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Denying Medical Bills: New Guidance From the Courts or More Confusion?

November 22, 2022
November 22, 2022

Fee review is a small but growing area of workers’ compensation law. Providers and insurers are given a separate arena to address disputes over the amount and timeliness of medical bills. In recent years, the Pennsylvania appellate courts have issued a number of decisions that, when taken together, expanded rights of providers in the fee review process while yielding some confusing results.

In Workers’ First Pharm. Servs., LLC v. BWC Fee Review Hearing Office, the Commonwealth Court [1] addressed a novel argument raised by providers. A full analysis of this case can be seen here, but in a nutshell, the case grappled with how and when an insurer can deny medical bills.

In Workers’ First, there was an accepted injury to the right shoulder. The claimant received a prescription for a topical cream, and the bill from the pharmacy was submitted to the carrier for payment. Notably, the billing submission did not contain any records showing that the medication was related to the work injury. As a result, the carrier denied same. The provider sought recourse through the fee review setting.

In a surprising decision, the Commonwealth Court held that because there was an accepted injury, the carrier was obligated to request utilization review of the treatment before it could deny payment of the bill. This was quite a shock for workers’ compensation practitioners. Putting aside the expense and logistics implicated by this ruling, the decision directly contradicts longstanding statute and precedent.

The Workers’ Compensation regulations explicitly state that the utilization review process “may not” address the causal relationship between medical treatment and the work injury.[2] Moreover, there is longstanding precedent by Pennsylvania courts upholding this restriction on the utilization review process. [3] The Workers’ First Court attempted to square this circle by holding that questions of causation can, in fact, be addressed in the utilization review process because if treatment is unrelated… “a fortiori it is not reasonable or necessary for the accepted wok injury.” Id., at 621. [4]

This left carriers in a difficult position. Based upon Workers’ First, many carriers wondered if they must request utilization review for all treatment before denying medical bills. This process is expensive and time-consuming. Carriers receive thousands of medical bills every single day; it is simply not practical to examine every bill through the utilization review process.  

In a recent decision, the Commonwealth Court seems to have addressed these concerns. Unfortunately, questions remain.

In Skay v. Borjeson & Maizel LLC (WCAB) [5], the court looked at a situation similar to that of the Workers’ First case. Here, the claimant had an accepted work injury. Prior utilization reviews from 2015 and 2017 were conducted and found certain medications reasonable and necessary. Years later, the carrier denied payment for those same medications on the basis that the treatment was unrelated to the work injury. In the ensuing Penalty Petition, the carrier argued that there was no evidence demonstrating that the medications were related to the work injury. Claimant, for reasons unknown, did not submit any medical evidence to address causation. Rather, she relied exclusively on the prior utilization reviews and argued that the treatment was already determined to be reasonable and necessary, and as such, the carrier was liable for same.

On appeal, the Commonwealth Court rejected this argument. The court noted that the claimant bears the burden in a Penalty Petition. Moreover, the court cited pre-Workers’ First­ case law to hold that the utilization review process does not “establish a causal connection between a medical condition and a claimant’s work injury.” [6] The court also cited the relevant statute, noting that utilization review determinations do not decide the causal relationship between the treatments at issue and the work injury. [7] Because the claimant failed to present any medical evidence to establish causation, the carrier was not liable for the treatment and the Penalty Petition was denied.

At first blush, this case seems to rectify the confusion in Workers’ First. The law on causation and utilization review has returned to its pre-Workers’ First status quo. Unfortunately, the Skay decision does not mention the Workers’ First case nor reference the ‘a fortiori’ argument it established. As a result, the court has arguably created two different standards for denying medical bills: one for the fee review setting, where a prior utilization review is required, and another for traditional workers’ compensation litigation, where it is not. If there are two standards, then under Skay, an insurer can properly deny a bill as unrelated, succeed in litigation before a Workers’ Compensation Judge, but still be held liable for that payment if the provider then files a fee review application. This seems unreasonable.

It is this author’s opinion that the court did not intend to create two standards for processing medical bills. Rather, the most practical interpretation of Skay is the simplest one: utilization review does not address causation. Skay, whether intended or not, reduces the scope of the fee review process back to its original purpose, i.e., to address only the amount and timeliness of a medical bill without reliance upon utilization review. With all that said, further litigation on this issue is likely. Carriers, therefore, are advised to review their medical billing processes with counsel.

[1] 225A.3d 613 (Pa.Cmwlth. 2020).

[2] 34 Pa. Code.§ 127.406(b)(1).

[3] See, Hoffmaster v. WCAB (Senco Products, Inc.), 721 A.2sd 1152 (Pa.Cmwlth. 1998).

[4] This reasoning was subsequently upheld in a decision circulated a few months after Workers’First. See, Omni Pham. Servs. LLC v. BWC, Fee Review Hearing Office (Am. Interstate Ins. Co.), 241 A.3d 1273 (Pa.Cmwlth. 2020).

[5] 280 A.3d 19 (Pa.Cmwlth. 2022).

[6] See, 280 A.3d at 22; see also, Securitas Sec. Servs. USA, Inc. v. WCAB (Schuh), 16 A.3d 1221, 1224 (Pa.Cmwlth.2011).

[7] Id.; see also, 34 Pa. Code.§127.406(b)(1).