Fredericksburg Orthopaedic Associates v. Fredericksburg Machine & Steel, LLC

741 S.E.2d 813, 62 Va. App. 83, 2013 WL 1952834, 2013 Va. App. LEXIS 154

• Court: Court of Appeals of Virginia
• Decided: May 14, 2013
• Docket: 1714122
• Status: Published

Opinions

FELTON, Chief Judge.

Fredericksburg Orthopaedic Associates (“medical provider”) appeals from the Workers’ Compensation Commission’s (“commission”) denial of its request for payment of $8,966.56 in medical service fees from Fredericksburg Machine & Steel, LLC and its insurer Commonwealth Contractors (collectively, “employer”). On appeal, the medical provider asserts that the commission erred in holding that because medical provider increased its charges for medical treatment by 40% for all workers’ compensation patients, its medical bills for this employee’s treatments were not prima facie evidence that the charged fees were reasonable and necessary. For the following reasons, we affirm the decision of the commission.

I. BACKGROUND

“We view the evidence on appeal in the light most favorable to [employer], the prevailing party before the commission.” Dunnavant v. Newman Tire Co., 51 Va.App. 252, 255, 656 S.E.2d 431, 433 (2008). On December 17, 2008, Michael Donald (“employee”) suffered a work-related injury to his right shoulder while working for employer. On February 16, 2009, medical provider performed surgery on employee’s right shoulder. Medical provider submitted a bill for employee’s medical treatment to employer in the amount of $12,682. Of that amount, employer paid medical provider $3,715.44. The medical provider asserted that the remaining balance of $8,966.56 was still owed to it. That claim was the subject of the medical provider’s March 2, 2011 application for hearing filed with the commission.

During a hearing on February 5, 2012, Ron Whiting, the Chief Financial Officer of the medical provider, testified that medical provider uses two different standard fee schedules, one for non-workers’ compensation medical treatment services, and another for workers’ compensation related medical treatment services. Mr. Whiting testified that the standard fee schedule charges workers’ compensation patients 40% more for medical treatment services than the standard fee schedule applicable to non-workers’ compensation patients. Whiting further testified that the reason workers’ compensation patients are charged 40% more for medical treatment services is due to the additional overhead costs medical provider incurs in processing workers’ compensation claims. He testified that:

It takes more to produce because number one, we, first we have to wait for your money, okay so you’ve got time value of money. I have to deal with case workers all the time. Everything that we do, unless it’s in the [emergency room] has to be ... approved by case managers and not always the same case managers working that case. So, and then we continually have to send out or fax out records. That takes ... time and money. I mean people don’t think about it, what goes in to produce a piece of paper in a fax machine but by the time you get with the ink and the toner and the lease payment and the personal property tax, that cost[s] us money so there’s an inherent overhead bump when you’re working with [workers’ compensation]. And it’s not ... an event. Okay, it’s an ongoing thing.

Following the hearing, the deputy commissioner concluded that the “medical provider’s practice of charging 40% more for the treatment of workers’ compensation patients is unreasonable under [Code] § 65.2-605. We also find that [medical provider] loses its presumption of the reasonableness of its charges.” The deputy commissioner found that there was

no evidence that the 40% surcharge bears any relation to the increase in overhead costs when [medical provider] treats a workers’ compensation patient. Therefore, we are constrained to find that this medical provider has failed to sustain its prima fade case showing that its charges for the medical treatment in question were reasonable under [Code] § 65.2-605. Additionally, having lost its presumption of reasonableness, [medical provider] did not assert or prove that medical charges based upon its general fee schedule would have been appropriate under [Code] § 65.2-605.

The medical provider thereafter requested review by the full commission. In its opinion, the commission affirmed the ruling of the deputy commissioner that the medical provider failed to establish a prima facie showing that its charges for medical treatment were reasonable and necessary under Code § 62.5-605. The commission made the following findings of fact:

1. Based upon the testimony of Mr. Ronald Whiting, Chief Financial Officer for [medical provider], we find that [medical provider] utilizes two fees schedules when assigning medical charges to a patient.

2. Based upon the testimony of Mr. Whiting, we find that the fee schedule for workers’ compensation patients charges 40 percent more for services than the general fee schedule for non-workers’ compensation patients based upon the additional clerical work required, the delay of payment by insurers and the expense of litigation.

3. There is no evidence as to the extent of [medical provider’s] additional workers’ compensation expenses in this specific case.

4. There is no evidence regarding the amount that the claimant would have been charged if he was a non-workers’ compensation patient.

II. ANALYSIS

On appeal, the medical provider asserts that the commission erred in affirming the deputy commissioner’s holding that, because the medical provider increased its charges by 40% for all workers’ compensation patients, the medical bills were not prima facie evidence that the charged fees in this case were reasonable and necessary.

“ ‘[I]t is our duty to determine whether credible evidence supports the [c]ommission’s finding ... and, if such evidence exists, to sustain the finding.’ ” Celanese Fibers Co. v. Johnson, 229 Va. 117, 121, 326 S.E.2d 687, 690 (1985) (quoting Cook v. City of Waynesboro, 225 Va. 23, 31, 300 S.E.2d 746, 750 (1983) (citations omitted)) (first alteration in original).

Code § 65.2-605 provides, in pertinent part:

The pecuniary liability of the employer for medical, surgical, and hospital service herein required when ordered by the Commission shall be limited to such charges as prevail in the same community for similar treatment when such treatment is paid for by the injured person----

Code § 65.2-714(A) provides, in pertinent part, that “[flees of ... physicians and charges of hospitals for services, whether employed by employer, employee or insurance carrier under this title, shall be subject to the approval and award of the Commission.” “This section was intended, as we construe it, to give the [commission] the power to pass on ... physicians’ charges when rendered—in other words, it was the intent of the act not to allow ... a physician to overcharge for their services.” Bee Hive Mining Co. v. Ind. Comm’n, 144 Va. 240, 242, 132 S.E. 177, 177 (1926) (involving predecessor statute).

However, “[s]o long as a causal relationship between the industrial accident and the ... [treatment rendered] is shown, the employer is financially responsible for the medical attention which the attending physician deems necessary, subject to review by the Commission.” Lynchburg Foundry Co. v. Goad, 15 Va.App. 710, 714, 427 S.E .2d 215, 217-18 (1993). Medical bills are “prima facie evidence that the charges” were reasonable and necessary. Ceres Marine Terminals v. Armstrong, 59 Va.App. 694, 703, 722 S.E.2d 301, 306 (2012). “[T]he employer bears the burden of proving the excessiveness of the charges contained in a proffered medical bill under a workers’ compensation award.” Id. at 705, 722 S.E.2d at 307. Pursuant to Code § 65.2-605, employers look to the prevailing rate in the community to challenge the reasonableness of a medical provider’s charges.¹

Here, the medical provider presented to the deputy commissioner its medical bills showing treatment costs of $12,682 to the employee. Employer argues that in this particular case, the burden remained with the medical provider to prove its medical charges were reasonable and necessary because it charged, without explanation, 40% more for this workers’ compensation patient. The commission found that there was “no evidence as to the extent of [medical provider’s] additional workers’ compensation expenses in this specific case” nor was there “evidence regarding the amount that the claimant would have been charged if he was a non-workers’ compensation patient.” The medical provider failed to offer any evidence supporting its assertion that in this particular case the medical charges, with the added 40% surcharge, were reasonable and necessary. The only reason given by the medical provider for its 40% surcharge of workers’ compensation patients was the testimony of its chief financial officer regarding that policy.

Accordingly, we conclude from the record on appeal that the commission did not err in finding that the medical provider’s treatment bills, including a 40% surcharge solely because employee was a workers’ compensation patient, were not prima facie evidence that the medical bills were reasonable and necessary.

We also affirm the commission’s finding that medical provider “failed to present any evidence and testimony that the medical charges based upon [medical provider’s] general fee schedule were limited to the prevailing community rate.” Accordingly we find no error in the commission’s holding that the deputy commissioner did not err in refusing to calculate and award payment of the unpaid balance of the medical treatment charges to medical provider.

III. CONCLUSION

For the reasons stated above, we affirm the decision of the commission holding that the medical provider’s unpaid medical treatment charges for the employee were not reasonable and necessary.

Affirmed.

1 . “Rule 14 of the commission defines the relevant community for the purposes of Code § 65.2-605.” Ceres Marine Terminals, 59 Va.App. at 705, 722 S.E.2d at 307 (citing 16 VAC 30-50-150). Fredericksburg is located in planning district 16 for which the relevant community, under Rule 14, is community 9.