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At a Glance:
Title:
453-02-1839-m5
Date:
September 19, 2002
Status:
Retrospective Medical Necessity

453-02-1839-m5

September 19, 2002

DECISION AND ORDER

The issue in this case is whether Petitioner, Highpoint Pharmacy (Highpoint), should be reimbursed $955.72 for pain medication and a muscle relaxant prescribed for the workers’ compensation claimant in late 2000 and early 2001. The Administrative Law Judge (ALJ) concludes that, as to three of the disputed dates of service, the carrier, American Motorist Insurance Company (American), has waived its challenge to the claims for reimbursement. Highpoint is entitled to reimbursement for those claims. Concerning the two remaining dates of service, Highpoint has failed to show that the medications provided were medically necessary, and therefore no reimbursement is warranted. Highpoint is entitled to payment in the amount of $582.08, plus accrued interest.

I. Jurisdiction, Notice, and Procedural History

The Texas Workers’ Compensation Commission (the Commission) has jurisdiction over this matter pursuant to Section 413.031 of the Texas Workers’ Compensation Act (the Act), Tex. Lab. Code Ann. ch. 401 et seq. The State Office of Administrative Hearings (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.

The Commission’s Medical Review Division (MRD) issued its decision November 16, 2001. Highpoint filed a timely request for hearing. Proper and timely notice of the hearing was issued February 14, 2002. The hearing was convened July 22, 2002, with the undersigned Administrative Law Judge (ALJ) presiding. Nicky Otts appeared by telephone for Highpoint, and Wayne Gill appeared for Respondent American. The Commission did not participate in the hearing. The hearing was adjourned the same day.

II. Legal Standards

The applicable legal standards are found in sections 408.021 and 401.011 of the Texas Labor Code. Section 408.021 states:

(a)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 compensable injury;
  2. promotes recovery; or
  3. enhances the ability of the employee to return to or retain employment.

Section 401.11(19) defines “health care” to include “all reasonable and necessary medical aid, medical examinations, medical treatments, medical diagnoses, medical evaluations, and medical services.”

The Commission’s Spine Treatment Guideline, though abolished effective January 1, 2002, was in effect at all times relevant to this case. The Guideline provided that treatment of a work related injury be adequately documented. 28 Tex. Admin. Code § 134.1001(e)(2)(A) (West 2002) (abolished by statute effective January 1, 2002).

Section 133.304 of the Commission’s rules establishes required procedures for medical payments and denials. 28 Tex. Admin. Code § 133.304. The rule requires that when an insurer denies payment on a medical bill, it must send an explanation of benefits (EOB) to the provider.28 Tex. Admin. Code § 133.304(c). When a carrier denies payment based on a peer review report, the doctor conducting the peer review must be of the same or similar specialty of the prescribing provider. 28 Tex. Admin. Code § 133.304(g). The insurer must provide a copy of the peer reviewer’s report along with the explanation of benefits. 28 Tex. Admin. Code §133.304(h).

The Petitioner has the burden of proof in this matter. 28 Tex. Admin. Code §148.21(h).

III. Discussion

Factual background. The record in this case is slim. There are few medical records in evidence; the only documents pertaining to medical necessity are a form letter from the treating physician and the report of a peer review conducted at the request of the carrier. See TWCC Exhibit 1, pp. 15, 34 - 36. Most of the information in the record about the claimant’s compensable injury and medical history comes from recitations in the peer review report.

The workers’ compensation claimant suffered a compensable injury on_______, while carrying a carpet. He was diagnosed as having a lumbar strain. An MRI showed dessication at two levels. In August 1998, following an eight-week work hardening program, the claimant was deemed to be at maximum medical improvement (MMI) with a 0% impairment rating.

Two years later, however, the claimant was still reporting pain and taking pain medications and muscle relaxants. Farooq I. Selod, M.D., an orthopedist, recommended a pain management program, stating, “He is taking too much [sic] medications.” TWCC 1, p. 35. A doctor’s note from June 28, 2000, stated that the claimant had degenerative disc disease with a bulging disc leading to chronic pain syndrome, heavy medication use for a prolonged period, and weight gain secondary to chronic pain syndrome. Id. The claimant evidently participated in a pain management program in the summer of 2000. Id.

The medications at issue in this case are the following:

Date

Medication

#

Amount billed

Physician

12-1-00

Lortab 5 mg.

50

$55.72

F.I. Selod

12-1-00

Vanadom

350 mg.

50

$141.91

F.I. Selod

1-4-01

Lortab 5 mg.

50

$55.72

F.I. Selod

1-4-01

Vanadom

350 mg.

50

$141.91

F.I. Selod

3-1-01

Lortab 5 mg.

50

$44.91

F.I. Selod

3-1-01

Vanadom

350 mg.

50

$141.91

F.I. Selod

4-3-01

Lortab 5 mg.

50

$44.91

F.I. Selod

4-3-01

Vanadom

350 mg.

50

$141.91

F.I. Selod

5-1-01

Lortab 5 mg.

50

$44.91

F.I. Selod

5-1-01

Vanadom

350 mg.

50

$141.91

F.I. Selod

TOTAL: $955.72

On November 1, 2000, John Harney, M.D., issued a peer review report based on a review of medical records. The report addressed the question whether any further “ongoing treatment” was reasonable and necessary for the claimant; while medications were mentioned, they may not necessarily have been the focus of the inquiry. Dr. Harney, a neurologist, stated:

The patient has had more than sufficient therapy. He has degenerative disc disease at L4-5 and L5-S1, as determined by MRI scan. His physical and neurological examination is normal. He has participated in regular passive physical therapy, biofeedback relaxation, and a work hardening program. He has had all the appropriate treatments for his condition. He has been judged to be non-surgical. No further diagnostic or therapeutic measures need to be performed at this time. . . I would recommended [sic] that he be maintained on [sic] simple regimen of anti-inflammatory medications as needed and home stretching and strengthening exercises.

TWCC Exhibit 1, p. 35.

An undated form letter from Dr. Selod reads as follows, with the underlined portions representing the blanks filled in with handwriting (or left blank):

[Claimant] has been under my care for [left blank]. I have prescribe [sic] the medication lortab and vanadom. And it is needed for continued care and treatment. This patient continues to have pain and occasional innflammation [sic], and possibly can not sleep at night. This medicine is medically necessary for the patient to have any kind of relief from the pain.

TWCC Exhibit 1, p. 15.

American did not pay for the medications listed above. With respect to the April and May 2001 prescriptions, American cited to the peer review and stated that the medications were not medically necessary. Highpoint requested review by the MRD. The MRD found that Dr. Selod’s letter concerning medical necessity was insufficient in that it did not provide a diagnosis or prognosis, and did not tie the use of the medications to the claimant’s compensable injury. The MRD concluded that Highpoint was not entitled to reimbursement.

Highpoint’s position. Highpoint argues that Dr. Selod’s letter, though brief, establishes medical necessity. Highpoint also asserts that American’s handling of these claims violated the Commission’s rules, in that the carrier failed to provide EOBs with respect to three of the dates of service, and issued late EOBs as to the other two dates. Indeed, only two EOBs (for April 3 and May 1, 2001) are in the record. TWCC Exhibit 1, pp. 16, 19. Highpoint further asserts that the carrier failed to provide Highpoint with a copy of Dr. Harney’s peer review. The peer review was done before the prescriptions in this case were filled, and Highpoint asserts that it might have chosen not to fill the disputed prescriptions had it been aware of the peer reviewer’s opinion. Highpoint also argues that Dr. Harney, a neurologist, is not an orthopedist like Dr. Selod, and the peer review is therefore invalid. Finally, Highpoint points to previous SOAH cases stating that a prescription establishes a presumption of medical necessity that can be overcome by evidence that the pharmacy acted in bad faith in accepting and filling the prescription.[1]

American’s position. American argues that even if it did not comply with all applicable procedural requirements in § 133.304 of the Commission’s rules, it should still not have to pay for treatment that was not medically necessary. According to American, Dr. Selod’s letter of medical necessity is inadequate in that it is undated and nonspecific. American argues that Dr. Harney, who is a neurologist, is competent to render opinions about the treatment of back injuries and back pain. The carrier argues that Dr. Harney’s peer review report shows that the medications prescribed by Dr. Selod were not medically necessary. Finally, American asserts that under the Labor Code, the provider must show medical necessity in order to be reimbursed.

ALJ’s analysis. The record supports Highpoint’s assertions that American committed procedural violations concerning at least some of these claims. It appears that American did not issue EOBs for the December 1, 2000, January 4, 2001, and March 1, 2001, dates of service.

Given that American failed to issue EOBs for three of the dates of service at issue here, the ALJ believes that the carrier has waived any objections it has to those claims. The ALJ does not believe that every procedural violation by a carrier constitutes such a waiver, but an utter failure to issue EOBs and offer any explanation for a carrier’s failure to pay is enough to bar the carrier’s challenges to those claims. By failing to issue EOBs, American has never actually challenged those particular claims. Highpoint should therefore be reimbursed for the medications provided on December 1, 2000, January 4, 2001, and March 1, 2001.

As to the other dates, the carrier did issue EOBs, which in turn referenced the peer review. Highpoint asserts that the EOBs for these dates were issued late, but the ALJ cannot verify this assertion based on the record, since the EOBs are not dated and Highpoint did not offer any other evidence about the date they were received. Therefore, for the April and May 2001 dates of service, the ALJ will take up the issue of medical necessity.[2]

The evidence is insufficient to establish medical necessity for the medications provided on April 3 and May 1, 2001. The letter from Dr. Selod fails to include a diagnosis or even an identification of the affected body part. A form letter merely stating that the patient has pain and “possibly can not sleep at night,” and that includes absolutely no medical information specific to the patient, is not enough to support a claim for reimbursement. The ALJ appreciates that the pharmacy is put in a difficult position by being asked to fill prescriptions without the benefit of the medical records and without the authority to make medical decisions. The Commission’s rules, however, require a provider to show medical necessity when challenged by the carrier.

Conclusion. Highpoint should be reimbursed $582.08, plus accrued interest, for medications provided to the claimant on December 1, 2002, January 4, 2001, and March 1, 2001. Highpoint should not be reimbursed for medications provided on April 3 and May 1, 2001.

IV. Findings of Fact

  1. The workers’ compensation claimant suffered a compensable injury on_______, while carrying a carpet. He was diagnosed as having a lumbar strain.
  2. The claimant underwent physical therapy, biofeedback, and work hardening.
  3. On December 1, 2000, and January 4, March 1, April 3, and May 1, 2001, the claimant filled prescriptions written by Farooq I. Selod, M.D., an orthopedist. The prescriptions were for Lortab, a pain medication, and Vanadom, a muscle relaxant.
  4. Highpoint Pharmacy (Highpoint) filled the prescriptions and submitted claims for reimbursement to American Motorist Insurance Company (American). The total amount claimed for all the medications at issue was $955.72 ($582.08 for the claims relating to December 1, 2000, and January 4 and March 1, 2001, and $373.64 for the claims relating to April 3 and May 1, 2001).
  5. As to the claims relating to December 1, 2000, and January 4 and March 1, 2001, American never issued explanations of benefits.
  6. As to the claims relating to April 3 and May 1, 2001, American denied reimbursement, asserting a lack of medical necessity.
  7. After unsuccessfully resubmitting its claims, Highpoint filed a Request for Medical Dispute Resolution with the Commission’s Medical Review Division (MRD).
  8. The MRD denied the request on the grounds that Highpoint had not shown medical necessity for the medications.
  9. Highpoint filed a request for hearing.
  10. Notice of the hearing was issued February 14, 2002.
  11. 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.
  12. The hearing was convened July 22, 2002, with the undersigned Administrative Law Judge (ALJ) presiding. Nicky Otts appeared by telephone for Highpoint, and Wayne Gill appeared for American. The hearing was adjourned the same day.
  13. There is no evidence in the record that the Lortab and Vanadom provided on April 3 and May 1, 2001, were intended to treat the compensable injury or were medically necessary to treat the compensable injury.

V. Conclusions of Law

  1. The Commission has jurisdiction over this matter pursuant to Section 413.031 of the Texas Workers’ Compensation Act (the 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. Highpoint has the burden of proof in this matter. 28 TAC §148.21(h).
  5. Based on Findings of Fact 3, 4, and 5, American violated the Commission’s procedural requirements and waived its challenge to the claims relating to December 1, 2000, and January 4 and March 1, 2001. 28 Tex. Admin. Code § 133.304(c)
  6. Based on Findings of Fact 3, 4, 6, and 13, Highpoint has failed to meet its burden to show that the medications provided on April 3 and May 1, 2001, were reimbursable under § 408.021 of the Texas Labor Code.
  7. Highpoint is entitled to reimbursement of $582.08, plus accrued interest, for the claims relating to December 1, 2000, and January 4 and March 1, 2001.
  8. Highpoint is not entitled to reimbursement of $373.64 for the claims relating to April 3 and May 1, 2001.

ORDER

IT IS THEREFORE ORDERED that American Motorist Insurance Company reimburse Highpoint Pharmacy $582.08, plus accrued interest, for medications prescribed for the workers’ compensation claimant on December 1, 2000, and January 4 and March 1, 2001.

Signed this 19th of September, 2002.

STATE OFFICE OF ADMINISTRATIVE HEARINGS

Shannon Kilgore
Administrative Law Judge

  1. See SOAH Docket Nos. 453-02-0528.M5 and 453-02-0773.M5. But see SOAH Docket No. 453-01-3298.M5.
  2. The ALJ is not persuaded that American’s other two alleged procedural violations constitute waivers of American’s challenges to Highpoint’s claims for reimbursement for April and May 2001. American’s apparent failure to send a copy of the peer review report to Highpoint as required by § 133.304(h) is a procedural violation. However, Highpoint was put on notice by the EOBs that the carrier was challenging medical necessity. Moreover, it is the weakness of Dr. Selod’s letter of medical necessity, more than the strength of Dr. Harney’s peer review that leads the ALJ to the conclusion that the medications have not been shown to be reasonable and necessary.
  3. In addition, the ALJ is not convinced by Highpoint’s claim that Dr. Harney’s area of specialization (neurology) is not sufficiently similar to that of Dr. Selod (orthopedics) to allow Dr. Harney to review treatments ordered by Dr. Selod.

End of Document
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