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Employers May Face Liability on Outstanding Medical Bills Even After a Compromise and Release Agreement

Pennsylvania
August 6, 2020
August 6, 2020
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Numerous decisions have been issued in recent years by the Pennsylvania Commonwealth Court that impact the liability of employers to pay medical bills/expenses.  For example, in Armour Pharmacy v. Bureau of Workers’ Compensation Fee Review Hearing Office (National Fire Insurance Company of Hartford), 192 A.3d 304 (Pa. Cmwlth. 2018 (also known as Armour I), the Commonwealth Court held that an employer cannot curtail its liability to pay a provider for medical bills through language in a C&R Agreement when the provider is not a party to the agreement and has not been given notice or an opportunity to be heard on the issue.  

Additionally, in Workers First Pharmacy Services, LLC v. Bureau of Workers’ Compensation Fee Review Hearing Office (Cincinnati Insurance Company), 216 A.3d 544 (Pa. Cmwlth. 2019), the Commonwealth Court held that an employer accepts liability for medical treatment pursuant to a C&R Agreement when it releases the claimant from any obligation to pay for that treatment.

More recently, in Workers’ First Pharmacy Services, LLC v. Bureau of Workers’ Compensation Fee Review Hearing Office (Gallagher Bassett Services), 225 A.3d 613 (Pa. Cmwlth. 2020), the Commonwealth Court found that an employer could not contest liability to pay for compound pain creams, on the basis that the treatment was not consistent with the claimant’s accepted injury/diagnosis, without filing a Utilization Review.

Applying the three above cases, the Commonwealth Court issued yet another decision that opens an employer up to further exposure/liability relative to medical bills following a C&R Agreement.  Specifically, in Bond Medical Services v. Bureau of Workers’ Compensation Fee Review Office (Travelers Casualty Insurance Company of America), bills were partially denied and partially paid, relative to durable medical equipment that was prescribed by a chiropractor.  Thereafter, on September 6, 2018, the Medical Fee Review Section determined that no monies were owed to the provider on the basis that a valid prescription or certificate for medical necessity was not submitted by the provider and that the prescription of durable medical equipment was not within the scope of chiropractic practice.  The provider then requested a hearing to contest the Fee Review Determination and it was assigned to a Fee Review Officer who identified jurisdictional issues and issued a decision/order finding that there was no jurisdiction to determine whether the employer was liable for the payment of durable medical equipment prescribed by a chiropractor.

A Petition for Review was then filed and, on appeal, the provider argued that the Fee Review Officer erred in sua sponte deciding that there was no jurisdiction and that it was deprived of due process of law because it did not have an opportunity for review of the denial.

Meanwhile, months after the initial partial denial/partial payment of the bills in question, on April 10, 2019, the claimant and employer entered into a C&R Agreement to resolve the workers’ compensation matter.  In the C&R Agreement, it was noted that the employer was “responsible for any and all reasonable and necessary medical bills for the work-related injury” up to the date that the C&R was approved.  

Citing the three cases set forth above, the court held that the liability to pay for claimant’s medical bills was established in the C&R Agreement where it noted that the employer was obligated to pay for “reasonable and necessary medical bills for the work-related injury up to the date of this Agreement.”  Therefore, the court held that, if the employer questioned liability regarding the durable medical equipment prescribed by the chiropractor, it should have filed a Utilization Review within 30 days of the provider’s invoice.  

From a practical standpoint, prior to entering into a C&R Agreement, it is important for an employer to research and identify all outstanding medical bills and determine the basis for the denial of the payment.  It is also important to include the providers in any agreements that involve a reduced/partial payment to that provider, including an affidavit from that provider, as an addendum to the C&R Agreement, stating that they are agreeable to the terms noted in the agreement.  Furthermore, it is important to utilize the Utilization Review process as early as possible so that the full exposure of any outstanding medical bills can be assessed.