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At a Glance:
February 14, 2003
Retrospective Medical Necessity


February 14, 2003


Hassle Free Pharmacy Services (Provider)[1] appealed the decision of the Texas Workers’ Compensation Commission’s (Commission) Medical Review Division (MRD) upholding American Home Assurance’s (Carrier) denial of reimbursement for two prescriptions dispensed on September 25, 2001, to ____(Claimant). Carrier had denied reimbursement on the basis Provider had failed to demonstrate that the medicines dispensed were medically necessary health care.[2] This decision finds Provider is not entitled to reimbursement for the two prescriptions.

I. Jurisdiction, Notice, and Procedural History

There were no contested issues of jurisdiction, notice or venue. Therefore, those issues are addressed in the findings of fact and conclusions of law without further discussion here.

The hearing in this matter convened January 7, 2003, in Austin, Texas, with Administrative Law Judge (ALJ) Cassandra Church presiding. Provider was represented by its attorney, Peter Rogers. Carrier was represented by its attorney, Steven Tipton. The Commission did not participate in the hearing. The record closed on the hearing date.

II. Discussion

At issue is reimbursement for a prescription each of hydrocodone (a narcotic analgesic) and diazepam (a sedative-hypnotic), both of which were dispensed on September 25, 2001. Daniel Thompson III, M.D., who was treating Claimant for ongoing pain, issued the two prescriptions. Claimant’s treating physician, Tam Vuong, D.C., had referred Claimant to Dr. Thompson in the Fall of 2000, some six months after her injury. Claimant had injured her back on________, when she fell backward into a door or counter while carrying boxes.[3] The injury appears to have been a localized, temporary injury to her lower back, with little or no injury to the lumbar spine itself. (Resp. Exh. 4, p. 3, Resp. Exh. 5, p. 4). In March 2001, the designated doctor in this case, Eric L. Gebhart, D.C., concluded that any of the mild to moderate injuries experienced by Claimant in the accident on_________, would have healed by the date of his examination. (Resp. Exh. 5). Further, Dr. Gehbart found Claimant tested positive for five of five signs of pain magnification (Waddell signs), and did not give full effort on range of motion testing performed on March 15, 2001.

The Carrier denied reimbursement for the prescriptions dispensed on September 25, 2001, on the basis the drugs were not needed to treat the back injury. As early as September 2000, Carrier had refused to pay for these drugs. Despite that, Claimant personally continued to pay for the medications through at least February 2001, and sought reimbursement for those payments. This dispute was the subject of a separate contested case hearing. The dispute regarding reimbursing Claimant directly for the drugs hydrocodone and diazepam dispensed to her between September 2000 and February 2001 was resolved against her. The ALJ in that case found that those medications were not reasonably required during that six-month period to treat Claimant for any injury arising out of the ________ fall, and that Claimant ceased to show objective physical symptoms from that injury by August 2001. (SOAH Docket No. 453-01-2770.M4, January 16, 2002). As to the seven-month period between the last date covered by the hearing and the date of service at issue here, it is unknown whether Carrier reimbursed any pharmacy, or Claimant herself, for the either or both of these medications, or even if any person presented claims for payment for these drugs.

On February 19, 2001, Dr. Thompson had issued a blanket letter of necessity for the disputed medications. That letter asserted that both hydrocodone and diazepam were needed to manage Claimant’s pain, and that she was experiencing “a pain syndrome triggered by her compensable injury.” (Pet. Exh. 1) (Emphasis supplied). Dr. Thompson added he would endeavor to minimize the doses and taper them “when possible.” However, nothing in the record provides any hint as to whether the pharmacist who filled Claimant’s prescriptions for hydrocodone and diazepam on September 25, 2001, had this letter on file or knew anything about it. Nor is there anything in the record to suggest whether the pharmacy filing the prescription had knowledge of the prior payment disputes.

Provider in this case asserted alternate grounds for reimbursement. First, it asserted that when a pharmacy fills a prescription in good faith, it is entitled to reimbursement. In the alternative, Provider contended that Dr. Thompson’s letter of medical necessity and his treatment notes were sufficient to demonstrate that the medications were medically necessary for Claimant’s treatment. For its part, Carrier contended that to prevail Provider must make the showing of medical necessity, regardless of its role as a more-distant third-party provider, but had failed to do so in this case.[4]

Even if the more-lenient standard of good faith were to be applied, Provider failed to demonstrate that the pharmacy reasonably relied on the prescription and acted in good faith. There was no evidence in the records about the pharmacy, or about the conduct or level of knowledge of any of its personnel. Given the history of reimbursement for this claim, it is equally likely that the dispensing pharmacy had sufficient knowledge regarding this history so as to make their reliance on the prescription unreasonable. In sum, there is no evidence in the record to tip the scales in favor of Provider.

In regard to the core issue of medical necessity, the ALJ concludes that Provider likewise failed to meet its burden of proof. While not disputing Dr. Thompson’s conclusion that the drugs were necessary to treat Claimant’s pain syndrome in 2000 and 2001, his treatment notes simply do not establish that the _______ work-related injury caused Claimant’s ongoing reports of pain in September 2001. Notwithstanding his assertion in February 2001 that the ________event triggered further pain episodes, he did not clarify how that moderate injury in ________continued to be the root cause of severe symptoms reported 18 months after the injury and nearly seven months after the date for complete healing which Dr. Gebhart identified. Far from being a snapshot, Dr. Thompson’s notes which are in evidence span the entire period between the initial referral to him in September 2000 and the date of the disputed prescription a year later in September 2001. The issue is not whether Claimant needed the medicines, but whether that need arose from the ______ injury. The medical evidence in this case does not make that link.

II. Findings of Fact

  1. On_____, Claimant suffered a back injury compensable under the Texas Workers’ Compensation Act and for which American Home Assurance (Carrier) was the responsible insurer.
  2. Claimant suffered injury to her lower back when she fell backwards into a door or counter while carrying two heavy boxes. Injuries sustained in that fall were moderate and transitory and had healed by or before March 2001.
  3. Claimant had sustained a work-related injury to her cervical spine in ____.
  4. In March 2000, she was under continuing medical treatment, including administration of Vicodin for pain.
  5. On September 18, 2000, Tam Vuong, D.C., Claimant’s treating physician, referred Claimant to Daniel O. Thompson III, M.D., for consultation in regard to ongoing pain reported by Claimant.
  6. On February 19, 2001, Dr. Thompson issued a general letter of medical necessity, which stated that management of Claimant’s pain syndrome required a regime of a narcotic analgesic (hydrocodone at 7.5 mg., four times a day), a sedative-hypnotic (diazepam at 10 mg., twice daily) and an anti-emetic (promethazine, 25 mg., once daily as needed). Dr. Thompson also stated he would attempt to minimize the dosages and taper them when possible. Dr. Thompson stated Claimant’s pain syndrome was triggered by the back injury on______.
  7. On March 15, 2001, Eric L. Gebhart, D.C., the designated doctor in this case, examined Claimant and concluded that moderate injuries Claimant had received in her fall on _______, would have healed by March 2001. Further, Dr. Gehbart found Claimant tested positive for five of five signs of pain magnification (Waddell signs), and did not give full effort on range of motion testing.
  8. On September 25, 2001, seven months after the letter described in Finding No. 6, prescriptions of hydrocodone (7.5 mg.) and diazepam (10 mg.) written by Dr. Thompson were dispensed to Claimant.
  9. Dr. Thompson’s treatment notes between September 2000 and September 2001 do not describe Claimant’s progress, outline a long-term treatment plans or contain objective evaluation or measurements of Claimant’s pain reports or manifestations. His treatment notes do not discuss or describe specifics of the triggering mechanism for the ongoing pain, or evaluate effects of her prior injury or other physical conditions.
  10. It is unknown which pharmacy dispensed the medications on September 25, 2001, and whether personnel at that pharmacy had Dr. Thompson’s letter of necessity on file, had any prior contact with Claimant, or had filed any claims for reimbursement in regard to prescriptions filled for Claimant.
  11. Provider in this case is not the dispensing pharmacy, but a company contracted to handle workers’ compensation claims for providers.
  12. Carrier denied reimbursement for the two prescriptions on the basis they were not medically necessary to treat Claimant’s compensable injury.
  13. After reviewing the administrative file, on July 2, 2002, the Texas Workers’ Compensation Commission’s (Commission) Medical Review Division (MRD) denied reimbursement to Provider for the medications.
  14. On September 12, 2002, Provider requested a hearing on the MRD decision.
  15. On September 16, 2002, the Commission issued a notice of hearing that included the date, time, and location of the hearing; the applicable statutes under which the hearing would be conducted; and a statement of matters asserted.
  16. Administrative Law Judge Cassandra Church conducted a hearing on the merits of this case on January 7, 2003, and the record closed that day.

III. Conclusions of Law

  1. The Texas Workers’ Compensation Commission (Commission) has jurisdiction related to this matter pursuant to TEX. LABOR CODE ANN. § 413.031.
  2. 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 ANN. ch. 2003.
  3. Provider timely requested a hearing, as specified in 28 Tex. Admin Code (TAC) §148.3.
  4. Proper and timely notice of the hearing was provided in accordance with TEX. GOV’T CODE ANN. §§ 2001.051 and 2001.052.
  5. Provider has the burden of proof in this proceeding pursuant to 28 TAC §§ 148.21(h) and (i); 1 TAC § 155.41.
  6. Provider failed to prove by a preponderance of the evidence that the drugs hydrocodone and diazepam were medically necessary and reasonably required in September 2001 to relieve the effects of or promote recovery from a compensable injury suffered by Claimant, within the meaning of Tex. Labor Code Ann. §§ 408.021 and 401.011(19).


IT IS ORDERED that Home Assurance Company is not required to reimburse Hassle Free Pharmacy Service for the prescriptions of hydrocodone and diazepam dispensed on Claimant’s behalf on September 25, 2001.

Signed February 14, 2003.


Administrative Law Judge

  1. Provider was not the dispensing pharmacy, but rather is a company contracted to handle workers’ compensation claims for providers. Notwithstanding this, the ALJ refers to Hassle Free Pharmacy Service as the “Provider” in this case, for ease of reference. Respondent raised no issue regarding Hassle Free Pharmacy Service’s standing as the current party in interest.
  2. The Carrier also denied payment under denial code “R,” which refers to an assertion that the treatment is not related to the compensable injury, and that extent of the injury has not be adjudicated. However, shortly before the date of the hearing, the ALJ verified that there was no outstanding dispute on extent of injury. Therefore, this reason for denial will not be addressed further.
  3. Claimant had apparently suffered an injury in ____ to her cervical spine in another work-related accident, and may have been also been injured in an automobile accident in____. She had been undergoing treatment for her prior injuries, including the administration of Vicodin (an analgesic) in_____, when the injury at issue took place. (Resp. Exh. 4).
  4. The medical necessity denial code “U”was used by the Carrier. That means it was denied without reliance on a peer review. Given the use of this denial code, Provider’s protests at hearing that the peer reviewer was not of the same specialty as the prescribing doctor, a pain management specialist, do not go directly to a point in contention.
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