Colorado Compensation Insurance Authority v. Nofio

886 P.2d 714, 18 Brief Times Rptr. 2162, 1994 Colo. LEXIS 879, 1994 WL 703303

• Court: Supreme Court of Colorado
• Decided: December 19, 1994
• Docket: 93SC535
• Status: Published

Opinions

Justice ERICKSON

delivered the Opinion of the Court.

We granted certiorari to review Nofio v. Colorado Compensation Insurance Authority, No. 92CA1441 (Colo.App. July 15, 1993) (not selected for publication). The primary issue we accepted for review on certiorari is:

Whether a claimant in a workers’ compensation matter is entitled to a de novo hearing pursuant to section 8-43-207, 3B C.R.S. (1994 Supp.), after medical utilization review under section 8-43-501, 3B C.R.S. (1994 Supp.), results in an order changing his health care provider and in retroactive denial of payments for medical services rendered.

Our answer is no. We granted certiorari on an additional issue which we need not address.¹ We do not address the due process claims raised in the second issue because we find that the petitioner lacks a protected property interest in receiving medical care from a particular provider or in receiving a certain type of treatment. Accordingly, we reverse and remand to the court of appeals with directions to approve the order entered by the Industrial Claim Appeals Panel.

I

Dominick A. Nofio (Nofio) suffered a work-related accident on October 5, 1982, injuring his neck and upper back. After being referred to two pain clinics, Nofio was referred to Dr. James Fuller in 1983, and then to chiropractor William L. Walker, D.C., in March 1985. Under Walker’s supervision, Nofio received palliative care including chiropractic and massage therapy treatments.

In an order dated April 5, 1986, the Division of Labor found Nofio to be permanently and totally disabled due to chronic pain. Scott Anderson, D.C., provided Nofio’s chiropractic treatments beginning in September, 1987. From March 1985 until February 1991, Nofio received approximately 1,000 chiropractic treatments.

On March 4, 1991, pursuant to the Medical Utilization Review statute, section 8413-501, 3B C.R.S. (1990 Supp.)² (M-U-R statute), the Colorado Compensation Insurance Authority (CCIA) requested a utilization review of Nofio’s medical treatment and the Director of the Division of Workers’ Compensation (Director) appointed a utilization review committee (review committee). The review committee consisted of two medical doctors and one chiropractor. The two medical doctors concluded that chiropractic care should have been concluded within three to six months of the injury, and recommended a change of physician and a retroactive denial of payments from 1986. By an order dated October 1, 1991, the Director adopted the majority recommendation of the review committee to change medical providers and retroactively deny payment after January 1, 1990.

Nofio sought review of the Director’s order by an Administrative Law Judge (ALJ). On February 19, 1992, the ALJ, after reviewing the recommendation of the review committee, affirmed the change of physician, finding that the recommendation was based on substantial evidence. The ALJ modified the order, limiting the retroactive denial of benefits to charges for brief examinations only.

On March 6, 1992, Nofio filed a petition to review the ALJ’s order with the Industrial Claim Appeals Panel (Panel). The Panel entered its final order on August 17, 1992, finding that Nofio lacked standing to contest the retroactive denial of benefits.³ Ch. 225, sec. 1, § 8-43-501(5)(d), 1991 Colo.Sess.Laws 1357-58. The Panel affirmed the ALJ’s order changing physicians and ruled that the findings and conclusions of the ALJ were supported by substantial evidence.

Nofio filed a notice of appeal to the court of appeals on August 31, 1992. On July 15, 1993-, the court of appeals held that the Director’s order terminated care of Nofio by a previously authorized provider and that he was therefore entitled to a de novo hearing. After the court of appeals denied the CCIA’s petition for rehearing, we granted certiorari.

II

A person claiming benefits under workers’ compensation is entitled to such medical benefits as are reasonably necessary to relieve the claimant from the effects of a work-related injury or illness. Grover v. Industrial Comm’n, 759 P.2d 705, 709 (Colo.1988); Hargett v. Director, Div. of Labor, 854 P.2d 1316, 1319 (Colo.App.1992). Pursuant to section 8-42-101, 3B C.R.S. (1994 Supp.), a claimant under the Workers’ Compensation Act is entitled to medical treatment and supplies “as may reasonably be needed at the time of the injury or occupational disease and thereafter during the disability to cure and relieve the employee from the effects of the injury.”

The Colorado General Assembly passed the M-U-R statute in 1988 to provide a method to review and remedy medical services which may not be reasonably necessary or reasonably appropriate in light of accepted professional standards. Ch. 49, sec. 3, § 8-49-102, 1988 Colo.Sess.Laws 375.⁴ Under the M-U-R statute, the Division of Labor addresses requests for review filed by claimants, insurers, and self-insured employers. Pursuant to the statute, the Director appoints a utilization review committee of three physicians who independently review the medical necessity and appropriateness of the care provided. By a majority vote, the review committee recommends to the Director whether or not a change in health care providers is appropriate. The review committee, in its discretion, may also recommend a retroactive denial of fees.

Hargett v. Director, Division of Labor, 854 P.2d 1316 (Colo.App.1992), was the first case to interpret the M-U-R statute. The M-UR statute in effect when Hargett was decided allowed a party to request a hearing at which the review committee’s report would be “admissible in evidence,” but also provided that “if the report of the utilization review committee upon which the director based his order in the case under this section is supported by substantial evidence, the director’s order shall not be altered by the administrative law judge.” § 8-49-102(56)(b)(III), 3B C.R.S. (1988) (repealed 1990). The court identified the inherent ambiguity in the statute, stating that: “While the phrase ‘admissible in evidence’ suggests an evidentiary, or de novo, hearing, the statute does not grant the ALJ any fact-finding authority; instead the statute imposes an appellate standard of review and restricts the ALJ to determining whether the Director’s order is supported by substantial evidence.” Hargett, 854 P.2d at 1320.

The court of appeals resolved the ambiguity by creating two separate review routes. Review under the M-U-R statute was limited to a review of the record to determine whether substantial evidence supported the Director’s order. An evidentiary hearing under the general hearing provision was authorized only “if the Director’s order has terminated a particular type of benefits, e.g., chiropractic care, or if a party seeks to terminate medical benefits based on the review proceedings.... ” Id.5

The court of appeals in this case relied upon the Hargett decision in finding that a de novo hearing was the appropriate remedy. Nofio v. Colorado Compensation Ins. Auth., No. 92CA1441 (Colo.App. July 15, 1993). The court stated:

In Hargett v. Director, Division of Labor ... this court ruled that a party adversely affected by a termination of previously authorized health care under § 8-43-501 can request that the matter be litigated de novo in an adversarial hearing pursuant to the regular hearing process under § 8-43-207.... Because the Director’s order in this case ordered a termination of the claimant’s care by a previously authorized provider, claimant is entitled to have the matter adjudicated de novo in an adversarial hearing before an ALJ.

Nofio, slip op. at 2.

In Nofio, the court of appeals gave undue breadth to the Director’s order and, therefore, exceeded the holding of Hargett. The order of the Director cannot require a termination of care, because the M-U-R statute authorizes neither the termination nor the recommendation of termination of medical treatment. Section 8-43-501(3)(e), 3B C.R.S. (1990 Supp.), provides the only options available to the review committee:

(c) ... Each committee shall issue a report to the director on the findings for each case reviewed. For each case, a committee may recommend by a majority vote of such committee that no change be ordered with respect to a case or that a change of provider be ordered. A committee, by a unanimous vote, may recommend that the director order that payment for fees charged for services in the case be retroactively denied.⁶

Once the review committee issues a recommendation, section 8-43-501(3) (c) mandates that: “The director shall accept the recommendation of a committee and base the order entered pursuant to this section thereon.” Therefore, the Director must defer to the recommendation of the committee, a recommendation which cannot suggest a termination of care. § 8 — 43—501 (3)(c).

Nor is there evidence that the effect of the Director’s order is to terminate Nofio’s care. Following the recommendation of the review committee, the Director ordered a change of provider. The M-U-R statute sets forth the procedure to be followed once a change of provider is ordered:

If the director orders pursuant to subsection (3) of this section that a change of provider be made ... the claimant ... shall have seven days from receipt of the director’s order in which to agree upon a level I provider. If the claimant ... cannot reach agreement within the seven day time period, the director shall select three providers. A new provider shall be chosen from the three providers so selected by the party who was successful in the request for review. If no appeal is filed, the successful party shall notify the division of the name of the new provider within seven days of the selection of the three potential providers. If the new health care provider is not selected within such seven days, the director shall select the provider.

§ 8-43-501(4), 3B C.R.S. (1994 Supp.). Such a procedure ensures that care is not terminated and that a new provider is chosen, either by the claimant or the Director. The mere possibility that Nofio’s benefits may be terminated at a later date does not entitle him to a de novo hearing. Nofio will be entitled to such a hearing under section 8-43-207 when his receipt of benefits is threatened, not his receipt of services from a particular chiropractor or his receipt of a particular type of treatment.

No provision in the M-U-R statute specifically authorizes a claimant to receive a de novo hearing before an ALJ.⁷ The court of appeals in Hargett provided for such a hearing only if benefits or a type of benefits were terminated, a recommendation beyond the reach of the M-U-R statute. Cases relying on Hargett, as well as the ease before this court, have exceeded the procedural remedies intended for workers’ compensation claimants. McWhorter v. CNA Ins. Co., 868 P.2d 1128 (Colo.App.1993); Dorm v. Industrial Claim Appeals Office, 865 P.2d 873 (Colo.App.1993); see also Williams v. Industrial Claim Appeals Office, 862 P.2d 1007 (Colo.App.1993) (addressing the preclusive effect of an M-U-R proceeding for collateral estoppel purposes); Mason Jar Restaurant v. Industrial Claim Appeals Office, 862 P.2d 1026 (Colo.App.1993) (same). Under these cases, an evidentiary heai’ing would be authorized for any change of health care provider, since all changes of providers have the effect of terminating a previously authorized provider. Because Nofio has failed to prove a termination rather than merely a change of benefits, we reverse the court of appeals ruling entitling Nofio to a de novo hearing.

Ill

A claimant who has been awarded benefits in a workers’ compensation case is entitled to procedural due process before those benefits may be terminated. Hargett, 854 P.2d at 1319; see Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).⁸ In order to claim a deprivation of due process, Nofio must establish that he has a property right either in receiving treatment from a specific medical provider or in receiving a specific type of treatment. We hold that neither interest exists.

The determination of the existence of a property interest is a question of state law:

To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it....

Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.

Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). Nofio possesses a property interest in receiving treatment and supplies which “may reasonably be needed at the time of the injury or occupational disease and thereafter during the disability to cure and relieve the employee from the effects of the injury.” § 8-42-101(l)(a), 3B C.R.S. (1994 Supp.). Neither the Workers’ Compensation Act nor any other state law, however, grants Nofio the right to receive medical care from a particular medical provider or to receive a particular type of treatment.⁹ In fact, Nofio has not specifically alleged any “legitimate claim of entitlement.” The mere existence of a procedure to determine whether a provider’s treatment is medically necessary does not expand Nofio’s substantive rights. In Ficarra v. Department of Regulatory Agencies, 849 P.2d 6, 20 (Colo.1993), we held that:

Th[e] right to a hearing, however, is statutorily based, and the fact that the General Assembly has created a right to such a hearing does not mean that the plaintiffs are independently entitled to it as a matter of constitutional law. In order to establish that they have a property interest in the renewal of their licenses that is entitled to the protections of procedural due process, the plaintiffs would have to show that they had a legitimate claim of entitlement in the renewal of their licenses....

Nofio has not alleged a specific entitlement nor does any statutory basis exist to find such an entitlement.

IV

We hold that Nofio is not entitled to a de novo hearing pursuant to section 8-43-207 because his benefits have been changed, not terminated. Section 8-43-501 does not violate Nofio’s right to due process because he has no protected property interest in receiving care from a specific health care provider or in receiving a particular type of treatment.

Accordingly, we reverse and remand to the court of appeals with directions to approve the order entered by the Industrial Claim Appeals Panel.

LOHR, J., dissents. KIRSHBAUM and VOLLACK, JJ., join in the dissent.

1 . The second issue is:

Whether section 8-43-501, 3B C.R.S. (1994 Supp.), violates the Due Process Clauses of the United States and Colorado Constitutions because it does not provide for a hearing before or after an order to change a claimant's health care provider or to retroactively deny payments for past medical services rendered.

2 .Section 8-43-50 l(2)(a), 3B C.R.S. (1990 Supp.), states that "[a]ny insurer, self-insured employer, or claimant may request review under the provisions of this section of services rendered pursuant to this article by a health care provider.”

Section 8 — 43—501(3)(a), 3B C.R.S. (1990 Supp.), provides in relevant part:

The director shall appoint members of utilization review committees for purposes of this section. The director shall establish committees based on the different areas of health care practice for which requests for utilization review may be made. The director, by rule and regulation, shall establish the qualifications for members of the different committees and the areas of health care practice in which each such committee shall conduct requested utilization reviews.

3 . The Panel cited the 1991 addition of subsection 5(d) to the statute, which read:

If the director issued an order specifying that the payment of fees in a case be retroactively denied, the health care provider may request a de novo hearing before an administrative law judge by filing an application for hearing within thirty days after the date of the certificate of mailing of the order.

Ch. 225, sec. 1, § 8-43-50 l(5)(d), 1991 Colo. Sess.Laws 1357-58.

4 . The purpose of the medical utilization review process is stated in § 8-43-501(1):

The general assembly hereby finds and determines that insurers and self-insured employers should be required to pay for all medical services pursuant to this article which may be reasonably needed at the time of an injury or occupational disease to cure and relieve an employee from the effects of an on-the-job injury. However, insurers and self-insured employers should not be liable to pay for care unrelated to a compensable injury or services which are not reasonably necessary or not reasonably appropriate according to accepted professional standards. The general assembly, therefore, hereby declares that the purpose of the utilization review process authorized in this section is to provide a mechanism to review and remedy services rendered pursuant to this ■article which may not be reasonably necessary or reasonably appropriate according to accepted professional standards.

§ 8-43-501, 3B C.R.S. (1994 Supp.) (emphasis added).

5 . The court also stated that:

“[W]e recognize that a change in health care provider may well result in the termination of a particular type of health care treatment.... Or, the committee may conclude that a change in a health care provider within the same specialty is appropriate.... [I]n such circumstances, we believe the remedy for the affected party is to request an evidentiary hearing under the hearing and review provisions of the Act.”

Hargett, 854 P.2d at 1319.

The appropriate hearing and review provisions, now codified at § 8-43-207, state that: "Hearings shall be held to determine any controversy concerning any issue arising under articles 40 to 47 of this title.” § 8-43-207(1), 3B C.R.S. (1994 Supp.). See Donn v. Industrial Claim Appeals Office, 865 P.2d 873, 876 (Colo.App.1993) (“[A] party adversely affected by a termination of previously authorized health care under § 8-43-501 can request that the matter be litigated de novo in an adversarial hearing pursuant to the regular hearing process under § 8-43-207...."); see also McWhorter v. CNA Ins. Co., 868 P.2d 1128, 1130 (Colo.App.1993) ("Inasmuch as claimant requested an evidentiary hearing at the time he appealed the Director's order, his request for hearing should be treated as a request for hearing under § 8-43-207.”).

6 . By ordering a “change of provider,” the Director complied with the statutory requirements. The Director also followed the statute by adopting the unanimous recommendation of the committee that fees be retroactively denied.

7 . At the time of review, only two provisions in the M-U-R statute referred to hearings for claimants. See § 8-43-501(5)(a), 3B C.R.S. (1990 Supp.) (allowing a dissatisfied claimant, insurer, or self-insured employer to "appeal an order specifying that ... a change of provider be made ... by requesting a hearing pursuant to this article.”); § 8-43-501 (5)(b)(III), 3B C.R.S. (1990 Supp.) (providing the appropriate review standard when "a claimant, insurer, or self-insured employer appeals an order ... by requesting a hearing before an administrative law judge according to the provisions of this article”). The court of appeals in McWhorter v. CNA Ins. Co., 868 P.2d 1128 (Colo.App.1993), ruled that the deletion of references to hearings did not alter the Hargett analysis and still entitled claimants to a hearing under § 8-43-207 if benefits were terminated.

8 . See also Wolff v. McDonnell, 418 U.S. 539, 557-58, 94 S.Ct. 2963, 2975-76, 41 L.Ed.2d 935 (1974) ("The Court has consistently held that some kind of hearing is required at some time before a person is finally deprived of his property interests.”); Henry J. Friendly, Some Kind of Hearing, 123 U.Pa.L.Rev. 1267 (1975).

We disapprove of Hargett insofar as that case would authorize a de novo hearing for a claimant when a type of treatment is terminated. We hold that a claimant possesses a property interest in receiving workers' compensation benefits. We find no such "legitimate claim of entitlement," however, in a claimant’s interest in receiving (1) treatment from a particular provider or (2) a particular type of treatment.

9 . Section 8-43-404(5)(a), 3B C.R.S. (1993 Supp.), states that "[i]n all cases of injury, the employer or insurer has the right in the first instance to select the physician who attends said injured employee.” Although claimants may re- , quest that a change of physician be ordered, such a change may be ordered only "upon a proper showing.” Id. No other provision grants claimants the right to select their medical provider.