Court Opinion

ID: 3005894
Source: CourtListenerOpinion
Date Created: 2015-09-30 14:10:01.525473+00
Date Added: 2024-06-11T11:46:03.042382
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Prescription Partners, LLC,             :
                         Petitioner     :
                                        :
            v.                          :   No. 2108 C.D. 2014
                                        :   Submitted: July 17, 2015
Bureau of Workers’ Compensation         :
Fee Review Hearing Office               :
(Healthsmart Casualty Claims            :
Solutions),                             :
                        Respondent      :

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
        HONORABLE P. KEVIN BROBSON, Judge
        HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE BROBSON                            FILED: September 30, 2015

            Prescription Partners, LLC (Prescription Partners) filed a petition for
review of an order of a Bureau of Workers’ Compensation (Bureau) Fee Review
Hearing Officer (Hearing Officer), denying and dismissing Prescription Partners’
request for a hearing. For the reasons discussed below, we vacate the order and
remand for proceedings consistent with this opinion.
            The facts of this case are not in dispute. Carol Stotka (Claimant), an
employee of St. Paul Surety (Employer), suffered a work-related injury on
September 27, 1990. Claimant receives treatment for her injury, a chronic pain
condition, from Dr. Michael Toshok (Provider). As part of Claimant’s treatment,
Provider dispensed two prescription medications1 out of his office.                    Provider
obtained these medications from an unknown vendor who, prior to giving them to
Provider, had repackaged the medications. Because the vendor repackaged the
medications, each medication had two packaging or NDC codes: one from the
manufacturer (original manufacturer NDC code or OMNDC code) and a
repackaged NDC code.
              Provider did not bill Employer directly for the medications dispensed
to Claimant but instead assigned the claim to Prescription Partners. Prescription
Partners then billed Employer, a self-insured entity, and its third-party
administrator, Healthsmart Casualty Claims Solutions (Healthsmart), a total of
$1,177.16 for the two medications. Prescription Partners arrived at this total by
calculating 110% of the average wholesale price (AWP)2 of each medication based
upon the repackaged NDC code.                 After reviewing the claim, Healthsmart
reimbursed Prescription Partners for $1,018.94, an amount equal to 110% of the
AWP of each medication based upon the OMNDC code.
              After receiving the partial payment from Healthsmart, Prescription
Partners filed an application for fee review with the Bureau.                   The Bureau’s
Medical Fee Review Section determined that Prescription Partners was not entitled
to any additional compensation from Healthsmart because Prescription Partners, as

       1
       The prescription medications dispensed by Provider to Claimant are Cyclobenzaprine
HCL and Lidoderm Patches.
       2
         The workers’ compensation regulations provide that “[w]hen a prescription is filled at a
physician’s office, payment for the prescription drug shall be limited to 110% of the average
wholesale price of the product.” 34 Pa. Code § 127.135(a).

                                               2
a third party, was not entitled to reimbursement. Prescription Partners then filed a
request for a fee review hearing to contest the adverse determination.
              At a hearing held July 17, 2014, Healthsmart presented the testimony
of Mr. William Jobes. Mr. Jobes testified that Healthsmart uses the “original NDC
number” when paying claims. (Reproduced Record (R.R.) 29a.) When asked on
cross-examination to identify the regulation that required the OMNDC code be
used, Mr. Jobes was unable to do so. (R.R. 30a.)
              Wendy Caldera, the manager of Prescription Partners’ billing
department, testified that Prescription Partners uses the Thompson Reuters Red
Book (Red Book), the schedule of AWPs used in Pennsylvania, to determine 110%
of the AWP for any medications dispensed by Provider. (R.R. 34a.) She also
testified that she was unaware of any regulation which required the OMNDC code
to be used to determine the AWP.         (R.R. 34a.)    During cross-examination,
Ms. Caldera testified that Prescription Partners acts only as a “billing service.”
(R.R. 35a.)    She further testified that Prescription Partners did not provide
prescription medication or healthcare services, but, instead, it purchased the claim
from the Provider. (R.R. 35-36a.)
              In his decision, the Hearing Officer noted that there were only two
issues, both of them questions of law: (1) whether Prescription Partners, as an
assignee of Provider, had standing to file the fee review application, and
(2) whether the proper amount for reimbursement for a repackaged drug is based
upon the OMNDC code or the repackaged NDC code. (R.R. 6a.) As to the first
issue, the Hearing Officer found that “Prescription Partners is not a provider of
healthcare services. It is, instead, an assignee of the provider.” (R.R. 9a.) The

                                         3
Hearing Officer then concluded that as an assignee, Prescription Partners had no
standing to request the fee review:
                The party requesting review, Prescription Partners, has
                failed to meet the burden of proof required to
                demonstrate that it is a proper party. Prescription
                Partners has failed to meet the burden of proof required
                to establish that it was a party competent either to file an
                original Application for Fee Review or a Request for de
                novo appeal therefrom. The applicable provision of the
                law, and its corresponding regulation, grant only to
                providers, not assignees, the right to file an Application
                for a Fee Review. Section 306(5) of the [Workers’
                Compensation] Act (Act), [Act of June 2, 1915, P.L. 736,
                as amended,] 77 P.S. § 531(5).[3]
                A provider, also known as healthcare provider, is defined
                in the regulations as follows: “A person, corporation,
                facility or institution licensed, or otherwise authorized,
                by the Commonwealth, to provide healthcare services,
                including physicians . . ., pharmacists, and officers,
                employees or agents of the person acting in the course
                and scope of employment or agency related to healthcare
                services.”[4]
                No mention is made in this definition of an assignee.
                It is specifically concluded as a matter of law, in this
                regard, that an assignee is not an agent of the healthcare
                provider in the present case. An agent is an individual or
                entity that acts on behalf of a provider or other party.
                An assignee is a claim holder in its own right.

       3
         Section 306(5) of the Act provides, in pertinent part: “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 . . . .” The corresponding regulation likewise provides: “A provider who has
submitted the required bills and reports to an insurer and who disputes the amount or timeliness
of the payment made by an insurer, shall have standing to seek review of the fee dispute by the
Bureau.” 34 Pa. Code § 127.251.
       4
           34 Pa. Code § 127.3.

                                               4
             Prescription Partners has no standing in this forum.
(R.R. 9-10a (second to last alteration in original).) The Hearing Officer also
concluded that any assignment of Provider’s claim to Prescription Partners was in
violation of Section 318 of the Act, Act of June 2, 1915, P.L. 736, as amended,
77 P.S. § 621. Section 318 of the Act provides, in pertinent part, that “[c]laims for
payments due . . . shall not be assignable.”
             As to the second issue, the Hearing Officer found that
             in billing [Employer/Healthsmart] the amount of
             $1,177.16, Prescription Partners was, indeed, using a
             repackaged drug NDC code, deriving the [AWP] of
             same, and then adding 10%. It is similarly found . . . that
             the amount paid by [Employer] was indeed $1,018.94. It
             is found as fact . . . that this was a correct amount when
             applying the original manufacturer NDC codes and the
             amounts derived with regard thereto from the Red Book
             for such original manufacturer packaging.
(R.R. 9a.) The Hearing Officer then concluded that Healthsmart was only liable
for “the original manufacturer average wholesale price, and not for the amount
corresponding to the repackaged number.”        (R.R. 10a.)    The Hearing Officer
explained that the OMNDC code was the correct NDC code to use because “the
law makes no provision for liability for reimbursement for repackaged drugs at a
higher rate than that of the original manufacturer.” (R.R. 10a.) He also noted that
the purpose of the regulations was to curtail escalating medical costs, and allowing
the use of a repackaged NDC code which corresponded to a higher AWP would go
against that purpose. (R.R. 10-11a.)

                                          5
               On appeal to this Court,5 Prescription Partners argues that the Hearing
Officer erred in considering whether Prescription Partners had standing to file a fee
review application and whether the assignment of Provider’s claim to Prescription
Partners violated the Act, because those issues exceeded the scope of the Hearing
Officer’s jurisdiction.6 Prescription Partners also argues that the Hearing Officer
erred in addressing the merits of the fee dispute given that Prescription Partners’
standing was in question.7
               This Court has explained that a “fee review is designed to be a ‘simple
process’ with a ‘very narrow scope’ limited to determining the ‘relatively simple
matters’ of ‘amount or timeliness’ of payment for medical treatment.” Selective
Ins. Co. of Am. v. Bureau of Workers’ Comp. Fee Review Hearing Office (The
Physical Therapy Inst.), 86 A.3d 300, 303-04 (Pa. Cmwlth.) (Selective Insurance)
(quoting Crozer Chester Med. Ctr. v. Dep’t of Labor & Indus., Bureau of Workers’
Comp., Health Care Servs. Review Div., 22 A.3d 189, 196-97 (Pa. 2011)), appeal
denied, 96 A.3d 1030 (Pa. 2014). Accordingly, this Court has held that “the
Bureau lacks jurisdiction to determine whether an entity is a ‘provider’ of medical

       5
          This Court’s review of a decision by a Bureau fee review hearing officer is limited to
determining whether the necessary findings of fact are supported by substantial evidence,
whether constitutional rights were violated, and whether the hearing officer committed an error
of law. Physical Therapy Inst., Inc. v. Bureau of Workers’ Comp. Fee Review Hearing Office
(Selective Ins. Co. of SC), 108 A.3d 957, 959 n.3 (Pa. Cmwlth. 2015).
       6
          Prescription Partners also makes arguments in the alternative as to the merits of these
issues. Because we agree that these issues exceeded the scope of the Hearing Officer’s
jurisdiction, we need not address these arguments.
       7
         Prescription Partners also argues that the Hearing Officer incorrectly interpreted the Act
and erred in concluding that only an original manufacturer NDC code could be used. Because
we agree that the Hearing Officer should not have addressed this issue at this time, we need not
address this argument.

                                                6
services, or simply a billing agency. This is a question of liability, which is
beyond the scope of a fee review and must be decided by a workers’ compensation
judge.” Physical Therapy Inst., Inc. v. Bureau of Workers’ Comp. Fee Review
Hearing Office (Selective Ins. Co. of SC), 108 A.3d 957, 959 (Pa. Cmwlth. 2015)
(PTI) (citing Selective Insurance, 86 A.3d at 304-05). In this case, Prescription
Partners’ standing was challenged on the basis that it was not a provider under the
Act but was, instead, merely a billing agency. Under Selective Insurance and PTI,
this is a question of liability to be decided by a workers’ compensation judge
(WCJ). Thus, we agree with Prescription Partners that the issue of Prescription
Partners’ standing was outside the scope of the fee review process and that the
Hearing Officer erred in considering this issue.
             Likewise, the legality of Provider’s assignment to Prescription
Partners falls well outside the “very narrow scope” of a fee review, as it is not at all
related to the amount or timeliness of the payment.          See Selective Insurance,
86 A.3d at 303. The Hearing Officer, therefore, exceeded his jurisdiction in
addressing this issue.
              What is clearly within the jurisdiction of the Hearing Officer, on the
other hand, are the merits of the fee dispute—i.e., which NDC code should be
used.   See id. at 304 n.6 (noting that “disputed billing codes” are a “classic
example” of a dispute encompassed by the fee review process).              This Court,
however, has stated that “[l]iability must be established before a fee review
proceeding can take place. . . . [T]he fee review process assumes that the person
seeking a fee review has been established as a valid medical provider.”
Id. at 304-05.   We, therefore, also agree that the Hearing Officer erred in

                                           7
addressing the merits of the fee dispute before the issue of Prescription Partners’
standing was resolved by a WCJ.
             Accordingly, we vacate the Hearing Officer’s order and remand the
case to the Bureau to either be dismissed without prejudice or stayed until the issue
of Prescription Partners’ standing is decided by a WCJ.

                                P. KEVIN BROBSON, Judge

                                         8
           IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Prescription Partners, LLC,              :
                         Petitioner      :
                                         :
            v.                           :   No. 2108 C.D. 2014
                                         :
Bureau of Workers’ Compensation          :
Fee Review Hearing Office                :
(Healthsmart Casualty Claims             :
Solutions),                              :
                        Respondent       :

                                      ORDER

            AND NOW, this 30th day of September, 2015, the order of the
Bureau of Workers’ Compensation (Bureau) Fee Review Hearing Office is hereby
vacated, and the matter is remanded to the Bureau with further direction to either
stay the matter or dismiss the case without prejudice in accordance with this
opinion.
            Jurisdiction relinquished.

                               P. KEVIN BROBSON, Judge
        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Prescription Partners, LLC,              :
                         Petitioner      :
                                         :
             v.                          :   No. 2108 C.D. 2014
                                         :
Bureau of Workers’ Compensation          :   Submitted: July 17, 2015
Fee Review Hearing Office                :
(Healthsmart Casualty Claims             :
Solutions),                              :
                        Respondent       :

BEFORE:      HONORABLE RENÉE COHN JUBELIRER, Judge
             HONORABLE P. KEVIN BROBSON, Judge
             HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION NOT REPORTED

CONCURRING OPINION
BY JUDGE COHN JUBELIRER                              FILED: September 30, 2015

      For the reasons set forth in the concurring opinion in Prescription Partners,
LLC v. Bureau of Workers’ Compensation Fee Review Hearing Office
(Healthsmart Casualty Claims Solutions) (Pa. Cmwlth., No. 2107 C.D. 2014, filed
September 30, 2015), I respectfully concur in the result.

                                         _______________________________
                                         RENÉE COHN JUBELIRER, Judge