Court Opinion

ID: 5122863
Source: CourtListenerOpinion
Date Created: 2021-11-03 14:18:53.229665+00
Date Added: 2024-06-11T08:22:30.382914
License: Public Domain

COURT OF APPEALS OF VIRGINIA
UNPUBLISHED

              Present: Judges Huff, Ortiz and Friedman
              Argued by videoconference

              PENINSULA NEUROSURGICAL ASSOCIATES
                                                                              MEMORANDUM OPINION* BY
              v.     Record No. 0423-21-1                                        JUDGE GLEN A. HUFF
                                                                                  NOVEMBER 3, 2021
              ZIMMERMAN MARINE, INC.,
               COMMERCE AND INDUSTRY INS. CO. AND
               AIG CLAIMS, INC.

                            FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION

                               Philip J. Geib (Philip J. Geib, P.C., on brief), for appellant.

                               Timothy D. Watson (Midkiff, Muncie & Ross, P.C., on brief), for
                               appellees.

                     Peninsula Neurosurgical Associates (“appellant”) appeals from a decision of the

              Workers’ Compensation Commission (the “Commission”) denying appellant’s application for

              reimbursement from Zimmerman Marine, Inc., Commerce and Industry Ins. Co. and AIG

              Claims, Inc. (collectively, “appellee”). The reimbursement that appellant sought was for medical

              services it rendered to a workers’ compensation claimant who was one of Zimmerman Marine’s

              former employees.

                     In denying appellant’s application, the Commission made two judgments relevant to this

              appeal. The first was that appellant was not entitled to full, unredacted copies of contracts

              between several insurance companies through which access was made to billing and claims

              handling networks that ultimately determined the payments due for the medical services rendered

                     *
                         Pursuant to Code § 17.1-413, this opinion is not designated for publication.
in this case. The second was that appellant was appropriately and fully reimbursed pursuant to

the terms of a contract it reached with Aetna, Inc., another insurance carrier involved in the facts

of this case. Appellant asks this Court to reverse on both issues; but because neither of the

Commission’s judgments was in error, this Court affirms.

                                        I. BACKGROUND

        “Under settled principles of appellate review, [this Court] consider[s] the evidence in the

light most favorable to [appellee] as the prevailing party before the [C]ommission.” Layne v.

Crist Elec. Contractor, Inc., 64 Va. App. 342, 345 (2015).

                    The Medical Insurance Network and the Various Contracts

       This appeal involves a complex network of medical providers, insurers, claims,

companies, and data bases. To appropriately contextualize the issues in this appeal, a general

description of the pertinent contractual relationships within that network is provided first.

       On February 22, 2001, appellant, a medical care provider, entered into a Physician Group

Agreement with Aetna, Inc.,1 a health insurance company that was appellant’s primary point of

contact whenever appellant sought reimbursement for medical care it rendered to patients in

Aetna’s network. As relevant to this appeal, paragraph 3.1 of the Physician Group Agreement

provided that Aetna would reimburse appellant for appellant’s medical services in accordance

with an attached “Compensation Schedule” or “in accordance with the compensation

arrangement then in effect [at the time of billing]; either of which may be modified from time to

time by [Aetna].” Under the Compensation Schedule, appellant agreed to “accept [Aetna’s] then

current Reasonable Equitable Fee Schedule (REF) as payment in full.” Barbara Sciro, Aetna’s

Senior Network Director for Network Management for Workers’ Compensation and Auto

Contracting, testified that Aetna would determine what appellant was owed under the contract

       1
           The Physician Group Agreement was signed by both appellant and Aetna.
                                            -2-
and then inform AIG of its billing determination. AIG would in turn provide the payment to

appellant pursuant to Aetna’s billing determination.

       Paragraph 8.2 of the Physician Group Agreement provided that Aetna reserved the right

to “introduce new Plans” in the course of appellant and Aetna’s arrangement, so long as Aetna

provided appellant “ninety (90) days prior written notice of such new Plans.” Paragraph 12.13

defined “Plan” as “[a]ny health benefit product, plan or program issued, administered, or

serviced by of one of its [Aetna’s] Affiliates, including but not limited to, HMO, preferred

provider organization, indemnity, Medicaid, Medicare and Workers’ Compensation.” If Aetna

chose to introduce a new plan, appellant would have “thirty (30) days” from its receipt of

Aetna’s written notice to let Aetna know if it would elect to not participate in the new plan. If

appellant did not do so within that thirty-day window, then any new plan would be incorporated

into the Physician Group Agreement.

       In addition to the Physician Group Agreement were contracts between Aetna and two

other insurance companies. The first was a Network Services Agreement reached between Aetna

and First Health Group Corp. (later known as Coventry Health Care, Inc.) on September 1, 2007

(the “Aetna-Coventry Agreement”). The Aetna-Coventry Agreement simply provided, among

other things not relevant to this appeal, that Coventry would have access to Aetna’s Workers’

Compensation Access network (the “AWCA network”) on behalf of Coventry’s “Clients.”

Paragraph 1.4 of the Aetna-Coventry Agreement defined “Client” as “[t]he entity, including but

not limited to, insurance carriers, third party administrators, resellers, employers, and other

entities, including, any client of such insurance carriers, third party administrators, resellers,

employers and other entities who contract with [Coventry] or [Coventry’s] Affiliate[s], either

directly or indirectly, to access the [AWCA network].”

                                                 -3-
       The second was a Managed Care Services Agreement reached between Coventry and

AIG on October 1, 2008 (the “Coventry-AIG Agreement”). Under the Coventry-AIG

Agreement, AIG was, among other things (again) not relevant to this appeal, granted access to

Coventry’s preferred provider networks. By entering into this contract, AIG became one of

Coventry’s “Clients” as contemplated in the Aetna-Coventry Agreement, which in turn gave

AIG access to the AWCA network (which appellant was a member of under the Physician Group

Agreement).

       On December 15, 2008, Aetna sent appellant a letter (the “December 2008 letter”) that

provided some basic reminders as to how appellant’s participation in the AWCA network

worked. On the topic of compensation structure, the letter explained that appellant would be

reimbursed for its medical services at the lesser of the following three rates:

       1. 100 percent of appellant’s billed charges;

       2. 100 percent of the “Allowable Amount”2 determined by “the payer”; and

       3. Appellant’s contracted rate with Aetna.

               Appellant’s Billing Claims and the Proceedings in the Commission

       Between May 26, 2011, and May 25, 2012, appellant provided medical care to Stephen

Hutton (“claimant”) on fourteen separate dates of service for injuries claimant suffered from a

compensable workplace accident. For that care, appellant billed appellee a total of $12,745.

       AIG reimbursed appellant in the amount of $6,059 between May 2011 and May 2012.

AIG accompanied its payments with an “Explanation of Bill Review” spreadsheet (the “EOB

spreadsheet”), which detailed the amount appellant billed, the “Allowable Amount,” and the

“Repriced Amount”—i.e., the amount Aetna determined based on the contracted rate under the

       2
          The December 2008 letter clarified that the “Allowable Amount” is “the reimbursement
rate set by the workers’ compensation payer” based either on the “applicable state fee schedule”
or the reasonable market rate.
                                               -4-
Physician Group Agreement. Sciro later explained in her testimony that AIG’s reimbursement

amount was based on the December 2008 letter’s provision that appellant would be compensated

at the lesser of appellant’s billed charges, the “Allowable Amount” rate, and the contracted rate

under the Physician Group Agreement.3 She further clarified that the “contracted rate” referred

to the Physician Group Agreement’s provision that appellant would agree to accept Aetna’s

“market fee schedule” as payment in full, whatever that fee schedule was at the time of billing.

       On September 1, 2018, appellant filed an application with the Commission seeking

payment for unpaid bill charges in the amount of $7,181. On February 25, 2019, the parties

stipulated to a Protective Order, regarding “[c]onfidential [i]nformation, including confidential

and/or proprietary competitive business and/or commercially sensitive information” contained in

the Aetna-Coventry Agreement and the AIG-Coventry Agreement. That order was entered by

the deputy commissioner on March 11, 2019.

       During discovery, appellant requested production of the Aetna-Coventry Agreement and

the AIG-Coventry Agreement. Appellee provided appellant copies of those contracts but

redacted certain sections of them, alleging the redacted sections were not implicated in the issues

raised by appellant and instead related to the insurance companies’ indemnification obligations,

resolution of disputes, fee agreements, and confidentiality agreements with others. To support

that allegation, appellee left the heading for each redacted section unredacted.

       3
          All but two of the reimbursement payment determinations were based on the contracted
rate. The two that were not were based on the “Allowable Amount” rate, which, according to the
EOB spreadsheet, was $0 per charge. For those reimbursement payments, the EOB spreadsheet
clarified that the contracted rate was also $0 per charge. Notwithstanding the fact that the
“Allowable Amount” rate and the contracted rate were the same for those reimbursement
determinations, the EOB spreadsheet provided that it was basing those determinations on the
“Allowable Amount” rate, not the contracted rate.
        The amount appellant billed for in those two charges was $665. But appellant does not
take issue with the EOB spreadsheet’s provision that the “Allowable Amount” for those charges
was $0. Therefore, this Court does not consider any argument appellant makes with respect to
$665 of the $7,181 it claims it is owed.
                                                 -5-
       On December 11, 2019, appellant filed a motion to compel the full, unredacted copies of

the Aetna-Coventry Agreement and the AIG-Coventry Agreement, arguing it required those

contracts to determine whether the Physician Group Agreement “truly govern[ed] the bill

charges pending.” Appellee countered that (1) those contracts were offered to simply establish

“the ability of AIG to properly access the controlling Physician Group Agreement,” (2) the

Physician Group Agreement, not the redacted contracts, governed how appellant was to be

reimbursed, and (3) relatedly, the redacted sections of the requested contracts were “not relevant

to the amount of payment due to [appellant].” In a letter opinion issued on January 27, 2020, the

deputy commissioner denied appellant’s motion to compel.

       A hearing on appellant’s application for further reimbursement took place before the

deputy commissioner on July 31, 2020. On October 14, 2020, the deputy commissioner issued

an opinion denying appellant’s application. In that opinion, the deputy commissioner explained

his prior denial of appellant’s motion to compel, finding that the redacted sections of the other

contracts were irrelevant because they went “solely to proprietary information that the insurer

agreed to protect from disclosure and [did] not affect the method” by which appellant was paid.

He further determined that the Physician Group Agreement and the December 2008 letter

governed the issue of whether appellant was properly reimbursed for its medical services. Based

on his review of the Physician Group Agreement and the December 2008 letter, the deputy

commissioner ruled that appellant “agreed to be bound by the amounts Coventry calculated,”

which in turn supported the conclusion that the reimbursement appellant received was consistent

with that contractual agreement.

       On November 11, 2020, appellant appealed the deputy commissioner’s ruling to the full

Commission. In an opinion issued on March 22, 2021, the Commission unanimously affirmed.

It, like the deputy commissioner, agreed that the Physician Group Agreement governed the issue

                                                -6-
of whether appellant was appropriately reimbursed for the medical services it provided to

claimant. It also agreed with the deputy commissioner that appellant was not entitled to

unredacted copies of the Aetna-Coventry Agreement and the AIG-Coventry Agreement because

those contracts were “only relevant to show AIG’s access to the controlling Aetna Physician

Group Agreement, and the portions of these [contracts] showing this information are not

redacted.” But unlike the deputy commissioner, the Commission did not find that appellant

agreed to be bound to reimbursement rates as calculated by “Coventry.” Instead, it credited

Sciro’s testimony that “Aetna priced the billed amounts based on the contract rates” and that

those contract rates were “based on the Aetna Market Fee Schedule, pursuant to the Physician[]

Group Agreement.”

       This appeal followed.

                                 II. STANDARD OF REVIEW

       Appellant’s first assignment of error challenges the Commission’s decision upholding the

deputy commissioner’s denial of appellant’s motion to compel production of unredacted copies

of the Aetna-Coventry Agreement and the AIG-Coventry Agreement. Decisions as to

evidentiary matters “lie within the [Commission’s] sound discretion and will not be disturbed on

appeal absent an abuse of discretion.” See Blankenship v. Commonwealth, 69 Va. App. 692,

697 (2019) (quoting Michels v. Commonwealth, 47 Va. App. 461, 465 (2006)). “[This Court]

can only conclude that an abuse of discretion has occurred in cases where ‘reasonable jurists

could not differ’ about the correct result.” Dalton v. Commonwealth, 64 Va. App. 512, 522

(2015) (quoting Thomas v. Commonwealth, 44 Va. App. 741, 753, adopted upon reh’g en banc,

45 Va. App. 811 (2005)).

       Appellant’s second assignment of error challenges the Commission’s finding that

appellant was properly reimbursed under the terms of the Physician Group Agreement. To the

                                               -7-
extent that assignment of error requires this Court to interpret the Physician Group Agreement, it

presents a question of law that this Court reviews de novo. See Plunkett v. Plunkett, 271 Va.

162, 166 (2006). But to the extent the assignment of error requires this Court to review the facts

surrounding Aetna’s performance under the Physician Group Agreement, this Court is bound by

the Commission’s findings of fact so long as they are supported by credible evidence in the

record. Wagner Enter., Inc. v. Brooks, 12 Va. App. 890, 894 (1991). In determining whether

credible evidence exists, this Court will not “retry the facts, reweigh the preponderance of the

evidence, or make its own determination of the credibility of the witnesses.” Id. Furthermore,

“[t]he fact that there is contrary evidence in the record is of no consequence if there is credible

evidence to support the [C]ommission’s finding.” Id.

                                           III. ANALYSIS

                                 A. Appellant’s Motion to Compel

       Appellant contends the Commission erred in upholding the deputy commissioner’s denial

of appellant’s motion to compel production of unredacted copies of the Aetna-Coventry

Agreement and the AIG-Coventry Agreement. Specifically, appellant avers that by not giving it

“equal opportunity to consider the entirety of the claimed contracts,” it was unable to “determine

whether or not the sections removed from the contracts were susceptible to being understood in

more than one way . . . [or] of even having any import one way or another, upon the claimant or

the defenses.” But because the Aetna-Coventry Agreement and the AIG-Coventry Agreement

were in all relevant aspects collateral to the issues appellant raised in its application, this Court

disagrees.

       The basis of appellant’s application before the Commission was whether appellant was

owed reimbursement in excess of what it received from appellee. To address appellant’s

application, the Commission had to determine whether appellant entered into a contract

                                                 -8-
governing reimbursement for any medical services appellant rendered to claimant. See Leibovic

v. Melchor, 35 Va. App. 51, 55 (2001) (noting that, under the statutory scheme governing

workers’ compensation cases, medical providers are permitted to “enter[] into agreements for fee

reimbursement”). On that question, the evidence established that appellant was a party to the

Physician Group Agreement,4 and there is no dispute that the Physician Group Agreement

contained terms controlling the issue of what level of reimbursement appellant was entitled to for

the services it rendered to claimant. Accordingly, because appellant had access to the unredacted

contractual terms that governed the reimbursement issue appellant raised before the Commission,

neither the deputy commissioner nor the Commission abused their discretion in preventing

appellant from accessing unredacted copies of the Aetna-Coventry Agreement or the

AIG-Coventry Agreement.

   B. The Sufficiency of Appellee’s Reimbursement Under the Physician Group Agreement

       As to the second issue, appellant contends the Commission erred in determining it “was

properly paid pursuant to the terms and conditions of the contracts.” Appellant’s primary

       4
          In the first portion of its second assignment of error, appellant avers that the
Commission erred “in finding that [appellee] satisfied [its] evidentiary burden of proving the
existence . . . of the contracts.” But appellant offers no argument on brief in support of that part
of its second assignment of error and instead dedicates its brief to contesting whether it was
sufficiently reimbursed under the terms of the Physician Group Agreement. See Teleguz v.
Commonwealth, 273 Va. 458, 473 (2007) (“In the absence of any argument in support of [an]
assignment of error, the assignment of error is abandoned.”).
         Although appellant appeared to offer some arguments at oral argument related to whether
appellee satisfied its burden of proving the existence of a contract between Aetna and appellant,
this Court generally does not consider arguments raised for the first time at oral argument but not
included in an appellant’s brief. See Stokes v. Commonwealth, 61 Va. App. 388, 397 (2013)
(citing Va. Dep’t of State Police v. Barton, 39 Va. App. 439, 447 (2002)). But even assuming
without deciding that appellant properly presented a challenge to the Commission’s finding of an
existing contract between appellant and Aetna, that challenge is without merit. For one thing, the
Physician Group Agreement contained the signatures of both appellant and Aetna, and appellant
does not challenge the validity of either signature. For another, the December 2008 letter noted
appellant’s participation in the AWCA network and gave appellant the opportunity to opt out of
that network. There is no evidence that appellant ever opted out of the network, nor does
appellant provide any argument to the contrary on appeal.
                                                  -9-
argument is that even though the EOB spreadsheet and Sciro’s testimony established what Aetna

determined appellant was owed under the Physician Group Agreement, neither established how

Aetna ultimately came to that determination.

       This Court finds no error in the Commission’s judgment on this point. Even if, for the

sake of argument, this Court were to accept appellant’s premise that appellee’s evidence never

explained how Aetna came to the reimbursement number it did, that premise is of no

consequence given what appellant agreed to in the Physician Group Agreement.

       In paragraph 3.1 of that contract, appellant agreed that Aetna would reimburse it for

medical services it rendered to claimant in accordance with the attached “Compensation

Schedule” or “in accordance with the compensation arrangement then in effect [at the time of

billing]; either of which may be modified from time to time by [Aetna].” Under the

Compensation Schedule, appellant agreed to “accept [Aetna’s] then current Reasonable

Equitable Fee Schedule . . . as payment in full.” Additionally, the December 2008 letter clarified

that appellant would be reimbursed at the lesser rate of (1) appellant’s billed charges, (2) the

“Allowable Amount,” and (3) the contracted rate under the Physician Group Agreement.5 And

the EOB spreadsheet made clear that for all but two charges, the contracted rate was the agreed

upon sum because it was the lesser of those three rates.

       Properly understood, then, the “contracted rate” appellant agreed to under the

Compensation Schedule was whatever Aetna’s “reasonable equitable fee schedule” was at the

       5
         Appellee asserted, and the Commission appeared to agree, that the December 2008
letter was an “amendment” made to the Physician Group Agreement in accordance with
paragraph 8.2 of that contract—i.e., the provision that allowed Aetna to introduce “new Plans” in
the course of appellant and Aetna’s arrangement that would be incorporated into the Physician
Group Agreement if appellant did not object within thirty days of receiving such “new Plans.”
Appellant does not challenge that aspect of the Commission’s opinion, so this Court assumes
without deciding that the December 2008 letter was an amendment to the Physician Group
Agreement.
                                               - 10 -
time of billing. But nowhere in the Physician Group Agreement—or in any

amendment/addendum to that contract—did appellant or Aetna include a provision explaining

what Aetna’s “reasonable equitable fee schedule” was or how Aetna calculated that schedule.

Nor did appellant seek to include a provision imposing a duty on Aetna or AIG to explain how

its then-current “reasonable equitable fee schedule” was calculated whenever AIG sent appellant

reimbursement payments.

       So, because appellant agreed to the terms it did, and because appellant does not argue

they are unconscionable, those terms bound the Commission in the proceedings below and bind

this Court on appeal. See VACORP v. Young, 298 Va. 490, 496 (2020) (“[O]ur common-law

tradition counsels that courts ‘are not lightly to interfere’ with lawful exercises of the ‘freedom

of contract.’” (quoting Commonwealth Div. of Risk Mgmt. v. Va. Ass’n of Counties Grp. Self

Ins. Risk Pool, 292 Va. 133, 143 (2016))); see also Chaplain v. Chaplain, 54 Va. App. 762, 773

(2009) (noting a contractual term is unconscionable if it works an inequality so “gross” as to

“shock the conscience” of the court). And in light of the terms appellant agreed to, all the

Commission needed to determine was whether the “repriced amount” in the EOB spreadsheet

was based on Aetna’s then-current fee schedule.

       Sciro provided unrebutted testimony that it was. As the trier of fact, the Commission was

entitled to weigh the credibility of Sciro’s testimony. See Montalbano v. Richmond Ford, LLC,

57 Va. App. 235, 252 (2010) (“[T]he [C]omission resolves all conflicts in the evidence and

determines the weight to be accorded the various evidentiary submissions.” (quoting Bass v. City

of Richmond Police Dep’t, 258 Va. 103, 114 (1999))). And because the Commission accepted

Sciro’s testimony as credible, this Court is bound by that factual judgment, particularly when

considering there is no argument that Sciro’s testimony was inherently incredible as a matter of

law. See Wagner Enterprises, 12 Va. App. at 894 (“[This Court] does not . . . make its own

                                                - 11 -
determination of the credibility of the witnesses.”); Kelley v. Commonwealth, 69 Va. App. 617,

626 (2019) (noting that a witness’ testimony is inherently incredible as a matter of law only

when it is “so contrary to human experience as to render it unworthy of belief” or is “shown to

be false by objects or things as to the existence and meaning of which reasonable men should not

differ” (citations omitted) (quotation marks omitted)).

       In its brief and at oral argument, appellant made much of the fact that appellee never

disclosed Aetna’s then-current reasonable equitable fee schedule to the Commission. But

appellant points to nowhere in the record where it requested production of that fee schedule.

And even if it could, it made no argument in the Commission or on appeal that appellee

prevented it from accessing Aetna’s then-current fee schedule.

       By making that strategic decision, appellant essentially left it to appellee’s discretion to

determine how it would prove that appellant was sufficiently reimbursed under the Physician

Group Agreement. Although appellee certainly could have produced Aetna’s reasonable

equitable fee schedule before the Commission, it chose not to do so, and nothing in the Physician

Group Agreement or in any governing law required otherwise. In proving its case, appellee

instead chose to rely on Sciro’s testimony that the “repriced amount” in the EOB spreadsheet

was based on Aetna’s then-current reasonable equitable fee schedule. The Commission accepted

Sciro’s testimony as credible, and this Court is bound by that decision under the applicable

standard of review.

       In short, appellant unqualifiedly agreed in the Physician Group Agreement to accept

Aetna’s then-current “reasonable equitable fee schedule” as “payment in full” for medical

services it rendered to claimant. Because that contracted rate represented the lowest rate

appellant was entitled to under the December 2008 letter, the Commission did not err in ruling

that appellant was properly reimbursed.

                                               - 12 -
                                       IV. CONCLUSION

       For the foregoing reasons, this Court affirms the Commission’s upholding of the deputy

commissioner’s denial of appellant’s motion to compel production of certain unredacted

contracts and its denial of application for further reimbursement for the medical services

rendered to claimant.

                                                                                         Affirmed.

                                              - 13 -