac technician for the City’s fire department. She filed a claim for wage and medical

benefits with the Commission. Consistent with an agreement reached by the City and claimant,

the Commission awarded claimant temporary total disability benefits for a defined period and

medical benefits “for as long as necessary.”2

       In August 1995, claimant underwent a lumbar discectomy as a result of her injury; the

doctor, who worked for Neurosurgical Associates, also found an extruded disk. Several years

later, in October 1999, claimant went to the doctor for “recurrent back and left leg pain.” The

doctor determined that she “likely has recurrent disk disease . . . [that] is most likely related to

her previous workman[’]s compensation injury.” She underwent an MRI, and the doctor

eventually confirmed that “[t]his is recurrent disk disease; the same level as the prior problem.”

       About a year later, claimant again went to the doctor for “back pain.” X-rays were taken,

and she was treated with epidural steroid injections. A few months thereafter, in January 2002,

claimant again complained of “[b]ack and leg pain” and reported that the epidurals she had been

receiving were providing “good relief, but they don’t last more than a month.” An x-ray

“reveal[ed] degenerative disk disease . . . pretty severe.” The doctor, noting that claimant was

experiencing “recurrent radicular pain” and that her “last MRI scan was not really normal[,]”

ordered an additional MRI as well as x-rays. At her follow-up visit a month later, claimant

received a diagnosis of “lumbar degenerative spondylolisthesis . . . and spinal stenosis and

       2
         The award initially was entered on October 23, 1996, but an amended award was
entered on June 7, 1997, to reflect a different average weekly wage.
                                                 -2-
associated lumbar degenerative disk disease . . . with disk herniation . . . .” Claimant and her

doctor then discussed potential operative treatment.

        Claimant elected to pursue operative treatment and underwent surgery in April 2002. She

had a follow-up visit in July to review her progress. About five years later, she returned to the

doctor, complaining of leg pain. The doctor determined that the pain was caused by a herniated

disk.

        The total cost of these doctor visits and treatments was $12,883. In due course, all bills

were submitted to the City’s third-party administrator (TPA), who in turn made payments on the

City’s behalf. Neurosurgical Associates received $6,714.18 for services rendered, but the

remaining balance of $6,168.82 was not paid.

        Sixteen years after claimant’s last doctor’s visit and almost twenty years after some of the

treatment at issue, Neurosurgical Associates filed an application with the Commission seeking

reimbursement from the City for the unpaid balance of $6,168.82. Neurosurgical Associates

alleged that the City “fail[ed] to pay the reasonable and medically necessary medical costs for

the treatment provided to the claimant as a result of the injuries sustained in the industrial

accident of April 16, 1995.” Neurosurgical Associates also requested an award of attorney’s

fees. The City defended on the grounds of “laches, spoliation, [and] prejudice to [the City] due

to unreasonable delay.”

        Neurosurgical Associates’ application was considered by the deputy commissioner at a

hearing conducted on March 4, 2019. The deputy commissioner noted that there are “no issues

of medical treatment, just medical pricing, between the parties . . . .” Neurosurgical Associates

submitted records related to claimant’s treatments, including letters from the doctor confirming

that the treatments were causally related to the compensable accident, requests for authorization,

                                                 -3-
and approvals. Only two witnesses testified; both parties called Donna McCord, while Elaine

Johnson testified on behalf of the City.

       McCord testified that she had worked as Neurosurgical Associates’ office manager since

1987. She related that she was responsible for all of Neurosurgical Associates’ billing and thus

was familiar with the billing procedures in place since 1995. She stated that in July 2018 she

started an audit of workers’ compensation files to determine whether there had been

underpayments on past patient charges. She testified that prior to the audit, she was not aware

that unpaid balances could be recouped from the City.

       McCord relayed that bills for claimant’s treatment dates had been submitted to the City’s

TPA. She confirmed that, although the charges totaled $12,883, Neurosurgical Associates

received only $6,714.18 from the TPA. She could not recall whether specific payments came

with an explanation of benefits or, if one had, whether it would have been destroyed.

       She testified that Neurosurgical Associates utilized only one fee schedule and that she

believed that the charges that had been billed were consistent with the prevailing community

rate. McCord testified that Neurosurgical Associates “did a write-off” of the remaining balance

of $6,168.82 for its own internal billing system. McCord conceded that she never notified the

City or the TPA of the underpayments, but also averred that Neurosurgical Associates never

agreed with the City or the TPA that it would not seek full payment or that either could close its

files related to claimant’s claim.

       Johnson testified that she served as the acting director of the City’s human resources

department and oversaw City workers’ compensation claims in that capacity. She stated that the

City was self-insured and had been using a TPA to process claims since the early 1990s. Richard

Flagship was the TPA when claimant first suffered her compensable injury, but soon thereafter

                                               -4-
FARA became the City’s TPA. The City, at some point later, switched TPAs again, first

utilizing VML and then ultimately PMA in 2009.

        Johnson stated that her office maintained a paper file for claimant, but there was no

notice of any underpayments in it until Neurosurgical Associates filed its claim in 2018. On

cross-examination, Johnson testified that, because claimant had been awarded an open medical

award, the City continued to maintain records related to medical services, including printouts of

bills and communications with doctors’ offices and risk managers. She stated that “[a]nything

that happened with the transitioning and the paying of the claim is in that file.” The City entered

into evidence a document depicting records from the FARA database to which the City had

access; Johnson testified that there was nothing in the records indicating any reason for the

discrepancy in the payments. Johnson was unaware of whether any explanation of benefits had

accompanied any of the payments related to claimant.

        Johnson also relayed her efforts to obtain relevant records from other sources. She

contacted the City attorney’s office and asked the office manager for any files that office had;

she was informed that because more than ten years had elapsed since the last legal action on the

claim, the records had been destroyed pursuant to pertinent records retention policy. She

testified that PMA had no files for claimant because her case had been treated as closed at the

time of the 2009 transition. Johnson further relayed that she also had attempted to contact

FARA, but discovered the company no longer existed after having merged with York Risk

Services in 2017. She communicated with York Risk Services, who had a record of the

payments and corresponding log notes that had been made, but no “explanation of benefits,

explanation of reviews, a claim summary, or anything that explained why a certain payment was

made . . . .”

                                               -5-
         In an effort to show prejudice in the instant case, the City’s counsel asked Johnson

whether there previously had been “a successful claim involving FARA from a medical

provider.” Neurosurgical Associates objected to the question on relevance grounds. Counsel

rephrased the question, specifically asking, “In the matter of the David Har[grave] case, did a

medical provider make a claim for underpayment for a 2005 date of service regarding a payment

made by FARA?”3 Neurosurgical Associates again objected on relevance grounds, arguing that

what happened in another case had no bearing on the instant matter. The City explained that it

was attempting to show, through the Hargrave case evidence, “that there had been prior claims

from 2005 where FARA was able to produce documents” but that no documents from that

company were now currently available because of Neurosurgical Associates’ delay in filing its

claim.

         The deputy commissioner sustained the objection. The deputy commissioner permitted

the City to proffer what the evidence would have been. The City proffered that the records from

the Hargrave case demonstrated that, in 2012, FARA had documentation allowing the City to

assert defenses to a medical provider’s claim regarding alleged underpayment related to a 2005

surgery. The City reasoned that if FARA maintained those records in the Hargrave case, it

would have maintained them in the instant case. As a result, the City argued that, if

Neurosurgical Associates had sought reimbursement while FARA was still a going concern, the

City would have had access to similar documents that might assist it in defending against the

application for payment.

         3
          The David Hargrave case was another workers’ compensation case in which a medical
provider made an underpayment claim against the City years after the medical treatment had
been provided. We refer to the evidence the City sought to introduce related to the Hargrave
case as the Hargrave case evidence.
                                             -6-
       The deputy commissioner issued his decision on April 8, 2019. He concluded that “[t]he

doctrine of laches [did] not bar [Neurosurgical Associates’] application” and that the doctrine of

spoliation did not apply.4

       Turning to the merits of Neurosurgical Associates’ application, the deputy commissioner

concluded that the medical services fell within the award of benefits and that the record

supported a finding that the charges fell within the prevailing community rate. Accordingly, the

deputy commissioner granted the application and ordered the City to pay Neurosurgical

Associates the outstanding balance. Furthermore, the deputy commissioner awarded

Neurosurgical Associates $3,000 in attorney’s fees under Code § 65.2-713 because he concluded

that the City “failed to prove that any of [its] defenses . . . were reasonable.”

       The City sought review by the full Commission, setting forth nine assignments of error in

its request for review. Pertinent here, the City asserted that the deputy commissioner erred in

failing to admit the City’s proffered evidence regarding the Hargrave case, in finding that

Neurosurgical Associates’ application was not barred by laches, and in awarding Neurosurgical

Associates attorney’s fees.

       In the normal course, the parties submitted their written statements on review. Despite

having asserted nine assignments of error in its request for review, the City’s written statement

contained two sections. In the first, it sought reversal of the deputy commissioner on the grounds

       4
           On appeal, the City asserts the deputy commissioner applied an incorrect standard in
resolving its laches defense, requiring the City to demonstrate detrimental reliance on
Neurosurgical Associates’ failure to pursue the claim as opposed to demonstrating that it had
been prejudiced by Neurosurgical Associates’ failure to pursue the matter. Although the
Commission summarized the reasoning of the deputy commissioner and found “no error” in the
result, it did not expressly adopt the deputy commissioner’s rationale and, in fact, rejected the
laches defense because the City “did not sufficiently prove it was prejudiced by the
[Neurosurgical Associates’] actions.” (Footnote omitted). Because our appellate review is
limited to final decisions of the Commission, see Code § 17.1-405(2), any error allegedly
committed by the deputy commissioner that was not adopted by the Commission is not before us
on appeal.
                                                 -7-
that laches barred Neurosurgical Associates’ application for payment. In the second, it sought

reversal of the deputy commissioner’s award of attorney’s fees to Neurosurgical Associates.

Although the written statement contained a passing reference to the City’s contention that “[t]he

[d]eputy [c]ommissioner erred in failing to admit” evidence related to the Hargrave case, the

written statement did not ask the Commission to take any action related to that alleged error.

       The Commission conducted an on-the-record review and issued its opinion on July 26,

2019; the Commission affirmed the deputy commissioner’s award of medical payments to

Neurosurgical Associates but reversed the award of attorney’s fees. Specifically, as regards the

City’s laches argument, the Commission “decline[d] to infer and presume that [Neurosurgical

Associates] abandoned its claim” and found that the City “did not sufficiently prove it was

prejudiced by [Neurosurgical Associates’] actions” in failing to pursue the application for

payment earlier. Additionally, the Commission vacated the deputy commissioner’s award of

attorney’s fees to Neurosurgical Associates. In doing so, the Commission explained that the City

               reasonably defended against the application. [Neurosurgical
               Associates] was seeking underpayment of medical services
               rendered numerous years ago. In response, [the City] raised
               appropriate arguments to counter the award as sought . . . . We
               recognize that the [City’s] defenses were not successful. Yet such
               failure does not establish unreasonableness. Additionally, . . . this
               was not a situation where a party neglected the case, unnecessarily
               prolonged the dispute, failed to present evidence, or ignored
               Commission directives.

Having not been asked to do so in the City’s written statement, the Commission did not address

the deputy commissioner’s evidentiary ruling related to the Hargrave case evidence.

       Both parties appeal the Commission’s decision to this Court. The City asserts that the

“Commission erred in excluding evidence” from the Hargrave case and in determining that

laches did not bar Neurosurgical Associates’ application for payment. Neurosurgical Associates

                                               -8-
asserts that the Commission erred in concluding that it was “not entitled to an award of

attorney[’s] fees pursuant to Virginia Code [§] 65.2-713(A).”

                                             ANALYSIS

                                     I. Hargrave case evidence

       Although the City asserts that “the Commission erred in excluding” the Hargrave case

evidence, a review of the Commission’s opinion in that matter reveals that the Commission made

no such ruling. The Commission’s opinion contains no reference to the Hargrave case evidence

and does not address whether it was admissible. Rather, it was the deputy commissioner, and not

the Commission, that made the only ruling in the case related to the Hargrave case evidence.

This fact is fatal to the City’s claim on appeal.

       As noted above, our appellate jurisdiction does not extend to decisions made by deputy

commissioners; rather, we are limited to reviewing “final decision[s] of the Virginia Workers’

Compensation Commission[.]” Code § 17.1-405(2). Thus, to the extent a litigant wishes to seek

our review of a ruling initially made by a deputy commissioner, it must first obtain a final

decision on the issue from the Commission, whether that decision adopts, modifies or rejects the

initial ruling of the deputy commissioner. See, e.g., Mouhssinne v. Crystal City Laundry,

62 Va. App. 65, 82 (2013) (holding that we may not consider arguments related to rulings of

deputy commissioners that are not ruled upon by the full Commission); Hodnett v. Stanco

Masonry, Inc., 58 Va. App. 244, 253 (2011) (same).

       Here, in its written statement on review before the Commission, the City did not ask the

Commission to rule on the evidentiary issue or to consider the evidence that had been excluded.

Having not been asked, the Commission did not rule on the issue. Because “we have no

[C]ommission ruling to review[,]” Hodnett, 58 Va. App. at 253, we do not address the merits of

                                                    -9-
the City’s argument regarding the deputy commissioner’s exclusion of the Hargrave case

evidence.

                                             II. Laches

       Laches is an affirmative defense, Smith v. Woodlawn Const. Co., 235 Va. 424, 430

(1988), that grew out of equity practice. The purpose of this equitable doctrine is to prevent a

litigant from gaining an unfair advantage from delaying its pursuit of an existing claim. Our

Supreme Court has “defined laches as ‘the neglect or failure to assert a known right or claim for

an unexplained period of time under circumstances prejudicial to the adverse party.’” Stewart v.

Lady, 251 Va. 106, 114 (1996) (quoting Princess Anne Hills v. Susan Constant Real Estate,

243 Va. 53, 58 (1992)). “The doctrine has no fixed guidelines—‘no rigid rule can be laid down

as to what delay will constitute laches; every suit must depend upon its own circumstances.’”

Berglund Chevrolet, Inc. v. Landrum, 43 Va. App. 742, 755 (2004) (quoting Stewart, 251 Va. at

114). “Delay alone does not establish laches; absent prejudice resulting from a party’s delay, the

bar of laches is not applicable.” Masterson v. Bd. of Zoning Appeals, 233 Va. 37, 48 (1987).

“The litigant raising laches as a defense bears the burden of demonstrating both the requisite

delay and prejudice . . . [,]” and determining whether a litigant satisfied that burden implicates

the Commission’s “factfinding discretion[.]” Berglund Chevrolet, 43 Va. App. at 755. Whether

the doctrine bars a claim in a given case “rests primarily in the discretion” of the tribunal.

Morris v. Mosby, 227 Va. 517, 521 (1984); see also May v. R.A. Yancey Lumber Corp., 297 Va.
1, 18 (2019); Masterson, 233 Va. at 48. Thus, we review the Commission’s rejection of the

City’s laches defense under the deferential abuse of discretion standard.

       As the party with the burden to establish the laches defense, the City had to both produce

evidence that it had been prejudiced by Neurosurgical Associates’ delay in filing its application

and have that evidence persuade the Commission as fact finder that the City had, in fact, suffered

                                                - 10 -
prejudice. See generally SunTrust Bank v. PS Bus. Parks, L.P., 292 Va. 644, 652 (2016)

(discussing the burdens of production and persuasion).

       Here, a review of the evidence admitted in the proceedings below reveals that the City

attempted to meet its burden largely by noting the passage of time, namely that nearly two

decades had passed from the time claimant received some of the care at issue and when

Neurosurgical Associates filed its application for payment with the Commission.5 Although a

two-decade delay is significant, the Commission was not convinced that the City had suffered

actual prejudice, finding that the City “did not sufficiently prove it was prejudiced” by

Neurosurgical Associates’ delay in pursuing its application for payment. We cannot say that the

Commission’s conclusion in this regard represents an abuse of discretion.

       “An abuse of discretion occurs only when reasonable jurists could not differ as to the

proper decision.” Wynnycky v. Kozel, 71 Va. App. 177, 193 (2019) (quoting Reston Hosp. Ctr.,

LLC v. Remley, 63 Va. App. 755, 764 (2014)). “[T]he abuse of discretion standard ‘necessarily

implies that, for some decisions, conscientious jurists could reach different conclusions based on

exactly the same facts—yet still remain entirely reasonable.’” Id. (quoting Hamad v. Hamad,

61 Va. App. 593, 607 (2013)). Accordingly, to reverse the Commission on this record, we would

have to find that every jurist would conclude that a twenty-year delay necessarily causes the

required prejudice, and thus, entitles a litigant to the protection of the laches bar. In essence, we

       5
          Although the Hargrave case evidence was not before the Commission, the City
attempted to augment its passage of time argument by suggesting that documentary evidence
may have existed at one time and was either destroyed because of records retention policies or
disappeared when FARA ceased to be a going concern. Given all of the testimony regarding
such documentary evidence and the lack thereof, the Commission, in its role as fact finder, was
not required to accept that such documentation existed or that it had been destroyed or lost as a
result of Neurosurgical Associates’ delay in filing its application for payment with the
Commission.
                                               - 11 -
would be finding that, as a matter of law, a near twenty-year delay automatically entitles a

litigant to dismissal of a claim based on laches.

       This we cannot do. As noted above, the doctrine of laches is not subject to such

bright-line rules. Berglund Chevrolet, 43 Va. App. at 755. Thus, we must reject any argument

that amounts to the passage of time “alone” being sufficient to “establish laches[.]” Masterson,
233 Va. at 48. Because we cannot create a hard and fast rule that the mere passage of time

always entitles a party to the laches defense, we cannot say that the Commission, on this record,

abused its discretion in finding a lack of the necessary prejudice. Accordingly, we affirm the

decision of the Commission as it relates to laches in this matter.

                                        III. Attorney’s fees

       In the proceedings below, Neurosurgical Associates sought an award of attorney’s fees

pursuant to Code § 65.2-713(A). Code § 65.2-713(A) provides that

               [i]f the Commission or any court before whom any proceedings are
               brought or defended by the employer or insurer under this title
               shall determine that such proceedings have been brought,
               prosecuted, or defended without reasonable grounds, it may assess
               against the employer or insurer who has so brought, prosecuted, or
               defended them the whole cost of the proceedings, including a
               reasonable attorney’s fee, to be fixed by the Commission.

(Emphasis added). Finding that the City’s laches defense was a reasonable, albeit unsuccessful,

one, the Commission vacated the deputy commissioner’s award of attorney’s fees to

Neurosurgical Associates and declined to make such an award. Neurosurgical Associates argues

that the Commission’s decision in this regard constituted reversible error. For the reasons that

follow, we disagree with Neurosurgical Associates.

       “The decision to assess fees or costs [pursuant to Code § 65.2-713] rests in the sound

discretion of the [C]ommission and will be reversed only for an abuse of that discretion.”

Virginia Polytechnic Inst. & State Univ./ Commonwealth v. Posada, 47 Va. App. 150, 159

                                               - 12 -
(2005). Thus, as with its decision regarding the application of laches, we can reverse the

Commission’s rejection of Neurosurgical Associates’ request for attorney’s fees only if

“reasonable jurists could not differ as to the proper decision.” Wynnycky, 71 Va. App. at 193

(quoting Reston Hosp. Ctr., 63 Va. App. at 764).

       The reasonableness of a defense “is to be judged from the perspective of the employer,

not the employee.” Philip Morris USA, Inc. v. Mease, 62 Va. App. 190, 203 (2013) (quoting

Lynchburg Foundry Co. v. Goad, 15 Va. App. 710, 716 (1993)). A defense is not unreasonable

for the purposes of Code § 65.2-713(A) merely because “it is later proven misplaced or in error.”

Goad, 15 Va. App. at 716 (quoting Volvo White Truck Corp. v. Hedge, 1 Va. App. 195, 201

(1985)).

       Here, the Commission found that, in asserting the laches defense, the City “reasonably

defended against the application” filed by Neurosurgical Associates. We agree. Although the

defense ultimately proved unsuccessful, there is nothing unreasonable about asserting that laches

bars a claim that a party waits nearly two decades to assert. Although, on this record, the

Commission found that the City failed to establish it had suffered actual prejudice due to

Neurosurgical Associates’ delay, we have not said and do not say that a different, equally

reasonable decisionmaker viewing the same evidence could not have reached the opposite

conclusion as an initial (as opposed to an appellate) matter. In short, there was nothing

unreasonable about the City’s assertion of the laches defense in this matter.6 Accordingly, the

       6
         There is nothing inconsistent in our affirming the Commission’s rejection of the City’s
laches defense on the one hand and our conclusion that the defense was reasonably asserted and
could have been successful if heard by a different decisionmaker on the other. Our decisions on
these issues simply reflect that the underlying questions were committed to the sound discretion
of the Commission and that the Commission’s answers to those questions fit within the
“bell-shaped curve of reasonability[,]” Hamad, 61 Va. App. at 607, which entitles them to
deference on appeal.

                                               - 13 -
Commission did not err in declining to award Neurosurgical Associates attorney’s fees pursuant

to Code § 65.2-713(A).

                                       CONCLUSION

       For the foregoing reasons, we affirm the judgment of the Commission in its entirety.

                                                                                      Affirmed.

                                             - 14 -