Back in Action Physical Therapy v. Liberty Northwest Insurance

316 P.3d 324, 259 Or. App. 743
CourtCourt of Appeals of Oregon
DecidedDecember 11, 2013
Docket0800163H; A147973; 0800217H; A147974 0800209H; A147975 0800185H; A147976 0800203H; A147977 0800162H; A147978 0800156H; A147979 0800221H; A147980 0800268H; A147981 0800250H; A147982 080013H; A147983 0800356H; A147984
StatusPublished

This text of 316 P.3d 324 (Back in Action Physical Therapy v. Liberty Northwest Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Back in Action Physical Therapy v. Liberty Northwest Insurance, 316 P.3d 324, 259 Or. App. 743 (Or. Ct. App. 2013).

Opinion

ARMSTRONG, P. J.

This is a consolidated medical fee dispute in which petitioners, Back in Action Physical Therapy (Back in Action) and 11 other medical providers, seek review of final orders of the Department of Consumer and Business Services (DCBS) concluding that petitioners were not entitled to additional payments from Liberty Northwest Insurance Corporation (insurer) for physical therapy services provided by petitioners to injured workers under the workers’ compensation system. Generally, the dispute involves whether insurer properly discounted its payments to petitioners for billed fees based on fee discount contracts between petitioners and MedRisk, Inc. (MedRisk), an “expert provider organization.” Petitioners raise five assignments of error, that, as explained below, are foreclosed by our recent decision in Cascade Physical Therapy v. Hartford Casualty Ins. Company, 258 Or App 612, 310 P3d 1156 (2013). Accordingly, we affirm.

With one exception described below, 259 Or App at 749-50, the issues presented are the same with respect to each petitioner. For ease of reference, we describe the background facts by reference to the “control” petitioner, Back in Action, except as otherwise noted. We take those facts — which are few and undisputed — from the amended final order in that case. Meltebeke v. Bureau of Labor and Industries, 322 Or 132, 134, 903 P2d 351 (1995) (unchallenged agency factual findings are the facts for purposes of judicial review).

In 2004, insurer contracted with MedRisk to arrange for the provision of rehabilitative treatment for injured workers being treated under the workers’ compensation system and to process the billings for that treatment from medical providers. In 2006, MedRisk entered into a contract with Back in Action, under which Back in Action agreed to accept specified rates of payment for specified services provided to injured workers. Between January 23, 2007, and June 17, 2007, Back in Action provided treatment to an injured worker and submitted bills to insurer for that treatment. Insurer sent the bills to MedRisk and, through MedRisk, paid Back in Action at the discounted rates set out [748]*748in Back in Action’s agreement with MedRisk. Back in Action requested administrative review under ORS 656.248(12),1 which ultimately resulted in this judicial review proceeding.

On July 7, 2008, DCBS adopted a temporary rule, OAR 436-009-0040 (07/07/08). Before the adoption of the temporary rule, OAR 436-009-0040(1) (01/01/08) (the former permanent rule) provided, as pertinent:

“The insurer must pay for medical services at the provider’s usual fee or in accordance with the fee schedule whichever is less. Insurers must pay for medical services that have no fee schedule at the provider’s usual fee. For all [managed care organization (MCO)] enrolled claims, the insurer must pay for medical services at the provider’s usual fee or according to the fee schedule, whichever is less, unless otherwise provided by MCO contract.”

The temporary rule amended subsection (1) to read:

“Unless otherwise provided by contract, insurers must pay providers at the providers’ usual fee, or the amount set by the fee schedule, whichever is less.”

OAR 436-009-0040(1) (07/07/08) (emphasis added). Thus, the temporary rule purported to enforce fee discount contracts, like those at issue in this case, in the calculation of medical provider fees. The temporary rule was in effect from July 7, 2008, through January 2, 2009, and applied to “[a] 11 payments made under a contract with a medical provider, regardless of the date of service.” OAR 436-009-0003(1) (07/07/08).

Applying the temporary rule to the dispute involving Back in Action, the Resolution Team of the Workers’ Compensation Division entered an Administrative Order concluding that insurer had correctly reduced the payment to Back in Action according to the contract and, therefore, was not liable for the additional amount claimed by Back [749]*749in Action.2 After a hearing, an administrative law judge (AL J) issued a proposed and final order concluding that the temporary rule could not be applied retroactively to this case because doing so would violate ORS 183.335(6)(a),3 that the former permanent rule did not authorize payments to be discounted under individual contracts, and, therefore, that insurer was liable for additional payment to Back in Action equal to the discount taken under the agreement between Back in Action and MedRisk. The director disagreed with the conclusion reached by the AL J and, in an amended final order, affirmed the Administrative Order applying the temporary rule allowing the contract discounts. Back in Action seeks judicial review of the amended final order.4 ORS 656.248(12); ORS 656.704(2)(a); ORS 183.480 -183.497.

One petitioner, Jackson County Physical Therapy, is in a slightly different procedural posture. In that case, one of the challenged administrative orders was issued after the temporary order had expired; thus, as the final order concludes, the controlling rule as to that order was the former [750]*750permanent rule. The director concluded that enforcing fee discount contracts was allowed under the former permanent rule as well.

As noted, petitioners raise five assignments of error on review. Specifically, they contend that the director erred in (1) retroactively applying the temporary rule to the payment of medical services provided and billed in 2007;5 (2) adopting the temporary rule, because it exceeds the agency’s authority under ORS chapter 656 (the workers’ compensation statutes); (3) interpreting the former permanent rule to allow insurer to discount payments to Jackson County Physical Therapy; (4) “finding [that] MedRisk did not actively manage medical care of injured workers on [insurer’s] behalf”; and (5) denying petitioners attorney fees and penalties under ORS 656.262(2) and (11).

As mentioned, the resolution of petitioners’ assignments of error are controlled by our decision in Cascade Physical Therapy. Similar to this case, the dispute in Cascade Physical Therapy was whether the administrative rule allowed insurers to discount payments to physical therapy providers based on a fee discount contract between those providers and a preferred provider organization (PPO), which also had a contract with insurers. As relevant here, the difference between Cascade Physical Therapy and this case is that the former involved only the interpretation of the former permanent rule, OAR 436-009-0040(1) (01/01/08), rather than the temporary rule, OAR 436-009-0040(1) (07/07/08). In Cascade Physical Therapy,

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Related

Meltebeke v. Bureau of Labor and Industries
903 P.2d 351 (Oregon Supreme Court, 1995)
Cascade Physical Therapy v. Hartford Casualty Insurance
310 P.3d 1156 (Court of Appeals of Oregon, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
316 P.3d 324, 259 Or. App. 743, Counsel Stack Legal Research, https://law.counselstack.com/opinion/back-in-action-physical-therapy-v-liberty-northwest-insurance-orctapp-2013.