State Workers' Insurance Fund v. Harburg Medical Sales Co., Inc. (Bureau of Workers' Compensation Fee Review Hearing Office) ( 2022 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
State Workers’ Insurance Fund, :
Petitioner :
:
v. :
:
Harburg Medical Sales Co., Inc., :
(Bureau of Workers’ Compensation :
Fee Review Hearing Office), : No. 712 C.D. 2021
Respondent : Argued: June 22, 2022
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE LORI A. DUMAS, Judge
OPINION
BY JUDGE FIZZANO CANNON FILED: December 15, 2022
The State Workers’ Insurance Fund (SWIF) petitions this Court for
review of the June 3, 2021 decision of the Bureau of Workers’ Compensation,
Medical Fee Review Hearing Office (Hearing Office). The Hearing Office reversed
a determination by the Bureau of Workers’ Compensation, Medical Fee Review
Section (Fee Review Section) that SWIF was not liable to provide reimbursement
for a disputed medical bill. Upon review, we affirm the Hearing Office’s
determination.
I. Background
In May 2004, Julius Holmes (Claimant) sustained various injuries in a
work-related incident while in the employ of W&W Contractors, Inc. (Employer).
See W&W Contractors, Inc. v. Workers’ Comp. Appeal Bd. (Holmes) (Pa. Cmwlth.,
No. 836 C.D. 2020, filed Dec. 15, 2020), slip op. at 1-2. Employer issued a notice
of compensation payable (NCP) accepting various injuries sustained by Claimant to
his chest, lower back, neck, abdomen, right shoulder, and right knee. Id. at 2. An
amended NCP expanding the description of Claimant’s injuries was issued in
October 2007. See Hearing Off. Decision, 6/3/21 at 7, Reproduced Record (R.R.) at
85a.1
SWIF reimbursed Harburg Medical Sales Company, Inc. (Harburg)
$1,725 for certain medical supplies and equipment prescribed to Claimant, but
denied payment for a piece of durable medical equipment described as a memory
foam queen mattress overlay with cover, which was billed at $2,199.95. Hearing
Off. Decision, 6/3/21 at 4, Finding of Fact (F.F.) 6, R.R. at 82a. SWIF denied
liability for the prescribed treatment on the basis that “[a] cu[r]rent medical report
[was] required specifically documenting the relationship [of] the prescribe[d]
medication [i.e., the mattress overlay] to the original accepted work injury.” Letter,
10/7/20, R.R. at 30a; see also F.F. 10. However, SWIF did not seek utilization
review concerning the prescribed treatment. F.F. 9.
Harburg submitted an application for fee review pursuant to Section
306(f.1) of the Act, 77 P.S. § 531, contesting SWIF’s nonpayment for the prescribed
mattress overlay. Application for Fee Review, 11/12/20 at 1, R.R. at 23a. The Fee
1
In December 2011, a workers’ compensation judge approved a compromise and release
agreement settling Claimant’s right to future indemnity benefits for the injuries sustained in the
May 3, 2004 work incident. See Hearing Off. Decision, 6/3/21 at 4, Finding of Fact (F.F.) 3,
Reproduced Record (R.R.) at 81a. Employer remained liable for Claimant’s reasonable, necessary
and causally-related medical bills consistent with the cost containment provisions of the Workers’
Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2710
(Act). See Section 449 of the Act, 77 P.S. § 1000.5.
2
Review Section determined that SWIF was not obligated to pay the cost of the
prescribed treatment because the “service ha[d] not been properly billed.” Fee
Review Section Determination, 12/10/2020, R.R. at 15a.
Harburg requested a hearing to contest the Fee Review Section’s
determination. Request for Hearing, R.R. at 18a. Hearings were held in January and
March 2021. Hearing Off. Decision, 6/3/21 at 3, R.R. at 81a.
Harburg submitted a post-hearing brief asserting that SWIF should
have sought utilization review before withholding payment for the prescribed
mattress overlay based on a “causal relatedness” denial. See Harburg’s Post-Hearing
Br. at 4, Certified Record (C.R.) at 65. SWIF argued in its post-hearing brief that it
was not obligated to request utilization review to “legitimize nonpayment” following
its “causal relatedness” denial. SWIF’s Post-Hearing Br. at 6, C.R. at 72. Further,
SWIF asserted that the Hearing Office lacked jurisdiction over Harburg’s fee review
application because SWIF’s liability for Claimant’s treatment was in dispute, rather
than the timeliness or amount of any payment. Id. at 7, C.R. at 71.
The Hearing Office reversed the Fee Review Section’s decision and
ordered SWIF to reimburse Harburg for the cost of the prescribed mattress overlay.
Hearing Off. Decision, 6/3/21 at 10, R.R. at 88a. The Hearing Office identified the
issue under review as whether, in a medical fee review proceeding, an insurer may
refuse to pay for prescribed durable medical equipment by asserting it was
“unrelated” to the work injury, without seeking utilization review.2 Id. at 6, R.R. at
84a. The Hearing Office reasoned that Workers’ Compensation Regulation (WC
2
The Hearing Office also considered the issue of whether a designation in a determination
by the Fee Review Section that the service “was not billed properly” supports the denial of an
otherwise apparently valid prescription for medical treatment, supplies or equipment. Hearing
Off. Decision, 6/3/21 at 6, R.R. at 84a. However, SWIF does not raise that issue on appeal.
3
Regulation) 127.208(e) is “clear and unequivocal that seeking [u]tilization [r]eview,
within 30 days of receipt of the billing, is a condition precedent to withholding
payment.” Id. at 6, R.R. at 84a (citing 34 Pa. Code § 127.208).3 Thus, the Hearing
Office determined that SWIF could not deny reimbursement for the prescribed
mattress overlay without first challenging the reasonableness and necessity thereof
through utilization review. See id. at 6-9, R.R. at 84a-87a (first citing Workers’ First
Pharmacy Servs., LLC v. Bureau of Workers’ Comp. Fee Rev. Hearing Off.
(Gallagher Bassett Servs.), 225 A.3d 613 (Pa. Cmwlth. 2020); and then citing Omni
Pharmacy Servs., LLC v. Bureau of Workers’ Comp. Fee Rev. Hearing Off. (Am.
Interstate Ins. Co.), 241 A.3d 1273, 1274 (Pa. Cmwlth. 2020), appeal denied, 257
A.3d 1212 (Pa. 2021)).
SWIF petitioned this Court for review.4
3
Pursuant to Workers’ Compensation Regulation (WC Regulation) 127.208(e),
[t]he 30-day period in which payment shall be made to the provider
may be tolled only if review of the reasonableness or necessity of
the treatment is requested during the 30-day period under the
[utilization review] provisions of Subchapter C (relating to medical
treatment review). The insurer’s right to suspend payment shall
continue throughout the [utilization review] process. The insurer’s
right to suspend payment shall further continue beyond the
[utilization review] process to a proceeding before a workers’
compensation judge, unless there is a [utilization review]
determination made that the treatment is reasonable and necessary.
34 Pa. Code § 127.208(e).
4
SWIF filed an application for supersedeas, averring that it possessed a great likelihood of
success on the merits. See Appl. for Supersedeas, 6/30/21 at 4, ¶ 8. This Court denied SWIF’s
application by order dated August 5, 2021. See Cmwlth. Ct. Order, 8/5/21.
4
II. Issues
On appeal,5 SWIF argues that this Court already determined in a
separate matter that Harburg does not qualify as a “health care provider” under the
Act and, thus, lacks standing to request fee review. SWIF’s Br. at 20-22 (citing
Harburg Med. Sales Co. v. PMA Mgmt. Corp. (Bureau of Workers’ Comp., Fee Rev.
Hearing Off.) (Pa. Cmwlth., No. 635 C.D. 2020, filed Aug. 30, 2021) (Harburg I),
appeal denied (Pa., No. 537 MAL 2021, filed Mar. 31, 2022)). SWIF asserts that
the doctrine of collateral estoppel precludes Harburg from asserting standing here to
request a fee review under the Act. SWIF also contends that the Hearing Office erred
in deeming SWIF liable for payment of the prescribed mattress overlay, because its
“causal relatedness” denial rendered Harburg’s fee review application premature by
operating as a denial of liability for the work injury pursuant to subsection (1) of WC
Regulation 127.255(1), 34 Pa. Code § 127.255(1). SWIF’s Br. at 9.
Harburg counters that SWIF waived its challenge to Harburg’s standing
to file the fee review application, by raising this issue for the first time in its principal
appellate brief. See Harburg’s Br. at 10. Harburg also asserts that an employer or
insurer must pursue utilization review before denying reimbursement on the basis
that the prescribed medical equipment or treatment lacks a causal relation to the
claimant’s work injury. Harburg’s Br. at 6 (citing Workers’ First; Omni). Further,
Harburg contends that allowing a “causal relatedness” denial alone to support
nonpayment of a provider’s bill absent utilization review would enable insurers to
curtail the fee review process entirely, thereby depriving providers of recourse for
5
Our review in medical fee review cases determines whether constitutional rights were
violated, whether an error of law was committed, or whether the necessary findings of fact were
supported by substantial evidence. Workers’ First Pharmacy Servs., LLC v. Bureau of Workers’
Comp. Fee Rev. Hearing Office (Gallagher Bassett Servs.), 225 A.3d 613, 616 n.3 (Pa. Cmwlth.
2020). Regarding questions of law, our scope of review is plenary and our standard of review is
de novo. Id.5
denials of reimbursement. Id. at 6-7. In addition, Harburg maintains that SWIF
offered no medical evidence to support its contention that the prescribed mattress
overlay was not related to Claimant’s work injury. Id. at 6.
By order dated January 31, 2022, this Court directed the parties to
submit supplemental briefs addressing the impact of the Pennsylvania Supreme
Court’s decision in Keystone Rx LLC v. Bureau of Workers’ Compensation Fee
Review Hearing Off. (Compservices Inc./AmeriHealth Casualty Services), 265 A.3d
322 (Pa. 2021), on the present matter. See Cmwlth. Ct. Order, 1/31/22. Specifically,
this Court instructed the parties to address whether a fee review petition may be
dismissed as premature where payment for treatment prescribed for a work injury is
denied on the basis of lack of “causal relation” when (1) the work injury is accepted,
(2) no utilization review petition has been filed, and (3) payment has not been made
within the statutory period. See id. SWIF contends that Keystone Rx supports its
assertion that a “causal relatedness” dispute must be resolved before a provider may
apply for fee review under the Act. See SWIF’s Suppl. Br. at 5. Harburg counters
that Keystone Rx is inapposite, as it involved an insurer’s petition for utilization
review, whereas, here, SWIF did not seek utilization review. Harburg’s Suppl. Br.
at 6. Thus, Harburg maintains that Keystone Rx does not affect its position that
SWIF should have petitioned for utilization review in order to render Harburg’s fee
review application premature. Id. at 6-7 (citing Workers’ First; Omni).
III. Discussion
A. Standing
SWIF asserted for the first time in its principal appellate brief that
Harburg lacked standing to file the November 2020 fee review application. Section
6
703(a) of the Administrative Agency Law provides that a “party may not raise upon
appeal any other question not raised before the agency (notwithstanding the fact that
the agency may not be competent to resolve such question) unless allowed by the
court upon due cause shown.” 2 Pa.C.S. § 703(a). Thus, we agree with Harburg
that SWIF waived this challenge. See Lord v. Workmen’s Comp. Appeal Bd., 395
A.2d 598, 602 (Pa. Cmwlth. 1978) (concluding that “this Court [was] not obliged to
address” arguments of employer and its insurance carrier “which were not raised
before the [Workers’ Compensation Appeal Board]”). Moreover, “[u]nlike the
federal courts, where standing is a nonwaivable jurisdictional issue, the courts of this
Commonwealth view the issue of standing as nonjurisdictional and waivable.” In re
Condemnation by Urban Redevelopment Auth. of Pittsburgh, 913 A.2d 178, 181 n.6
(Pa. 2006).
We acknowledge that the Harburg I decision relied upon by SWIF to
support its challenge to Harburg’s standing was issued on August 30, 2021, roughly
two months after SWIF filed its petition for review with this Court on June 29, 2021.
Nevertheless, SWIF could and should have challenged Harburg’s standing to apply
for fee review during the administrative proceedings, as any question regarding
Harburg’s standing as a “provider” was evident from the plain language of the Act.
See Section 306(f.1) of the Act, 77 P.S. § 531(5) (stating that “[a] provider . . . who
disputes the amount or timeliness of the payment from the employer or insurer shall
file an application for fee review . . .”) (emphasis added); see also Section 109 of the
Act, 77 P.S. § 29 (stating that the term “‘provider’ means a health care provider” and
defining the term “health care provider” as a person or entity “licensed or otherwise
authorized by the Commonwealth to provide health care services, including, but not
7
limited to, any physician, coordinated care organization,[6] hospital, health care
facility, dentist, nurse, optometrist, podiatrist, physical therapist, psychologist,
chiropractor or pharmacist . . .”). Thus, SWIF is unable to establish that it had due
cause for its failure to raise the issue of standing during the administrative
proceedings below or that it could not, by the exercise of due diligence, have raised
that issue at an earlier stage. See 2 Pa.C.S. § 703(a); Hugh H. Eby Co. v. Workmen’s
Comp. Appeal Bd. (Vadi), 407 A.2d 148, 150 (Pa. Cmwlth. 1979) (stating that
“[q]uestions not raised below before the governmental unit or Commonwealth
agency will not be considered for the first time by this Court unless due cause is
shown”); see also Pa.R.A.P. 1551 (providing that “[o]nly questions raised before the
government unit shall be heard or considered, except . . . [q]uestions that the [C]ourt
is satisfied the petitioner could not by the exercise of due diligence have raised
before the government unit”).
SWIF also attempts to invoke the doctrine of nonmutual offensive
collateral estoppel to establish that Harburg lacked standing to apply for fee review,
because: (i) both Harburg I and the instant matter involve the question of Harburg’s
standing, (ii) the determination of whether Harburg was a provider under the Act
was essential to the judgment in Harburg I; and (iii) Harburg I resulted in a final
judgment on the merits. SWIF’s Br. at 20-22 (citing Pucci v. Workers’ Comp.
Appeal Bd. (Woodville State Hosp.), 707 A.2d 646, 647-48 (Pa. Cmwlth. 1998)).
However, as with its initial challenge to standing, SWIF has raised this issue for the
first time in its principal appellate brief. Accordingly, SWIF has likewise waived
its assertion that collateral estoppel precludes relitigating whether Harburg
6
Section 109 of the Act defines the term “coordinated care organization” to mean “an
organization licensed in Pennsylvania and certified by the Secretary of Labor and Industry on the
basis of established criteria possessing the capacity to provide medical services to an injured
worker.” 77 P.S. § 29.
8
possessed standing to apply for fee review. See Section 703(a) of the Administrative
Agency Law, 2 Pa.C.S. § 703(a); Pa.R.A.P. 1551; Hugh H. Eby Co., 407 A.2d at
150.
B. Harburg’s Fee Review Application
SWIF maintains that it was not required to pursue utilization review
before denying reimbursement on the basis that the prescribed mattress overlay was
not related to Claimant’s work injury, because the utilization review process may
not decide questions of “causal relatedness.” SWIF’s Br. at 10 (citing WC Regul.
127.406(b)(1), 34 Pa. Code § 127.406(b)(1) (providing that utilization review
organizations may not decide “[t]he causal relationship of the treatment under
review and the employe’s work-related injury”)); WC Regul. 127.470, 34 Pa. Code
§ 127.470 (stating that physician-peers conducting utilization review “shall assume
the existence of a causal relationship between the treatment under review and the
employe’s work injury”). SWIF also argues that WC Regulation 127.255, 34 Pa.
Code § 127.255, “expressly” renders the fee review process premature where the
carrier denies payment on the basis of lack of “causal relatedness.” Id. at 13.
Asserting that the Hearing Office erred in relying on Workers’ First and
Omni to conclude that SWIF was obligated to pursue utilization review before
withholding payment, SWIF insists that “[those cases] have wrongfully eroded the
ability of insurance carriers to ‘[deny] liability for the alleged work injury,’ contrary
to 34 Pa. Code § 127.255 and the Pennsylvania Supreme Court’s decision in Crozer
Chester [Medical Center v. Department of Labor and Industry, Bureau of Workers’
Compensation, Health Care Services Review Division, 22 A.3d 189 (Pa. 2011)
(Crozer Chester II)].” SWIF’s Br. at 12 & 18 (quoting WC Regulation 127.255(1),
9
34 Pa. Code § 127.255(1)). SWIF contends that “[i]t is a well-established practice
of insurance carriers to respond to non-work-related bills by issuing a simple and
efficient denial letter,” and that a claimant may pursue recourse by filing a claim
petition, review petition, or penalty petition. SWIF’s Br. at 18. SWIF highlights the
statement of the Pennsylvania Supreme Court in Crozer Chester II that “in cases in
which liability for a particular treatment is at issue, the claimant, not the medical
provider, must pursue compensation before a workers’ compensation judge in the
regular course.” Id. at 12-13 (quoting Crozer Chester II, 22 A.3d at 195). SWIF
reasons further:
Importantly, [WC Regulation 127.255] places no
affirmative obligation on the insurer to initiate a formal
proceeding to “den[y] liability for the alleged work injury”
such as by filing a [utilization review p]etition. By contrast,
127.255(2) states that a [f]ee [r]eview [a]pplication is
premature where “the insurer has filed a request for
utilization review of the treatment.” . . . If the
administrative agency had intended to require insurance
carriers to file a formal petition to deny liability [for the
work injury for purposes of WC Regulation 127.255(1)],
it clearly could have and would have included language to
that effect in the regulation. As a result, a usual and
customary practice has developed where carriers may
simply issue a one sentence letter denying payment based
on lack of causal relatedness, rather than initiate costly and
protracted litigation over relatively nominal medical bills.
SWIF’s Br. at 9 n.1. SWIF, therefore, requests that this Court reverse the Hearing
Office’s June 3, 2021 decision and dismiss Harburg’s fee review application. Id. at
24.7
7
SWIF observes that the Hearing Office’s decision “contains no reference to 34 Pa. Code
§ 127.255[.]” SWIF’s Br. at 13. While SWIF is correct that the June 3, 2021 decision does not
directly reference WC Regulation 127.255, we note that the Hearing Office cited Workers’ First
and Omni, which, in turn, relied primarily on this regulation. Further, we note that the Hearing
10
Despite contending that its “causal relatedness” denial constituted a denial
of liability for Claimant’s work injury pursuant to subsection (1) of WC Regulation
127.255, SWIF inconsistently asserts that the present “dispute . . . turns solely on []
Employer’s liability for a particular medical treatment,” thereby implicating
subsection (2) of that regulation. See SWIF’s Br. at 19-20 (emphasis added).
Section 306(f.1) of the Act provides, in relevant part:
(5) The employer or insurer shall make payment and
providers shall submit bills and records in accordance with
the provisions of this section. All payments to providers
for treatment provided pursuant to this act shall be made
within thirty (30) days of receipt of such bills and records
unless the employer or insurer disputes the reasonableness
or necessity of the treatment provided pursuant to
paragraph (6). The nonpayment to providers within thirty
(30) days for treatment for which a bill and records have
been submitted shall only apply to that particular treatment
or portion thereof in dispute; payment must be made
timely for any treatment or portion thereof not in dispute.
A provider who has submitted the reports and bills
required by this section and who disputes the amount or
timeliness of the payment from the employer or insurer
shall file an application for fee review with the
[D]epartment no more than thirty (30) days following
notification of a disputed treatment or ninety (90) days
following the original billing date of treatment. If the
insurer disputes the reasonableness and necessity of the
treatment pursuant to paragraph (6) [(delineating the
Office had no reason to cite this regulation, because the Fee Review Section did not dismiss
Harburg’s fee review application as premature. See Hearing Off. Decision, 6/3/21 at 6, R.R. at
84a. Moreover, the Hearing Office did not identify the question of whether Harburg’s fee review
application was premature as one of the two issues under review. See Hearing Off. Decision,
6/3/21 at 6, R.R. at 84a. See id.Notably, SWIF quoted WC Regulation 127.255 in its post-hearing brief submitted to the
Hearing Office but did not specifically assert that Harburg’s fee review application was premature
under subsection (1) (fee review application premature where insurer disputes liability for work
injury). Rather, SWIF contended that the Hearing Office lacked jurisdiction, because neither the
timeliness nor the amount of payment was in dispute. Nevertheless, we conclude that this issue is
not waived. See discussion infra, pages 13-16.
11
utilization review process)], the period for filing an
application for fee review shall be tolled as long as the
insurer has the right to suspend payment to the provider
pursuant to the provisions of this paragraph. Within thirty
(30) days of the filing of such an application, the
[D]epartment shall render an administrative decision.
(6) Except in those cases in which a workers’
compensation judge asks for an opinion from peer review
under section 420, disputes as to reasonableness or
necessity of treatment by a health care provider shall be
resolved in accordance with the following provisions:
(i) The reasonableness or necessity of all treatment
provided by a health care provider under this act
may be subject to prospective, concurrent or
retrospective utilization review at the request of an
employe, employer or insurer. The [D]epartment
shall authorize utilization review organizations to
perform utilization review under this act.
Utilization review of all treatment rendered by a
health care provider shall be performed by a
provider licensed in the same profession and having
the same or similar specialty as that of the provider
of the treatment under review.
77 P.S. § 531(5), (6)(i).
We agree with the Hearing Office that SWIF failed to stay its obligation
to reimburse Harburg for the cost of the prescribed mattress overlay. Pursuant to
WC Regulation 127.208(e),
[t]he 30-day period in which payment shall be made to
the provider may be tolled only if review of the
reasonableness or necessity of the treatment is requested
during the 30-day period under the [utilization review
(UR)] provisions of Subchapter C (relating to medical
treatment review). The insurer’s right to suspend payment
shall continue throughout the [utilization review] process.
The insurer’s right to suspend payment shall further
continue beyond the [utilization review] process to a
proceeding before a workers’ compensation judge, unless
12
there is a [utilization review] determination made that the
treatment is reasonable and necessary.
34 Pa. Code § 127.208(e). Here, SWIF did not request utilization review. F.F. 9.
Thus, SWIF failed to toll the 30-day period in which to remit payment for the billed
durable medical equipment. See WC Regul. 127.208, 34 Pa. Code § 127.208.
Nevertheless, SWIF maintains that the Hearing Office should have
determined that SWIF was not liable for payment on the basis that its “causal
relatedness” denial constituted a denial of liability for Claimant’s work injury under
WC Regulation 127.255(1), 34 Pa. Code § 127.255(1), rendering Harburg’s fee
review application premature. SWIF asserts that this regulation “expressly” renders
the fee review process premature where the carrier denies payment on the basis of
lack of “causal relatedness.” Id. at 13. We observe that SWIF raises this issue for
the first time on appeal. However, we conclude that SWIF has not waived this
contention, because whether Harburg prematurely filed its fee review application
implicates the doctrine of ripeness, which we may consider sua sponte. As our
Supreme Court has explained,
[t]he doctrine of ripeness . . . is a judicially-created
principle which mandates the presence of an actual
controversy. When determining whether a matter
is ripe for judicial review, courts generally consider
whether the issues are adequately developed and the
hardships that the parties will suffer if review is
delayed. In the context of administrative law, the basic
rationale of ripeness is to prevent the courts, through the
avoidance of premature adjudication, from entangling
themselves in abstract disagreements over administrative
policies, and to protect state agencies from judicial
interference until an administrative decision has been
formalized and its efforts felt in a concrete way by the
challenging parties. Gardner v. Dep’t of Env’t Res., 658
A.2d 440, 444 (Pa. Cmwlth.1995) (citing Abbott Labs. v.
Gardner, 387 U.S. 136, 148-49 . . . (1967)).
13
Bayada Nurses, Inc. v. Dep’t of Labor & Indus., 8 A.3d 866, 874-75 (Pa. 2010)
(quotation marks and citation omitted); see also Texas Keystone Inc. v. Pa. Dep’t of
Conserv. & Nat. Res., 851 A.2d 228, 239 (Pa. Cmwlth. 2004) (“The ripeness
doctrine insists on a more concrete context, i.e., one involving a final agency action
and a factual record that would allow this Court to properly review [the] substantive
claims.”). Here, SWIF’s assertion that Harburg prematurely filed its fee review
application implicates the doctrine of ripeness, because a prematurely filed fee
review application denies the Fee Review Section and, ultimately, this Court, a
“concrete” decision. For instance, assuming SWIF’s assertions are correct, the
Hearing Office’s fee review determination in Harburg’s favor could be undermined
by a subsequent finding either that the underlying injury was not work related or that
the billed treatment was not reasonable or necessary. See WC Regul. 127.255, 34
Pa. Code § 127.255. Further, this question involves the subject matter jurisdiction
of the Hearing Office and, in turn, this Court. We explained previously:
Whether the lack of ripeness goes to our subject matter
jurisdiction is determined by whether it involves both this
court’s and the [lower tribunal’s] power to hear the class
of cases to which the case belongs, as well as to enter upon
the inquiry, not whether or not the court may ultimately
grant the relief requested. Commonwealth v. Court of
Common Pleas of [Phila. Cnty.] . . . 485 A.2d 755 ([Pa.]
1984). . . . [W]e do not have the ability to grant any relief
that is merely advisory, one that does not involve any case
or controversy. . . .
When the matter does not present a case or controversy,
the courts have consistently held that they were without
jurisdiction to hear the matter.
Brown v. Pa. Liquor Control Bd., 673 A.2d 21, 23 (Pa. Cmwlth. 1996).
14
SWIF asserts that the Hearing Office should have dismissed Harburg’s
fee review application as premature on the basis that SWIF’s dispute as to liability
for the underlying work injury remained outstanding. “Whether the time is right to
adjudicate a claim is an issue that the Pennsylvania courts consider.” Phila. Entm’t
& Dev. Partners, L.P. v. City of Philadelphia, 937 A.2d 385, 392 (Pa. 2007)
(explaining “that while subject matter jurisdiction concerns the power of a court to
hear a claim, the doctrine of ripeness concerns the timing of a court[’s] intervention
in litigation”). SWIF’s assertion that Harburg’s fee review application was
premature calls into question the timing of the Hearing Office’s decision. See id.Thus, SWIF’s contention that Harburg prematurely filed its fee review application
questions the ripeness of the fee review dispute. As this issue pertains to the subject
matter jurisdiction of the Hearing Office and, subsequently, this Court on appeal, we
may consider this question sua sponte despite SWIF’s failure to raise it properly.
See Brown, 673 A.2d at 23 (stating that “[b]ecause whether there [was] a case or
controversy [went] to our subject matter jurisdiction, we [were obliged to] determine
if the declaration of the statutory limits of commonwealth parties where there [was]
no judgment [was a] case or controversy and ripe for judicial determination”); see
also Texas Keystone Inc., 851 A.2d at 239 (considering question of ripeness despite
omission from preliminary objections and explaining that “since lack of ripeness
goes to our subject matter jurisdiction, we may raise the issue sua sponte”); Ginter
v. Workers’ Comp. Appeal Bd. (Chili’s Grill & Bar) (Pa. Cmwlth., No. 1330 C.D.
2010, filed Dec. 8, 2011), slip op. at 1 & 4-58 (dismissing claimant’s appeal as
premature on the basis that the matter was not ripe, where claimant’s challenge to
an order of the Workers’ Compensation Appeal Board directing him to submit to an
8
This unreported decision is cited as persuasive authority pursuant to Section 414(a) of
this Court’s Internal Operating Procedures. 210 Pa. Code § 69.414(a).
15
impairment rating evaluation (IRE) on the basis that the IRE process was
unconstitutional did not constitute a justiciable controversy) (citing Texas Keystone).
Turning to the merits, we reject SWIF’s assertion that WC Regulation
127.255, 34 Pa. Code § 127.255, “expressly” requires dismissal of Harburg’s fee
review application as premature on the basis of SWIF’s “causal relatedness” denial.
SWIF’s Br. at 13. WC Regulation 127.255 contains no such requirement, either
express or implied. This regulation merely mandates:
The Bureau [of Workers’ Compensation] will return
applications for fee review prematurely filed by providers
when one of the following exists:
(1) The insurer denies liability for the alleged work injury.
(2) The insurer has filed a request for utilization review of
the treatment under Subchapter C (relating to medical
treatment review).
(3) The 30-day period allowed for payment has not yet
elapsed . . . .
34 Pa. Code § 127.255. None of the three prerequisites for deeming a fee review
application premature has been met here. See id.SWIF’s assertion that its “causal relatedness” denial in fact contested
liability for Claimant’s work injury under subsection (1) of the above cited
regulation lacks merit, because SWIF accepted liability for Claimant’s work injury
by means of an NCP. See W&W Contractors, slip op. at 2; see also Beissel v.
Workmen’s Comp. Appeal Bd. (John Wanamaker, Inc.), 465 A.2d 969, 971-72 (Pa.
1983) (holding that an employer that has admitted liability for a work-related injury
by means of an NCP after having full opportunity to investigate the claim may not
subsequently challenge causation of injury absent evidence that the NCP is
materially incorrect); Mahon v. Workers’ Comp. Appeal Bd. (Expert Window
16
Cleaning), 835 A.2d 420, 426 (Pa. Cmwlth. 2003) (“[A]n insurer may have an initial
belief as to the right of a claimant to benefits, thus supporting a decision not to issue
a notice of temporary compensation payable, and then . . . challenge the notice of
compensation payable because of information received after that issuance.”) (citing
Section 413 of the Act, 77 P.S. § 771).9 Rather, SWIF’s assertion that the prescribed
treatment is not causally related to Claimant’s work injury disputes liability for the
treatment.
However, SWIF’s denial alone does not render Harburg’s fee review
application premature, because SWIF has not “filed a request for utilization review
of the treatment[.]” WC Regul. 127.255, 35 Pa. Code § 127.255. This Court
explained in Workers’ First:
Had [e]mployer sought utilization review, its 30-day
deadline to pay [p]harmacy’s invoice would have been
stayed. Claimant may be under treatment for an array of
medical problems, only some of which relate to the work
9
Pursuant to Section 413 of the Act,
[a] workers’ compensation judge may, at any time, review and
modify or set aside a notice of compensation payable and an original
or supplemental agreement or upon petition filed by either party
with the [D]epartment, or in the course of the proceedings under any
petition pending before such workers’ compensation judge, if it be
proved that such notice of compensation payable or agreement was
in any material respect incorrect.
77 P.S. § 771. Further, Section 413(a) of the Act provides that
[a] workers’ compensation judge designated by the [D]epartment
may, at any time, modify, reinstate, suspend, or terminate a notice
of compensation payable, an original or supplemental agreement or
an award of the [D]epartment or its workers’ compensation judge,
upon petition filed by either party with the [D]epartment, upon proof
that the disability of an injured employe has increased, decreased,
recurred, or has temporarily or finally ceased, or that the status of
any dependent has changed.
77 P.S. § 772.
17
injury. It is for the Utilization Review Organization to
sort this out. If the compound cream was prescribed for
a non-work-related injury of [c]laimant, a fortiori it is
not reasonable or necessary for treatment of her accepted
work injury. [The e]mployer’s stated reason for denying
[p]harmacy’s invoice was that the “diagnosis is
inconsistent with the procedure.” . . . This is just another
way of stating that the compound cream was not a
reasonable or necessary “procedure” for treating
Claimant’s “diagnosis,” i.e., a shoulder sprain.
An application for fee review is deemed premature in
three circumstances: (1) where the insurer denies
liability for the alleged work injury; (2) where the
insurer has filed a request for utilization review; or (3)
where the 30-day period insurer is allowed for payment
of a provider’s invoice has not yet elapsed. 34 Pa. Code
§ 127.255. Here, the Hearing Office concluded that
[p]harmacy’s fee review was premature because [the
e]mployer denied that the compound cream was related
to [c]laimant’s accepted work injury. The Hearing
Office erred because [the e]mployer’s non[]payment did
not fit any of the exceptions to the rule that an employer
must pay an invoice within 30 days. See 34 Pa. Code §
127.255. [The e]mployer did not file a modification
petition to revise [c]laimant’s accepted work injury and
did not seek utilization review. [The e]mployer expressly
accepted liability for [c]laimant’s work injury in the nature
of a right shoulder strain both in the [notice of temporary
compensation payable] and in the [compromise and
release a]greement.
[The e]mployer contends that the compound cream was
not related to the accepted work injury, i.e., a shoulder
sprain. It argues that its liability for this treatment must be
established in a claim petition proceeding. We disagree.
The work injury has been accepted, and the sole question
is whether the compound cream was reasonable and
18
necessary for treatment of the accepted work injury. This
is an issue for utilization review.
We hold that [the e]mployer was obligated to seek
utilization review upon receipt of [the p]harmacy’s
invoice.
Workers’ First, 225 A.3d at 620-21 (emphasis added) (footnotes omitted).
Similarly, in Omni, we held that in denying pharmacy payment for treatment on the
basis of the “issue of causation” between claimant’s work injury and the prescribed
compound cream, “[e]mployer [was] challenging whether the compound cream
prescribed to [c]laimant constituted reasonable and necessary treatment for the
accepted work injury,” a question reserved for the utilization review process. Omni,
241 A.3d at 1275 & 1278 (citing Workers’ First, 225 A.3d at 621).
Likewise, here, SWIF was obligated to seek utilization review to
dispute liability for Claimant’s treatment in order to render Harburg’s fee review
application premature, because SWIF’s “defense” that the prescribed mattress
overlay was not related to Claimant’s work injury was “just another way of stating
that [it] was not a reasonable or necessary ‘procedure’ for treating Claimant’s
‘diagnosis[.]’” Workers’ First, 225 A.3d at 620-21; see also Omni, 241 A.3d at 1275
& 1278.10
We acknowledge that, in a footnote in Crozer Chester II, the
Pennsylvania Supreme Court suggested that WC Regulation 127.255(1), 34 Pa.
10We clarify that Workers’ First and Omni do not stand for the proposition that liability
for a claimant’s prescribed treatment may only be disputed through the utilization review process.
An employer may also petition for review of medical treatment to challenge the causal relation
between the prescribed treatment and the claimant’s work injury. See CVA, Inc. v. Workers’ Comp.
Appeal Bd. (Riley), 29 A.3d 1224, 1229 (Pa. Cmwlth. 2011). Rather, the import of Workers’ First
and Omni is that where an employer or insurer also seeks to render a provider’s fee review
application premature, a dispute regarding the causal connection between the prescribed treatment
and the underlying work injury must be reframed as a challenge to the reasonableness and necessity
of the treatment through the utilization review process. See Omni, 241 A.3d at 1275 & 1278 (citing
19
Code § 127.255(1), might be susceptible to a reading that would allow disputes
regarding liability for the prescribed treatment, in addition to denials of liability for
the alleged work injury, to serve as bases for deeming fee applications prematurely
filed. See Crozer Chester II, 22 A.3d at 194 n.5. The Supreme Court observed:
We recognize that the language of Regulation 127.255(1)
[regarding when a fee review application shall be deemed
prematurely filed] appears to contain a latent ambiguity
insofar as it refers to the insurer denying “liability for the
alleged work injury.” See 34 Pa. Code § 127.255. Indeed,
Section 306(f.1)(5) of the Act, which the regulation
addresses, indicates that it is sufficient if the insurer denies
liability for a “particular treatment,” as explained
further infra. See 77 P.S. § 531(5); 77 P.S. § 991(a)(v)
(Department [of Labor and Industry (Department)] to
promulgate regulations “reasonably calculated to . . .
explain and enforce the provisions of th[e] [A]ct”). In this
case, the Department is interpreting the Regulation
consistently with the Act, as required, and there is no issue
before us regarding the overall validity of Regulation
127.255(1) in light of the latent ambiguity. See 77 P.S.
§ 991(a) (Department to promulgate regulations “consistent
with th[e] [A]ct”).
Crozer Chester II, 22 A.3d at 194 n.5.
However, the outcome of Crozer Chester II does not apply here. That
case involved a provider’s petition for review in mandamus seeking to compel the
Department to decide the merits of a fee review application that had been rejected
as premature. See id. at 7, R.R. at 85a. The Pennsylvania Supreme Court affirmed
Workers’ First, 225 A.3d at 621 (citing WC Regul. 127.255, 34 Pa. Code § 127.255)); see also
WC Regul. 127.406(a), (b), 34 Pa. Code § 127.406(a), (b) (“[Utilization Review Organizations]
shall decide only the reasonableness or necessity of the treatment under review” and “may not
decide . . . [t]he causal relationship between the treatment under review and the employe’s work-
related injury”); WC Regul. 127.470(a), (b), 34 Pa. Code § 127.470(a), (b) (“[Utilization Review]
Reviewers shall assume the existence of a causal relationship between the treatment under review
and the employe’s work-related injury”).
20
this Court’s decision sustaining the Department’s preliminary objection on the basis
that provider failed to plead a legally cognizable claim in mandamus, where the
provider failed to establish a clear right to relief and sought to compel the
Department to perform a discretionary act. See id. at 192. By contrast, here, the
issue is whether the Hearing Office erred in concluding that SWIF was obligated to
seek utilization review before denying payment for the prescribed mattress overlay
on the basis that it was not related to Claimant’s work injury, not whether either
party impermissibly sought to compel the exercise of agency discretion.
Likewise, the footnote from Crozer Chester II quoted above does not
govern the present dispute. We construe the Court’s reference to a “latent
ambiguity” between subsections (1) and (2) of WC Regulation 127.255, 34 Pa. Code
§ 127.255, as pertaining to circumstances where, for instance, an employer has
denied liability for the injury early on and although that denial may be the subject of
claim petition litigation, the employer is not yet responsible for medical bills. Thus,
an employer or insurer would be denying liability for both the work injury and any
billed treatment pending resolution of a claim petition, apparently implicating both
subsections (1) and (2) of the above-cited regulation to render fee review
premature.11 See id.; Armour Pharmacy v. Bureau of Workers’ Comp. Fee Rev.
Hearing Office (Wegman’s Food Mkts., Inc.), 206 A.3d 660, 665-66 (Pa. Cmwlth.
2019) (stating that “[i]n short, an employer’s liability for a claimant’s work injury
must be established before the fee review provisions can come into play.”). This
perceived ambiguity does not exist here where, despite SWIF’s post hoc position
that it has, in fact, challenged liability for the injury, it has not petitioned to set aside
the NCP it issued accepting liability for the injury.
11
In that instance, the medical provider assumes the risk that the claimant’s claim petition
may be unsuccessful and the provider may not be paid for treatment.
21
Moreover, as footnote 5 of Crozer Chester II points out, Section
306(f.1)(5) specifically provides that an insurer’s dispute regarding a “particular
treatment” may suspend the 30-day payment period. See Section 306(f.1)(5) of the
Act, 77 P.S. § 531(5). Critically, this portion of Section 306(f.1)(5) does not pertain
to instances where the employer has denied liability for the injury. It governs
challenges raised through the utilization review process, which can only arise after
the employer has accepted liability for the underlying injury. See id. (providing that
employer or insurer shall make payment for treatment provided pursuant to the Act
“unless the employer or insurer disputes the reasonableness or necessity of the
treatment provided [through the utilization review process] pursuant to paragraph
(6)”) (emphasis added). Expanding WC Regulation 127.255(1) by incorporating
utilization review provisions (the subject of subsection 2) would render meaningless
any distinction between subsection (1) (denial of liability for alleged work injury)
and subsection (2) (treatment disputed through utilization review), as both bases for
deeming a fee application premature would then include denials of liability for
treatment pursued through the utilization review process.12
We also agree with Harburg that Keystone Rx does not preclude
affirmance of the Hearing Office’s June 3, 2021 decision. In Keystone Rx, the
Pennsylvania Supreme Court held that “the Act makes clear that a non-treating
12
We further note that footnote 5 of Crozer Chester II constitutes non-binding dictum. See
In re L.J., 79 A.3d 1073, 1081 (Pa. 2013) (holding that a footnote in a separate case constituted
“non-binding dict[um]” to which “stare decisis did not apply,” where “the passage was not
necessary to the outcome of the case” and “the majority . . . simply volunteered the discussion”
when “the issue was not litigated by the parties”). Moreover, the “latent ambiguity” referenced by
the Court in that footnote is not of concern here as Employer issued an NCP that remains open,
thereby foreclosing SWIF’s ability to render fee review premature by means of WC Regulation
127.255(1), 34 Pa. Code § 127.255(1), absent some further action by Employer to rescind, amend,
or terminate the NCP. See Beissel, 465 A.2d 969 at 971-72; Mahon, 835 A.2d at 426. Thus,
subsection (2) of that regulation constituted SWIF’s sole means of temporarily forestalling the fee
review process. See WC Regul. 127.255(2), 34 Pa. Code § 255(2).
22
provider does not have a constitutionally-protected property interest in goods or
services that it dispensed, as these providers were never entitled to payment under
the Act; rather they simply have an expectation of payment in the normal course.”
Keystone Rx, 265 A.3d at 333. The Court further noted that non-treating providers
may dispute the amount or timeliness of payment by applying for fee review. Id. at
325. However, this holding does not bear upon whether SWIF’s “causal relatedness”
denial entitled it to withhold reimbursement for the prescribed mattress overlay
without first initiating the utilization review process.
Accordingly, as none of the conditions in WC Regulation 127.255, 34
Pa. Code § 127.255, have been met, the Hearing Office correctly determined that
Harburg’s fee review petition was not premature, and we affirm.
__________________________________
CHRISTINE FIZZANO CANNON, Judge
23
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
State Workers’ Insurance Fund, :
Petitioner :
:
v. :
:
Harburg Medical Sales Co., Inc., :
(Bureau of Workers’ Compensation :
Fee Review Hearing Office), : No. 712 C.D. 2021
Respondent :
ORDER
AND NOW, this 15th day of December, 2022, the June 3, 2021 order
of the Bureau of Workers’ Compensation Fee Review Hearing Office is
AFFIRMED.
__________________________________
CHRISTINE FIZZANO CANNON, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
State Workers’ Insurance Fund, :
Petitioner :
:
v. : No. 712 C.D. 2021
: Argued: June 22, 2022
Harburg Medical Sales Co., Inc. :
(Bureau of Workers’ Compensation :
Fee Review Hearing Office), :
Respondent :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE LORI A. DUMAS, Judge
CONCURRING AND DISSENTING OPINION BY
PRESIDENT JUDGE COHN JUBELIRER FILED: December 15, 2022
I agree with the Majority that the State Workers’ Insurance Fund (SWIF) has
waived its challenge to Harburg Medical Sales Co., Inc.’s (Harburg) standing by
raising the issue for the first time on appeal to this Court. Therefore, I concur with
that portion of the Majority. However, for the reasons set forth in my dissenting
opinion in UPMC Benefit Management Services, Inc. d/b/a UPMC Work Partners
v. United Pharmacy Services (Bureau of Workers’ Compensation Fee Review
Hearing Office), __ A.3d __ (Pa. Cmwlth., No. 558 C.D. 2021, filed December 15,
2022) (Cohn Jubelirer, P.J., dissenting), I disagree with affirming the Workers’
Compensation Fee Review Hearing Office’s decision that held that Harburg’s Fee
Review Applications were not premature due to SWIF’s failure to seek Utilization
Review, notwithstanding that its challenge was based on the treatment not being
related to the work-related injury. Accordingly, I must, respectfully, dissent from
that portion of the Majority.
__________________________________________
RENÉE COHN JUBELIRER, President Judge
RCJ – 2