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This profession is full of surprises. One came my way from a recent decision of the Commonwealth Court in Enterprise Rent-A-Car v. WCAB (Clabaugh), filed Sept. 27. This decision dealt with the recurring question of whether an employer or insurer who makes timely payments to a provider can face penalties from a claimant where the amount paid was less than what the provider expected for his/her services, even in the face of Bureau of Workers’ Compensation regulations providing for fee disputes. In Enterprise Rent-A-Car, the claimant suffered severe work-related injuries that left him a quadriplegic. The claimant filed a utilization review (UR) request seeking a prospective determination on the reasonableness and necessity of home modifications to accommodate his quadriplegia. After examining numerous medical records, a floor plan and a specifications sheet from a building contractor, the Utilization Review Organization (URO) determined that the proposed home modifications were reasonable. The employer did not appeal the UR determination. The claimant subsequently filed a penalty petition alleging that the employer violated the Workers’ Compensation Act by failing to make timely payments for home accommodations deemed reasonable by the UR determination. Testimony was taken from the building contractor, who stated that while the original estimate for home remodeling was $108,226, delays and increased construction costs caused overruns that raised the final cost of home remodeling to $200,626.71. Although the contractor expected an insurance reimbursement of $160,501.31, representing 80 percent of the actual cost for “orthopedic appliances,” the insurer paid the contractor a total of $114,149.67, leaving a shortfall of $46,891.20. The WCJ found that the employer was liable for 80 percent of the claimant’s cost for home modifications based upon the unappealed UR determination. The WCJ also opined that because it was foreseeable for the employer to expect cost overruns, the employer violated the act by failing to file a retrospective UR request for the additional costs or alternatively pay 80 percent of the outstanding balance when due within 30 days. The WCJ, therefore, assessed a 10 percent penalty. The appeal board affirmed, but the Commonwealth Court reversed. The court held that while the employer was responsible for the cost of remodeling the claimant’s home and that payments were required within 30 days of receiving the invoice, once the insurer made payment to the extent it deemed itself liable, the provider’s sole remedy was to file an application for fee review within the timeframes permitted under Section 306(f.1)(5) if dissatisfied with the reimbursement. In rendering this opinion, the court relied upon a recent decision in Hospital of the University of Pennsylvania v. Bureau of Workers’ Compensation (Tyson Shared Service Inc.), filed on Aug. 23. In the HUP case, a worker was admitted to the hospital’s trauma center for injuries sustained in a car accident. HUP submitted a UB92 and medical records to Tyson Shared Services for payment. Tyson promptly processed the bill and paid HUP within 30 days from the date it received the provider’s documentation. HUP was dissatisfied with the payment and notified Tyson that as a Level I Trauma Center they were entitled to 100 percent of the usual and customary charges. Tyson made an additional payment, but HUP remained dissatisfied with the payment amount. Fifteen months later, HUP filed an application for fee review. Tyson challenged the application, asserting that it was time-barred under Section 306(f.1)(5) of the PAWCA. The bureau denied the application and the hospital requested a de novo hearing. During the de novo proceeding, HUP argued that its original bill to Tyson was incomplete, as no LIBC-9 form was attached to either the UB92 or supporting medical records. HUP argued that because the employer had no obligation to pay for medical treatment until there was a “complete” bill, its application for fee review was filed in a timely manner. Tyson responded that while HUP was technically correct that the employer was under no obligation to reimburse the provider until there was a complete bill consisting of a UB92, supporting medical records and an LIBC-9 form, if the employer elected to make payment, HUP’s only recourse was to file an application for fee review within 90 days from the original billing date (date of the UB92) or 30 days from notice of disputed treatment (payment), whichever occurred later. The bureau hearing officer ruled that the application was time-barred, which was affirmed by Commonwealth Court. The court held that once an insurer makes payment to the extent it deems itself liable, the provider’s sole remedy is to file an application for fee review within the time limits proscribed under Section 306(f.1)(5), or waive its right to challenge the employer’s payment. By applying its holding in the HUP case to the matter of overrunning construction costs by the contractor, the court determined that the insurer had made payment for the cost of remodeling the claimant’s home based upon the original estimate. In fact, the court determined that the insured paid more than the actual cost of the original estimate and more than five times what it was obliged to pay under Section 306(f.1)(3)(i) of the PAWCA. The court held further that because the contractor never sought a fee review, it waived its right to any additional reimbursement due to cost overruns. The court, therefore, determined that the claimant’s filing of a penalty petition to recover the cost overruns was an attempt to confer jurisdiction of a fee dispute on the WCJ where the WCJ lacked such jurisdiction. The court likewise held that once the insurer made payment on the remodeling costs to the claimant’s home, there was no further obligation by the employer or its insurer to file for retroactive utilization review. The court held that UR requests shall only decide the reasonableness or necessity of the treatment under review and not the reasonableness of the fees charged by a provider. Accordingly, even though the employer elected not to appeal the UR determination that the remodeling of the claimant’s home reasonable, the determination had no effect upon the amount of reimbursement. The court, therefore, reversed the assessment of penalty. I argued the case for Tyson Shared Services Inc. against HUP’s application for fee review. While that case was limited to whether HUP’s application was time barred under the PAWCA, I had no idea at the time that it would lead to the court’s decision in Enterprise Rent-A-Car and eliminate penalty petitions filed by claimants for alleged underpayments of medical bills by insurers. This decision, therefore, has significance for employers, insurers and, in an indirect way, injured workers in the sense that it serves as a tool for holding down escalating costs of medical care and discourages penalty petitions for disagreements between insurers and providers over what is a reasonable amount of reimbursement. Accordingly, employers or insurers who make good faith (and I emphasize good faith) payments promptly to medical providers to the extent they deem themselves liable for those payments are protected from potential penalties in a fee dispute, and are not required to incur additional costs by filing prospective or retroactive requests for UR Reviews. Claimants are protected because medical providers cannot as a matter of law seek reimbursement from injured workers for disputes over the payment amount. As for construction costs, this case also protects employers and injured workers from cost overruns caused by contractors who tarry on making desperately needed modifications to an injured worker’s home while at the same time expecting to be rewarded for their tardiness by receiving additional compensation. Anyone who has had to deal with contractors in making home repairs can appreciate my point on this matter. Accordingly, if contractors or medical providers believe they are be entitled to more money, let them face the scrutiny of the bureau’s fee review section, whose charter is to assure that medical costs are fairly processed, paid and reviewed in a prompt manner consistent with legislative intent. What occurs when an insurer is an aggrieved party to a determination for additional payment of a medical service by the fee review section remains to be seen, but that’s for another day. Daniel V. DiLorettopractices in the workers’ compensation law practice area with Harvey Pennington in Philadelphia. He has developed extensive experience in the defense of workers’ compensation litigation, as well as related employment issues such as the Americans with Disabilities Act, and the Family and Medical Leave Act. He can be contacted at [email protected].

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