Court Opinion

ID: 8991215
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:11:20.926674+00
Date Added: 2024-06-11T17:10:54.799621
License: Public Domain

WIDENER, Circuit Judge,
dissenting:
I respectfully dissent.
I would affirm on the opinion of the Benefits Review Board, which I find it difficult to improve upon.
*518I here highlight certain parts of that opinion to annunciate my differences with the majority.
First. The setting of this case is that Newport News, the employer, refused to make payment in full for bills submitted in 1985 for treatment of work-related injuries sustained by ten of its employees.
Second. As a result of this non-payment, Dr. Loxley complained to Deputy Commissioner B.A. Voultsides, who initiated an investigation on the unpaid charges. In the course of his investigation, the Deputy Commissioner requested the opinion of Dr. Jervis S. Taylor, an ortho-paedic surgeon and Chairman of the Medical Peer Review Committee of the Eastern Virginia Area, as to the appropriateness of the fees charged by Dr. Loxley. Dr. Taylor’s response to the Deputy Commissioner was that he was of the opinion that the charges were low or low/normal. The Deputy Commissioner subsequently advised Newport News that he found Dr. Loxley’s charges to be appropriate as reasonable charges in the community where he practices and recommended that payment be made in full.
Third. Newport News then requested a hearing challenging the Deputy Commissioner’s determination that the fees charged did not exceed the prevailing community rate.
Fourth. Thus, Newport News was the moving party in this case and properly assigned the burden of proof under 5 U.S.C. § 556(d), which provides in pertinent part that “the proponent of a rule or order has the burden of proof.” Since Newport News is the proponent of an order deciding that the Deputy Commissioner's ruling was in error, it is at once apparent to me that it had the burden of proof and that the Benefits Review Board properly assigned the burden to Newport News.
Fifth. Newport News and the Steel Workers Union agreed by contract that the employer would only pay the prevailing rate for physicians’ fees, which the contract defined as the 80th percentile of those fees. But Newport News used a data base of all physicians’ fees, not physicians’ fees of orthopaedic surgeons, of which specialty Dr. Loxley was a member. Thus, the fees which Newport News was willing to pay to Dr. Loxley for medical care, I think, were patently in violation of 33 U.S.C. § 907(g), which provides that such charges are limited “to such charges as prevailing in the community for such treatment,” and 20 C.F.R. § 702.413, which provides that the physician’s fees “shall not exceed the customary charges of the medical care provider for the same or similar services.”
While it is true that under § 907(g) a physician's charges are subject to regulation by the Secretary, it is not true that physicians’ charges are subject to regulation by Newport News and the employees’ union. The Secretary has not regulated the same. Indeed, it does not require any stretching to find that the decision of the Deputy Commissioner, that Dr. Loxley’s fees met statutory and regulatory requirements, is an administrative action presumed to be regular and not subject to overturning except for the most extraordinary reasons not present here.
I have attached a copy of the decision of the Benefits Review Board to this opinion and subscribe to it.
APPENDIX
U.S. DEPARTMENT OF LABOR
Benefits Review Board
1111 20th Street, N.W.
Washington, D.C. 20036
PUBLISHED
BRB No. 87-1666
Dr. Sidney S. Loxley and Dr. Lawrence D. Bourgard Health Care Providers-Petitioners v. Newport News Shipbuilding and Dry Dock Company Self-Insured Employer-Respondent
DECISION AND ORDER
Appeal of the Decision and Order of John C. Bradley, Administrative Law Judge, United States Department of Labor.
*519John L. Smith, Jr. (Outland, Gray, O’Keefe & Hubbard), Chesapeake, Virginia, for the health care providers. Lawrence P. Postol (Seyfarth, Shaw, Fairweather & Geraldson), Washington, D.C., for the self-insured employer. Before: BROWN, DOLDER, and McGRANERY, Administrative Appeals Judges.
PER CURIAM:
Dr. Sidney S. Loxley and Dr. Lawrence D. Bourgard appeal the Decision and Order (86-LHC-1235; 86-LHC-1232; 86-LHC-1227; 86-LHC-1233; 84-LHC-1644; 85-LHC-1760; 86-LHC-1229; 86-LHC-789; 86-LHC-1234; 86-LHC-1248) of Administrative Law Judge John C. Bradley rendered pursuant to the provisions of the Longshore and Harbor Workers’ Compensation Act, as amended, 33 U.S.C. § 901 et seq. (the Act). Pursuant to the Board’s Order dated August 31, 1989, oral argument was held in Norfolk, Virginia, on October 11, 1989.
The sole issue on appeal is whether the administrative law judge properly determined that the fees charged by Dr. Loxley and his associate Dr. Bourgard (hereinafter, collectively referred to as Dr. Lox-ley), orthopedic surgeons who rendered medical service to injured employees pursuant to the Act, exceed the prevailing community charges for the same or similar services in violation of the Act. See 33 U.S.C. § 907(b), (g) (Supp. V 19867); 20 C.F.R. §§ 702.413-702.417. We must affirm the findings and conclusions of the administrative law judge which are rational, supported by substantial evidence, and in accordance with law. 33 U.S.C. § 921(b)(3); O’Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359, 85 S.Ct. 1012, 13 L.Ed.2d 895 (1965).
The instant appeal arises from a dispute concerning charges for medical services rendered by Dr. Loxley to injured employees pursuant to Section 7 of the Act, 33 U.S.C. § 907.9 The record establishes that employer refused to make payment in full for bills submitted in 1985 for treatment of work-related injuries sustained by ten of employer’s employees. Employer disputed Dr. Loxley’s charges for three types of services coded according to the Current Procedural Terminology (CPT), a uniform coding of procedures and services performed by physicians, adopted by the American Medical Association and utilized by Dr. Loxley. At issue in this case are Dr. Loxley’s charges for services described by the following three CPT Codes:
CPT Code Description of Service
90060 Office Services, Established Patient, intermediate.
90070 Office Services, Established Patient, extended.
90220 Initial Hospital Care, Comprehensive history and examination, initiation of diagnostic and treatment programs, and preparation of hospital records.
Rather than paying Dr. Loxley’s charges in full, employer paid Dr. Loxley only what it determined to be the prevailing; rate for such services. In making its determination as to what was an appropriate prevailing community charge, employer adopted medical fee data from its self-insured health benefit plan for its employees and their dependents. Under its health benefit plan, employer pays only the prevailing rate, defined as the 80th percentile, or the level at which 80 percent of the medical charges received by the insurance plan for a particular service are below. In extending its self-insured health benefit plan’s prevailing rate limitation to medical charges in compensation claims, employer utilized survey data on the fees charged in 1984 by physicians in the community for the three relevant CPT Codes in insurance claims submitted to employer’s health benefit plan. Employer’s data base does not distinguish among physicians on the basis of medical specialty; thus, the 80th percentile prevailing rate is based on charges submitted by all physicians across the board and is not confined to charges submitted by only *520those physicians practicing a particular medical specialty. Employer accordingly compiled data on medical charges submitted to its health benefit plan for services described by CPT Codes 90060, 90070, and 90220,10 calculated the 80th percentile for each of those CPT Codes, and paid Dr. Loxley only the amount represented by the 80th percentile.11
After being advised that employer would not make payment in full, Dr. Loxley contacted Deputy Commissioner B.E. Voult-sides, who initiated an investigation of the unpaid medical charges. See 20 C.F.R. §§ 702.407, 702.414(a). In the course of his investigation, the deputy commissioner requested the opinion of Dr. Gervas S. Taylor, an orthopedic surgeon and chairman of the Medical Peer Review Committee for the Eastern Virginia Area, as to the appropriateness of the fees charged by Dr. Loxley. Dr. Taylor responded that each of the charges was normal or low/normal. The deputy commissioner subsequently advised employer that he found Dr. Loxley’s charges to be appropriate as reasonable charges in the community where he practices and recommended that payment be made in full. See 20 C.F.R. § 702.414(c).
Employer requested a hearing, challenging the deputy commissioner’s determination that the fees charged do not exceed the prevailing community rate. See 20 C.F.R. § 702.415. Subsequent to the referral for hearing, employer compiled additional fee data in an attempt to extract charges by orthopedic surgeons for the relevant CPT Codes. After an unsuccessful attempt to obtain a list of Board-certified and Board-eligible orthopedic specialists from local medical societies, employer relied on the listing of orthopedic surgeons in the Peninsula and Norfolk telephone directory yellow pages. Employer isolated the fee data on these orthopedic surgeons contained in its original data base of physicians who had submitted bills under employer’s health benefit plan for services described in the relevant CPT Codes,12 and applied the 80th percentile limitation to the charges of those orthopedists.13
In his Decision and Order issued May 27, 1987, the administrative law judge noted that fees for medical care rendered under the Act must meet a dual standard, in that they “shall be limited to such charges for the same or similar care ... as prevails in the community in which the medical care provider is located” and “shall not exceed the customary charges of the medical care provider for the same or similar services.” See 20 C.F.R. § 702.413.14 Noting that the *521statute does not address the question of which party bears the burden of proof'with respect to whether a medical fee exceeds the prevailing community rate, the administrative law judge determined that such burden lies with the health care provider. The administrative law judge next determined that “community” was properly defined by employer as the area used by employer in its self-insured health benefit plan.15 The administrative law judge rejected Dr. Lox-ley’s contention that employer’s determination of prevailing community rates is flawed by employer’s failure to distinguish among medical specialists, noting that when employer enlarged its original survey data base to break out specific fee data regarding orthopedic surgeons, the result was that Dr. Loxley was paid more for services under two of the three CPT Codes using the general survey data than he would have been paid if employer had considered only the data concerning orthopedic surgeons. Having found unpersuasive the testimony of both Drs. Loxley and Taylor concerning prevailing community rates, the administrative law judge ultimately found that Dr. Loxley failed to sustain his burden of proof that his fees were reasonable. Finding that employer’s evidence was persuasive, the administrative law judge noted that the end result would have been the same even had he found that employer had the burden of proof. The administrative law judge rejected Dr. Loxley’s argument that employer’s fee schedule violates an employee’s right pursuant to Section 7(b) of the Act, 33 U.S.C. § 907(b), to choose his attending physician, stating that such right is, by statute, not without exception. The administrative law judge, accordingly, con-eluded that employer’s use of the 80th percentile method is a satisfactory standard for determining prevailing community rates, that the methodology used to establish the 80th percentile was appropriate, and that employer demonstrated that Dr. Loxley’s charges exceed the prevailing community rates.
On appeal, Dr. Loxley contends that employer’s definition of prevailing community charges is arbitrary and constitutes an unauthorized and illegal mandatory fee schedule; that the administrative law judge erroneously found that Dr. Loxley bears the burden of proof as to whether a medical charge exceeds the prevailing community charge; that the administrative law judge’s finding that Dr. Loxley’s charges exceed prevailing community rates is not - supported by substantial evidence; and that the administrative law judge erroneously found it unnecessary to distinguish between fees charged by orthopedic surgeons and fees charged by other physicians in determining prevailing community rates. Employer responds that the administrative law judge’s Decision and Order should be affirmed.16
The relevant provisions of the Act are as follows:
SEC.7 (a) The employer shall furnish such medical, surgical, and other attendance or treatment, nurse and hospital service, medicine, crutches, and apparatus, for such period as the nature of the injury or the process of recovery may require.
(b) The employee shall have the right to choose an attending physician authorized *522by the Secretary to provide medical care under this Act as hereinafter provided.
The Secretary shall actively supervise the medical care rendered to injured employees, * * * and may, on his own initiative or at the request of the employer, order a change of physicians or hospitals when in his judgment such change is desirable or necessary in the interest of the employee or where the charges exceed those prevailing within the community for the same or similar services or exceed the provider’s customary charges. * * # * * *
(g) All fees and other charges for medical examinations, treatment or service shall be limited to such charges as prevail in the community for such treatment, and shall be subject to regulation by the Secretary. The Secretary shall issue regulations limiting the nature and extent of medical expenses chargeable against the employer without authorization by the employer or the Secretary.
33 U.S.C. § 907(a), (b), (g) (Supp. V 1987). The pertinent regulation provides:
All fees charged by medical care providers for persons covered by this Act shall be limited to such charges for the same or similar care (including supplies) as prevails in the community in which the medical care provider is located and shall not exceed the customary charges of the medical care provider for the same or similar services. Official state medical fee schedules for workers’ compensation charges may be used as guidelines in determining the prevailing community rate where available and to the extent appropriate. The opinion of the OWCP district medical director that a charge by a medical care provider disputed under the provisions of § 702.414 exceeds the charge which prevails in the community in which said medical care provider is located shall constitute sufficient evidence to warrant further proceedings pursuant to § 702.414 and to permit the Director to direct the claimant to select another medical provider for care to the claimant.
20 C.F.R. § 702.413.17
Proceedings concerning medical fees are initiated by the complaint of an interested party that a medical charge appears to exceed prevailing community charges for similar services, which is filed with the Director, Office of Workers’ Compensation Programs (the Director), or upon the Director’s own initiative. The Director is granted the authority to conduct an investigation and to make specific findings as to whether the disputed fee exceeds the prevailing community charges or the provider’s customary charges. 20 C.F.R. § 702.414. Section 702.415 of the Act’s regulations provides that, following issuance of the Director’s findings and proposed action, any interested party has the right to a hearing to be conducted in accordance with 5 U.S.C. § 556 and with the procedures pertaining to adjudication of compensation claims found at 20 C.F.R. Part 702, Subpart C. See also 20 C.F.R. §§ 702.416, 702.417.
As a threshold matter, we hold that the administrative law judge erroneously placed the burden of proof on Dr. Loxley to establish that his fees do not exceed the prevailing community charges. While Section 7 of the Act does not directly address the question of the burden of proof in fee disputes, Section 702.415 of the regulations, 20 C.F.R. § 702.415, provides for the right to a hearing pursuant to 5 U.S.C. § 556. Thus, our disposition of the burden of proof issue under Section 7 and the applicable regulations must be consistent with 5 U.S.C. § 556(d), which provides, in pertinent part, that “[ejxcept as otherwise provided by statute, the proponent of a rule *523or order has the burden of proof.” In the case at bar, employer is the proponent of an order ruling that Dr. Loxley’s medical fees exceed the prevailing community charges, and, thus, employer bears the burden of proof with respect to this issue. See generally 5 U.S.C. § 556(d); 33 U.S.C. § 907(a), (b), (g) (Supp. Y 1987); 20 C.F.R. §§ 702.407, 702.413-702.417.
We further hold that employer has failed to sustain its burden of proving that Dr. Loxley’s fees exceed the prevailing community rate, inasmuch as employer’s evidence is wholly insufficient to establish prevailing community charges for the medical services performed by Dr. Loxley. Employer’s approach to defining prevailing community charges is vulnerable to attack on a number of grounds. First, employer has provided no evidence that the medical fee data relied upon by employer represent a true sample of the medical fees charged by physicians practicing in the community since the charges used in employer’s data base were compiled exclusively from medical bills submitted under employer’s selfin-sured health benefit plan, a contractually negotiated plan between employer and the United Steel Workers, the employee’s union bargaining agent. According to the agreement, employer would pay only those charges below the 80th percentile of all billings. Indeed, the administrative law judge recognized that the fees reflected in employer’s sample would be distorted in employer’s favor if physicians limited the charges submitted to employer’s health benefit plan to the maximum 80th percentile level employer would pay.
It is interesting, as noted by the administrative law judge, that the purpose of setting a percentile by a health care provider, whether 75, 80, or 90, was to set the portion of a charge that the provider would pay, with liability to pay the balance on the patient. Decision and Order at 6,17; Transcript of the Hearing at 111, 113, 128. This, of course, is a proper subject for negotiation between a health care provider and a union for the payment of charges under a health benefit plan. It is not applicable, however, under a workers’ compensation system such as the Longshore Act which provides that the employer shall furnish all medical, surgical, and other related treatment. 33 U.S.C. § 907(a). Also, as noted by Dr. Loxley on appeal, employer’s use of 1984 as a base year for 1985 billings fails to account for any intervening fee increases brought about by inflation or otherwise affecting the prevailing community rates for 1985.18 Further, no evidence was submitted as to the amount of charges rendered by physicians to patients in the general populations of the Norfolk-Newport News area covered under other plans, whether employer-provided plans or individually acquired plans. Thus, employer has failed to meet its burden of establishing that the fee data collected solely from its own health benefit plan represent an accurate depiction of the applicable prevailing community rates.
Second, employer’s initial survey of fees charged to its health benefit plan fails to distinguish on the basis of medical specialization and, thus, is inherently flawed as a method of determining prevailing community charges. The Act and its regulations provide that medical fees shall be limited to prevailing community charges for “the same or similar” care. See 33 U.S.C. § 907(b), (g) (Supp. V 1987); 20 C.F.R. §§ 702.413, 702.414. Employer thus bears the burden of proving that fee data relied upon to establish the prevailing community rates are limited to charges for services which are, in fact, the same as or similar to those services rendered by Dr. Loxley. In the case at bar, employer merely compared Dr. Loxley’s charges for the services codified by CPT Codes 90060, 90070 and 90220 with charges made by all physicians in the data base for services classified according to the same three broad CPT Codes, without presenting any evidence that services performed by these other physicians, in fact, constituted the same or similar care *524as that rendered by Dr. Loxley. We therefore hold that employer’s failure to limit its fee data to only those physicians practicing Dr. Loxley’s specialty of orthopedic surgery renders its method of determining prevailing community charges insufficient to meet employer’s burden under Section 7 of the Act. Employer’s subsequent attempt to isolate fee data on orthopedic surgeons also is insufficient to sustain employer’s burden, inasmuch as the sample of orthopedic surgeons’ charges surveyed is quite limited, and, as in employer’s initial survey, the data pertaining to orthopedic surgeons are limited to those doctors submitting charges to employer’s health benefit plan. In light of our holdings that employer bears the burden of establishing that Dr. Loxley’s fees exceed the prevailing community charges and that employer’s evidence is insufficient to sustain its burden, the administrative law judge’s determination that Dr. Loxley failed to demonstrate that his charges are within the prevailing community rates is reversed.
Accordingly, the Decision and Order of the administrative law judge is reversed.
SO ORDERED.
/s/ James F. Brown
JAMES F. BROWN
Administrative Appeals Judge
/s/ Nancy S. Polder
NANCY S. DOLDER
Administrative Appeals Judge
/s/ Regina C. McGranery
regina c. McGranery
Administrative Appeals Judge
Dated this 28th day of February 1990.

. The parties stipulated that Dr. Loxley did, in fact, perform the services for which charges were submitted and that the medical services rendered were for work-related injuries.

.Dr. Loxley's charges and payment received are as follows:
CPT Code Dr. Loxley’s Charge Employer’s Payment
90060 $ 38.50 ; 25.00
90070 52.00 35.00
90220 122.00 110.00

.Employer's data base includes approximately 1,700 physicians. The survey includes 38,792 charges for CPT Code 90060, 4,834 charges for CPT Code 90070, and 3,097 charges for CPT Code 90220.

.The subsequent survey of orthopedic surgeons contains 520 charges for CPT Code 90060, 650 charges for CPT Code 90070, and 74 charges for CPT Code 90220.

. Employer's fee data on orthopedic surgeons are as follows:
Dr. Loxley's Amount Paid CPT Code Charge by Employer Fees 80th Percentile-Orthopedic Surgeons
90060 I 38.50 $ 25.00 $ 30.00
90070 52.00 35.00 30.00
90220 122.00 110.00 100.00

. It is noted that the administrative law judge in the instant case found that Dr. Loxley's charges exceeded the prevailing community rate, the first prong of the standard, not that they exceeded his customary charges, the second prong. Employer does not contend on appeal that the administrative law judge also should have found that Dr. Loxley’s charges exceeded his customary charges.

. The definition of "community" applied by the administrative law judge is not challenged by Dr. Loxley on appeal.

. Dr. Loxley, in his reply brief, contends that the statement of facts contained in employer’s response brief misrepresents Dr. Taylor’s hearing testimony. We agree. First, Dr. Loxley correctly asserts that, contrary to employer's contention that Dr. Taylor changed his opinion as to the charge for an intermediate office visit, the record is clear that the confusion over this charge was due to an error on the part of the deputy commissioner. Next, as pointed out by Dr. Loxley, employer’s conclusion that Dr. Taylor was of the opinion that physicians’ charges should be the same irrespective of their medical specialty is wholly unsupported by the testimony of Dr. Taylor cited by employer. Finally, as Dr. Loxley correctly maintains, Dr. Taylor’s testimony that he could not dispute the documentation underlying employer’s statistical analysis but that employer’s figures seem extremely low does not support employer’s conclusion that Dr. Taylor was in agreement with employer’s method of statistical analysis.

. It is noted that 20 C.F.R. § 702.413 provides that official state medical fee schedules for workers’ compensation charges may be used as guidelines in determining the prevailing community rate. Section 702.413 additionally provides for the issuance of opinions of the OWCP district medical director whether charges exceed the prevailing charges in the community. The parties agreed at oral argument that Virginia law has no medical fee schedule and that no opinion was rendered by the OWCP district medical director.

. The increase in the cost of medical care in 1984 was 6.4 percent and in 1985 was 6.1 percent. Consumer Price Index (CPI-U) Medical Care, U.S. Department of Labor, Bureau of Labor Statistics,