lon-f-gamble-v-twin-cities-concrete-products-and-gallagher-bassett ( 2014 )

STATE OF MINNESOTA
IN SUPREME COURT
A13-1409
Workers’ Compensation Court of Appeals Dietzen, J.
Concurring in part, dissenting in part, Page, J.
Lon F. Gamble,
Respondent,
vs. Filed: August 13, 2014
Office of Appellate Courts
Twin Cities Concrete Products and
Gallagher Bassett Services, Inc.,
Relators,
Lakeview Hospital,
Intervenor, Respondent,
Minnesota Laborers Health & Welfare
Fund, Dr. Elmer Kasperson, Nurse
Anesthesia Services, St. Croix
Orthopaedics,
Intervenors.
________________________
David N. Larson, Sarah A. Bennett, Fitch, Johnson, Larson & Held, P.A., Minneapolis,
Minnesota, for relators.
Kris A. Wittwer, Jessica A. Syverson, Kris A. Wittwer Law Firm, Roseville, Minnesota,
for intervenor, respondent Lakeview Hospital.
________________________
1
SYLLABUS
When an employer fails to give a medical provider notice of its right to intervene
in a workers’ compensation proceeding, the medical provider is not entitled to automatic
payment of unpaid medical charges under Brooks v. A.M.F., Inc., 278 N.W.2d 310(Minn. 1979), unless the medical provider can show the lack of notice resulted in
prejudice.
Reversed and remanded.
OPINION
DIETZEN, Justice.
The question before us is whether we should extend our decision in Brooks v.
A.M.F., Inc., 278 N.W.2d 310 (Minn. 1979), and require automatic payment of a medical
provider’s treatment expenses when an employer fails to give the medical provider notice
of its right to intervene in a workers’ compensation proceeding to determine
responsibility for those expenses.
The employee, Lon Gamble, was injured in a work-related accident at Twin Cities
Concrete Products (Twin Cities). His doctor recommended surgery, but Twin Cities
objected to the surgery on the ground that it was not reasonable and necessary. Gamble
obtained approval for the surgery from the Minnesota Laborers Health & Welfare Fund
(the Fund), a union-sponsored benefit plan, and proceeded with the surgery at Lakeview
Hospital. A workers’ compensation judge conducted a hearing and determined that the
surgery was not reasonable and necessary and ordered Twin Cities to reimburse the Fund
for the medical bills, but concluded that Twin Cities could itself seek reimbursement of
2
the expenses from the medical providers. Lakeview, however, was not given notice of
that hearing. Subsequently, before a second hearing on Twin Cities’ request for
reimbursement, Lakeview intervened. Following the second hearing, the compensation
judge concluded again that Gamble’s surgery was not reasonable and necessary and
ordered the medical providers, including Lakeview, to reimburse Twin Cities. On appeal,
the Workers’ Compensation Court of Appeals (WCCA) reversed, concluding that the
Brooks automatic-reimbursement rule should be extended to Lakeview because it was not
given notice of the first hearing. We disagree and therefore reverse and remand.
The relevant facts are largely undisputed. Gamble injured his low back when he
fell six or seven feet from a ladder during the course of his employment at Twin Cities
Concrete Products on May 24, 2010. He reported the incident to Twin Cities and saw
Dr. Christian DuBois for medical treatment. An MRI conducted at Lakeview in July
2010 revealed mild to moderate disk space narrowing at L4-5 and L5-S1 with mild
degenerative changes. Gamble received epidural injections in July and September 2010,
but the injections provided little relief. Gamble then returned to Dr. DuBois, who
recommended back surgery to relieve the back pain.
Gamble subsequently filed a petition for workers’ compensation benefits in
November 2010. At the request of Twin Cities, Dr. David Florence conducted an
independent medical examination of Gamble and concluded that surgery was not only
unreasonable and unnecessary, but was “contraindicated in view of the total picture and
the lack of surgical guidelines.” Thereafter, Twin Cities refused to pay for the surgery.
Nevertheless, Gamble obtained pre-authorization from the Fund to proceed with the back
3
surgery, and then Dr. DuBois performed the surgery at Lakeview. Lakeview charged
$67,460.25 for the back surgery, of which the Fund paid $52,809.36.
A hearing was held in June 2011 on Gamble’s petition to consider, among other
things, whether the back surgery was causally related to his work injury, whether the
surgery was reasonable and necessary, and who was responsible for the medical expenses
related to that surgery. Prior to the hearing, Gamble notified the Fund and some of the
medical providers of their right to intervene in the proceeding, see Minn. Stat. § 176.361,
subd. 1 (2012) (providing intervention rights to a “person who has an interest” in the
matter), but failed to notify Lakeview of its intervention right.1 Based on the record,
including the opinions and notes of the treating physicians, the workers’ compensation
judge concluded that Gamble’s back surgery was not reasonable and necessary, for
reasons not relevant here. The judge ordered Twin Cities to reimburse the Fund for its
payment of the medical expenses and authorized Twin Cities to seek reimbursement from
the medical providers.
Twin Cities reimbursed the Fund and then filed a medical request seeking
reimbursement from the medical providers. Lakeview filed a motion to intervene, in
which it sought to obtain payment of the unpaid balance of Gamble’s medical bills.2
1
The medical providers notified were St. Croix Orthopaedics, High Pointe Surgery
Center, Therapy Partner/OSI, and Stillwater Medical Group. It appears to be undisputed
that the parties were aware of Lakeview’s interest before the June 2011 hearing, but the
hearing proceeded without Lakeview’s participation.
2
Lakeview had previously moved to intervene in the matter after it first learned in
late 2011 of the June 2011 proceeding. This motion was denied because there were no
(Footnote continued on next page.)
4
Following a hearing in September 2012, the workers’ compensation judge evaluated the
evidence, including new evidence presented by Lakeview, and determined that the
surgery was not reasonable and necessary and ordered the medical providers to reimburse
Twin Cities for the medical bills it had paid to the Fund.
The WCCA reversed, concluding that the Brooks automatic-reimbursement rule
applied, and that Lakeview was entitled to payment in full of its medical charges because
it had not been given notice of its right to intervene in Gamble’s proceeding. Gamble v.
Twin Cities Concrete Prods. & Gallagher Bassett Servs., Inc., 2013 WL 3791882, at *4-7
(Minn. WCCA July 8, 2013). The WCCA reasoned that it was undisputed that Lakeview
did not receive notice of the first hearing, and therefore Lakeview was entitled to
reimbursement regardless of the reasonableness and necessity of the surgery. Id. at *7.
This certiorari appeal followed.
I.
Twin Cities argues that the Brooks automatic-reimbursement rule applies only in
the context of settlement negotiations, and thus the WCCA erred in extending Brooks
simply because Lakeview was not given notice of its right to intervene in Gamble’s
workers’ compensation proceeding. Lakeview counters that the Brooks automatic-
(Footnote continued from previous page.)
disputes pending, but once Twin Cities requested reimbursement, Lakeview filed a
second motion to intervene seeking payment of the unpaid balance, which is often
referred to as the Spaeth balance. A Spaeth balance is the amount that remains after a
health insurer pays the medical provider the amount provided under the workers’
compensation fee schedule. See Spaeth v. Cold Spring Granite Co., 56 Minn. Workers’
Comp. Dec. 136 (WCCA 1996), aff’d in part, rev’d in part without opinion, 560 N.W.2d
92 (Minn. 1997).
5
reimbursement rule applies not only to potential intervenors that are excluded from
settlement negotiations, but also to potential intervenors that are excluded from a hearing
on the merits.3
The determination of whether to extend the holding of Brooks to provide
automatic reimbursement to Lakeview is a question of law that we review de novo.
Troyer v. Vertlu Mgmt. Co./KOK & Lundberg Funeral Homes, 806 N.W.2d 17, 23
(Minn. 2011). To provide context, it is useful to first examine the workers’ compensation
statutory framework as it relates to medical treatment for work-related injuries and the
intervention rights of a medical provider that provides treatment to an injured worker.
Under the Workers’ Compensation Act, an employer is responsible for furnishing
medical treatment to an injured employee if two conditions are met. First, the employee
must have sustained a personal injury “arising out of and in the course of employment.”
Minn. Stat. § 176.021, subd. 1 (2012). Second, the medical treatment must “reasonably
be required . . . to cure and relieve from the effects of the injury” including treatment
“necessary to physical rehabilitation.” Minn. Stat. § 176.135, subd. 1(a) (2012). Unless
a claim is denied for reasons permitted by statute, the employer must “pay the charge” for
3
Lakeview also contends that the workers’ compensation judge erred in relying on
Chrz v. Sacred Heart Hospice, 1990 WL 291794 (Minn. WCCA Feb. 13, 1990), to
require Lakeview to reimburse Twin Cities because Chrz did not involve the failure to
provide intervention notice. Lakeview’s argument lacks merit. Chrz involved the
reimbursement procedures when an employee is covered by a health insurer and an
employer-insurer and there is a dispute about whether the employee’s medical treatment
was reasonable and necessary. Id. at *3-4. The workers’ compensation judge here did
not rely on Chrz to reject Lakeview’s automatic-reimbursement argument, but instead
concluded, consistent with Chrz, that Twin Cities was entitled to reimbursement from
Lakeview for its payment of medical treatment that was not reasonable and necessary.
6
the reasonable and necessary treatment, including surgery charges. Minn. Stat.
§ 176.135, subds. 1a, 6 (2012). In general, therefore, an employer must pay for an
employee’s medical treatment that is reasonable and necessary to cure or relieve the
effects of a personal injury arising out of and in the course of employment, but is not
required to pay for medical treatment that is not “reasonably required for the cure or
relief of the effects of a compensable injury.” Minn. R. 5221.0500, subp. 1F (2013); see
also Minn. Stat. § 176.135, subd. 1.
A medical provider that treats an injured employee has the right to intervene in the
employee’s workers’ compensation case. See Minn. Stat. § 176.361, subd. 1 (2012)
(stating that “[a] person who has an interest in any [workers’ compensation matter] such
that the person may either gain or lose by an order or decision may intervene in the
proceeding”). The attorneys representing the parties in the matter must inquire from their
clients whether there are medical providers that provided treatment to the employee that
are entitled to notice of the right to intervene in the matter. See Minn. R. 1415.1100,
subp. 1 (2013). If such a medical provider exists, the attorneys must promptly serve the
provider with written notice of its right to petition for intervention and reimbursement.
Id., subp. 3 (2013).
We have not addressed the consequence of excluding a medical provider that has
provided medical treatment or services to an injured employee from a hearing on the
merits of the employee’s claim. But we have addressed the consequence of excluding an
insurer that has paid medical or disability benefits to an injured employee from settlement
negotiations between the employer-insurer and the injured employee. See Le v. Kurt
7
Mfg., 557 N.W.2d 202 (Minn. 1996); Vetsch v. Schwan’s Sales Enters., 283 N.W.2d 884(Minn. 1979); Brooks v. A.M.F., Inc., 278 N.W.2d 310 (Minn. 1979). In Brooks, we
considered whether a group health insurer that had intervened in a workers’
compensation matter but was then excluded from participating in settlement negotiations
between the employee and the employer-insurer—which resulted in a complete
settlement of the employee’s workers’ compensation claim—was entitled to full
reimbursement of the medical expenses it had paid on behalf of the employee. 278
N.W.2d at 311. We concluded that a group health insurer who has intervened in a matter
and “is excluded from participating in negotiations resulting in a final settlement and who
is not a party to the settlement stipulation should, on principles of equity and public
policy, be awarded full reimbursement by the settlement award.” Id. at 315. We adopted
the automatic-reimbursement rule to motivate the employer-insurer and the employee to
include an intervening group health insurer in all settlement negotiations, knowing the
insurer may be fully reimbursed if excluded. Id. at 316. Additionally, we intended to
encourage health insurers to continue to make prompt payment of claims, “with the
assurance that they w[ould] be able to compromise and settle or receive reimbursement if
the employee later recover[ed] workers’ compensation benefits.” Id.
We applied the Brooks automatic-reimbursement rule in both Vetsch and Le to
award reimbursements to health and disability insurers that had been excluded from
negotiations between the employee and the employer-insurer that had resulted in
settlement of the employee’s claim. Le, 557 N.W.2d at 205; Vetsch, 283 N.W.2d at 886-
87.
8
II.
With the relevant law in mind, we turn to the question of whether we should
extend the Brooks automatic-reimbursement rule to a medical provider that does not
receive notice of a hearing to determine responsibility for its medical bill. We conclude
that when an employer fails to give a medical provider notice of its right to intervene in a
workers’ compensation proceeding, the medical provider is not entitled to automatic
payment of its medical bill under Brooks, unless the medical provider can show the lack
of notice resulted in prejudice. Two reasons support our conclusion.
First, since Brooks was decided, rules have been promulgated to protect an
intervenor’s interest in workers’ compensation proceedings. Minnesota Rule 1420.1850
(2013) provides for the resolution of claims when a stipulation for settlement does not
include the agreement of all intervenors or potential intervenors. It provides in relevant
part that, subject to certain time limitations, the intervenor is entitled to a hearing to
present evidence that the intervenor was effectively excluded from
meaningful settlement negotiations through lack of an offer of settlement,
lack of notice of the right to intervene, or an unreasonable or bad faith offer
of settlement. If the judge finds that the intervenor was effectively
excluded from the proceeding or negotiations, full reimbursement to the
intervenor will be ordered.
Minn. R. 1420.1850, subp. 3B.
Moreover, under Minnesota Rule 1415.1100, subpart 4 (2013), a judge may
sanction a party for failing to give a potential intervenor notice of its right to intervene in
a matter if that failure “materially prejudice[d] the rights and liabilities of the other
parties or the potential intervenor.” Minn. R. 1415.1100, subp. 4. The sanctions
9
available include, among other things, any “sanction permitted by rule, statute, or case
law, as the judge deems just or appropriate under the circumstances.” Minn. R.
1420.3700, subp. 1G (2013).
These post-Brooks intervention rules adequately protect the rights of an interested
party, including a medical provider, that is not given notice of its right to intervene and
participate in a hearing or settlement negotiations. At the time Brooks was decided, the
lack of such procedures left intervenors with no remedy to protect their interest in the
proceeding. See Brooks, 278 N.W.2d at 315 (“[T]o leave an intervenor [excluded from
participating in settlement negotiations] with no remedy other than to . . . undertake the
burden of proving that the injury was work related is not the type of protection which
strikes a proper balance of the interests of all parties concerned.”). Now, however,
Minnesota Rules 1415.1100, subpart 4, and 1420.1850, subpart 3, provide consequences
for excluding a potential intervenor from a workers’ compensation matter. See also
Minn. R. 1420.3700, subp. 1G (providing a number of sanctions that are available).
Second, Lakeview was not prejudiced by its absence from the June 2011 hearing.
In Brooks, we concluded that the health insurer was prejudiced by being excluded from
settlement negotiations resulting in a full settlement of the employee’s claim because “it
is incongruous to place upon the intervenor the burden of proving that the injury was
work related before [the intervenor] can recover reimbursement.” Brooks, 278 N.W.2d at
315. Further, we noted that the employee had no incentive to cooperate with an
intervenor once the employee settled on the workers’ compensation claim. Id.
10
The concerns expressed in Brooks are not present here, and there is no material
prejudice to Lakeview or any other party under Minnesota Rule 1415.1100, subpart 4. In
this case, Gamble established that his injury was work-related at the June 2011 hearing,
and therefore the remaining issue was whether Gamble’s back surgery was reasonable
and necessary. It is true that the compensation judge concluded in Lakeview’s absence
that the back surgery was not reasonable and necessary. When Lakeview’s intervenor
interest was asserted, however, the compensation judge revisited the issue de novo at a
second hearing. Lakeview relied upon the evidence presented at the June 2011 hearing
and presented new testimony from Gamble and a new report from Dr. DuBois. We
conclude that the procedures employed by the workers’ compensation judge ensured that
Lakeview’s interests were protected and not materially prejudiced.4
For the foregoing reasons, we decline to extend Brooks, and we conclude that
Lakeview is not entitled to automatic payment of its medical bill for treatment of
Gamble.5
4
Although a second proceeding to determine the reasonableness and necessity of
the surgery before the same workers’ compensation judge was not completely
satisfactory from the perspective of Lakeview, and perhaps understandably so, we cannot
say on this record that the proceeding was unfair or resulted in prejudice.
5
At oral argument, Lakeview indicated that if we reverse the WCCA, it may seek
reimbursement from Gamble. The issue of whether Lakeview is entitled to obtain
reimbursement from Gamble is not before us, and we decline to reach it. See Meyer v.
Nwokedi, 777 N.W.2d 218, 223 n.5, 224 n.6 (Minn. 2010) (declining to address issues not
before the court). We observe, however, that Minn. Stat. § 176.136, subd. 2 (2012),
provides that a medical provider may not collect or attempt to collect payment from an
injured employee for treatment that is not reasonable and necessary, unless the
(Footnote continued on next page.)
11
III.
Having concluded that Lakeview is not entitled to automatic payment of its
medical bill, we must remand the case to the WCCA to decide whether the workers’
compensation judge’s conclusion that the surgery was not reasonable and necessary is
supported by the record.6 Lakeview raised this issue before the WCCA, but the WCCA
did not reach it because it concluded Lakeview was entitled to automatic reimbursement.
Gamble, 2013 WL 3791882, at *7, n.4. A remand is therefore necessary. See Minn. Stat.
§ 176.481 (2012) (“Where necessary the Supreme Court may remand the cause to the
[WCCA] for a new hearing or for further proceedings with such directions as the court
deems proper.”); Middleton v. Nw. Airlines, 600 N.W.2d 707, 711 (Minn. 1999)
(remanding case to the WCCA when issue of legal causation was raised before the
WCCA but not reached by it).
Reversed and remanded.
(Footnote continued from previous page.)
commissioner, the workers’ compensation judge, or the WCCA determines otherwise.
See also Minn. R. 5221.0500, subp. 1F.
6
The concurrence and dissent contends that Lakeview is not obligated to reimburse
Twin Cities, presumably because the Fund authorized Gamble’s surgery and therefore the
Fund, and not Lakeview, should ultimately be responsible for Gamble’s medical
expenses. That issue is not before us, and therefore we decline to reach it.
12
CONCURRENCE & DISSENT
PAGE, Justice (concurring in part, dissenting in part).
Although I do not disagree with the court’s conclusion that respondent Lakeview
is not entitled to automatic reimbursement of its treatment expenses, I nonetheless dissent
from that part of the court’s opinion that suggests that Lakeview may have some
obligation to reimburse relator Twin Cities. I do so because, on the record presented
here, it is not clear to me that Lakeview has any such obligation.
C/D-1