Court Opinion

ID: 4473775
Source: CourtListenerOpinion
Date Created: 2020-01-16 14:09:02.860258+00
Date Added: 2024-06-11T15:45:47.631876
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Workers’ First Pharmacy Services, LLC, :
                   Petitioner          :
                                       :
             v.                        :           No. 901 C.D. 2018
                                       :           Argued: November 12, 2019
Bureau of Workers’ Compensation Fee :
Review Hearing Office (Gallagher       :
Bassett Services),                     :
                   Respondent          :

BEFORE:         HONORABLE MARY HANNAH LEAVITT, President Judge
                HONORABLE CHRISTINE FIZZANO CANNON, Judge
                HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION
BY PRESIDENT JUDGE LEAVITT                                        FILED: January 16, 2020
                Workers’ First Pharmacy Services, LLC, (Pharmacy) petitions for
review of an adjudication of the Bureau of Workers’ Compensation (Bureau), Fee
Review Hearing Office (Hearing Office) that vacated a determination of the
Bureau’s Medical Fee Review Section. At issue is Pharmacy’s invoice for a
compound cream that it dispensed to Adriana Lozano (Claimant) for treatment of a
work injury, which Claimant’s employer, Bayada Home Health Care, Inc.
(Employer),1 refused to pay. When the Medical Fee Review Section ordered
Employer to pay Pharmacy’s invoice, Employer appealed. The Hearing Office held
that Pharmacy’s fee review petition was premature; vacated the determination of the
Medical Fee Review Section on Pharmacy’s petition; and dismissed Employer’s
appeal of the directive to pay Pharmacy’s invoice for the compound cream. Before
this Court, Pharmacy asserts that the Hearing Office erred and has left it without a
forum to challenge Employer’s refusal to reimburse it for the compound cream it

1
    Employer is insured by Gallagher Bassett Services/Arch Insurance Company.
dispensed to Claimant, and this deprives Pharmacy of due process. We vacate and
remand.
                                          Background
                 On December 18, 2016, Claimant sustained a shoulder injury while
working for Employer. Pursuant to the Workers’ Compensation Act,2 Employer
issued a medical-only Notice of Temporary Compensation Payable (NTCP),
accepting the work injury as a right shoulder strain. On June 16, 2017, Samuel
Grodofsky, M.D., prescribed Claimant a compound cream, i.e., Diclofenac 1.5%
Topical Solution, for application to the “affected area 2-4 times daily[.]”
Reproduced Record at 13a (R.R. __). On June 21, 2017, Pharmacy dispensed the
compound cream to Claimant and billed Employer $4,869.99. Employer denied
payment for the stated reason that the “diagnosis is inconsistent with the procedure.”
R.R. 11a.
                 On August 25, 2017, Pharmacy filed a fee review application.
Pharmacy submitted a “Health Insurance Claim Form” reporting Claimant’s address
and insurance information. R.R. 9a. It also documented that Claimant received the
compound cream on June 21, 2017, and the cost was $4,869.99. Additionally,
Pharmacy submitted a copy of Dr. Grodofsky’s prescription for the compound
cream.
                 In the meantime, Claimant and Employer pursued litigation related to
Claimant’s work injury. On May 23, 2017, Claimant filed a penalty petition,
alleging that Employer had violated the Act by unilaterally stopping Claimant’s
benefits as of January 4, 2017. On June 30, 2017, Employer filed a termination
petition, alleging that Claimant had fully recovered from her work injury. On July

2
    Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1-1041.4, 2501-2710.
                                                2
18, 2017, Claimant filed a review petition seeking to amend the description of her
injury in the NTCP to include an acromioclavicular joint separation and a clavicular
avulsion fracture. These petitions were assigned to a Workers’ Compensation Judge
(WCJ), who scheduled a hearing for August 23, 2017.
             At that scheduled hearing, the parties requested the WCJ to approve
their Compromise and Release (C & R) Agreement, by which Employer agreed to
pay Claimant $15,000 to resolve any future medical or wage loss claims and any
medical bills incurred prior to the date of the hearing that were related to the accepted
work injury, which the C & R Agreement described as a “right shoulder strain.”
R.R. 34a. The WCJ approved the C & R Agreement on August 25, 2017.
             On October 12, 2017, the Bureau’s Medical Fee Review Section acted
upon Pharmacy’s fee review petition that had been filed on August 25, 2017, the
same day the WCJ approved the C & R Agreement. The Medical Fee Review
Section held that Employer was obligated to reimburse Pharmacy $4,455 plus
interest from July 6, 2017. Employer requested a de novo hearing to contest the fee
determination, arguing that the compound cream dispensed by Pharmacy had never
been adjudicated as related to Claimant’s work injury and, thus, Pharmacy’s fee
review application was premature. Pharmacy responded that Employer should have
sought utilization review if it believed that the compound cream it dispensed was not
related to Claimant’s work injury. Dismissing Pharmacy’s fee review application
would leave it without a remedy and violate due process.
             The Hearing Office found that Employer denied payment because of
Employer’s “belief that the bill for the [compound cream] is not related to the work
injury.” Adjudication, 6/7/2018, at 4, Finding of Fact No. 13; R.R. 108a. The
Hearing Office cited Claimant’s testimony from the C & R hearing that it was her

                                           3
understanding that the C & R Agreement obligated Employer to pay only those
medical bills “related” to the work injury. Id., Finding of Fact No. 14(a); R.R. 108a.
However, there was no statement in the C & R Agreement that the compound cream
dispensed by Pharmacy related to Claimant’s work injury. Concluding that liability
for the compound cream had to be established either by Employer’s acceptance or a
determination by a WCJ, the Hearing Office determined that Pharmacy’s fee review
petition was premature.
              The Hearing Office vacated the Medical Fee Review Section’s fee
determination and dismissed Employer’s request for a hearing on the fee
determination.
                                            Issues
              Pharmacy has petitioned for this Court’s review. On appeal, it raises
two issues.3 First, it asserts that the Hearing Office erred in dismissing Employer’s
request for a de novo hearing on the merits of the Medical Fee Review Section’s
determination that Employer had to pay Pharmacy’s invoice. Pharmacy contends
that its fee petition was not premature in light of the fact that Employer did not
request utilization review of the treatment. Second, it argues that it violates due
process not to provide Pharmacy a mechanism for challenging Employer’s refusal
to reimburse it for compound cream it dispensed to Claimant.4

3
  Our review in medical fee review cases determines whether constitutional rights were violated,
whether an error of law was committed, or whether the necessary findings of fact were supported
by substantial evidence. Pittsburgh Mercy Health System v. Bureau of Workers’ Compensation,
Fee Review Hearing Office (U.S. Steel Corp.), 980 A.2d 181, 184 n.4 (Pa. Cmwlth. 2009).
Regarding questions of law, our scope of review is plenary and our standard of review is de novo.
Sedgwick Claims Management Services, Inc. v. Bureau of Workers’ Compensation, Fee Review
Hearing Office (Piszel and Bucks County Pain Center), 185 A.3d 429, 433 n.2 (Pa. Cmwlth. 2018).
4
  The Due Process Clause of the Fourteenth Amendment states as follows:
                                               4
               This Court directed the parties to file supplemental briefs to address
recent developments in the law with respect to the fee review process. The Court’s
order stated as follows:

               [T]he parties are directed to file supplemental briefs in the above-
               captioned matter addressing the applicability of Armour
               Pharmacy v. Bureau of Workers’ Compensation Fee Review
               Hearing Office (Wegmans Food Markets, Inc.), 206 A.3d 660
               (Pa. Cmwlth. 2019) [Armour Pharmacy II].

Order of Commonwealth Court, 6/14/2019.
               In its supplemental brief, Pharmacy argues that Armour Pharmacy II
established that the Hearing Office may address the threshold question of whether
the compound cream dispensed by Pharmacy was, in fact, related to the accepted
work injury. A contrary ruling would violate due process. Alternatively, Pharmacy
argues that Employer had to file a utilization review petition if it believed that the
compound cream Pharmacy dispensed to Claimant did not “relate to” the accepted
work injury.
                              Workers’ Compensation Act
               The Act requires employers to make prompt payment on provider
invoices for reasonable and necessary medical treatment of a claimant’s work injury,
and it establishes procedures for resolving disputes between a provider and an
employer about whether the treatment actually meets that standard. Specifically,
Section 301(f.1)(5) states:

      No State shall make or enforce any law which shall abridge the privileges or
      immunities of citizens of the United States; nor shall any State deprive any person
      of life, liberty, or property, without due process of law; nor deny to any person
      within its jurisdiction the equal protection of the laws.
U.S. CONST. amend. XIV, §1. The Pennsylvania Constitution also provides this protection. PA.
CONST. art. I, §9.
                                             5
             The employer or insurer shall make payment and providers shall
             submit bills and records in accordance with the provisions of this
             section. All payments to providers for treatment provided
             pursuant to this act shall be made within thirty (30) days of
             receipt of such bills and records unless the employer or insurer
             disputes the reasonableness or necessity of the treatment
             provided pursuant to paragraph (6). The nonpayment to
             providers within thirty (30) days for treatment for which a bill
             and records have been submitted shall only apply to that
             particular treatment or portion thereof in dispute; payment must
             be made timely for any treatment or portion thereof not in
             dispute. 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 no more than
             thirty (30) days following notification of a disputed treatment or
             ninety (90) days following the original billing date of treatment.
             If the insurer disputes the reasonableness and necessity of the
             treatment pursuant to paragraph (6), the period for filing an
             application for fee review shall be tolled as long as the insurer
             has the right to suspend payment to the provider pursuant to the
             provisions of this paragraph. Within thirty (30) days of the filing
             of such an application, the department shall render an
             administrative decision.

77 P.S. §531(5) (emphasis added). “Paragraph 6” states, in relevant part, as follows:

             [D]isputes as to reasonableness or necessity of treatment by a
             health care provider shall be resolved in accordance with the
             following provisions:
                   (i) The reasonableness or necessity of all treatment
                   provided by a health care provider under this act
                   may be subject to prospective, concurrent or
                   retrospective utilization review at the request of an
                   employe, employer or insurer. The department
                   shall authorize utilization review organizations to
                   perform utilization review under this act.
                   Utilization review of all treatment rendered by a
                   health care provider shall be performed by a
                   provider licensed in the same profession and having
                   the same or similar specialty as that of the provider
                   of the treatment under review.
                                          6
77 P.S. §531(6) (emphasis added).
              The Department of Labor and Industry’s (Department) cost
containment regulation states that utilization review does “not decide” the “causal
relationship between the treatment under review and the employe’s work-related
injury.” 34 Pa. Code §127.406(b)(1).5 The regulation also states that “[i]n medical
only cases, when an insurer is paying for an injured worker’s medical treatment” but
has not admitted liability for a work-related injury, “the insurer may still seek review
of the reasonableness or necessity of the treatment by filing a request for [utilization
review].” 34 Pa. Code §127.405(a).
              In sum, where an employer challenges a provider’s treatment as neither
reasonable nor necessary for a work injury, it must seek utilization review pursuant
to Section 301(f.1)(6) of the Act, 77 P.S. §531(6). Until the utilization review
determination is issued, the employer may “suspend payment to the provider.”

5
 The cost containment regulation states as follows:
       (a) UROs [Utilization Review Organizations] shall decide only the reasonableness
           or necessity of the treatment under review.
       (b) UROs may not decide any of the following issues:
               (1) The causal relationship between the treatment under review
               and the employe’s work-related injury.
               (2) Whether the employe is still disabled.
               (3) Whether “maximum medical improvement” has been
               obtained.
               (4) Whether the provider performed the treatment under review as
               a result of an unlawful self-referral.
               (5) The reasonableness of the fees charged by the provider.
               (6) The appropriateness of the diagnostic or procedural codes used
               by the provider for billing purposes.
               (7) Other issues which do not directly relate to the reasonableness
               or necessity of the treatment under review.
34 Pa. Code §127.406
                                              7
Section 301(f.1)(5), 77 P.S. §531(5). Where a provider does not receive payment
within 30 days (and payment has not been stayed by an employer’s utilization review
request), the provider may file a fee review petition pursuant to Section 301(f.1)(5)
of the Act, 77 P.S. §531(5).
             A fee review proceeding is not the mechanism for establishing that a
claimant has sustained a work-related injury or the scope of the work injury. As this
Court has explained:

             the fee review process presupposes that liability has been
             established, either by voluntary acceptance by the employer or a
             determination by a WCJ. Neither the Act nor the medical cost
             containment regulations provide any authority for a fee review
             officer to decide the issue of liability in a fee review proceeding.
             The Department’s regulations, at 34 Pa. Code §127.255(1), state
             that an application for fee review filed by a provider is premature
             and will be returned if “[t]he insurer denies liability for the
             alleged work injury.” The issue for the fee review officer is the
             “amount and timelines[s] of the payment made by an insurer.”
             34 Pa. Code §127.251.

Nickel v. Workers’ Compensation Appeal Board (Agway Agronomy), 959 A.2d 498,
503 (Pa. Cmwlth. 2008) (emphasis added).             Accordingly, the medical cost
containment regulation states that a fee review is premature in the following
instances:
             (1) The insurer denies liability for the alleged work injury.
             (2) The insurer has filed a request for utilization review of the
             treatment under Subchapter C (relating to medical treatment
             review).
             (3) The 30-day period allowed for payment has not yet elapsed,
             as computed under §127.208 (relating to time for payment of
             medical bills).

34 Pa. Code §127.255.

                                          8
             A dispute about whether a claimant has a work injury, or the scope of
that injury, must be litigated in accordance with the procedures of the Act for a claim
petition proceeding. See Inglis House v. Workmen’s Compensation Appeal Board
(Reedy), 634 A.2d 592, 595 (Pa. 1993) (“[I]n a claim proceeding, the employee bears
the burden of establishing a right to compensation and of proving all necessary
elements to support an award.”).
             In Armour Pharmacy I, 192 A.3d 304 (Pa. Cmwlth. 2018), a compound
cream prescribed to the claimant had previously been determined to be a reasonable
and necessary treatment of the claimant’s accepted work injury. When the employer
refused to reimburse the pharmacy for this compound cream, the Bureau’s Medical
Fee Review Section directed the employer to pay the repriced invoice with interest.
While the employer’s appeal was pending, the claimant and the employer entered
into a C & R agreement in which the employer accepted liability for past medical
expenses incurred, with the exception of the compound cream.             The C & R
agreement also stated that the claimant was excused from liability for the compound
cream. The Hearing Office held that the C & R agreement extinguished the
employer’s liability for the compound cream and, thus, vacated the fee determination
of the Medical Fee Review Section.
             On appeal, this Court vacated the adjudication of the Hearing Office
and remanded the matter for further proceedings. We held that “[a] C & R
[a]greement, to which a provider is not a party, cannot be used to deprive a provider
of the review procedures and excuse the employer from paying the provider.”
Armour Pharmacy I, 192 A.3d at 312. “To hold otherwise would eviscerate Section
301(f.1)(5) and (6) of the Act and violate the due process of law guaranteed to
providers.” Id. Further, the C & R agreement obligated the employer to pay past

                                          9
medical expenses, and the utilization review had found the compound cream at issue
to be reasonable and necessary for treatment of the claimant’s work injury. In short,
the C & R agreement made the employer liable for the prescription.
                In Armour Pharmacy II, 206 A.3d 660, the employer refused to
reimburse the pharmacy for the stated reason that the pharmacy was not a “health
care provider” as defined by the Act6 and, thus, not entitled to reimbursement.
Explaining that the fee review procedure is designed to determine the amount or
timeliness of payment for medical treatment, the Hearing Office concluded that
whether a pharmacy is a health care “provider” under the Act was beyond the scope
of a fee review proceeding. The Hearing Office dismissed the matter for lack of
jurisdiction.
                On appeal to this Court, the pharmacy argued it had been denied due
process of law because the Act provided no forum for the pharmacy to litigate the
question of whether the pharmacy was a health care provider within the meaning of
the Act. We agreed that it violated due process to leave the pharmacy without a
forum to litigate its provider status and held that the threshold question of whether
the pharmacy was a provider was a matter for the Hearing Office to determine.
                With these principles in mind, we turn to the instant appeal.

6
 Section 109 of the Act defines a “health care provider” as follows:
        [A]ny person, corporation, facility or institution licensed or otherwise authorized
        by the Commonwealth to provide health care services, including, but not limited
        to, any physician, coordinated care organization, hospital, health care facility,
        dentist, nurse, optometrist, podiatrist, physical therapist, psychologist, chiropractor
        or pharmacist and an officer, employe or agent of such person acting in the course
        and scope of employment or agency related to health care services.
77 P.S. §29 (emphasis added).
                                                 10
                                      Analysis
             Pharmacy argues that Employer waived its right to challenge the
compound cream as not related to the accepted work injury because it did not seek
utilization review of Pharmacy’s invoice. As such, Employer had the obligation to
pay the invoice within 30 days of its receipt. See 34 Pa. Code §127.255 (fee review
of non-payment of provider invoice is premature only where the employer denies
liability for the work injury; has requested utilization review; or 30 days has not yet
elapsed). Pharmacy contends that because Employer lacked grounds for not paying
the compound cream invoice in a timely manner, Pharmacy’s fee review application
was not premature.
             Employer responds that only a WCJ can determine whether a provider’s
treatment relates to a work injury or to another, non-work-related problem. Here,
the prescription instructed Claimant to apply the compound cream to the “affected
area 2-4 times daily” but did not identify the body part. R.R. 13a. Employer notes
that the cost containment regulation states that utilization review does not decide the
“causal relationship between the treatment under review and the employe’s work-
related injury.” 34 Pa. Code §127.406(b)(1). Employer further notes that the
Hearing Office found that Employer believed the “topical solution is not related to
the work injury.” Adjudication, 6/7/2018, Finding of Fact No. 13, at 4; R.R. 108a.
             In support of their respective positions, the parties both cite Crozer
Chester Medical Center v. Department of Labor and Industry, Bureau of Workers’
Compensation Health Care Services Review Division, 22 A.3d 189 (Pa. 2011). In
that case, the medical center filed a petition for review addressed to this Court’s
original jurisdiction to compel the Department to hold a hearing on its fee petition.
This Court dismissed Crozer’s request for a writ of mandamus, and Crozer appealed.

                                          11
The Department argued that there were practical considerations for a “regulatory
prohibition against litigating liability within the context of the fee review process.”
Id. at 193. The Supreme Court agreed. It concluded that because the employer
disputed liability, the medical center did not state a claim in mandamus.7 The
Supreme Court observed that the employer may “question liability for a particular
treatment” by filing a petition to modify the description of the work injury in the
notice of compensation payable (NCP) or by seeking a utilization review of the
“‘reasonableness or necessity’ of a treatment offered for an accepted work-related
injury.” Id. at 195.
               Here, liability for Claimant’s work injury has been established. As the
Supreme Court observed in Crozer, to question liability for the compound cream
treatment, Employer could have filed a modification petition to change the scope of
the accepted work injury or sought utilization review of the treatment. Employer
did neither.
               Had Employer sought utilization review, its 30-day deadline to pay
Pharmacy’s invoice would have been stayed. Claimant may be under treatment for
an array of medical problems, only some of which relate to the work injury. It is for
the Utilization Review Organization to sort this out.8 If the compound cream was
prescribed for a non-work-related injury of Claimant, a fortiori it is not reasonable

7
  The Supreme Court was split. Justice Baer, joined by Justices Todd and McCaffery, would have
permitted the petition for review to proceed and would have granted the writ of mandamus.
8
  Under the Bureau’s regulation, the Utilization Review Organization (URO) does not decide an
issue about the “causal relationship” between the treatment and the “employe’s work injury.” 34
Pa. Code §127.406(b)(1). On the other hand, the URO must decide the “reasonableness or
necessity of the treatment.” 34 Pa. Code §127.406(a). The regulation is ambiguous. The mandate
to determine “reasonableness or necessity” of the treatment cannot be sidestepped. That the
treatment may be reasonable for a non-work-related injury is beyond the scope of utilization
review, which may be the purpose of 34 Pa. Code §127.406(b)(1).
                                              12
or necessary for treatment of her accepted work injury. Employer’s stated reason
for denying Pharmacy’s invoice was that the “diagnosis is inconsistent with the
procedure.” R.R. 11a. This is just another way of stating that the compound cream
was not a reasonable or necessary “procedure” for treating Claimant’s “diagnosis,”
i.e., a shoulder sprain.
              An application for fee review is deemed premature in three
circumstances: (1) where the insurer denies liability for the alleged work injury; (2)
where the insurer has filed a request for utilization review; or (3) where the 30-day
period insurer is allowed for payment of a provider’s invoice has not yet elapsed. 34
Pa. Code §127.255. Here, the Hearing Office concluded that Pharmacy’s fee review
was premature because Employer denied that the compound cream was related to
Claimant’s accepted work injury. The Hearing Office erred because Employer’s
non-payment did not fit any of the exceptions to the rule that an employer must pay
an invoice within 30 days. See 34 Pa. Code §127.255. Employer did not file a
modification petition to revise Claimant’s accepted work injury and did not seek
utilization review. Employer expressly accepted liability for Claimant’s work injury
in the nature of a right shoulder strain both in the NTCP and in the C & R
Agreement.9
              Employer contends that the compound cream was not related to the
accepted work injury, i.e., a shoulder sprain. It argues that its liability for this
treatment must be established in a claim petition proceeding. We disagree. The
work injury has been accepted, and the sole question is whether the compound cream

9
  To be sure, Employer opposed Claimant’s effort to expand the description of the work injury to
include an acromioclavicular joint separation and a clavicular avulsion fracture.
                                              13
was reasonable and necessary for treatment of the accepted work injury. This is an
issue for utilization review.
              We hold that Employer was obligated to seek utilization review upon
receipt of Pharmacy’s invoice. Had Employer sought utilization review, the filing
of Pharmacy’s fee review petition would have been premature. 34 Pa. Code
§127.255.       Further, Employer’s liability to Pharmacy would have been
“suspend[ed]” pursuant to Section 301(f.1)(5) of the Act, 77 P.S. §531(5). The
Hearing Office erred in finding Pharmacy’s fee review petition premature because
Employer had accepted liability for Claimant’s work injury and had not sought
utilization review to challenge the compound cream as neither reasonable nor
necessary for treatment of Claimant’s work-related shoulder sprain.10
                                         Conclusion
              For all the above reasons, we vacate the determination of the Hearing
Office that Employer’s fee review petition was premature and remand to the Hearing
Office for a decision on the merits of the fee review determination.

                                        _____________________________________
                                        MARY HANNAH LEAVITT, President Judge

10
    Because we find that Pharmacy’s fee review petition was not premature, we need not consider
Pharmacy’s second issue, i.e., whether the Hearing Office’s dismissal of Employer’s appeal of the
fee determination violated Pharmacy’s right to due process in accordance with Armour Pharmacy
II.
                                               14
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Workers’ First Pharmacy Services, LLC, :
                   Petitioner          :
                                       :
             v.                        :   No. 901 C.D. 2018
                                       :
Bureau of Workers’ Compensation Fee :
Review Hearing Office (Gallagher       :
Bassett Services),                     :
                   Respondent          :

                                   ORDER

            AND NOW, this 16th day of January, 2020 the order of the Bureau of
Workers’ Compensation Fee Review Hearing Office, dated June 7, 2018, is hereby
VACATED and this matter is REMANDED for further proceedings in accordance
with the attached opinion.
            Jurisdiction relinquished.

                                  _____________________________________
                                  MARY HANNAH LEAVITT, President Judge