DECISION AND ORDER

I. PROCEDURAL HISTORY

Liberty Mutual Fire Insurance Company (Petitioner or Carrier) appealed the decision of the Texas Worker’s Compensation Commission’s Medical Review Division (MRD) that granted reimbursement for certain durable medical equipment to Oxymed, Inc. (Respondent) in the amount of $769.

The Administrative Law Judge (ALJ) convened a hearing on July 14, 2003. Petitioner was represented by Charlotte Salter, attorney. Respondent was represented by Peter N. Rogers, attorney. The evidentiary hearing was concluded that day, but the record was left open until July 18, 2003, for the parties to file closing arguments.

II. EVIDENCE AND BASIS FOR DECISION

The documentary record in this case consists of the medical records submitted by Respondent to the MRD. In addition, both parties presented witnesses to support their positions. Carrier presented NickTsourmas, M.D., who testified that, individually, the various components of durable medical equipment (DME) supplied by Respondent would be of no benefit to the Claimant. Dr. Tsourmas testified the components work together as a unit, and not individually, to effect a medical benefit. In his experience, the water cooling unit and the pad are always delivered together as a unit. The Carrier also presented Tom Lang, an independent adjuster who investigates insurance issues. Mr. Lang testified he had surveyed other vendors of DME in Texas and found those vendors charged less than $500 for the two major components (circulating unit and water pad) of the Polar Care 500.

Respondent’s employee, ___, testified that the Polar Care 500 units are purchased in bulk by Respondent from Medico Medical Supplies. The units are not assembled when they are delivered. Respondent receives the coolers, pads, wraps, adaptors, etc., separately and stores the components until it receives prescriptions for specific DME. At that point, Respondent fills the prescriptions with the various component parts that are required and sends them to the claimants, with explanations as to how the components are to be used. Claims are then submitted to the carriers for the separate components that were supplied. Because the separate components usually do not

exceed $500, Respondent generally does not seek preauthorization. However, in response to cross examination questions, ___ stated that he had never supplied only the cooler to a claimant, as it would serve no medical purpose by itself. The cooler, the pad, and the wrap go together to provide a medical benefit.

___ further testified that although he had not seen the prescription in this case, he knew that Dr. Henderson always ordered the Polar Care 500, which was large enough to be applied to Claimant’s spine. ___ testified the cryotherapy unit indicated under CPT Code E0237Bwater circulating pump with pad (Polar Care 300) was too small to treat Claimant’s back, and that is why the larger unit was supplied to Claimant.^[1] In this case, pursuant to Dr. Robert Henderson’s prescription of April 23, 2001, for a cold therapy unit,^[2] Respondent supplied Claimant with the following: a water circulating unit, billed at $494; a water circulating pad, billed at $155; an adaptor, billed at $45; and a cooler wrap, billed at $75. Respondent submitted its claim for $769, but the Carrier denied the claim.

Both parties introduced copies of decisions issued by other SOAH ALJs that dealt with whether DME whose cost is greater than $500 when its separate or component parts are added together requires preauthorization under 28 Tex. Admin. Code (TAC) ‘134.600(h)(11).

The facts in this case are essentially undisputed. The parties agreed that Dr. Henderson prescribed a cold therapy unit^[3] for treating Claimant’s back following spinal surgery. It is also undisputed that the cold therapy unit is made up of several parts or components that must be put together before the unit will provide a medical benefit. The only issue presented is whether the cold therapy unit prescribed should be considered one item or multiple items. Commission rule at 28 TAC §134.600(h)(11) provides that DME (to be rented or purchased) that costs more than $500 per item requires preauthorization.

The ALJ concedes that rule 134.600(h)(11) is susceptible to different interpretations. Respondent urges that the phrase, per item, means that DME that consists of multiple components may be unbundled and billed according to the separate parts that make up the DME item or unit that is prescribed. This ALJ disagrees with that contention. The more reasonable interpretation is that if the unit or item prescribed is made up of individual components that must be assembled to effect the result intended by the treating physician when he prescribed the DME, then the cost of the unit or item as assembled must be considered in deciding whether preauthorization must be obtained. The individual or separate components involved in this case could provide no medical benefit whatsoever to Claimant.The DME item that was prescribed by the treating doctor was a cold therapy unit. The unit was medically viable for Claimant only when the individual parts were put together.

Thus, the ALJ finds that Dr. Henderson’s prescription was for an assembled cold therapy unit, and because the cost of that unit was more than $500, Respondent should have obtained preauthorization prior to supplying the DME. Therefore, Petitioner’s appeal should be granted.

III. FINDINGS OF FACT

1. On__________, Claimant suffered a compensable injury to her back. Robert J. Henderson, M. D., treated Claimant’s injury by performing a surgical procedure some time after April 5, 2001, when the procedure was authorized.
2. Claimant’s injury is covered by workers’ compensation insurance written for Claimant’s employer by Liberty Mutual Fire Insurance Company (Carrier).
3. On April 23, 2001, after the surgical procedure, Dr. Henderson prescribed a cold therapy unit, as part of Claimant’s continued treatment. Cold therapy units are durable medical equipment (DME) under the Commission’s 1996 Medical Fee Guideline.
4. Pursuant to the prescription, Oxymed, Inc. (Respondent) supplied the cold therapy unit to Claimant. It supplied the unit as individual components, water circulating unit, water circulating pad, auto adaptor, and cold therapy cooler wrap.
5. In May 2001, Respondent, billed the Carrier $769, which represented payment for the individual or separate components, as follows: water circulating unit-E0236–$494; water circulating pad-E01399–$155; auto adaptor-E01399–$45; and a cooler wrap- E01399–$75.
6. The Carrier denied payment indicating the DME’s cost was more than $500 and required preauthorization, which had not been obtained.
7. The prescription written by Dr. Henderson was for one item, a cold therapy unit.
8. Neither Dr. Henderson nor Respondent sought preauthorization for the purchase of the DME.
9. Independent of each other, the water circulating unit, cooler wrap and water circulating pad that were supplied to Claimant by Respondent serve no medical purpose or function in Claimant’s treatment.
10. When assembled together, the water circulating unit, cooling pad, and cooler wrap function as a unit to provide medical treatment for Claimant’s condition.
11. Respondent timely requested medical dispute resolution by the Medical Review Division (MRD) of the Texas Workers’ Compensation Commission (Commission).
12. On October 11, 2002, the MRD issued its decision that Carrier should pay Respondent for the DME that was billed separately. The Carrier timely appealed the MRD’s decision.
13. The Commission sent notice of the hearing to the parties on February 11, 2003. The hearing notice informed the parties of the matter to be determined, the right to appear and be represented by counsel, the time and place of the hearing, and the statutes and rules involved.
14. The hearing was held on July 14, 2003, and all parties appeared and participated. The record of the hearing closed on July 18, 2003.

IV. CONCLUSIONS OF LAW

1. The Texas Workers’ Compensation Commission (Commission) has jurisdiction to decide the issues presented pursuant to Tex. Lab. Code Ann. § 413.031.
2. The State Office of Administrative Hearings has jurisdiction over matters related to the hearing in this proceeding, including the authority to issue a Decision and Order, pursuant to Tex. Lab. Code Ann.§ 413.031 and Tex. Gov’t Code ch. 2003.
3. The notice of hearing complied with requirements of Tex. Gov’t Code §2001.052, as it included the time, place, and nature of the hearing; a statement of the legal authority and jurisdiction under which the hearing was to be held; a reference to the particular section of the statutes and rules involved; and a short plain statement of the matters asserted.
4. Petitioner has the burden of proving by a preponderance of the evidence that it should prevail in this matter. Tex. Lab. Code Ann. §413.031 and 28 Tex. Admin. Code (TAC) § 148.21(h) and (i).
5. To be liable for certain services and supplies, a carrier must preauthorize the purchase or rental. Tex. Lab. Code Ann. §413.014 and 28 TAC §134.600(h).
6. All durable medical equipment (DME) in excess of $500 per item (either purchase or expected cumulative rental) requires preauthorization. 28 TAC § 134.600 (h)(11).
7. Respondent did not obtain preauthorization prior to supplying the DME item to Claimant.
8. Based on Findings of Fact Nos. 3 – 4, 7, 9 – 10, and Conclusions of Law, Nos. 5 – 7, the cold therapy unit or item was DME that required preauthorization.
9. Because Respondent did not obtain preauthorization prior to supplying the DME item described in Finding No. 10, the Carrier is not required to reimburse the Respondent.

ORDER

IT IS, THEREFORE, ORDERED that Liberty Mutual Fire Insurance Company shall not be required to reimburse Oxymed, Inc., for the amount claimed.

Issued this 11^th day of September 2003.

RUTH CASAREZ
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

1. ___ also stated that Respondent only carries the Polar Care 500.↑
2. See Respondent’s Ex. 1 for copy of prescription.↑
3. One possible disagreement in the facts of the case relates to the specific type of cold therapy unit that was prescribed. ___ testified that Dr. Henderson always prescribed the 500 Polar Care Unit, which was a bigger and different unit than the unit indicated in CPT Code E0237, water circulating heat/cold pad with pump. The prescription written by Dr. Henderson, however, simply read cold therapy unit.↑