Derry Township Supervisors v. Workers' Compensation Appeal Board (Reed)
158 A.3d 194
| Pa. Commw. Ct. | 2017Background
- Claimant (Reed) received work-related physical therapy at a Latrobe facility where THE pt GROUP owned the space and employed staff, but PTI (The Physical Therapy Institute) billed for the services.
- PTI and the pt Group operated under a leasing/staffing/joint-venture arrangement: pt Group leased space and employees to PTI for PTI’s workers’ compensation patients; PTI submitted bills and was a Medicare Part A provider, pt Group was a Medicare Part B provider.
- Insurer (Selective) denied PTI’s bills (~$9,564.62), contending pt Group actually provided the services and thus bills should be paid at Part B/Medicare-based rates (and that PTI was not the provider).
- Claimant filed penalty and medical review petitions; a WCJ credited testimony that CMS and the Bureau knew of the joint-venture arrangement and that no authority had found it unlawful, and ordered payment, 50% penalty and counsel fees.
- The Workers’ Compensation Appeal Board affirmed; the Commonwealth Court likewise affirmed, holding Employer/Insurer lacked a reasonable basis to contest payment because it produced no evidence the arrangement or PTI’s billing was unlawful.
Issues
| Issue | Plaintiff's Argument (Reed) | Defendant's Argument (Derry Twp./Selective) | Held |
|---|---|---|---|
| Whether PTI is the proper provider authorized to bill for Claimant’s PT | PTI lawfully leased space/staff from pt Group under a disclosed joint-venture and is the proper billing/provider entity | pt Group actually provided the services (employees, therapists, billing slips) so pt Group — not PTI — is the provider; PTI’s billing avoids cost-containment rules | WCJ and court found PTI’s joint-venture/leasing arrangement lawful, credited evidence of disclosure to CMS/Bureau, and treated PTI as a proper provider eligible to bill |
| Whether Insurer’s denial constituted unreasonable contest for penalty under Section 435 | Claimant: denial was unreasonable because Employer had no evidence proving illegality or that PTI was not provider | Employer: complex facts and leasing arrangement gave a reasonable basis to deny payment | Court held Employer presented no evidence to refute PTI’s status; denial was unreasonable; 50% penalty proper |
| Whether Insurer’s contest was reasonable for purposes of awarding claimant attorney’s fees under Section 440 | Claimant: insurer had no reasonable basis; fees should be awarded | Employer: contest was reasonable given complexity and facts | Court held contest was unreasonable (no evidence of illegality or contrary proof); counsel fees awarded |
| Whether Board/WCJ erred as to credibility or legal standard on review | Claimant: credibility findings and legal conclusions proper | Employer: WCJ/Board failed to account for operation and evidence showing pt Group rendered care and billing mismatch | Court deferred to WCJ’s credibility findings and affirmed Board; no error shown |
Key Cases Cited
- Selective Ins. Co. of Am. v. Bureau of Workers’ Comp. Fee Review Hearing Off., 86 A.3d 300 (Pa. Cmwlth. 2014) (fee review section lacks jurisdiction to determine provider identity where issues implicate liability or fraud)
- Eidell v. Workmen’s Comp. Appeal Board (Dana Corp.), 624 A.2d 824 (Pa. Cmwlth. 1993) (Section 440 attorney’s-fee award deters unreasonable contests and requires a reasonable basis by insurer/employer to avoid fees)
- Yespelkis v. Workers’ Comp. Appeal Board (Pulmonology Associates, Inc.), 986 A.2d 194 (Pa. Cmwlth. 2009) (reasonableness of employer’s contest is a legal conclusion based on WCJ’s factual findings)