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At a Glance:
March 7, 2002
Retrospective Medical Necessity


March 7, 2002


This case is a dispute over whether Medical Center Pharmacy (Pharmacy) should be reimbursed $1,070.69 for prescriptions dispensed between June 13, 2000 and August 1, 2000.

The Administrative Law Judge (ALJ) concludes the Petitioner waived its statutory right to assert that the prescriptions were not medically necessary.

I. Findings of Fact

  1. A patient suffered a compensable back injury on ________________.
  2. The Insurance Company of the State of Pennsylvania (Carrier) provided workers’ compensation insurance to the patient’s employer,______________, at the time of the injury.
  3. Between June 13, 2000 and August 1, 2000, Medical Center Pharmacy (Pharmacy) dispensed the following prescriptions to the patient and billed the following amounts to the Carrier:

Date DispensedPrescriptionAmount

6/13/00 Hydrocodone APAP (10/500 mg x 40) $37.50

Valium (10 mg x 40) $63.00

6/20/00 Stadol NS (10 mg x 2.5 ml) $93.90

Vanadom (350 mg x 40) $89.50

6/27/00 Hydrocodone APAP (10/500 mg x 40) $37.50

Valium (10 mg x 40) $63.00

7/5/00 Stadol NS (10 mg x 2.5 ml) $93.90

Vanadom (350 mg x 40) $89.50

7/11/00 Hydrocodone APAP (10/500 mg x 40) $37.50

Valium (10 mg x 40) $63.00

7/18/00 Stadol NS (10 mg x 2.5 ml) $93.90

Vanadom (350 mg x 40) $89.50

7/25/00 Hydrocodone APAP (10/500 mg x 40) $37.50

Valium (10 mg x 40) $63.00

7/27/00 Amitriptyline (50mg x 30) $36.00

Vanadom (350 mg x 40) $89.50

8/1/00 Vanadom (350 mg x 40) $89.50

Total $1077.70

  1. The maximum allowable charge for these prescriptions is $1070.69.
  2. Prior to dispensing each prescription, the Pharmacy called the Carrier’s third party administrator (TPA), Gates-McDonald A. I. G., and received approval to fill the prescriptions.
  3. On several occasions, the Pharmacy called the patient’s treating physician, Dr. Richard D. Raughton, D.O., to inquire as to the appropriateness of the prescriptions and was told by the doctor’s office that the prescriptions should be filled.
  4. The treating physician wrote a letter stating the patient needs the prescriptions to follow his treatment plan and ensure his recovery.
  5. On August 3, 2000, the Carrier mailed the Pharmacy notice that it was denying payment for the prescriptions because that they were not reasonable and necessary.
  6. The Pharmacy filed a Request for Medical Dispute Resolution with the Texas Workers’ Compensation Commission (the Commission), seeking reimbursement for the above detailed prescriptions.
  7. On January 25, 2000, the Commission’s Medical Review Division (MRD) approved the request for reimbursement.
  8. The Carrier filed a timely request for a hearing before the State Office of Administrative Hearings (SOAH).
  9. Notice of the hearing was sent March 13, 2001.
  10. The notice contained a statement of 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 sections of the statutes and rules involved; and a short, plain statement of the matters asserted.
  11. The hearing was held January 8, 2002, with ALJ Bill Zukauckus presiding and the Carrier and the Pharmacy participating. The hearing was adjourned the same day.
  12. In dispensing the disputed prescriptions, the Pharmacy reasonably relied upon the representations of the Carrier’s TPA that the prescriptions should be filled.
  13. The Pharmacy called the treating physician’s office to alert the doctor of the potential harmful interactions of the prescribed drugs. The doctor’s office informed the Pharmacy that the doctor was aware of the interactions, and the drugs should be dispensed as prescribed.

II. Conclusions of Law

  1. The Commission has jurisdiction over this matter pursuant to Section 413.031 of the Texas Workers' Compensation Act, Tex. Lab. Code Ann. ch. 401 et seq.
  2. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order, pursuant to Tex. Lab. Code Ann. § 413.031(d) and Tex. Gov’t Code Ann. ch. 2003.
  3. Adequate and timely notice of the hearing was provided in accordance with Tex. Gov’t Code Ann. § 2001.052.
  4. The Carrier has the burden of proof in this matter. 28 Tex. Admin. Code (TAC) § 148.21(h).
  5. Petitioner waived its statutory right to assert that the prescriptions were not medically necessary due to the representations made by its TPA to the Pharmacy.[1]
  6. The Carrier has not met its burden of proving the Pharmacy is not entitled to reimbursement.
  7. The Carrier should reimburse the Pharmacy $1070.69.


IT IS, THEREFORE, ORDERED that the appeal of the Insurance Company of the State of Pennsylvania is denied and it is ordered to pay $1,070.69 plus all accrued interest due to Medical Center Pharmacy.

Signed this 7th day of March, 2002.


Administrative Law Judge

  1. See Ford v. Culbertson, 308 S.W.2d 855 (Tex. 1958)(a waiver takes place where one dispenses with performance of something which he has a right to exact, and occurs where one in possession of any right, whether conferred by law or by contract, with full knowledge of material facts, does or forbears to do something, the doing of which is inconsistent with its right to rely upon it.)
End of Document