Central La. Ambulatory Surgical Center,(edith Hilborn) v. Rapides Parish School Board

• Court: Louisiana Court of Appeal
• Decided: July 28, 2010
• Docket: WCA-0010-0097
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

10-86 (consolidated with) 10-91, 10-92, 10-96, 10-97, 10-99, 10-100, 10-115, 10-117, and 10-118

CENTRAL LOUISIANA AMBULATORY SURGICAL CENTER, INC. (BRIDGET HUIE)

VERSUS

PAYLESS SHOESOURCE, INC.

**********

APPEAL FROM THE OFFICE OF WORKERS’ COMPENSATION - # 2 PARISH OF RAPIDES, NO. 08-02882 JAMES L. BRADDOCK, WORKERS’ COMPENSATION JUDGE

ULYSSES GENE THIBODEAUX CHIEF JUDGE

Court composed of Ulysses Gene Thibodeaux, Chief Judge, Shannon J. Gremillion, and David E. Chatelain,* Judges.

Gremillion, J., concurs and assigns written reasons.

AFFIRMED IN PART, REVERSED IN PART, AND RENDERED.

Roger Anthony Javier The Javier Law Firm 800 Energy Centre 1100 Poydras Street New Orleans, LA 70163 Telephone: (504) 599-8570 COUNSEL FOR: Defendant/Appellant - Payless Shoesource, Inc.

* Honorable David E. Chatelain participated in this decision by appointment of the Louisiana Supreme Court as Judge Pro Tempore. Richard Bray Williams Williams Family Law Firm, LLC P. O. Box 15 Natchitoches, LA 71458-0015 Telephone: (318) 352-6695 COUNSEL FOR: Plaintiff/Appellee - Central Louisiana Ambulatory Surgical Center, Inc. (Bridget Huie) THIBODEAUX, Chief Judge.

The plaintiff-appellee, Central Louisiana Ambulatory Surgical Center,

Inc. (CLASC), filed ten disputed claim forms with the Office of Workers’

Compensation (OWC) for the underpayment of medical bills for services provided

by CLASC to ten injured workers. The named defendants, all appellants, were the

employers of the injured workers: Payless Shoesource, Inc. (one worker); Gilchrist

Construction Co. (one worker); and, Rapides Parish School Board (eight workers).

The defendants-appellants will be collectively referred to as “the Employers.”

The disputes arose from a web of contracts with a preferred provider

organization (PPO) which discounted its payments to CLASC by twenty percent

(20%). This 20% reduction in medical fee reimbursement was calculated upon a fee

that had already been reduced by ten percent (10%) in accordance with La.Admin.

Code tit. 40, part I, § 2507 promulgated in conjunction with La.R.S. 23:1034.2 of the

Louisiana Workers’ Compensation Act (LWCA or the Act). Following two hearings

on the partially consolidated claims, the OWC entered judgment in favor of CLASC

on each of the ten claims for underpayments ranging from approximately $137.00 to

$2,200.00. The OWC also awarded CLASC $1,500.00 in attorney fees, along with

a penalty of $2,000.00, on each of the ten claims. The Employers appealed the

judgment.1

Finding that the issues, as well as the plaintiff and the pertinent

contracts, are the same in all ten cases, we have consolidated the ten appeals. For the

reasons set forth below, we affirm the OWC’s awards for underpayments to CLASC.

1 CLASC answered the appeal in each case, in addition to filing its opposition. We note, however, that CLASC’s two-page answer does not contain any assignments of error. Accordingly, we will not address the errors assigned by CLASC in its opposition brief in appeal number 10-86 (OWC 08-02882). Finding, however, that the Employers reasonably controverted the claims by CLASC,

we reverse all awards for attorney fees and penalties.

I.

ISSUES

We must decide:

(1) whether the PPO contracts are legally valid and enforceable against the established, mandatory fee rates set forth in the medical fee reimbursement schedule of the LWCA;

(2) whether the claims of CLASC for penalties and attorney fees have prescribed; and,

(3) whether the Employers in these consolidated cases reasonably controverted CLASC’s claims of underpayments, thereby rendering the OWC’s assessment of penalties and attorney fees against the Employers a reversible manifest error.

II.

FACTS AND PROCEDURAL HISTORY

In December of 1995, the business director of CLASC signed a

document entitled “Affordable Health Care Concepts Participating Provider

Agreement.” The document was signed by Affordable Health Care Concepts

(Affordable) in February 1996 and became effective the following month. The

document’s stated purpose was to create a “Preferred Provider Panel” which would

“agree to comply with the reimbursement mechanisms established by

AFFORDABLE.” It further stated that Affordable would “offer to certain Payors the

opportunity to participate” in a PPO plan that used the services of the “Preferred

Provider Panel.”

The nine-page Affordable PPO document addressed requirements that

medical providers had to meet, such as cooperating with “Payors” in “expediting the

2 return to work of Participating Patients” in workers’ compensation cases, as well as

maintaining staff privileges, professional licenses, and professional liability

insurance. Couched in terms relating to what the “Payor” agreed to pay, the

Affordable PPO document referenced “the lesser of the Provider’s charges or the fee

schedule listed in Appendix A.” Attached to the Affordable PPO Agreement is a one-

page, unsigned, undated document entitled “Appendix A – First Health Outpatient

Care Network Reimbursement” (First Health Appendix or Appendix A). The First

Health Appendix does not contain the name of the main document or bear reference

to the Affordable PPO document to which it is attached.

However, Subpart (D) of the First Health Appendix provided that

reimbursement from workers’ compensation Payors would not exceed 80% of the

maximum amount payable under governing state law, whether the state rules were in

existence at the time of the execution of the agreement or established at a later time.

Affordable changed its operating name to First Health Group Corporation (First

Health) at some point in time, but apparently no efforts were made to notify CLASC

of the corporate changes or to provide proper documentation in that regard.

On January 1, 2002, First Health entered into an agreement with

Gallagher Bassett Services, Inc. (Gallagher). The title of that document was

“Workers’ Compensation Managed Care Services Agreement” (Gallagher/First

Health Agreement). It provided that First Health would perform services including

clinical management, bill review, access to the First Health network, and “Front-End

Processing” (electronic data capture from paper claims documents). Gallagher was

identified as the “Client” in the agreement, and the entities for whom the “Client”

would make managed care services available were referred to as “Sub-Clients.” The

document further provided that neither First Health nor Gallagher, as “Client,” would

render any medical services to the claimants and that Gallagher was responsible for 3 “all decisions regarding the payment or denial of payment of medical benefits to

Claimants.”

While clearly dated January 1, 2002, on the first line identifying the

parties, the Gallagher/First Health Agreement was signed by Gallagher on January

12, 2005, and was signed by First Health on January 24, 2005. In addition to the

internal date discrepancies in the Gallagher/First Health Agreement, vague and

disparate terminology further lends to the confusion where the Affordable PPO

document refers to the Employer-defendants in these cases as “Payors” while the

Gallagher/First Health Agreement refers to them as “Sub-clients.”

In addition to the above-described contract between CLASC and

Affordable, and the above contract between Gallagher and First Health, each of these

consolidated cases contains approximately five other contracts, which are between

Gallagher or First Health and the adjusting companies, or between Gallagher and the

Employers. There are no contracts between CLASC and the Employers or the

Employers’ insurance company. Notably, the only contract that CLASC signed is the

Affordable PPO contract.

Beginning in June 2005, CLASC provided surgeries and medical

procedures for ten injured employees of the three Employers in these ten consolidated

cases.2 When CLASC received the Employers’ payments on its medical bills, the

payments were reduced by the ten percent (10%) mandatory reduction of the LWCA;

this 10% reduction is not an issue of dispute. The reduced payments were then

reduced again by twenty percent (20%) for the PPO discounts, as reflected by

Gallagher on the explanation of benefits (EOB) forms that it sent to CLASC in each

2 Neither the injuries nor the medical procedures are at issue in these cases.

4 case. CLASC filed the ten disputed claims forms against the Employers for the 20%

payment reductions on CLASC’s bills for medical services.

III.

LAW AND DISCUSSION

Validity of the PPO Discount Agreements Under the Framework of the LWCA

The Employers argue that the OWC erred in concluding that the PPO

discounts are not authorized by the LWCA. We find no error in the OWC’s

judgment. An examination of the underlying goals of the LWCA instructs us as to

the validity of the PPO discounts.

(1) Goals of the LWCA

An early decision of the Louisiana Supreme Court described the LWCA

as follows:

The act, which is social legislation, was passed for the joint benefit of labor and management in order to insure that employees who became disabled as a result of their labors in hazardous industries would have, during the period of their disability, a weekly income for the upkeep of themselves and their families. . . . In order that this end might be accomplished, the Legislature provided for sacrifices to be made by both the employer and the employee. The employee was required to waive the right granted him under the general law, Article 2315 of the Civil Code, in consideration of receiving a fixed percentage of his wages during the period of disability. The employer, on the other hand, was deprived of the defenses afforded to him by the general law and he was assured that, in case any of his employees were injured, they would be entitled to no more than the amount stipulated in the statute as compensation during the period of disability. . . .

Atchison v. May, 201 La. 1003, 10 So.2d 785, 788 (La.1942).

As Atchison demonstrates, the LWCA is remedial social legislation. The

Legislature’s goal was to relieve the injured employee of the burden of paying for his 5 own medical care and to replace his lost wages on a temporary or permanent basis,

as needed. The purpose of the LWCA is to advance the legitimate social interest of

ensuring that employees are not reduced to poverty because of an occupational or

traumatic injury. By providing for complete reimbursement of medical fees, the Act

intends for injured workers to receive the same high level of medical care as any other

person seeking medical assistance.

Not only is the workers’ compensation statutory framework social

legislation, but it is also specifically-regulated legislation. That is, it is separate and

apart from tort law or personal injury law, and it occupies a specially-regulated place

in Louisiana law. Consequently, those provisions dealing with workers’

compensation must be strictly followed. No deviation from the statutory text is

allowed.

(2) Validity of the PPO Discount Agreement

It is with that backdrop in mind that we consider the issue of whether the

PPO agreement is in violation of the LWCA and the reimbursement schedule. The

Employers argue that the OWC erred in finding that the PPO agreement violates the

LWCA. Specifically, they assert that though the OWC correctly held that La.R.S.

23:1033 does not prohibit contracting below the fee schedule, the OWC’s remaining

decisions conflict with the plain text of the LWCA. We disagree.

The Employers’ argument fails because it attempts to view specific

sections of the LWCA in a vacuum, without considering the interrelationship between

the sections or the overall purpose of the Act. Considering these factors together, the

PPO discounts taken by the Employers are simply not authorized under the LWCA.

Louisiana Revised Statutes 23:1203 provides that employers are liable

for the payment of medical expenses. Notably, La.R.S. 23:1203(B) states:

6 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 published 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.

Moreover, La.R.S. 23:1033 provides that: “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.” These sections, as

well as the LWCA as a whole, prohibit any contracts that would operate to relieve an

employer of liability created by the LWCA. In his concurring opinion to this court’s

en banc opinion in Beutler England Chiropractic Clinic v. Mermentau Rice, Inc., 05-

942, p. 9 (La.App. 3 Cir. 5/31/06), 931 So.2d 553, 561 (citing his dissenting opinion

in Beutler England Clinic v. Market Basket No. 27, 05-952 (La.App. 3 Cir. 12/30/05),

919 So.2d 816, 821), Judge Peters 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].

This court recently revisited this issue in Agilus Health (Allison Taylor)

v. Accor Lodging North America, 09-1049 (La.App. 3 Cir. 3/10/10), 32 So.3d 1120,

and affirmed the trial court’s judgment that the PPO agreement between the parties

violated the LWCA. Our position on the issue has not changed.

Here, the PPO contract by its very terms purports to reduce or relieve the

employer’s liability for workers’ compensation medical payments from the full

amount of the fee schedule to only eighty percent (80%) of the fee schedule. This

7 contractual maneuver, however, flies in the face of the language and purpose of the

Act.

The LWCA is highly regulated. As CLASC aptly points out, the Act

regulates the amounts owed for weekly benefits, maximum and minimum

compensation rates, mileage reimbursement, medical reimbursement, attorney fees,

and settlements. Almost every conceivable scenario is addressed in the scheme of the

LWCA. If the Legislature intended for PPO contracts to fall into the scheme of

workers’ compensation, it would have addressed them in the Act. Instead, the Act

specifically prohibits manipulation of its mandatory provisions. The Employers’

attempt to do so through PPO contracts, is, therefore, impermissible.

Moreover, the Employers’ actions violate the social legislative purpose

of the workers’ compensation act. Not only do the PPO contracts purport to limit the

employer’s liability for medical care, but they also threaten the foundation of the

workers’ compensation system—namely, providing quality medical care to injured

workers. When medical providers are forced to accept less reimbursement for the

same quality of care they provide to paying patients, it is likely that they will be

reluctant to participate in the workers’ compensation program. That reluctance will

then lead to a fewer number of providers accepting workers’ compensation patients,

and consequently, substandard care. We cannot allow the workers’ compensation

system to be compromised in such a way.

(3) The PPO Discount Agreements and the Louisiana Reimbursement Schedule

The Employers also argue that the Fee Schedule allows for, rather than

prohibits, PPO discounting. Specifically, the Employers rely on La.Admin. Code tit.

40, part I, § 4733 in support of that argument. Section 4733(A)(2)(b), however,

provides that if a hospital or medical fee schedule contains “pre-negotiated rates,” the

8 pre-negotiated rate must be negotiated between the provider and the carrier/self-

insured employer. Here, CLASC did not negotiate any contracts with the Employers.

Accordingly, the criteria of Section 4733 have not been met, and the Employers’

reliance on this Section is misplaced.

(4) Notice to CLASC

CLASC argues that even if the PPO network reduction did not violate

the LWCA and the Fee Schedule, the reductions would remain non-binding and

unenforceable under the express provisions of La.R.S. 40:2203.1, since the

Employers gave no prior notice to CLASC as required by the statute. The OWC’s

silence on the issue renders it implicitly denied.

Louisiana Revised Statutes 40:2203.1 governs PPO agreements with

health care providers in Louisiana. It provides in pertinent part:

A. Except as otherwise provided in this Subsection, the requirements of this Section shall apply to all preferred provider organization agreements that are applicable to medical services rendered in this state and to group purchasers as defined in this Part. The provisions of this Section shall not apply to a group purchaser when providing health benefits through its own network or direct provider agreements or to such agreements of a group purchaser.

B. A preferred provider organization’s alternative rates of payment shall not be enforceable or binding upon any provider unless such organization is clearly identified on the benefit card issued by the group purchaser or other entity accessing a group purchaser’s contractual agreement or agreements and presented to the participating provider when medical care is provided. When more than one preferred provider organization is shown on the benefit card of a group purchaser or other entity, the applicable contractual agreement that shall be binding on a provider shall be determined as follows:

....

(5) When no benefit card is issued or utilized by a group purchaser or other entity, written notification shall

9 be required of any entity accessing an existing group purchaser’s contractual agreement or agreements at least thirty days prior to accessing services through a participating provider under such agreement or agreements.

The record in these proceedings is clear that notice was not given to

CLASC as required by La.R.S. 40:2203.1. Identification cards were not issued for

workers’ compensation matters, nor was a written notice issued to the providers

containing the PPO networks. We conclude and hold that the specific notice

provisions of La.R.S. 40:2203.1 apply to workers’ compensation patients in a PPO

network.

Our decision on the necessity of notice is consistent with the very recent

opinion of our court in Gunderson v. F.A. Richard & Associates, Inc., 09-1498

(La.App. 3 Cir. 6/30/10), __ So.3d __. We agree entirely with Gunderson.

Timeliness of Claims for Penalties and Attorney Fees

The Employers contend that the claims for penalties and attorney fees

have prescribed. The Employers argue that the one-year prescriptive period found in

La.Civ.Code art. 3492 applies to claims for penalties and attorney fees. Specifically,

they attempt to persuade this court to join our colleagues in the first and fifth circuit

courts of appeal and to adopt the holding of Craig v. Bantek West, 03-2757 (La.App.

1 Cir. 11/17/04), 885 So.2d 1234, writ denied, 04-2995 (La. 3/18/05), 896 So.2d

1004.

We disagree with the Employers’ position. The Employers ignore the

plain text of La.R.S. 23:1201(F)(4), and they ignore the past jurisprudence of this

court. Moreover, the cases upon which the Employers rely are distinguishable on

their facts.

The Employers ignore the applicable statute on this issue—namely,

La.R.S. 23:1201(F)(4) which states:

10 In the event that the health care provider prevails on a claim for payment of his fee, penalties as provided in this Section and reasonable attorney fees based upon actual hours worked may be awarded and paid directly to the health care provider. This Subsection shall not be construed to provide recovery of more than one penalty or attorney fee.

The statute, therefore, provides that the medical provider’s claims for

penalties and attorney fees are separate and distinct from that of the injured employee

and do not accrue until the medical provider’s underlying claim for payment is

adjudicated. Because the health care provider cannot seek an award of statutory

penalties and attorney fees from a defendant employer/insurer until the health care

provider prevails on his claim for payment of his fee, that cause of action had not yet

accrued at the time of trial.

The Employers urge us to adopt Craig and its progeny, which support

the position that a one-year prescriptive period governs the cause of action for

penalties and attorney fees. Craig and its progeny are distinguishable, however,

because they do not address statutory penalties and attorney fees owed to a health

care provider under La.R.S. 23:1204(F)(4), but rather address benefits owed to

claimants.

Not only do the Employers ignore the plain text of the statute at issue,

but they also ignore this court’s prior rulings on this issue. Specifically, in Rave v.

Wampold Cos., 06-978, p. 12 (La.App. 3 Cir. 12/6/06), 944 So.2d 847, 855, we

stated, “It is clear from a reading of the jurisprudence that when claims for penalties

and attorney fees accompany the claim for benefits, if the underlying claims have not

prescribed, neither have the claims for attorney fees and penalties.”

Here, the claims for underpayment or late payment and legal interest

filed by CLASC have not yet prescribed. Thus, the underlying claims for attorney

fees and penalties have not yet prescribed.

11 Reasonable Controversion of Claims of Underpayments

Pursuant to La.R.S. 23:1201(F)(4), the OWC awarded $2,000.00 in

penalties and $1,500.00 in attorney fees in each of the ten consolidated cases for the

Employer’s underpayment of CLASC’s medical bills for the services it provided to

each injured worker. The workers’ compensation judge stated that the single

violation leading to the $2,000.00 penalty in each case was the employer’s “error of

thinking” that it could rely upon a PPO contract. The determination by the OWC that

an employer or insurer should be cast with penalties and attorney fees is a question

of fact subject to the manifest error or clearly wrong standard of review. Authement

v. Shappert Eng’g, 02-1631 (La. 2/25/03), 840 So.2d 1181.

The Employers argue that penalties and attorney fees should not have

been assessed against them because they reasonably controverted the claims of

CLASC for underpayments due to the existence of valid PPO contracts setting forth

the rates for the payments actually submitted. Louisiana Revised Statutes

23:1201(F)(2) provides that penalties and attorney fees “shall not apply if the claim

is reasonably controverted or if such nonpayment results from conditions over which

the employer had no control.”

The Louisiana Supreme Court in Authement articulated the reasoning

behind the imposition of penalties and fees as follows:

As stated in Williams v. Rush Masonry, Inc., 98-2271 (La. 6/29/99), 737 So.2d 41, 46, awards of penalties and attorney fees in workers’ compensation cases are essentially penal in nature. The purpose of imposition of penalties and attorney fees is to discourage indifference and undesirable conduct by employers and insurers. The crucial inquiry in determining whether to impose penalties and attorney fees on an employer is whether the employer had an articulable and objective reason to deny benefits at the time it took action. Id.

Authement, 840 So.2d at 1188.

12 While we find that the PPO contracts in these cases did not have legal

effect for the rate reductions applied, we find that the Employers did have “articulable

and objective” reasons to reduce the payments to CLASC at the time that the

Employers took that action. As previously indicated, attached to the Affordable PPO

Agreement in the record is an unsigned, undated “Appendix A” bearing the name of

First Health.

The First Health Appendix discusses reimbursement formulas containing

multipliers, conversion factors, medical procedure codes, pricing methodologies,

existing guidelines, and it shows various group payments, fee schedules, and specific

medical service pricing for named procedures. Then, under section (D)(1), the First

Health Appendix provides that reimbursement from workers’ compensation payors

shall not exceed eighty percent (80%) of the maximum amount payable under the

state’s regulating rules, which ostensibly refers to the LWCA. The First Health

Appendix further provides that the reimbursement rate shall apply whether the state

rules are in existence at the time of the execution of the agreement or established at

a later time.

In case 10-99 of these consolidated cases (OWC 08-02851), CLASC

provided medical services to a Rapides employee, Forrest Robinson, on May 18,

2007. CLASC billed charges of $1,198.00. The Third Party Administrator,

Gallagher Bassett, generated a payment and an EOB. The EOB showed the total

charges of $1,198.00, then subtracted $119.80 (10%), described as a “Bill Review

Deduction.” More specifically, however, this initial 10% reduction of the payment

to CLASC is the mandatory reduction pursuant to La.Admin. Code tit. 40, part I, §

2507, which governs the rate for outpatient care and which is promulgated in

accordance with the LWCA at La.R.S. 23:1034.2. The CLASC bill for services was

thus reduced to $1,078.20 per the LWCA. The Gallagher EOB then showed an

13 additional reduction for a “PPO Discount” of $215.64, which equates to a 20%

discount off of the $1,078.20, resulting in a “Recommended Allowance” of $862.56

(or 80% of $1,078.20). The amount then submitted by Rapides to CLASC as

payment for its medical services to Forrest Robinson was $862.56.

Accordingly, the $215.64 underpayment claimed by CLASC in that case

was the amount calculated by Gallagher using the method set forth under section

(D)(1) of the First Health Appendix, which was attached to the Affordable PPO

contract between CLASC and Affordable. Likewise, this calculation was used in the

other nine payments in these ten consolidated cases, all containing the Affordable

PPO contract and the First Health Appendix described above.

Therefore, while we have found that this web of PPO agreements is not

valid under the LWCA and cannot usurp the rates and fee schedules established by

the LWCA, specifically La.R.S. 23:1203 and 23:1034.2, the contracts form a

reasonable basis for controverting the claims of CLASC regarding underpayments.

See Henderson v. Pavy, 96-90 (La.App. 3 Cir. 5/15/96), 688 So.2d 1048 (an

employer’s failure to pay the amount remaining on the doctor’s medical bill for a

workers’ compensation claimant did not warrant an assessment of penalties and

attorney fees where there was a dispute regarding a lower estimate); see Baca v.

Natchitoches Parish Hosp., 06-1132 (La.App. 3 Cir. 2/7/07), 948 So.2d 1205 (after

quoting the language regarding an employer’s articulable and objective reason to

deny payment, no penalties and attorney fees were assessed where the employer had

sufficient grounds to dispute the claim).

In the ten consolidated cases, while we find that the Employers

underpaid CLASC due to their reliance upon the PPO contracts, we find that the

OWC manifestly erred in imposing penalties and attorney fees against the Employers,

and we reverse.

14 IV.

CONCLUSION

Based upon the foregoing, all of the OWC awards for underpayments to

CLASC, beginning as low as $137.00 in one of the ten consolidated cases and

reaching as high as $2,200.00 in one case, are affirmed. With regard to the $2,000.00

penalty and the $1,500.00 attorney fee in each of the ten cases, we reverse. The

existence of the PPO contracts, though the contracts are invalid, provided an

articulable basis for the Employers to pay the additionally discounted amounts, at the

time the Employers took action, thus controverting the claims of CLASC. Costs of

this appeal are assessed to the Employers.

15 STATE OF LOUISIANA

COURT OF APPEAL

THIRD CIRCUIT

10-86 (Consolidated with) 10-91, 10-92, 10-96, 10-97, 10-99, 10-100, 10-115, 10-117, and 10-118

CENTRAL LOUISIANA AMBULATORY SURGICAL CENTER, INC.

PAYLESS SHOE SOURCE, INC.

GREMILLION, Judge, Concurring.

While I agree with the majority’s result, I disagree with the majority’s

reasoning. The majority invalidates the PPO agreement on the basis that La.R.S.

23:1033 prohibits the contractual limitation of an employer’s liability under the

Workers’ Compensation Act. The PPO agreement in no way limits the employer’s

liability; rather, such contracts reflect the sound policy underlying La.R.S.

23:1034.2(E), which provides, “Nothing in this Section shall prevent a health care

provider from charging a fee for such care, services, treatment, drugs, or supplies that

is less than the reimbursement established by the reimbursement schedule.” When

a provider and an employer or workers’ compensation insurer enter into a PPO

contract, they are agreeing that the provider will only charge a certain amount for

specific care, services, and treatment procedures. The fact that they might charge a

patient who is not a member of the PPO a greater amount than an employee member

does not render the PPO agreement invalid under the Workers’ Compensation Act,

nor does it render the employee’s care substandard.

The majority also concludes that the PPO agreement runs afoul of the social

contract implicit in the Workers’ Compensation Act: the employee is guaranteed

payment of his medical expenses and indemnity in exchange for recovery of a lesser amount. It states (emphasis added):

Not only do the PPO contracts purport to limit the employer’s liability for medical care, but they also threaten the foundation of the workers’ compensation system—namely, providing quality medical care to injured workers. When medical care providers are forced to accept less reimbursement for the same quality care they provide to paying patients, it is likely that they will be reluctant to participate in the workers’ compensation program. That reluctance will then lead to a fewer numbers of providers accepting workers’ compensation patients, and consequently, substandard care.

This conclusion ignores the basic PPO structure. The PPO agreement is just that—an

agreement. No provider is forced to accept anything. They can choose to not

participate in the PPO. This reasoning also ignores the fundamental purpose

underlying the reimbursement schedule: to cap the amount providers can charge

employees for work-related injury expenses.

The manner in which billing is performed by the health care providers should

not determine the validity of a PPO agreement. I am mindful of this court’s decision

in Agilus Health v. Accor Lodging N.A., 09-1049 (La.App. 3 Cir. 3/10/10), 32 So.3d

1120, writ granted, 10-800 (La. 6/18/10), ___ So.3d ___, in which a PPO agreement

was invalidated on the ground that it violated La.R.S. 23:1203(B). As the majority

stated, “[The defendants], however, ignore the fact that this provision [La.R.S.

23:1034.2] does not allow the employer to pay less than the scheduled amount if the

provider charges that amount or more.” Id., at 1121. What constitutes the amount the

provider charges is, in my mind, the critical issue.

For instance, would the misplacement of a decimal point by the provider’s

billing clerk change the amount actually charged from $100.00 to $1,000.00? Under

the Agilus Health case, if the PPO paid the $100.00 it and the provider had agreed to,

it is conceivable the provider would be subject not only to paying the difference

between the agreed-to and the scheduled amounts, but also to a $2,000.00 penalty and attorney fees.

Statutes governing the same subject are to be read in pari materia.

La.Civ.Code art. 13. Further, the standard rules of statutory construction provide that

(1) one presumes that every provision of law was intended to serve a purpose; (2) one

does not presume that the lawmaker intended for any part of a law to be meaningless;

(3) one presumes the lawmaker to have enacted the law with full knowledge of all

other laws pertaining to the same subject matter; (4) the duty of the courts is to

interpret a provision of law which harmonizes and reconciles it with other provisions

pertaining to the same subject matter; and (5) of two or more possible interpretations

of a law, “that which affords a reasonable and practical effect to the entire act is

preferred to one that renders part of the act nugatory.” Ransome v. Ransome, 01-

2361, 8 (La.App. 1 Cir. 6/21/02), 822 So.2d 746, 754. In the present matter, as in

Agilus Health, the literal application of La.R.S. 23:1203, without reference to La.R.S.

23:1034.2, renders section 1034.2(E) superfluous.

The PPO agreement does not, in my opinion, violate the Workers’

Compensation Act. I fully agree with Judge Amy’s dissent in the Agilus Health case.

The PPO agreement was precisely the sort of vehicle envisioned when Section

1034.2(E) was enacted.

Rather, I agree with the majority in ruling that the PPO failed to comply with

the notice requirements of La.R.S. 40:2203.1. The majority has aptly characterized

the relationship between the parties hereto as “a web of contracts.” The plaintiff may

be even more felicitous in describing a “convoluted series of at least four contracts.”

In addition, CLASC had no other notice that it was to provide services under a PPO

agreement at any other time until Gallagher Bassett notified it of such at the time of

payment. Surely, leaving the provider so completely uninformed was exactly what the legislature sought to avoid when it enacted LARS 40:2203.1.

I note, as did the majority, that this was the basis for this court’s decision in the

very recent case of Gunderson v. F.A. Richard & Assoc., Inc., 09-1498 (La.App. 3

Cir. 6/30/10), ___ So.3d ___. Also, our colleagues on the fourth circuit have found

that no party has the right to enforce the PPO agreement against a health care provider

when the notice requirements of Section 2203.1 are not followed. Touro Infirmary

v. American Maritime Officer, 09-697 (La.App. 4 Cir. 11/9/09), 24 So.3d 948.

I agree with the majority on the issue of the awards of penalties and attorney

fees. I concur with the result, given that the PPO failed to comply with the dictates

contained in La.R.S. 40:2203.1.