Agilus Health v. Accor Lodging North America

52 So. 3d 68, 2010 La. LEXIS 2605, 2010 WL 4845732
Supreme Court of Louisiana·Decided November 30, 2010·No. 2010-C-0800·Published·Cited by 9 cases

Opinion

CIACCIO, J. *

| jThis case involves an alleged underpayment of workers’ compensation benefits from the employer to the treating health care provider. The Louisiana Workers’ Compensation Act (“LWCA”) provides a reimbursement schedule, which sets forth maximum charges for medical treatment to workers’ compensation patients. In this case, the payments to the health care provider were discounted below the reimbursement schedule pursuant to a preferred provider organization contract (“PPO”). We granted certiorari in this case to determine whether PPO discounted reimbursement payments to health care providers in amounts below those set forth in the LWCA’s reimbursement schedule run afoul of the LWCA. For the reasons set forth below, we find the payment to a health care provider in an amount below the LWCA reimbursement schedule for workers’ compensation services pursuant to a valid PPO contract does not violate Louisiana law. Thus, the judgment of the court of appeal is reversed.

FACTS & PROCEDURAL HISTORY

Agilus Health executed a PPO contract with First Health in June 2004. Pursuant to this contract, Agilus joined a network of providers and payors into the network. The contract stated, “[Agilus] understand[s] and agree[s] that First Health |2will offer to certain Payors the opportunity to contract with First Health to utilize the services of the health care providers.... ” In exchange for the benefits of being in the network and receiving the benefits of “steerage” and “more patients,” Agilus agreed to accept discounted rates from payors into the network for certain services. Concerning workers’ compensation reimbursement, the contract stated:

D. Reimbursement from Workers Compensation Payors for services rendered to occupationally ill/injured employees shall be as follows:
(1) If any state law or regulation establishes rules or guidelines for the payment of health care services, reimbursement shall not exceed 85% of the maximum amount payable under such rules or guidelines. 1

As a member of the First Health network, Agilus agreed to receive lower rates from payors into the network for a number of different services. Liberty Mutual Insurance Company was one of the many payors into the First Health network.

*71 Allison Taylor was employed by Accor Lodging North America (“Accor”), and suffered an injury in the course and scope of her employment on June 14, 2007. She was referred to and treated by Agilus Health for her injuries. 2 Agilus submitted its bills to Liberty Mutual, Accor’s workers’ compensation insurer, for Taylor’s treatment. Agilus claims it charged Liberty Mutual and Accor Lodging $1,158.00 for the services rendered to Taylor with the maximum reimbursement under the LWCA reimbursement schedule being $906.00. Agilus claims it expected to be paid this amount. However, because Agi-lus belonged to the First Health network and Liberty Mutual was a payor in the network, Liberty Mutual paid the bill timely in the amount of $724.80, which was 80% of the LWCA reimbursement schedule. Liberty Mutual Lpaid this amount pursuant to the PPO agreement, which set forth the amount of reimbursement for workers’ compensation services for payors into the network at 80% of the state’s reimbursement schedule. Agilus then filed suit against Liberty Mutual and Accor seeking recovery of the alleged underpayment in the amount of the difference between the amount in the reimbursement schedule and the 80% paid ($181.20) plus penalties, attorney fees, and legal interest.

Following a hearing, the Office of Workers’ Compensation (“OWC”) hearing officer ruled in favor of the plaintiff, Agilus Health, finding the PPO contract violated provisions of the LWCA. The hearing officer found in his oral reasons for judgment that PPO agreements are limited and confined to operation within the general health arena and do not apply in the area of workers’ compensation. The court awarded Agilus Health the underpayment of $181.20, a $2,000 penalty, $4,000 in attorney fees, plus legal interest. Both Liberty Mutual and Accor appealed the Workers’ Compensation Court’s ruling.

The Third Circuit Court of Appeal, in a split opinion, affirmed the lower court’s ruling. Agilus Health v. Accor Lodging North America, 09-1049 (La.App. 3 Cir. 3/10/10) 32 So.3d 1120. Accor and Liberty Mutual argued the PPO agreement was not a violation of the LWCA because La. R.S. 23:1034.2(E) allows a provider to charge a fee that is less than that established by the reimbursement schedule. However, the court reasoned that 1034.2(E) “does not allow the employer to pay less than the scheduled amount if the provider charges that amount or more.” Agilus, 32 So.3d at 1121. The court of appeal cited La. R.S. 23:1203(B), which states:

The obligation of the employer to furnish such care, services, treatment, drugs, and supplies, whether in state or out of state, is limited to the reimbursement determined to be the mean of the usual and customary charges for such care, services, treatment, drugs, and supplies, as determined under the reimbursement schedule annually |4published pursuant to R.S. 23:1034.2 or the actual charge made for the service, whichever is less. Any out-of-state provider is also to be subject to the procedures established under the office of workers’ compensation administration utilization review rules.

The opinion also cited La. R.S. 23:1033, which provides, “no contract, rule, regulation or device whatsoever shall operate to relieve the employer, in whole or in part, from any liability created by this Chapter except as herein provided.” The court also cited a portion of Judge Peter’s con *72 currence in Beutler England Chiropractic Clinic v. Mermentau Rice, Inc., 05-942 (La.App. 8 Cir. 5/31/06) 931 So.2d 553, 561, which stated:

[T]o the extent that the PPO contract purports to further limit the employer’s liability for medical care, it runs afoul of La.R.S. 23:1033 and may not serve as a basis to reduce the amount owed to Beutler England for the treatment of [the injured employee]. Because the PPO contract may not serve as a basis to reduce the amount owed for the treatment of [the injured employee], Beutler England’s claim is properly before the OWC pursuant to La.R.S. 23:1034.2(F)(1) as a garden-variety medical expense claim. Whatever remaining rights the defendants have vis-a-vis the PPO, in light of the Workers’ Compensation Act’s express disallowal of contracts in contravention of its provisions, is another issue for another forum.

Accordingly, the court of appeal found no error in the decision of the OWC hearing officer ruling finding the PPO contract provisions related to workers’ compensation violated the LWCA. The court also affirmed the award of penalties and attorney fees finding the defendants violated a statutorily mandated payment schedule and did not reasonably controvert the plaintiffs claim. Agilus, 32 So.3d at 1122.

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Agilus Health v. Accor Lodging North America, 52 So. 3d 68, 2010 La. LEXIS 2605, 2010 WL 4845732 (La. 2010).

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