DECISION AND ORDER
This case involves a dispute over Facility Insurance Corporation’s (Carrier’s) refusal to reimburse EZ Rx Pharmacies (Pharmacy) for a Talwin NX prescription the Pharmacy filled for a workers’ compensation claimant. The amount in dispute is $7 and the Pharmacy has appealed the decision of the Texas Worker’s Compensation Commission (TWCC) Medical Review Division (MRD), which denied the reimbursement request. In this decision, the Administrative Law Judge (ALJ) orders the Carrier to reimburse the Pharmacy for the medication.
The Pharmacy claims reimbursement for filling a prescription for Talwin NX, a potent analgesic used to relieve moderate to severe pain. The workers’ compensation claimant has been taking Talwin for several years following his lumbar fusion surgery, and the Carrier had reimbursed the Pharmacy for this claimant’s same prescription on at least two prior occasions.
At the MRD level, the Carrier argued that a letter of medical necessity the Pharmacy obtained from the claimant’s treating physician was insufficient to establish that the prescription was medically necessary. To support its position, the Carrier relied on a peer review by Thomas Padgett, M.D., to show that the Talwin NX medication was not medically necessary to treat the claimant’s compensable injury. The MRD found for the Carrier.
The ALJ convened the contested hearing on February 11, 2002. The hearing was concluded and the record closed the same day. The Pharmacy appeared by telephone through its president, Nicky Otts. Charles Finch represented the Carrier.
The pharmacy challenged the MRD decision on two grounds. First, it argued that the Carrier violated TWCC Rule 133.304(c) because it denied payment for the prescription under denial code R, but failed to include an adequate explanation of that code on the Explanation of Benefits (EOB) form. The Carrier responded that the explanation on the EOB was broad enough to encompass the reason for the denial.
The Carrier’s EOB appears in the certified record. It describes the denial as follows: R - These services appear to be non-covered and not the responsibility of the carrier unless additional substantiation can be provided. The ALJ agrees with the Pharmacy that the explanation accompanying the R code was ambiguous and not in compliance with Rule 133.304(c) because it did not provide a sufficient explanation to allow the provider to understand the reason for the Carrier’s action. As the rule states, 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 the rule.
Second, the Pharmacy challenged the MRD decision on the ground that the Carrier failed to follow TWCC Rule 133.304(h) by denying payment based on a peer review that was never sent with the EOB. The ALJ agrees. TWCC Rule 133.304(h) requires a carrier who reduces or denies payment for a treatment or service on the recommendation of a peer review to provide a copy of the peer reviewer’s report to the sender of the bill with the explanation of benefits. The evidence shows that Dr. Padgett completed his peer review of the claimant’s records on November 8, 2000, about a month before the Pharmacy filled the prescription at issue. Nothing on the EOB or the peer review letter indicates that a copy of the review was sent to the Pharmacy with the payment denial. Had the Carrier sent the peer review to the Pharmacy as required by the rule, the Pharmacy would have had more complete information to communicate to the claimant’s treating physician about the reason for the denial, and subsequently to the Carrier and the MRD, about the necessity of the medication.
It was reasonable for the Pharmacy to fill an anti-inflammatory, pain control prescription for treatment of an injured worker. Finally, the evidence showed that the Pharmacy had filled the same prescription previously for the claimant without denial of the claims.
Based on the evidence, the ALJ concludes that the Carrier should reimburse the Pharmacy for the prescription.
FINDINGS OF FACT
- The claimant’s treating physician prescribed Talwin NX, a potent analgesic used for relief of moderate to severe pain, for a workers’ compensation claimant who had suffered a compensable back injury.
- Petitioner, EZ Rx Pharmacies (Pharmacy) filled the prescription for Talwin NX on December 12, 2000, and submitted a claim for reimbursement in the amount of $152.37 to Facility Insurance Corporation (Carrier).
- The Carrier denied the claim and the Pharmacy timely requested dispute resolution before the Texas Workers’ Compensation Commission Medical Review Division (MRD).
- The MRD issued its findings and decision on October 8, 2001, concluding that the disputed expenses should not be paid; the Pharmacy timely appealed the MRD decision to the State Office of Administrative Hearings (SOAH).
- The December 3, 2001 notice of hearing 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.
- The SOAH hearing was held February 11, 2002, with ALJ Deborah L. Ingraham presiding and representatives of the Pharmacy and the Carrier participating.
- The explanation accompanying denial code R on the Carrier’s EOBC that these services appear to be non-covered and not the responsibility of the carrier unless additional substantiation can be provided was an ambiguous, generic explanation of the reason for the denial of payment.
- The Carrier denied payment based on a peer review prepared by Thomas Padgett, M.D. on November 8, 2000, which found that the claimant’s use of the medication Talwin was related to his numerous pre-existing conditions, not the compensable injury.
- When the Carrier sent the Pharmacy an Explanation of Benefits (EOB) form denying the December 12, 2000 prescription claim, it failed to send a copy of the peer review with the EOB.
- The Pharmacy had filled prior Talwin prescriptions for the claimant and had received appropriate payments.
- It was reasonable for the Petitioner to fill an anti-inflammatory and pain control prescription for treatment of an injured worker.
CONCLUSIONS OF LAW
- The Texas Workers’Compensation Commission (TWCC) has jurisdiction to decide the issues presented pursuant to Tex. Labor Code §413.031.
- 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. Labor Code §413.031 and Tex. Gov’t Code ch. 2003.
- The Notice of Hearing issued by TWCC conformed with the requirements of Tex. Gov’t Code §2001.052.
- 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 Tex. Labor Code §408.021 (a).
- The Pharmacy had the burden of proving by a preponderance of the evidence that it should prevail in this matter. Tex. Labor Code §413.031.
- Based on Findings of Fact Nos. 1-3 and 7, the Pharmacy proved by a preponderance of the evidence that the Carrier failed to follow 28 Tex. Admn. Code §133.304(c) by failing to provide a sufficient explanation to allow the provider to understand the reason for the Carrier’s action.
- Based on Findings of Fact Nos.1-3 and 8-10, the Pharmacy proved by a preponderance of the evidence that the Carrier failed to follow 28 Tex. Admn. Code §133.304(h) by failing to send the Pharmacy a copy of the peer review report with the explanation of benefits form denying payment for the medication, Talwin NX.
- The Carrier should reimburse the Pharmacy for the prescription filled on December 12, 2000, in the amount of $152.37.
IT IS, THEREFORE, ORDERED that Facility Insurance Corporation reimburse EZ Rx Pharmacies for the December 12, 2000 prescription it filled for the claimant in the amount of $152.37.
Issued this 12th day of April, 2002.
Deborah L. Ingraham
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS