STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
10-593
THOMAS MEDICAL GROUP, APMC (ERIC BREWTON)
VERSUS
STINE, LLC, ET AL.
**********
APPEAL FROM THE OFFICE OF WORKERS’ COMPENSATION - # 2 PARISH OF RAPIDES, NO. 08-05501 JAMES L. BRADDOCK, WORKERS COMPENSATION JUDGE
JOHN D. SAUNDERS JUDGE
Court composed of John D. Saunders, J. David Painter, and Shannon J. Gremillion, Judges.
AFFIRMED.
Gremillion, J., concurs in parts and dissents in part and assigns written reasons.
Roger Anthony Javier The Javier Law Firm 1100 Poydras St., #800 New Orleans, LA 70163 (504) 599-8570 Counsel for Defendant/Appellant: Zurich American Ins. Co. Stine, LLC
Richard Bray Williams Williams Family Law Firm, LLC P. O. Box 15 Natchitoches, LA 71458-0015 (318) 352-6695 Counsel for Plaintiff/Appellee: Thomas Medical Group, APMC (Eric Brewton) SAUNDERS, Judge.
This appeal involves a dispute between a health care provider and an employer,
its insurer, and a third party administrator. The insurer’s third party administrator and
the health care provider were both parties to preferred provider agreements (PPO)
with First Health Group Corp (First Health). Despite the existence of this PPO
agreement, the health care provider, plaintiff/appellee Thomas Medical Group,
APMC (Thomas), which agreed to accept 90% of the statutory reimbursement
schedule established in the Louisiana Workers’ Compensation Act, filed a disputed
claim for compensation with the Office of Worker’s Compensation by which it
sought—and was awarded—the alleged underpayment amount of $51.66 plus a
penalty of $2,000.00 and attorney fees of $4,500.00 against the employer,
defendant/appellant Stine, LLC (Stine), and its insurer, defendant/appellant Zurich
American Insurance Company (Zurich). Stine and Zurich appealed the judgment.
Thomas answered the appeal, asserting that because there were two bills that were
discounted improperly, it was entitled to two awards of penalties. Thomas also seeks
additional attorney fees for defending the judgment on appeal. For the reasons that
follow, we affirm the workers’ compensation judge’s (WCJ) judgment.
FACTS
In January 2002, Gallagher Bassett Services, Inc. (Gallagher Bassett), entered
into a contract with First Health allowing Gallagher Bassett access to First Health’s
preferred provider network. In July 2005, Dr. James Knecht, a Natchitoches,
Louisiana, physician, contracted with First Health to become a member of First
Health’s preferred provider network.1 Dr. Knecht was asked to complete a
1 Dr. Knecht and Dr. Joseph A. Thomas formed the Thomas Medical Group, a corporation operating under Subchapter S. Three years later, Dr. Thomas died. Dr. Knecht is the sole physician member of the Thomas Medical Group. questionnaire that specifically queried his workers’ compensation practice as part of
this enrollment. In November 2006, Gallagher Bassett entered into a Third Party
Administrator Agreement with Zurich, whereby Gallagher Bassett agreed to
administer certain workers’ compensation claims for Zurich. Zurich provided
workers’ compensation insurance to Stine.
Dr. Knecht is a general practitioner in Natchitoches who accepts workers’
compensation cases only on referrals from employers. He employs Acadiana
Computer Services to perform his billing. He and his staff were not aware that
Stine’s employee, Mr. McDavid, was being seen pursuant to the PPO agreement until
an Explanation of Benefits (EOB) was received by his office. His staff alerted him
to the fact that First Health had taken a further PPO reduction from the statutory
reimbursement schedule that fixes the maximum amount a health care provider can
be reimbursed. Thomas then initiated this litigation.
The WCJ heard this matter and, for oral reasons handed down in another
matter, found that Stine and Thomas had not negotiated over the application of the
PPO agreement to the treatment of workers’ compensation patients, and that PPO
arrangements simply are not compatible with the statutory workers’ compensation
scheme. Therefore, the WCJ rendered judgment in favor of Thomas.
ASSIGNMENTS OF ERROR
Stine and Zurich assign as error:
(1) The WCJ’s ruling that the PPO contracts are not authorized by the Workers’
Compensation Act;
(2) The WCJ’s ruling that PPO agreements must be specifically authorized by
statute to have effect;
2 (3) The WCJ’s ruling that they were arbitrary and capricious in reducing
payments to Thomas, thus subjecting them to penalties and attorney fees; and,
(4) The WCJ’s assessment of penalties and attorney fees.
Thomas assigns as error the WCJ’s ruling admitting evidence of the relationship
between First Health and a company known as Concentra, Inc., and FOCUS Health
Care Management, Inc.2 Thomas also assigns a error the ruling that Stine and Zurich
were only liable for a single penalty, as it contends each failure to properly reimburse
constitutes a separate violation of the Workers’ Compensation Act.
ANALYSIS
This Court has wrestled with this issue for the past several months. See Agilus
Health (Allison Taylor) v. Accor Lodging N. Am., 09-1049 (La.App. 3 Cir. 3/10/10),
32 So.3d 1120, writ granted, 10-800 (La. 6/18/10), 38 So.3d 312, and Central La.
Ambulatory Surgical Ctr., Inc. v. Payless Shoesource, Inc., 10-86 (La.App. 3 Cir.
7/28/10), ___ So.3d ___, on rehearing, (La.App. 3 Cir. 10/20/10), ___ So.3d ___.
We disagree with the WCJ that this matter hinges upon whether a PPO agreement
runs afoul of the Workers’ Compensation Act. Assuming that a PPO agreement is
valid, the defendants were not entitled to take any discount on the workers’
compensation reimbursement schedule. The dictates of La.R.S. 40:2203.1, which
requires advanced notice to the health care provider either in the form of a benefit
card that identifies the PPO or other written notice by the PPO to the provider at least
30 days in advance of services, were not followed. See Touro Infirmary v. Am.
Maritime Officer, 09-697 (La.App. 4 Cir. 11/9/09), 24 So.3d 948, and Gunderson v.
2 The last exhibit of which Thomas complains consists of documents reflecting the terms of the settlement a class action suit, Gunderson v. F.A. Richard & Assocs., Inc., docket 2004-2417 of the 14th Judicial District Court, Calcasieu Parish, Louisiana. The suit was settled releasing the “affiliates, ” which included entities related to FOCUS and Concentra.
3 F.A. Richard & Assocs., Inc., 09-1498 (La.App. 3 Cir. 6/2/10), 40 So.3d 418. Under
the plain terms of section 2203.1, unless this notice is provided, “[a] preferred
provider organization’s alternative rates of payment shall not be enforceable or
binding.” La.R.S. 40:2203.1(B).
Clearly, the lack of notice to Thomas that Mr. McDavid’s treatment would be
provided under the auspices of the PPO precludes enforcement of those discounts.
These notice provisions are statutorily mandated. They are clear and unambiguous.
Gunderson, 40 So.3d 418. The imposition of penalties by the WCJ is subject to
review under the manifest error standard. Wilczewski v. Brookshire Grocery Store,
08-718 (La.App. 3 Cir. 1/28/09), 2 So.3d 1214, writ denied, 09-456 (La. 4/13/09), 5
So.3d 170. We find that the record reasonably supports the imposition of penalties
under La.R.S. 23:1201(F)(4), which reads:
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STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
10-593
THOMAS MEDICAL GROUP, APMC (ERIC BREWTON)
VERSUS
STINE, LLC, ET AL.
**********
APPEAL FROM THE OFFICE OF WORKERS’ COMPENSATION - # 2 PARISH OF RAPIDES, NO. 08-05501 JAMES L. BRADDOCK, WORKERS COMPENSATION JUDGE
JOHN D. SAUNDERS JUDGE
Court composed of John D. Saunders, J. David Painter, and Shannon J. Gremillion, Judges.
AFFIRMED.
Gremillion, J., concurs in parts and dissents in part and assigns written reasons.
Roger Anthony Javier The Javier Law Firm 1100 Poydras St., #800 New Orleans, LA 70163 (504) 599-8570 Counsel for Defendant/Appellant: Zurich American Ins. Co. Stine, LLC
Richard Bray Williams Williams Family Law Firm, LLC P. O. Box 15 Natchitoches, LA 71458-0015 (318) 352-6695 Counsel for Plaintiff/Appellee: Thomas Medical Group, APMC (Eric Brewton) SAUNDERS, Judge.
This appeal involves a dispute between a health care provider and an employer,
its insurer, and a third party administrator. The insurer’s third party administrator and
the health care provider were both parties to preferred provider agreements (PPO)
with First Health Group Corp (First Health). Despite the existence of this PPO
agreement, the health care provider, plaintiff/appellee Thomas Medical Group,
APMC (Thomas), which agreed to accept 90% of the statutory reimbursement
schedule established in the Louisiana Workers’ Compensation Act, filed a disputed
claim for compensation with the Office of Worker’s Compensation by which it
sought—and was awarded—the alleged underpayment amount of $51.66 plus a
penalty of $2,000.00 and attorney fees of $4,500.00 against the employer,
defendant/appellant Stine, LLC (Stine), and its insurer, defendant/appellant Zurich
American Insurance Company (Zurich). Stine and Zurich appealed the judgment.
Thomas answered the appeal, asserting that because there were two bills that were
discounted improperly, it was entitled to two awards of penalties. Thomas also seeks
additional attorney fees for defending the judgment on appeal. For the reasons that
follow, we affirm the workers’ compensation judge’s (WCJ) judgment.
FACTS
In January 2002, Gallagher Bassett Services, Inc. (Gallagher Bassett), entered
into a contract with First Health allowing Gallagher Bassett access to First Health’s
preferred provider network. In July 2005, Dr. James Knecht, a Natchitoches,
Louisiana, physician, contracted with First Health to become a member of First
Health’s preferred provider network.1 Dr. Knecht was asked to complete a
1 Dr. Knecht and Dr. Joseph A. Thomas formed the Thomas Medical Group, a corporation operating under Subchapter S. Three years later, Dr. Thomas died. Dr. Knecht is the sole physician member of the Thomas Medical Group. questionnaire that specifically queried his workers’ compensation practice as part of
this enrollment. In November 2006, Gallagher Bassett entered into a Third Party
Administrator Agreement with Zurich, whereby Gallagher Bassett agreed to
administer certain workers’ compensation claims for Zurich. Zurich provided
workers’ compensation insurance to Stine.
Dr. Knecht is a general practitioner in Natchitoches who accepts workers’
compensation cases only on referrals from employers. He employs Acadiana
Computer Services to perform his billing. He and his staff were not aware that
Stine’s employee, Mr. McDavid, was being seen pursuant to the PPO agreement until
an Explanation of Benefits (EOB) was received by his office. His staff alerted him
to the fact that First Health had taken a further PPO reduction from the statutory
reimbursement schedule that fixes the maximum amount a health care provider can
be reimbursed. Thomas then initiated this litigation.
The WCJ heard this matter and, for oral reasons handed down in another
matter, found that Stine and Thomas had not negotiated over the application of the
PPO agreement to the treatment of workers’ compensation patients, and that PPO
arrangements simply are not compatible with the statutory workers’ compensation
scheme. Therefore, the WCJ rendered judgment in favor of Thomas.
ASSIGNMENTS OF ERROR
Stine and Zurich assign as error:
(1) The WCJ’s ruling that the PPO contracts are not authorized by the Workers’
Compensation Act;
(2) The WCJ’s ruling that PPO agreements must be specifically authorized by
statute to have effect;
2 (3) The WCJ’s ruling that they were arbitrary and capricious in reducing
payments to Thomas, thus subjecting them to penalties and attorney fees; and,
(4) The WCJ’s assessment of penalties and attorney fees.
Thomas assigns as error the WCJ’s ruling admitting evidence of the relationship
between First Health and a company known as Concentra, Inc., and FOCUS Health
Care Management, Inc.2 Thomas also assigns a error the ruling that Stine and Zurich
were only liable for a single penalty, as it contends each failure to properly reimburse
constitutes a separate violation of the Workers’ Compensation Act.
ANALYSIS
This Court has wrestled with this issue for the past several months. See Agilus
Health (Allison Taylor) v. Accor Lodging N. Am., 09-1049 (La.App. 3 Cir. 3/10/10),
32 So.3d 1120, writ granted, 10-800 (La. 6/18/10), 38 So.3d 312, and Central La.
Ambulatory Surgical Ctr., Inc. v. Payless Shoesource, Inc., 10-86 (La.App. 3 Cir.
7/28/10), ___ So.3d ___, on rehearing, (La.App. 3 Cir. 10/20/10), ___ So.3d ___.
We disagree with the WCJ that this matter hinges upon whether a PPO agreement
runs afoul of the Workers’ Compensation Act. Assuming that a PPO agreement is
valid, the defendants were not entitled to take any discount on the workers’
compensation reimbursement schedule. The dictates of La.R.S. 40:2203.1, which
requires advanced notice to the health care provider either in the form of a benefit
card that identifies the PPO or other written notice by the PPO to the provider at least
30 days in advance of services, were not followed. See Touro Infirmary v. Am.
Maritime Officer, 09-697 (La.App. 4 Cir. 11/9/09), 24 So.3d 948, and Gunderson v.
2 The last exhibit of which Thomas complains consists of documents reflecting the terms of the settlement a class action suit, Gunderson v. F.A. Richard & Assocs., Inc., docket 2004-2417 of the 14th Judicial District Court, Calcasieu Parish, Louisiana. The suit was settled releasing the “affiliates, ” which included entities related to FOCUS and Concentra.
3 F.A. Richard & Assocs., Inc., 09-1498 (La.App. 3 Cir. 6/2/10), 40 So.3d 418. Under
the plain terms of section 2203.1, unless this notice is provided, “[a] preferred
provider organization’s alternative rates of payment shall not be enforceable or
binding.” La.R.S. 40:2203.1(B).
Clearly, the lack of notice to Thomas that Mr. McDavid’s treatment would be
provided under the auspices of the PPO precludes enforcement of those discounts.
These notice provisions are statutorily mandated. They are clear and unambiguous.
Gunderson, 40 So.3d 418. The imposition of penalties by the WCJ is subject to
review under the manifest error standard. Wilczewski v. Brookshire Grocery Store,
08-718 (La.App. 3 Cir. 1/28/09), 2 So.3d 1214, writ denied, 09-456 (La. 4/13/09), 5
So.3d 170. We find that the record reasonably supports the imposition of penalties
under La.R.S. 23:1201(F)(4), which reads:
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 for recovery of more than one penalty or attorney fee.
Because the notice provisions were not followed, the WCJ’s imposition of penalties
was not manifestly erroneous. See Central La. Amb. Surg. Ctr., Inc., 10-86 (La.App.
3 Cir. 10/20/10), ___ So.3d ___ (On rehearing).
We disagree with Thomas that each failure to reimburse at the proper rate
constitutes a separate violation for purposes of imposing penalties. Whether multiple
violations occur is a determination subject to review under the manifest error
standard. Wyble v. Acadiana Prep. Sch., 07-91 (La.App. 3 Cir. 5/2/07), 956 So.2d
722, writ denied, 07-1178 (La. 9/14/07), 963 So.2d 1004. Our supreme court has
directed us to “ferret out” these situations. See Fontenot v. Reddell Vidrine Water
4 District, 02-439, p.18 (La. 1/14/03), 836 So.2d 14, 27. We have done so in cases
such as Ducote v. Louisiana Industries, Inc., 07-1536 (La.App. 3 Cir. 4/2/08), 980
So.2d 843, and Burnett v. Villiage of Esterwood, 09-680 (La.App. 3 Cir. 12/9/09), 25
So.3d 997.
In this case, the WCJ found, as fact, that it was a good-faith, single error made
by the benefits providers, i.e. that they could pay the negotiated lower prices for
health care services, that led to multiple bills being underpaid. Given these
circumstances, we cannot say that the WCJ erred in awarding a single penalty to
Thomas. Thus, we find the record reasonably supports the imposition of a single
penalty.
The WCJ awarded Thomas $4,500.00 in attorney fees. Louisiana Revised
Statute 23:1201(F)(4) allows a health care provider to collect an attorney fee based
on the actual hours worked. “The [WCJ] has great discretion in the award of
attorney’s fees and will not be disturbed absent manifest error.” Dietz v. Guichard
Drilling Co., 626 So.2d 79, 83 (La.App. 3 Cir. 1993).
In the case before us, Thomas’s attorney submitted an affidavit attesting that
as of October 19, 2009, he had worked 2.2 hours on the case. Since October 19,
2009, Thomas’ attorney has also prepared this case for trial and tried this case, along
with three others on these issues, in a trial that lasted an entire day. Given the great
discretion affording the WCJ on this issue, we find no error in its award.
Thomas also seeks additional attorney fees for work on appeal. The award of
additional attorney fees is warranted when the claimant successfully defends its
judgment. See Central La. Ambulatory Surgical Ctr., Inc.,10-86 (La.App. 3 Cir.
10/20/10), ___ So.3d ___ (On rehearing). “Generally, when an award for attorney’s
5 fees is granted [by the WCJ], additional attorney’s fees are proper for work done on
appeal [so as] to keep the appellate judgment consistent with the underlying
judgment.” Wilczewski, 2 So.3d at 1226. Accordingly, we award Thomas an
additional $1,500.00 in attorney’s fees for work done on appeal.
Thomas assigned an error in the admission of certain documents. We consider
this assignment of error moot.
CONCLUSION
The issue of the validity of a PPO agreement to a workers’ compensation case
need not be addressed, because even if such an agreement were valid, the notice
required be given to the health care provider was not effected. Therefore, the PPO
was not allowed to discount the reimbursement below the workers’ compensation
reimbursement schedule. The judgment of the Workers’ Compensation Judge
awarding Thomas $51.66 is affirmed. Likewise, the notice provisions of the PPO
laws are clear and unambiguous. The failure to follow these dictates, yet to still
attempt to discount the health care provider’s reimbursement, warrants the imposition
of penalties. The single penalty of $2,000.00 is affirmed. Moreover, the award of
$4,500.00 in attorney fees is affirmed given the great discretion afforded the WCJ.
Finally, Thomas is awarded additional attorney’s fees for this appeal of $1,500.00.
6 STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
GREMILLION, Judge, concurs in part and dissents in part.
I find that the attorney fees awarded by the WCJ are too high and should be
reduced. Thus, I dissent on this issue for the same reasons I assigned in my dissent
in Central La. Amabulatory Surgical Crt., Inc., 10-86 (La.App. 3 Cir. 10/20/10),
__So.3d__ (On rehearing). In all other respects I concur with the majority.