DECISION AND ORDER

Texas Mutual Insurance Company (Carrier) requested a hearing to contest the May 13, 2004, Findings and Decision of the Texas Workers’ Compensation Commission (Commission) authorizing reimbursement of $1,201.69 to First Rio Valley Medical P.A. (Provider) for established patient focused office visits,^[1] aquatic therapy,^[2] sterile whirlpool therapy,^[3]and massage therapy^[4] from October 22, 2003, through November 3, 2003, (Disputed Services). Carrier has the burden of showing by a preponderance of the evidence that the Disputed Services were not medically necessary.^[5] This decision denies, in part, the relief sought by Carrier and grants reimbursement to Provider for the Disputed Services, but with aquatic therapy being reimbursed at the group rate, instead of the rate for one-on-one therapy.

The hearing convened on February 2, 2005, before Administrative Law Judge (ALJ) Catherine C. Egan at the State Office of Administrative Hearings, Austin, Texas. Attorneys Chris Trickey and Tom Hudson represented Carrier. Attorney Keith Gilbert represented Provider. William DeFoyd, D.C., Nicholas Tsourmas, M.D., and Alfred Richard Ball testified for Carrier. Robert S. Howell, D.C., Provider’s owner, testified for Provider. There were no contested issues of notice or jurisdiction.

The hearing adjourned and, at the request of the parties, the record remained open for the filing of briefs regarding the admission of a deposition and other items. On February 16, 2005, Carrier filed a brief in support of the admission of the deposition of Sam Allen, D.C. Provider filed no response, and, on February 21, 2005, the deposition was admitted and the record closed.

I. BACKGROUND

___ (Claimant), a 54-year old male, sustained a work-related injury on ___, when he slipped and fell into a ditch while carrying plywood. Claimant experienced lower back pain that radiated into his left leg. He was treated with passive physical therapy through May 11, 2000, that was unsuccessful in relieving his pain. On May 9, 2000, Claimant underwent a lumbar MRI that showed “a small left subligamentous L4-5 disc herniation and also borderline spinal stenosis . . . chronic degenerative disc changes at the L2 level, but without a disc herniation or stenosis at L2.”^[6] On May 26, 2000, Claimant went to Provider for treatment. Provider treated Claimant in May, June, July and August 2000, but Claimant’s condition continued to deteriorate.

On September 11, 2000, Claimant underwent lumbar spinal fusion surgery. Claimant returned to Provider for rehabilitative therapy following this surgery. On August 23, 2001, Claimant underwent spinal surgery to insert a trial spinal cord stimulator on his spine. On October 4, 2001, a permanent spinal cord stimulator was inserted. The battery of the stimulator had to be replaced the following year which necessitated another surgery on June 18, 2002. On April 1, 2003, Claimant underwent spinal surgery to remove the hardware from prior surgeries.

Following the April 1, 2003, surgery, Claimant did not return to Provider for treatment until October 21, 2003. Claimant reported to Provider that cold weather aggravated his lower back and he suffered with low back pain that radiated down the left leg to his heel. Provider recommended four to six sessions of physical therapy consisting of group aquatic therapy in the pool, 30-minutes of massage, and sterile whirlpool.^[7]

II. LEGAL ISSUE

Pursuant to 28 Tex. Admin. Code (TAC) §133.304(c), when a carrier denies payment, the carrier must send an explanation of benefit (EOB) to the appropriate party with the proper exception code and “sufficient explanation to allow the sender to understand the reason(s) for the insurance carrier’s action(s). A generic statement that simply states a conclusion such as ‘not sufficiently documented’ or other similar phrases with no further description of the reason for the reduction or denial of payment does not satisfy the requirements of this section.”

Carrier denied payment to Provider for treatment rendered from October 22, 2003, through November 3, 2003, under payment exception code “U” for “unnecessary treatment (without peer

review).”^[8] Carrier’s explanation for denying these services was set out in Carrier’s rationale code “RG,” described on the EOB as “the treatment/service provided exceeds medically accepted utilization review criteria and/or reimbursement guidelines established for severity of injury, intensity of service and appropriateness of care.”^[9]

On the EOB for the October 22, 2003, office visit, Carrier added a qualifier “1″ to the “RG” rationale code. Carrier defined “1″ as “all EM services per the chiropractor must be a separate identifiable service medically necessary.” Carrier also added a qualifier “2″ after the October 22, 2003, claim for aquatic therapy. Qualifier “2″ was defined on the EOB as “clinical justification is needed as to the medical necessity of care at this phase of the claim.^[10] On November 2, 2003, Carrier added a qualifier “3″ to the “RG” rationale code. Carrier defined this qualifier on the EOB as “clinical justification is needed as to the medical necessity of continued therapy at this time.”^[11]

Dr. Howell testified that the explanation provided by Carrier for rationale code “RG” did not tell him why Carrier found the services to be unnecessary treatment. He was unaware of any healthcare provided to Claimant that exceeded any published medically accepted utilization review criteria. Provider filed its request for reconsideration seeking more information to explain why Carrier had denied these claims.^[12] Carrier responded by reissuing the EOBs, and adding payment

exception code “O” for “denial after reconsideration” with a rationale code of “YO” for “reimbursement was reduced or denied after reconsideration of treatment/service billed.”^[13] Carrier did not disclose its criteria and guidelines to Provider.

Carrier did not retain Dr. DeFoyd until December 2004. Dr. DeFoyd was not involved in Carrier’s initial decision to deny this claim, nor does he know what Carrier’s criteria and guidelines say that are referenced in the EOBs.^[14] When asked if he knew the protocol Carrier used to deny a procedure based on the “U” payment denial code, Dr. DeFoyd stated he was not an employee of

Carrier’s and he did not know the process Carrier followed.^[15] Dr. Tsourmas, Carrier’s expert and medical director, testified that he believed Carrier’s guidelines track national medical guidelines. However, when Dr. Tsourmas was asked to explain Carrier’s “RG” modifier, he could not do so.^[16]

Even after Provider requested clarification, and furnished Carrier additional information, Carrier did not provide a sufficient explanation for denying Provider’s claim. The Commission’s rules required Carrier to provide on the EOB a sufficient explanation to allow Provider to understand the reason(s) for Carrier’s denial. Carrier did not furnish Provider with the relevant portions of its criteria and guidelines in response to Provider’s request for the same.

Carrier may not substitute at a much later date a reason or an explanation other than that provided by Carrier when it denied the claims. The physicians who testified at the hearing on behalf of Carrier were unable to testify regarding Carrier’s criteria and guidelines referenced in the EOBs. Under the Commission’s rules, Carrier’s explanation was insufficient. The Commission’s rules will not permit Carrier now to substitute an explanation that was not furnished in compliance with 28 TAC § 133.304(c).^[17] Therefore, where Carrier failed to timely submit a sufficient explanation of its denial, it may not now create one to deny the claim based on lack of medical necessity.

III. WERE THE DISPUTED MEDICAL SERVICES

MEDICALLY UNNECESSARY?

A. IRO’s Decision and the Medical Record

On April 30, 2003, the independent review organization (IRO) determined that all of the Disputed Services were medically necessary.^[18] The IRO’s rationale for its decision was as follows:

The patient was postsurgical, with ongoing problems. He suffered a flare-up and the doctor prescribed exercises and some passive therapy. Apparently aquatic exercises were deemed favorable due to the patients (sic) postsurgical presentation. Treatments appeared to be successful in reducing the patient’s pain level and increasing his functional ability with respect to range of motion. As such the above mandates for medical necessity appear to have been satisfied.

In conclusion, the care appears to have been provided well within the parameter of current clinical standard.^[19]

On October 2, 2003, Climant went to Tim Chowdhury, M.D. for a follow-up visit. Dr. Chowdhury recorded that Claimant complained that the spinal cord stimulator that Dr. Chowdhury had placed in Claimant was not relieving the pain in his low back and lower extremities. Claimant rated his pain level at an eight or nine out of ten, with ten being unbearable pain. Dr. Chowdhury diagnosed Claimant with Apost lumbar laminectomy syndrome and Astatus post malfunctioning of implanted spinal column stimulator electrodes and possible battery.^[20]

Provider’s October 21, 2003, interim report documented tht three weeks later Claimant came to Provider for treatment because cold weather Aexacerbated Claimant’s lumbar spine.^[21] Claimant reported a pain level of five out of ten, with ten being the highest level of pain. Provider’s diagnoses included Apost op lumbar spinal surgery and Alumbar disc displacement.^[22] Provider’s treatment plan included four to six sessions of Agroup therapy for the pool, 30 minutes of massage therapy, and sterile whirlpool therapy.^[23]

In the November 6, 2003, interim report, Provider documented that following the six sessions of physical therapy, Claimant’s pain level decreased to a 4, and his range of motion improved in extension and right lateral flexion. Provider noted that the patient has undergone 6 sessions of physical therapy consisting of group therapy for the pool . . ..^[24]

B. Carrier’s Position and Evidence

Dr. Tsourmas, an orthopedic surgeon who works for Carrier as a medical director, reviewed Provider’s medical records to assess the medical necessity of the services in dispute. Dr. Tsourmas testified that cold weather reportedly exacerbated Claimant’s condition. Instead of the “group” aquatic therapy ordered by Dr. Howell to treat Claimant, Dr. Tsourmas maintains Claimant should have been on an independent program. The one-on-one therapy provided, Dr. Tsourmas testified,

was “redundant and repetitive and not medically necessary.”^[25] When asked if the massage therapy and whirlpool therapy were medically necessary, Dr. Tsourmas stated, “if someone is having a temporary aggravation, a massage always feels good, for a day or two; or the cold weather goes away; one of the two. But, again, for the duration and intensity prescribed here, no.”^[26] In conclusion, Dr. Tsourmas maintains that Claimant should have progressed by this time to an independent land-based exercise program.

Dr. DeFoyd practices at the Spine and Rehab Center and treats spinal injuries.^[27] Dr. DeFoyd noted that Provider initiated the Disputed Services six months after Claimant’s spinal surgery to remove the hardware. On October 21, 2003, Provider reported that Claimant had low back pain due to the cold weather for which Provider treatment plan included six sessions of group aquatic therapy, 30 minutes of massage therapy, and sterile whirlpool therapy. However, Claimant actually received one-on-one aquatic therapy. Dr. DeFoyd opined that none of the therapy needed to be performed one-on-one. Likewise, the massage therapy and whirlpool therapy were not medically necessary because they were passive treatments. According to Dr. DeFoyd, “[t]here is no indication that massage therapy is going to cure or relieve that exacerbation due to the cold weather . . .” and would not help Claimant at this stage of recovery.^[28] Dr. DeFoyd opined that the office visits and the rest of the services were repetitive and not medically necessary.^[29]

C. Provider’s Position and Evidence

Dr. Howell has been a licensed chiropractor in Texas since October 1990. Provider’s clinic is a 12,300-square-foot facility with a junior Olympic indoor pool (77,000 gallons), a 1,000-square-foot gym with modern weight lifting equipment, massage therapy rooms, examination rooms, physical therapy rooms, an adjusting room, a reception area, administrative offices, bathrooms with six showers, a return-to-work area, and a chronic pain management area.^[30]

Dr. Howell testified that Claimant underwent the removal of his lumbar hardware at L4/L5, a fusion exploration, and augmentation on April 1, 2003. The cold weather exacerbated the pain in his lower back. The therapy provided between October 22, 2003, and November 3, 2003, reduced

Claimant’s pain level and increased his functional ability. Dr. Howell explained that the whirlpool therapy causes vasodilation which increases circulation, which improves the healing process, which in turn reduces pain.^[31] According to Dr. Howell, as a result of Provider’s treatment protocol Claimant’s range of motion approached normal and his pain decreased.^[32]

D. ALJ’s Analysis

Crrier was required to show by a preponderance of the evidence that it properly denied Provider’s claims for services provided to Claimant due to a lack of medical necessity. Under the Commission’s rules, Carrier is required to provide a sufficient explanation for why it determined Provider’s medical services were not medically necessary at the time it issues the EOB. Carrier’s explanation codes ARG and its definition provided an insufficient explanation as it relied upon Carrier’s confidential criteria and guidelines which Carrier chose not to disclose. Carrier’s own expert, Dr. Tsourmas, was unable to explain what Carrier meant in its definition of ARG, and neither expert knew what Carrier’s criteria and guidelines were. Despite Provider’s request for clarification about what guidelines Carrier was referring to, Carrier failed to provide this information.

Neither of Carrier’s experts could testify about why Carrier denied Provider’s claims at the time Carrier denied the claims, particularly since neither knew what Carrier’s criteria and guidelines provided. Carrier chose not to offer any evidence explaining what its proprietary criteria and guidelines stated or to clarify the rationale for denying the claims other than the global statement that they were not medically necessary. Consequently, the ALJ finds Carrier failed to show by a preponderance of the evidence why it denied Provider’s claims.

In addition, the ALJ finds Carrier failed to show by a preponderance of the evidence that the Disputed Services provided by Provider from October 22, 2003, through November 11, 2003, were not medically necessary. Claimant has undergone numerous surgeries on his lumbar spine to treat his compensable injury without much relief. Carrier’s experts argued that Claimant should already have been engaged in a home exercise program. However, Dr. Chowdhury’s evaluation of Claimant on October 2, 2003, indicated he was in significant pain due to a malfunctioning spinal stimulator. When Claimant came to Provider for treatment of his lumbar pain, the problem with his spiral stimulator had not been rectified and his lower back was being aggravated by the cold weather. Provider’s treatment did relieve Claimant’s pain and improved his range of motion. However, Provider’s interim report conceded that one-on-one aquatic therapy was not medically necessary as group therapy was what was ordered. Therefore, the ALJ finds that Carrier failed to carry its burden

of proof and Provider is entitled to recover the amount due for the Disputed Services except for one-on-one aquatic therapy which should be reimbursed at the group rate, instead of the rate for one-on-

one therapy.

IV. FINDINGS OF FACT

1. Claimant, a 54-year-old male, sustained a work-related injury on ___, when he slipped and fell into a ditch while carrying plywood (compensable injury).
2. On May 26, 2000, Claimant sought treatment from Robert S. Howell, First Rio Valley Medical, P.A. (Provider).
3. On September 11, 2000, Claimant underwent lumbar spinal fusion surgery.
4. On August 23, 2001, Claimant underwent spinal surgery to insert a trial spinal cord stimulator.
5. On October 4, 2001, Claimant underwent spinal surgery to insert a permanent spinal cord stimulator.
6. On June 18, 2002, Claimant underwent spinal surgery to replace the battery on the spinal cord stimulator.
7. On April 1, 2003, Claimant underwent spinal surgery to remove hardware from prior surgeries.
8. On October 2, 2003, Claimant experienced severe lower back and lower extremities pain due to the malfunction of his spinal stimulator.
9. On October 21, 2003, Claimant came to Provider for treatment because cold weather had exacerbated Claimant’s lumbar spine pain.
10. Provider diagnosed Claimant as failed back syndrome, thoracic or lumbosacral neuritis or radiculitis, displacement of lumbar intervertebral disc without myelopathy, and neuropathy.
11. Texas Mutual Insurance Company (Carrier) issued an explanation of benefits (EOB), denying payment for the disputed services.
12. Provider’s treatment plan for Claimant was four to six sessions of group aquatic therapy, 30-minute massage therapy and sterile whirlpool therapy.
13. Crrier denied reimbursement for the Disputed Services under the payment exception code AU, for Aunnecessary treatment (without peer review).
14. On the EOBs denying these Disputed Services, Carrier used the rationale code ARG,”and its definition for this code, as its explanation to Provider for denying the claims.
15. Crrier defined ARG” on the EOB as the treatment/service provided exceeds accepted utilization review criteria and/or reimbursement guidelines for severity of injury, intensity of service and appropriateness care.” For the claims dated October 22, 2003, and November 2, 2003, Carrier added some additional qualifying information to the ARG rationale code, but still provided insufficient information to explain why Carrier denied the claims.
16. Carrier refused to disclose to Provider the relevant utilization review criteria and/or reimbursement guidelines, asserting they were proprietary and confidential.
17. Carrier’s failure to disclose to Provider the relevant utilization review criteria and reimbursement guidelines rendered Carrier’s explanation insufficient for Provider to understand Carrier reason(s) for denying Provider’s claims.
18. Provider filed a request for reconsideration of the Disputed Services with Carrier and asked Carrier to identify what guidelines it was using as a basis to deny the claims and to explain the rationale behind its denial of the Disputed Services.
19. Carrier denied the requests for reconsideration, and failed to provide any additional information regarding the rationale behind its denial of the disputed claims, including the contents of the criteria and guidelines it relied upon.
20. The condition of Claimant’s lumbar spine after multiple spine surgeries rendered him disabled.
21. Provider ordered group aquatic therapy for Claimant, not one-on-one therapy.
22. Group aquatic therapy, not one-on-one aquatic therapy, was medically necessary.
23. As a result of Provides treatment from October 22, 2003 through November 3, 2003, Claimant’s range of motion improved, and his pain decreased.
24. The Disputed Services with aquatic therapy being provided at a group rate, provided by Provider to Claimant, were medically necessary to treat his compensable injury.
25. On April 30, 2003, an independent review organization (IRO) concluded that the Disputed Services were medically necessary to treat the compensable injury.
26. By Decision dated April 22, 2003, based on the IRO decision, the Texas Workers’ Compensation Commission (Commission) Medical Review Division determined the Disputed Services were medically necessary and granted Provider reimbursement.
27. Carrier timely requested a hearing to contest the Commission’s decision.
28. All parties received not less than 10 days notice of the time, place, and nature of the hearing; the legal authority and jurisdiction under which the hearing was to be held; the particular sections of the statutes and rules involved; and a short, plain statement of matters asserted be billed at the group rate.
29. A hearing was convened by Administrative Law Judge Catherine C. Egan on February 2, 2005, in the hearing rooms of the State Office of Administrative Hearings. The hearing adjourned and the record closed February 21, 2005.
30. For the dates of service in question, Carrier failed to show that the Disputed Services were not medically necessary to treat Claimant’s compensable injury.

V. CONCLUSIONS OF LAW

1. 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(k) and Tex. Gov’t Code Ann. ch. 2003.
2. Carrier timely requested a hearing in this matter pursuant to 28 Tex. Admin. Code (TAC) §§ 102.7 and 148.3.
3. Notice of the hearing was proper and complied with the requirements of Tex. Gov’tCode Ann. ch. 2001.
4. Carrier had the burden of proof in this matter, which was the preponderance of evidence standard. 28 TAC §§ 148.21(h) and (i); 1 TAC § 155.41(b).
5. When an insurance carrier makes or denies payment on a medical bill, the carrier must include on the EOB the correct payment exception code and a sufficient explanation to allow the sender (Provider) to understand the reason for the carrier’s action. A general statement that simply states a conclusion is not sufficient. 28TAC§ 133.304(c).
6. Carrier’s explanation for denying the claims from October 22, 2003, through November 3, 2003, was legally inadequate as it failed to deny reimbursement in compliance with the Commission’s rules.
7. Carrier may not now assert an explanation for denying Provider’s claims that was not stated in the Explanation of Benefits as required by 28 TAC § 33.304(c).
8. Based on the Findings of Fact, Provider is only entitled to be reimbursed at the group rate for the aquatic therapy.
9. Based on the Findings of Fact, Carrier failed to demonstrate that the Disputed Services were not reasonable and medically necessary for the treatment of Claimant’scompensable injury.
10. Based upon the Findings of Fact and Conclusions of Law, Provider is entitled to reimbursement for the Disputed Services, with the adjustment to the group rate for aquatic therapy, as they were reasonable and medically necessary.

ORDER

THEREFOREIT IS ORDERED that Texas Mutual Insurance Company reimburse First Rio Valley Medical, P.A., for the Disputed Services provided to Claimant from October 22, 2003, through November 3, 2003, with the aquatic therapy being reimbursed at the group rate, together with any and all applicable interest.

Signed April 21, 2005.

CATHERINE C. EGAN
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

1. CPT Code 99212.↑
2. CPT Code 97113.↑
3. CPT Code 97022-22.↑
4. CPT Code 97124.↑
5. A copy of the claims log showing the dates and services in dispute is attached as Appendix A↑
6. Ex. 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 201.↑
7. Joint Ex. 4, Tab 1 at 26-27.↑
8. Joint Ex. 4, Tab 1 at 87-97.↑
9. Joint Ex. 4, Tab 1 at 87.↑
10. Joint Ex. 4, Tab 1 at 88.↑
11. Joint Ex. 4, Tab 1 at 96.↑
12. Joint Ex. 4, Tab 1 at 117-126, 138-156, and 161-170.↑
13. Joint Ex.4, Tab 1 at 98-105.↑
14. Ex. 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 52 and 557-564.↑
15. Ex 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 178.↑
16. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 57-58.↑
17. See also 28 TAC § 133.307(j)(2).↑
18. Joint Ex. 4, Tab 1 at 7.↑
19. Joint Ex. 4, Tb 1 at 7-8. The term Aabove mandate referred to Section 408.021 of the Texas Labor Code.↑
20. Joint Ex. 4, Tab 3 at 436.↑
21. Joint Ex. 4, Tab 1 at 26.↑
22. Joint Ex. 4, Tab 1 at 27.↑
23. Id.↑
24. Joint Ex. 4, Tab 1 at 29.↑
25. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 248.↑
26. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 248-249.↑
27. Dr DeFoyd has been a chiropractor for 18 years. Ex. 16, Tab 1, Prefiled Testimony of Dr. Defoyd at 9.↑
28. Ex. 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 266.↑
29. Ex. 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 267.↑
30. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell Vol. I at 5-6.↑
31. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell Vol. III at 88.↑
32. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell Vol. III at 86.↑