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At a Glance:
Title:
453-01-3456-m5
Date:
March 7, 2020
Status:
Retrospective Medical Necessity

453-01-3456-m5

March 7, 2020

DECISION AND ORDER

This case is a dispute over whether National Union Fire Insurance Company of Pittsburgh Pa. (Carrier) should pay a claim filed by Back & Joint Clinic (Clinic) for services performed on an injured worker (Claimant) from June 19, 1999, through February 2, 2000. The Texas Workers’ Compensation Commission (Commission) Medical Review Division (MRD) ordered the Carrier to pay $7,896.00. This decision concludes that the Carrier should pay for the majority of the disputed services because it pre-authorized the services and is precluded from denying the Clinic’s claim on the ground of medical necessity. Overall, the Carrier should pay $7,280.50.

I. PROCEDURAL HISTORY

Hearings were held in this case on June 18, 2002, August 28, 2002, and March 17, 2003, before James W. Norman, Administrative Law Judge (ALJ), at the State Office of Administrative Hearings (SOAH), 4th Floor, William P. Clements Building, 300 West 15th Street, Austin, Texas. The Carrier was represented by Attorney Steven M. Tipton. Attorney Scott Hilliard represented the Clinic.

After the June 18, 2002, hearing convened, the parties and the ALJ agreed it would be more efficient to try first the threshold issue of whether the Carrier pre-authorized treatment to the Carrier’s lumbar spine. A Commission hearing officer had ruled on January 26, 1999, that the Claimant’s compensable injury was limited to his lumbar spine. The Carrier contended its review agent’s pre-authorization was to the cervical spine only. Both parties said this decision would largely control the case. The Clinic asked to recess the hearing for time to research and prepare testimony specifically on this issue. The Carrier did not object, and the motion was granted.

The hearing reconvened on August 28, 2002. After the presentation of evidence, the Carrier conceded that the evidence did not support its position that its pre-authorization approvals were limited to the cervical spine and agreed that a lack of pre-authorization is not an issue in this case. However, the Carrier still asserted that SOAH has no jurisdiction to order medical benefit payments in cases where it has yet to be determined that the medical treatment was for the compensable injury. The Carrier contended compensability issues are exclusively within the Commission’s jurisdiction to determine.[1] The parties submitted extensive briefing on this issue. In an order dated December 6, 2002, the ALJ ruled that SOAH does have jurisdiction to consider the matters appealed given the facts that: the Carrier invoked SOAH’s jurisdiction by appealing the MRD decision; the matters appealed (such as whether the services are medically necessary) are within the general jurisdiction of SOAH/MRD to decide; and there is no evidence that the Commission Hearing Division has pending compensability issues applicable to the services in dispute in this case.

The hearing reconvened on March 17, 2003, and concluded on that date.

There were no additional challenges to notice or jurisdiction, and those matters are set forth in the findings of fact and conclusions of law.

II.DISCUSSION

The parties said at the March 17, 2003, hearing that the remaining issues were: whether the Carrier could contest the medical necessity of certain treatments and services it had previously pre-authorized; if it could, whether those services were medically necessary; and whether certain other services, consisting of office visits on October 26, 1999, and January 7, 2000, a functional capacity evaluation (FCE) on January 3, 2000, range of motion (ROM) testing on August 17, 1999, and muscle testing and ROM testing on October 26, 1999, were medically necessary.

A. Background

An employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury, as and when needed. The employee is specifically entitled to health care that: (1) cures or relieves the effects naturally resulting from the injury; (2) promotes recovery; or (3) enhances the ability to return to or retain employment. Tex. Labor Code Ann. § 408.021. "Health care" includes "all reasonable and necessary medical . . . services." Tex. Labor Code § 401.011(19).

On_________, the Claimant, a _____ man, suffered low back pain while helping a co-worker push a dolly. He had a previous low-back injury in_____. He first presented to the Clinic on June 19, 1998.

B. Whether the Carrier May Contest the Medical Necessity of Pre-authorized Treatments

The Carrier pre-authorized several physical medicine sessions.[2] As previously indicated, the Carrier conceded that its pre-authorized approval included the lumbar spine.

Parties

The Carrier argued that it could contest the medical necessity of the treatments despite the its pre-authorization because the Clinic either misrepresented or fraudulently stated the facts in its pre-authorization request. It cited language from TWCC rule-adoption preambles saying a pre-authorization can be challenged if it was obtained by fraud or misrepresentation.

The Carrier argued it was not precluded from asserting that the pre-authorization was obtained by misrepresentation/fraud by failing to expressly assert that matter in its TWCC 62/EOBs denying payment for the service.[3] It pointed out there was no specific denial code for that assertion. It contended the denial code “U” (unnecessary treatment without peer review)[4] that it used was adequate because the treatments were in fact unnecessary and its pre-authorizations of medical necessity were invalidly obtained. It asserted that at the time it denied the Clinic’s claim, insurers were simply required to use denial codes they thought were appropriate with no requirement for any additional explanation. It maintained if a party is going to be put in jeopardy of waiving a defense by failing to assert it, the duty to assert it should be unambiguously clear.

The Carrier stressed its position that the only real chance it has had to review the medical necessity of the treatments was through a retrospective review, given the fact that the pre-authorizations were obtained by fraud/misrepresentation. The Carrier also arguedit is only necessary to raise the misrepresentation/fraud issue at the time the provider raises the defense of pre-authorization to the Carrier’s assertion that the services were medically unnecessary. It reasoned that because the provider’s assertion that the services were pre-authorized is essentially an affirmative defense, it is only necessary to counter it when it is asserted.

The Clinic contended as follows:

  • The Carrier is precluded from asserting that the pre-authorizations were invalid because it did not do so when it denied the claim. The Clinic pointed out the Carrier has seen at least three sets of HCFA claims and has gone through the MRD review without raising the issue.
  • The Carrier is attempting to withdraw its August 28, 2002; concession that pre-authorization would no longer be an issue in this case.
  • Once a treatment is pre-authorized, medical necessity is no longer an issue.
  • The Carrier has obviously pre-authorized something. If a treatment can be justified under a compensable diagnosis, it is irrelevant that non-compensable diagnoses are also involved because a provider is allowed to bill only one compensable code.

Analysis

This decision concludes the Carrier is precluded from now asserting that the pre-authorizations were procured through fraud/misrepresentation because it did not assert that matter when it denied the claim or in its response to the Clinic’s request for medical dispute resolution. The following matters are significant to this conclusion:

  • The record makes it clear and it is undisputed that the Carrier denied the Clinic’s claims on the basis of a lack of medical necessity, not on the basis of its current fraud/misrepresentation assertion. Peer reviews,[5] which were required to be submitted to the Clinic as an explanation of the reason for the denial,[6] asserted a lack of medical necessity only.
  • Because the TWCC 62s, peer reviews, and the Carrier’s response to the Clinic’s request for medical dispute resolution did not notify the Clinic of the fraud/misrepresentation assertion, the Clinic did not have a chance to respond when it re-submitted its claims or when it requested medical dispute resolution and MRD did not have a chance to address the issue before issuing its order.
  • The Carrier knew or was on notice that it had pre-authorized the services when it denied the claims as not medically necessary and could have made its fraud/misrepresentation assertions at that time.
  • The Carrier was put on notice of the Clinic’s defense that the treatments were pre-authorized when the Clinic said in its June 8, 2001, request for medical dispute resolution that “[P]reauthorization was obtained for all physical therapy sessions after the initial 8 weeks.”[7] The Carrier could have but did not address that assertion in its June 23, 2000, response to the Clinic.[8]

The ALJ agrees with the majority view in previous SOAH dockets which hold that an insurer may not assert a reason for denying a claim that was not stated prior to the filing of a request for medical dispute resolution.[9] These decisions were based largely on § 408.027(d) of the Labor Code, which states that if an insurer disputes the amount of payment or the health care provider’s entitlement to payment, it must send to the Commission, the provider, and the injured employee a report that “sufficiently explains the reasons for the reduction or denial of payment. . . .” The Carrier did not raise the fraud/misrepresentation issue until the SOAH hearing.

C. Medical Necessity of Additional Services

The remaining disputed services are office visits on October 26, 1999, and January 7, 2000, an FCE on January 3, 2000, ROM testing on August 17, 1999, and muscle testing and ROM testing on October 26, 1999. The issue is whether the services were medically necessary.[10]

Carrier

The Carrier argued that two peer reviews-one dated April 18, 2000, from Dorothy Leong, M.D., a specialist in physical medicine and rehabilitation,[11] and the other dated May 10, 1999, from Patti Cates, D.C.[12]-showed the services were not medically necessary. It asserted that both doctors said the Claimant’s back problems had resolved. It contended that the Claimant’s _____, injury was merely a back strain superimposed on an existing injury that by any measure had independently resolved before the services were provided.

Dr. Leong’s letter said “. . . there is no objective indication to support the necessity of continued treatment as it relates to the injury date of 06/11/98. The MRI study of the lumbar spine was reviewed and there is no indication from the MRI to support the allegations of continued low back pain with radiation to bilaterally lower extremities as [unintelligible] as of 2/10/00.”

After reviewing relevant records, Dr. Cates said

In my opinion, the injury on _____ by the claimant was documented on June 19, 1998, by Dr. Opersteny as an acute exacerbation of low back pain at work, due to pushing and prolonged standing. . . On September 16, 1998, an examination from the Back and Joint Clinic reportedly revealed the claimant to have good range of motions documented. While overlooking the examinations performed by Back and Joint Clinic on August 21, September 16, November 9, 1998, and February 16, 1999,[13] I have noted that on September 16, 1998, no pain was noted in lumbar range of motion. Sitting and supine straight leg raising was noted at 90 degrees bilateral. Seated Kemps’ test and medical hip rotation noted painful bilaterally on all examination visits. Heel walk and toe walk was noted on Sept. 16, 1998, as within normal limits. Lumbar postural evaluation and weight bearing were noted as within normal limits. In comparison of all examination visits, on November 9, 1998, and on February 16, 1999; these examinations found more positive findings in the lumbar spine and in the wrist area than ever noted before in any prior examinations performed by Back and Joint Clinic. Per the DeLorme muscle testing performed on September 21, 1998 and October 16, 1998, the claimant had overall increased muscle strength noted on October 16, 1998.

Necessity of treatment of active and passive modalities past the October 16, 1998, DeLorme’s muscle test, I feel has not been beneficial to the claimant. MRI of the lumbar spine revealed some mild generalized disc desiccation changes with some ligament and facet hypertrophic changes. With the comprehensive testing and examination on September 16, 1998, showing results that are revealing SLR at 90 degrees, no pain in the lumbar range of motion, I feel the claimant has reached a static end point to his chiropractic care on or about October 16, 1998, and that a home exercise program could be implemented. (Emphasis in original.)

Clinic

The Clinic contended the burden of proof was on the Carrier because MRD ruled against it. It pointed out that the Carrier’s peer reviews opine that treatments are unnecessary rather than addressing office visits and diagnostic procedures.

The Clinic addressed each disputed service as follows:

a. January 7, 2000, Office Visit

The Clinic cited pages 296 and 297 of the certified record relating to the office visit, where

the Claimant reported pain in numerous areas, including his lumbar spine. The Claimant was approved to return to work with restrictions. The Clinic contended the office visit was justified because the doctor met with the Claimant to say he could return to work under restricted conditions.

b. October 26, 1999, Office Visit, Muscle Testing, and ROM Testing

The Clinic indicated CPT code 99215 for this office visit is probably the highest level of office visit. It occurred at the same time as muscle and ROM testing and included a discussion of the tests.

At pages 274 and 275 of the certified record, the testing is described in detail; the Claimant’s level of pain, including lumbar pain, and progress are also described. The Claimant reported decreased pain levels since his last visit. The Claimant’s test results are discussed beginning at page 151 and the rationale for the testing is stated as periodic monitoring of the rehabilitation process to prevent over utilization, assessment of patient progress and compliance, and setting future workout limits. The Clinic also said the test values determine the extent of the disability, quantify performance deficiencies, help detect and prove malingering, evaluate rehabilitation goals and progress, and help determine the type of rehabilitation program to be followed. The Clinic reported that the Claimant did not meet minimum acceptable performance levels, although there had been improvement since his last visit. A treatment plan is stated beginning at page 159.[14]

c. January 3, 2000, FCE

The Clinic argued the FCE was necessary because it gave a thorough breakdown of the Claimant’s physical abilities and lead to his being released to return to work. The FCE report also recounted the Claimant’s medical history since his________, injury. The examining doctor said he could return to work with restrictions.[15]

d. August 17, 1999, ROM Testing

The Clinic’s records show the results of lumbar ROM testing on August 17, 1999.[16]

Analysis

The preponderant evidence shows the services were not medically necessary. The first basis of this conclusion is the opinions of the peer review doctors. Dr. Cates based her opinion largely on a September 16, 1998, examination showing good ROM with no pain in the lumbar region. She compared these results with later tests showing more positive findings in the lumbar and wrist areas than in previous tests. She pointed out that an MRI of the lumbar spine revealed some mild generalized disc desiccation changes with some ligament and facet hypertrophic changes. This evidence appears to show the Claimant’s back problems from his________, injury had resolved within approximately three months of the injury.

Although Dr. Leong’s April 18, 2000, opinion focused primarily on the necessity of ongoing rather than previous treatments, she also said the MRI of the lumbar spine did not support continued low back pain complaints.

In addition, the evidence cited by the Clinic does not specifically and expressly state the services/treatments were necessary for treating the_______, injury. The records talk about the Claimant’s pain levels, his test results, the rationale for the testing, the FCE results, and his being approved to return to work. However, to some degree at least, the ALJ is called on to serve as his own expert in concluding that the services were necessary to treat the ____, injury. Although there might be sufficient grounds to do find the services were necessary if there were little or no evidence to the contrary, the peer review opinions against medical necessity carried more weight.

The ALJ was not persuaded by the Clinic’s argument that the peer review doctors addressed only treatments and not office visits and diagnostic procedures. Obviously, if treatments were not necessary at the time of those services, the services themselves would likely be unnecessary as well.

III.FINDINGS OF FACT

  1. On________, the Claimant suffered a compensable injury to his lumbar spine.
  2. The Claimant presented to Back and Joint Clinic (Clinic) on June 18, 1999, after which he received extensive treatment through February 2, 2000.
  3. The treatments and services at issue in this case are certain physical medicine services to the Claimant’s lumbar spine pre-authorized by National Union Fire Insurance Company of Pittsburgh Pa. (the Carrier) as medically necessary and other services, consisting of office visits on October 26, 1999, and January 7, 2000, a functional capacity evaluation (FCE) on January 3, 2000, range of motion (ROM) testing on August 19, 1999, and muscle and ROM testing on October 26, 1999.

Pre-authorized Services

  1. The Carrier claimed the physical medicine services it had pre-authorized were not medically necessary and denied the claim.
  2. The Clinic requested medical dispute resolution before the Texas Workers’ Compensation Commission medical review division (MRD).
  3. In its request for medical dispute resolution, the Clinic pointed out that the services were pre-authorized.
  4. In its response to the Clinic’s request for medical dispute resolution, the Carrier maintained its position that the physical medicine services were medically unnecessary.
  5. At the hearing, the Carrier contended for the first time that the physical medicine service pre-authorizations were obtained by fraud or misrepresentation.

October 26, 1999, and January 7, 2000, Office Visits; January 3, 2000, FCE; August 19, 1999, ROM; and October 26, 1999, Rom and Muscle Testing

  1. The Carrier’s position that the October 26, 1999, and January 7, 2000, Office Visits; January 3, 2000, FCE; August 19, 1999, ROM; and October 26, 1999, Rom and Muscle Testing were medically unnecessary was supported by peer review opinions from medical experts.
  2. A September 16, 1998, examination, approximately three months after the Claimant’s injury, showed he had good ROM with no pain in the lumbar region.
  3. Later tests showed more positive findings in the lumbar and wrist areas than in previous tests.
  4. An MRI of the lumbar spine revealed some mild generalized disc desiccation changes with some ligament and facet hypertrophic changes.
  5. Evidence cited by the Clinic to support the medical necessity of the treatments did not expressly and specifically state the services were necessary to treat the______, injury.

Costs

  1. The MRD ordered the Carrier to pay $7,896.00 to the Clinic.
  2. The amount stated in Finding of Fact No. 14 included $615.50 for the services described in Finding of Fact No. 9.

Notice

  1. 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 the matters asserted.
  2. All parties had an opportunity to respond and present evidence and argument on each issue involved in the case.

IV. CONCLUSIONS OF LAW

  1. The State Office of Administrative Hearings has jurisdiction over matters related to the hearing, including the authority to issue a decision and order. Tex. Labor Code Ann. §413.031(k).
  2. All parties received proper and timely notice of the hearing. Tex. Gov’t Code Ann. §§ 2001.051 and 2001.052.
  3. The Carrier is precluded from asserting that the physical medicine services were obtained by fraud or misrepresentation. Tex. Labor Code Ann. § 408.027(d).
  4. The Carrier may not raise a lack of medical necessity as a reason for denying payment for the pre-authorized physical medicine services. Tex. Labor Code Ann. § 413.014; 28 Tex. Admin. Code § 134.600(a) (effective at the time the services were pre-authorized).
  5. The services described in Finding of Fact No. 9 were not medically necessary. Tex. Labor Code Ann. § 408.021.
  6. The Carrier should pay the Clinic $7,280.50 plus interest.

ORDER

IT IS, THEREFORE, ORDERED that National Union Fire Insurance Company of Pittsburgh Pa. pay Back and Joint Clinic $7,280.50 plus interest.

Signed this 7th day of March, 2020.

JAMES W. NORMAN
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. Compensability issues are determined by the Commission Hearing Division. Tex. Labor Code Ann. ch. 410.
  2. Ex. 1 at 39-52.
  3. Although TWCC Rule 28 TAC§ 133.301(a) now says a Carrier may not retrospectively review the medical necessity of a treatment for which the provider obtained pre-authorization, it was silent on that issue at the time this matter was submitted for medical dispute resolution in June 2000. However, both parties agreed there was a general understanding that a Carrier could not revisit the issue of medical necessity once a treatment was pre-authorized. The ALJ believes this is a correct understanding. Commission Rule 134.600(a), effective at the time the services were pre-authorized, provided that a Carrier is liable for the reasonable and necessary medical costs of health care services it pre-authorized.
  4. Contrary to this description, the Carrier did obtain peer reviews.
  5. Ex. 1 at 412-420.
  6. 28 TAC §133.304(g) (in effect at the time the Clinic filed the dispute with the Commission).
  7. Ex. 1 at 18.
  8. Ex. 1 at 410.
  9. See SOAH Docket No. 453-01-1958.M5 (ALJ Corbitt); SOAH Docket No. 453-01-0309.M5 (ALJ Doherty); SOAH Docket No. 453-00-1570.M5 (ALJ Smith); SOAH Docket No. 453-99-3399 (ALJ Pacey); SOAH Docket No. 453-99-2021.M5 (ALJ Rusch); SOAH Docket No. 453-97-0973.M4 (ALJ Card); and SOAH Docket No. 453-96-0817.M4 (ALJ Corbitt).
  10. The parties cited specific pages of the 486-page certified record as supporting their contentions. The ALJ reviewed the pages cited in determining medical necessity.
  11. Ex. 1 at 412-416.
  12. Ex. 1 at 417-420.
  13. Although a period is inserted here in Dr. Cates’ narrative, the text indicates she intended a comma.
  14. Ex. 1 at 151-161.
  15. Ex. 1 at 165-172.
  16. Ex. 1 at 337. The Clinic cited the certified record at page 165 as evidence of this testing, but that page and the following pages related to the January 3, 2000, FCE. The Clinic did not specifically contend that the August 17, 1999, ROM testing was necessary apart from general arguments applicable to all services.
End of Document
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