In Armour Pharmacy v. Bureau of Workers’Compensation Fee Review Hearing Office (National Fire Insurance Company), the Commonwealth Court held that the parties to a C&R Agreement can bindonly each other and cannot release themselves from liability to a person who is not a party to the C&R Agreement, who has not been given notice or theopportunity to be heard on the C&R Agreement.
In ArmourPharmacy, the claimant sustained a low back injury in1999. With the indemnity portion of the claim resolved via C&RAgreement, in 2015 the employer requested utilization review of a topicalcompound cream prescribed to treat claimant’s work-related injury. Theutilization reviewer determined that the compound cream was reasonable andnecessary treatment for the claimant’s accepted work-related low backinjury. In 2016, the employer refused to pay for the compound cream“based on utilization review.” The pharmacy filed a timely fee reviewapplication. The fee review section of the Bureau determined that theemployer owed $6,644.30 to the pharmacy. The employer requested a hearingto contest the fee review determination, at which time it presented a copy ofthe C&R Agreement approved by a WCJ three months after the fee reviewhearing section of the Bureau directed the employer to pay the pharmacy. The C&R Agreement included aprovision that the employer would not be responsible for payment of thecompound pain cream. The pharmacy was not a party to theC&R proceedings or privy to the settlement negotiations.
In its rationale for the above holding, the Commonwealth Court initially determined that reasonable and necessary treatment for the claimant’s work-related injurydid include the compound pain cream because the utilization review specificallydetermined that the compound pain cream was reasonable and necessary prior tothe date of the C&R Agreement hearing. The Court then went on todetermine that the parties to the C&R Agreement could not avoid payment forthe “property rights” of Armour Pharmacy without affording the pharmacy dueprocess of the law.Ultimately the Court remanded the matter to the feereview hearing office to consider the award of payment and interest in the feereview proceeding.