192 A.3d 304
Pa. Commw. Ct.2018Background
- Claimant injured at work in 1999; Employer covered medicals and previously entered a 2000 C&R that left medicals open.
- In 2015 a utilization review (UR) approved a compounded topical cream prescribed by Dr. Bundy as reasonable and necessary; Employer did not appeal that UR.
- Pharmacy dispensed the same compound in April 2016; Employer refused payment and Pharmacy timely filed for fee review. The Bureau awarded Pharmacy $6,644.30 plus interest on July 25, 2016.
- Employer then submitted a Compromise & Release (C&R) executed in October 2016 (approved after the fee determination) that purported to relieve Employer of liability for any compounded creams, alleging Dr. Bundy had a financial interest in Pharmacy. Pharmacy was not a party to that C&R and received no notice of it.
- The Hearing Office vacated the fee-review award, concluding the C&R eliminated Employer’s liability; Pharmacy appealed to this Court arguing the C&R cannot override fee-review procedures and that depriving Pharmacy of payment without notice violated due process.
Issues
| Issue | Plaintiff's Argument (Pharmacy) | Defendant's Argument (Employer/Insurer) | Held |
|---|---|---|---|
| Whether a post-award C&R to which a provider is not a party can nullify a prior Medical Fee Review determination | C&R cannot be used to subvert statutory fee-review procedures; Pharmacy has a vested right to payment and was denied notice/opportunity to be heard | Section 449(a) permits parties to compromise and release liability; the C&R thus extinguishes Employer’s obligation | C&R cannot extinguish a non-party provider’s statutory fee-review rights; the Hearing Office’s order vacating the award was vacated and case remanded for merits review |
| Whether Employer lawfully suspended payment to Pharmacy without initiating UR for the 2016 bill | Pharmacy: Employer failed to file a new UR for the 2016 dispensing and thus unlawfully withheld payment | Employer: relied on prior UR and later C&R to justify nonpayment | Employer did not follow UR/notice rules for suspending payment of the 2016 bill; refusal to pay violated the Act and regulations |
| Whether deprivation of Pharmacy’s fee-review award without notice violated due process | Pharmacy: deprivation of property (payment) requires notice and opportunity to be heard; C&R deprived it without either | Employer: C&R was authorized by statute and approved by WCJ; Hearing Office lacks authority to address C&R validity | Court: Due process prevents using a C&R (to which the provider is not party) to deprive provider of statutory rights; provider must have notice and opportunity to contest |
| Whether questions about alleged physician self-referral could justify vacating the fee award via C&R | Pharmacy: Alleged self-referral was unproven and cannot justify extinguishing provider’s rights without adjudication | Employer: C&R reflected a belief Dr. Bundy had a financial interest in Pharmacy, thus excluding liability | Court: There was no legal determination of self-referral; the parties’ unproven belief in the C&R is insufficient to override UR/fee-review protections |
Key Cases Cited
- Nickel v. Workers' Compensation Appeal Board (Agway Agronomy), 959 A.2d 498 (Pa. Cmwlth. 2008) (fee review presupposes liability; fee officers cannot decide liability)
- Inglis House v. Workmen's Compensation Appeal Board (Reedy), 634 A.2d 592 (Pa. 1993) (liability and scope of injury litigated in claim/claim petition proceedings)
- In re Upset Sale, 479 A.2d 940 (Pa. 1984) (due process requires notice and opportunity to be heard before depriving property rights)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (notice must reasonably apprise interested parties and afford opportunity to be heard)
- Baksalary v. Smith, 579 F. Supp. 218 (E.D. Pa. 1984) (automatic suspension of benefits without hearing can violate due process)
- Gingerich v. Workers' Compensation Appeal Board (U.S. Filter), 825 A.2d 788 (Pa. Cmwlth. 2003) (parties to a C&R cannot extinguish rights of a nonparty who is the holder of the claim)