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At a Glance:
Title:
453-03-2416-m5
Date:
September 9, 2003
Status:
Retrospective Medical Necessity

453-03-2416-m5

September 9, 2003

DECISION AND ORDER

The State Office of Risk Management (SORM) appealed the Findings and Decision of the Texas Workers’ Compensation Commission’s Medical Review Division (MRD) in Medical Dispute Resolution Docket No. M5-03-0461-01. The MRD had determined that Hassle Free Pharmacy[1] (Hassle Free) was entitled to reimbursement for medically necessary prescriptions provided to___ (Claimant) in the amount of $394.28 and ordered SORM to pay Hassle Free that amount plus interest. This decision finds that Hassle Free is not entitled to reimbursement because it is not a health care provider pursuant to Tex. Labor Code Ann. (Labor Code) §413.031(a). Therefore Hassle Free had no standing to seek review by the MRD, the MRD never acquired subject matter jurisdiction over the merits of the dispute, and the MRD had no authority to issue the order being appealed in this case. SOAH derives its jurisdiction through the MRD’s jurisdiction and thus has no subject matter jurisdiction over the merits of this dispute. SOAH does, however, have authority to determine issues and enter an order regarding jurisdiction. Therefore, this decision finds the MRD order to be of no force and effect, and dismisses the case for lack of subject matter jurisdiction.

I. Procedural Background

This case was heard by ALJ Nancy N. Lynch on June 23, 2003, at the State Office of Administrative Hearings (SOAH), 300 West 15th Street, Austin, Texas. SORM was represented by Stephen S. Vollbrecht, Deputy General Counsel, and Hassle Free was represented by Peter N. Rogers, attorney. Evidence and arguments were submitted and the record was closed.

Hassle Free requested, and SORM’s counsel concurred, that the ALJ might find it helpful to review the briefs filed in SOAH Docket No. 453-03-0380.M5.[2] The ALJ has reviewed those briefs. The ALJ also notes that, after the hearing in this case, the ALJ in SOAH Docket No. 453-03-0380.M5 granted a motion to dismiss for lack of jurisdiction.

No motion to dismiss has been filed in this case. SORM urges that it is a party aggrieved by the order of the MRD because it was ordered to reimburse Hassle Free for prescriptions and, therefore, is entitled to appeal to SOAH. Labor Code § 413.011(k). The question of jurisdiction, however, is raised by SORM’s evidence and arguments and will be addressed below.

II. Background Facts

_____, an injured worker, obtained prescription medications from pharmacies through an arrangement with Hassle Free. Hassle Free gave her a card that guaranteed payment to the pharmacies that filled her prescriptions. After a pharmacy filled her prescriptions, an intermediary pharmacy benefits company paid the pharmacy a reduced rate for the prescriptions pursuant to contract. The pharmacy benefits company then billed Hassle Free, and Hassle Free billed SORM at the Maximum Allowable Rate (MAR) established by the Commission. Hassle Free made its profit by paying the pharmacy benefits company an amount less than the MAR.

III. The Parties’ Arguments

SORM asserts that Hassle Free is not entitled to any reimbursement because it is not an entity entitled to payment for_____’s prescriptions under workers’ compensation laws and regulations. Hassle Free is not a pharmacy, nor a billing service entitled to seek MRD review of SORM’s denial of payment for the prescriptions. SORM did not request dismissal of the appeal because it was uncertain whether the MRD order would continue to be effective if the appeal was dismissed. It requested that SOAH enter an order finding that Hassle Free is not entitled to any reimbursement in this case.

Respondent Hassle Free argues that this appeal involves only one issue: whether ____’s prescriptions were medically necessary. That was the only issue raised in the Explanation of Benefits (EOBs) sent to it by SORM. Hassle Free contends that because MRD ruled in its favor, the Administrative Law Judge (ALJ) must affirm that decision unless SORM proves the medications were not medically necessary.

Hassle Free cites the D&O in SOAH Docket No. 453-03-0381.M5[3] as precedent for a ruling that in an appeal at SOAH, the ALJ can only consider arguments previously raised by the Carrier in the EOBs and before the MRD. In that case, Hassle Free prevailed in a case with a similar issue of medical necessity by arguing the Carrier waived its standing argument.

IV. Discussion

An employee who sustains a compensable injury under the Workers Compensation Act is entitled to all health care reasonably required by the nature of the injury as and when needed. Labor Code § 413.014. Health care includes appropriate prescription medications. Id. at § 401.011(19)(E). A health care provider can dispute the denial of a medical bill by a carrier by requesting medical dispute resolution at the Commission. However, to use the medical dispute resolution process, an entity must be a health care provider (or one of the other entities listed in the rules). 28 TAC § 133.305.[4]

Hassle Free is not a health care provider.

Hassle Free readily acknowledges it is not a pharmacy. It does not provide prescription drugs, medicines or other remedies, and does not contract directly with pharmacies. However, Hassle Free argues that the law should be construed liberally so as to bring it within the definition of a health care provider. Tex. Labor Code Ann. § 401.011(19-22). A liberal construction is encouraged to make the statute better serve the injured workers. Hassle Free argues it makes the system better serve injured workers by making it possible for them to obtain their prescriptions in a timely manner.

However, the ALJ concludes that a liberal construction is inappropriate because under the plain language of the statute, Hassle Free is not a health care provider. A health care provider can be a practitioner or a facility. Clearly, Hassle Free is not a practitioner because it is not an individual and does not provide health care. Similarly, it is not a health care facility because it is not a hospital, emergency clinic, outpatient clinic, or other facility (like a pharmacy) providing health care. Id. It simply guarantees payment to the pharmacy on behalf of claimants. “ liberal”construction may not be used where the law is expressed in plain and unambiguous language. Second Injury Fund v. Keaton, 345 S.W.2d 711, 714 (Tex. 1969). Therefore, Hassle Free’s claim that it is a health care provider fails.

Because Hassle Free is not a health care provider, it has no standing to contest SORM’s denial of reimbursement. In the absence of standing, there is no subject matter jurisdiction at MRD.

Hassle Free argued that SORM waived any challenge to its status as a health care provider because SORM did not raise this argument in the EOBs or before the MRD, citing the D&O in SOAH Docket No. 453-03-0381.M5 as authority. However, the ALJ in that case did not have the benefit of evidence and arguments developed later about the true nature of Hassle Free. Even so, the ALJ expressed reservations: “This decision should not be interpreted as agreeing with or approving the arguments made by Hassle Free.” The D&O based its conclusion solely on finding the Carrier had waived its argument regarding anything other than medical necessity by failing to provide proper EOBs and failing to assert any defenses while the case was pending at the MRD. D&O, p. Hassle Free’s method of operation became more clear through further discovery in other cases after the D&O cited by Hassle Free was issued. The D&O does not strengthen Hassle Free’s argument in this case.

Because Hassle Free is not a health care provider, it had no standing to ask MRD to review SORM’s denial to pay its claims. Labor Code § 413.031(a)(1). Since no party with standing invoked the medical dispute resolution process, the MRD had no subject matter jurisdiction to consider this dispute or issue an order in this case.[5] The Texas Supreme Court has held that standing is a component of subject matter jurisdiction that cannot be waived and may be raised for the first time on appeal. Texas Ass’n of Bus. v. Texas Air Control Bd.,852 S.W.2d 440, 445 (Tex. 1993).[6]

SOAH has the authority determine issues related to subject matter jurisdiction, including whether the order issued by the MRD was valid.

Because the question of jurisdiction goes to the very authority of an agency to enter a valid order, it may be raised by an ALJ even if not raised by any party. An agency’s authority and subject matter jurisdiction are delineated by its governing statute. SOAH’s subject matter jurisdiction, in turn, is derived from the jurisdiction of the referring agency. 1 TAC § 155.7. Parties cannot confer jurisdiction upon an agency by agreement; it must emanate from the statute itself. Texas Util. Public Elec. Co. v. Public Utility Comm’n, 881 S.W.2d 387, 394-395 (Tex.App.BAustin 1994, rev’d in part on other grounds, 935 S.W.2d 109 (Tex. 1996).

The ALJ may inquire into the standing of a party seeking relief because standing is an essential part of subject matter jurisdiction, and subject matter jurisdiction is a necessary prerequisite to proceeding further. The absence of subject matter jurisdiction requires the dismissal of the case. 1 TAC § 155.57(c). Security State Bank of San Juan v. State, 169 S.W.2d 554, 560 (Tex. Civ. App.BAustin, 1943, writ ref’d w.o.m.); See Texas Ass’n of Bus., 852 S.W.2d at 445.

Because Hassle Free lacked standing, the MRD did not have subject matter jurisdiction to order SORM to reimburse Hassle Free for____’s prescriptions. However, when MRD entered that order, SORM, an aggrieved party, was authorized by the statute to appeal to SOAH. Labor Code § 413.031(d). SOAH has authority to consider issues related to jurisdiction, including the validity of the MRD order, although like the MRD, it has no jurisdiction to consider the underlying medical necessity issues. 1 TAC §155.57

An order is void if entered by an agency without jurisdiction over the subject matter. Security State Bank of San Juan v. State, 169 S.W.2d at 560. In this case, the MRD had no jurisdiction to enter an order in favor of Hassle Free because Hassle Free did not have standing. Therefore, the MRD order is void. Id.Labor Code § 413.031 and 28 TAC § 133.305.

V. Conclusion

SOAH has the authority to consider issues related to jurisdiction in this case. Because the MRD order was issued without subject matter jurisdiction, it is void and of no force or effect. The appropriate remedy is the dismissal of the appeal and the vacation of the order issued by MRD in this case. Hassle Free has no right of reimbursement from SORM under the void MRD order.

VI. Findings of Fact

  1. Hassle Free Pharmacy Services (Hassle Free) issues pharmacy cards to workers’ compensation claimants guaranteeing the pharmacy will be paid for prescriptions dispensed to the cardholders.
  2. ____, a worker who had sustained a compensable injury, used a Hassle Free card to fill prescriptions between October 29, 2001, and December 22, 2001.
  3. Hassle Free billed SORM $394.28, the maximum allowable reimbursement (MAR) for these prescriptions in the amount.
  4. SORM declined to reimburse Hassle Free for claims submitted related to these prescriptions, on the grounds they were not medically necessary.
  5. Hassle Free requested medical dispute resolution and received an order in its favor from MRD dated January 17, 2003, directing SORM to pay Hassle Free $394.28 plus interest.
  6. SORM appealed the MRD’s order to SOAH.
  7. Appropriate notice was issued. The hearing was convened on June 23, 2003, at the State Office of Administrative Hearings, in Austin, Texas, before ALJ Nancy N. Lynch, and both SORM and Hassle Free appeared for the hearing. The record closed the same day.
  8. Hassle Free is not a pharmacy and does not provide medical services.
  9. Hassle Free is not a health care provider.

VII. Conclusions of Law

  1. The State Office of Administrative Hearings (SOAH) has authority to determine issues
  2. related to its jurisdiction, and the jurisdiction of MRD. 1 TAC § 155.57(c); Security State Bank of San Juan v. State, 169 S.W.2d 554, 560 (Tex. Civ. App.BAustin, 1943, writ ref’d w.o.m.); See Texas Ass’n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 444-446 (Tex. 1993).
  3. Hassle Free Pharmacy Services (Hassle Free) has no standing to seek review through the Medical Dispute Resolution process authorized by Tex. Labor Code Ann. ( Labor Code) § 413.031.
  4. The Medical Review Division (MRD) has no subject matter jurisdiction over this dispute because Hassle Free lacked standing to invoke the process pursuant to Labor Code § 413.031.
  5. The State Office of Risk Management (SORM) was aggrieved by the order issued by MRD in this case and was authorized to appeal to SOAH pursuant to Labor Code § 413.031.
  6. SOAH, like MRD, has no subject matter jurisdiction over the merits of the medical necessity dispute because its subject matter jurisdiction derives from MRD’s subject matter jurisdiction. Gov’t Code, § 2003.021; Labor Code §413.031(d); 1 TAC § 155.7; Security State Bank of San Juan v. State, 169 S.W.2d at 560.
  7. The order of MRD was issued without subject matter jurisdiction, and therefore is void and of no force and effect. Id.
  8. The appropriate remedy where there is no subject matter jurisdiction is dismissal. 1 TAC §155.57; See Texas Ass’n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 444-446 (Tex. 1993).

ORDER

IT IS, THEREFORE, ORDERED, that this case is DISMISSED. The order issued by the Medical Review Division in this case is void and is of no force and effect.

Signed September 9, 2003.

Nancy N. LynchAdministrative Law Judge

State Office of Administrative Hearings

  1. Hassle Free changed its name between the issuance of the MRD Decision and hearing on the merits in this case, adding the word “Services”
  2. City of Fort Worth c/o RSKCo v. Hassle Free Pharmacy Services and consolidated with it, Docket No. 453-03-2062.M5, Hassle Free Pharmacy Services v. City of Fort Worth c/o RSKCo. (ALJ Cloninger, issued July 17, 2003.)
  3. Hassle Free Pharmacy Services v. Casualty Reciprocal Exchange, ALJ Walston, issued January 8, 2003).
  4. Other parties authorized to seek medical dispute resolution before the Commission are injured employees, or insurance carriers acting as requestor or respondent. 28 TAC §133.305(a)(11). This refers to the version of the rule in effect between October 29, 2001, and December 22, 2001, the dates of service in this case.
  5. Other parties authorized to seek medical dispute resolution before the Commission are injured employees, or insurance carriers acting as requestor or respondent. 28 TAC ' 133.305(a)(11). This refers to the version of the rule in effect between October 29, 2001, and December 22, 2001, the dates of service in this case.
  6. This case overruled Texas Industrial Accident League v. Railroad Commission, 633 S.W.2d 821, 823 (Tex. 1982)(per curiam) that held standing could be waived if not raised at the trial court level.
End of Document
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