Keystone RX LLC v. Bureau of Workers' Comp. Fee Review Hearing Office

265 A.3d 322

KEYSTONE RX LLC,

v.BUREAU OF WORKERS' COMPENSATION FEE REVIEW HEARING OFFICE (Compservices Inc./AmeriHealth Casualty Services)

Appeal of: Compservices/AmeriHealth Casualty Services

Keystone RX LLC

v.Bureau of Workers' Compensation Fee Review Hearing Office (Compservices Inc./AmeriHealth Casualty Services)

Appeal of: Bureau of Workers' Compensation Fee Review Hearing Office

No. 27 EAP 2020

No. 28 EAP 2020

Supreme Court of Pennsylvania.

Argued: April 13, 2021

Decided: December 22, 2021

Kimberly Dawn Mazin, Esq., Philadelphia, Eric G. Preputnick, Esq., Commonwealth of Pennsylvania, Deborah Jean Schwartz, Esq., Pennsylvania Department of Labor & Industry, Harrisburg, Kelly Kathleen Smith, Esq., for Bureau of Workers' Compensation Fee Review Hearing Office, Appellant.

Audrey Jacobsen Copeland, Esq., King of Prussia, Marshall Dennehey Warner Coleman & Goggin, PC, for The Coalition Against Insurance Fraud, Appellant Amicus Curiae.

Steven Burgess Davis, Esq., Philadelphia, for Insurance Federation of Pennsylvania, et al., Appellant Amicus Curiae.

Karl Stewart Myers, Esq., Stradley, Ronon, Stevens & Young, LLP, Philadelphia, for Insurance Federation of Pennsylvania, et al., Appellant Amicus Curiae.

Michele R. Punturi, Esq., Marshall Dennehey Warner Coleman & Goggin, Philadelphia, for The Coalition Against Insurance Fraud, Appellant Amicus Curiae.

Anthony J. Bilotti, Esq., Anthony J. Bilotti & Associates, L.L.C., Media, for Compservices Inc./AmeriHealth Casualty Services, Appellee.

Jay Brandon Todd McCoy, Esq., Anthony J. Bilotti & Associates, L.L.C., for Compservices Inc./AmeriHealth Casualty Services, Appellee.

Daniel Joel Siegel, Esq., Law Offices of Daniel J. Siegel, L.L.C., Havertown, for Keystone Rx LLC, Appellee.

Karl Stewart Myers, Esq. Stradley, Ronon, Stevens & Young, LLP, Philadelphia, for American Property Casualty Insurance Association, Amicus Curiae, Insurance Federation of Pennsylvania, et al., Appellant Amicus Curiae.

Anthony J. Bilotti, Esq., Media, Jay Brandon Todd McCoy, Esq., Anthony J. Bilotti & Associates, L.L.C., Compservices Inc./AmeriHealth Casualty Services, Appellant.

Audrey Jacobsen Copeland, Esq., Marshall Dennehey Warner Coleman & Goggin, PC, King of Prussia, for The Coalition Against Insurance Fraud, Appellant Amicus Curiae.

Steven Burgess Davis, Esq., Philadelphia, for Insurance Federation of Pennsylvania, et al., Appellant Amicus Curiae.

Shawn C. Gooden, Esq., Weber Gallagher Simpson Stapleton Fires & Newby, LLP, Harrisburg, for Laundry Owners Mutual Liability Insurance Association, et al., Appellant Amicus Curiae.

Anthony Natale III, Esq., Michele R. Punturi, Esq., Marshall, Dennehey, Warner, Coleman & Goggin, P.C., Philadelphia, for The Coalition Against Insurance Fraud, Appellant Amicus Curiae.

Lori Anne Tunstall, Esq., Weber Gallagher Simpson Stapleton Fires & Newby, LLP, Philadelphia, for Laundry Owners Mutual Liability Insurance Association, et al., Appellant Amicus Curiae.

Kimberly Dawn Mazin, Esq., Philadelphia, Eric G. Preputnick, Esq., Commonwealth of Pennsylvania, Bureau of Workers' Compensation Fee Review Hearing Office, Appellee, Deborah Jean Schwartz, Esq., Pennsylvania Department of Labor & Industry, Harrisburg, for Bureau of Workers' Compensation Fee Review Hearing Office, Appellee.

Daniel Joel Siegel, Esq., Law Offices of Daniel J. Siegel, L.L.C., Havertown, for Keystone Rx LLC, Appellee.

BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

CHIEF JUSTICE BAER

In this workers’ compensation matter, the Bureau of Workers’ Compensation Fee Review Hearing Office ("Hearing Office") concluded that, in the fee review setting, a non-treating healthcare provider, like a pharmacy, cannot challenge a utilization review ("UR") determination that medications prescribed by a treating healthcare provider, such as a physician, but dispensed by the non-treating entity, were unreasonable and unnecessary for the treatment of a claimant's work-related injury. The Commonwealth Court affirmed the Hearing Office's order. However, after reaching this result, the intermediate court held that for UR procedures occurring in the future, when an employer, insurer or an employee requests UR, non-treating providers, such as pharmacies, must be afforded notice and an opportunity to establish their right to intervene in the UR proceedings. Keystone Rx LLC v. Bureau of Workers’ Comp. Fee Review Hearing Office (Compservices Inc.) , 223 A.3d 295, 299 (Pa. Cmwlth. 2019) (" Keystone Rx "). While we affirm the Commonwealth Court's result, we respectfully reject its prospective holding that non-treating healthcare providers must be given notice and an opportunity to intervene in UR proceedings.

By way of a statutory background, Section 306(f.1)(1)(i) of the Workers’ Compensation Act ("Act") requires employers and their insurers to pay the costs of "reasonable surgical and medical services, ... medicines[,] and supplies as and when needed" for work injuries sustained by their employees. 77 P.S. § 531(1)(i). The Act provides that disputes regarding the "reasonableness or necessity of treatment by a health care provider" shall be resolved by a UR, i.e. , utilization review, "at the request of an employe, employer, or insurer." 77 P.S. § 531(6)(i). URs are conducted by health care providers "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(6)(i).¹

If a treating "provider, employer, employe or insurer" disagrees with the result of the UR, a petition for review must be filed. See 77 P.S. § 531(6)(iv) (explaining that in disputes as to reasonableness or necessity of treatment, if "the provider, employer, employe or insurer disagrees with the finding of the utilization review organization, a petition for review by the department must be filed within thirty (30) days after receipt of the report"). The Act dictates that, after a petition for review is filed by one of these parties, a workers’ compensation judge ("WCJ") must hold a hearing at which the WCJ may make recommendations that will control only if all parties agree that the WCJ's recommendations will be binding. 77 P.S. § 711.1. The Act does not permit non-treating providers that deliver services in conjunction with a claimant's medical treatment, such as pharmacies, to participate in the UR process. The Act, however, contains a fee review process that allows these non-treating entities to dispute "the amount or timeliness of the payment from the employer or insurer." 77 P.S. § 531(5).²

Turning to the factual background of this case, Thomas Shaw ("Claimant"), an employee of the Roman Catholic Archdiocese of Philadelphia ("Employer"), suffered a workplace-related left knee injury in 2014.³ Claimant sought and received medical care from a physician, Dr. Bradley Ferrara ("Physician"), including prescriptions for medications starting in April of 2015 and continuing until at least April of 2017. Keystone Rx LLC ("Pharmacy") dispensed the medications to Claimant and billed Employer's insurer, Compservices/AmeriHealth Casualty Services ("Insurer").

Insurer filed a UR request in 2017 regarding medical treatment, including medications prescribed by Physician and dispensed by Pharmacy, that Shaw received after November 2, 2016. Because Pharmacy was not a treating provider for purposes of the UR procedures of the Act, it was not a party to the UR process. The result of the UR was a determination that all treatment rendered by Physician after November 2, 2016, including the prescribed medications that Pharmacy dispensed to Claimant, was unreasonable and unnecessary because it was unrelated to Claimant's workplace injury. Claimant filed two petitions to review the UR determination, but those petitions were later withdrawn pursuant to a Compromise and Release ("C&R") Agreement that resolved Claimant's then-pending claims but left open whether he could receive future medical coverage for his workplace injury. This outcome meant that Insurer was not required to pay Pharmacy under the Act for the aforementioned medications that Pharmacy provided to Claimant.

Pharmacy then filed the two applications for fee review that are at issue in this appeal. The Medical Fee Review Section of the Department of Labor and Industry ("Fee Review Section") held a hearing on the applications, after which it concluded that Insurer owed Pharmacy over $4,000 for providing Claimant the medications at issue in this case. Insurer sought and was granted a hearing to contest this conclusion, as it believed that any need for these medications was unrelated to Claimant's work injury because the medications were found to be unreasonable and unnecessary for treatment of Claimant's work-related injury during the UR process.

After a hearing, Hearing Office ruled in favor of Insurer by vacating the previously entered administrative determinations and dismissing Pharmacy's applications for fee review. The Hearing Office concluded that Insurer met "its burden of proving that the medications prescribed by [Physician] had been classified as unreasonable and unnecessary treatment via the Utilization Review process." Petition for Review, 10/15/2018, Exhibit A, at 13. In reaching this conclusion, the Hearing Office explained that Pharmacy did not have standing in a fee review procedure to challenge the UR determination that the medications prescribed by Physician were unreasonable and unnecessary. The Hearing Office also rejected Pharmacy's argument that the Commonwealth Court's decision 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) (" Armour "), a case we discuss in more detail infra , holds that non-treating providers may not be deprived of compensation in the workers’ compensation setting without receiving due process.

Pharmacy then filed a petition for review in the Commonwealth Court, where Pharmacy...