DECISION AND ORDER

Texas Mutual Insurance Company (Carrier) requested a hearing to contest the January 30, 2004, Findings and Decision of the Texas Workers’ Compensation Commission (Commission) authorizing reimbursement of $8,836.00, to First Rio Valley Medical, P.A., (Provider) for aquatic therapy (CPT Code 97113), electrical stimulation (CPT Code 97032), massage therapy (CPT Code 97124), therapeutic exercises (CPT Code 97110), phonophoresis (CPT Code 97139-PH), and phonophoresis cream (CPT Code 99070-PH) provided to ___ (Claimant) from December 21, 2001, through March 4, 2002, (Disputed Services).^[1] Carrier has the burden of showing by a preponderance of the evidence that the Disputed Services were not medically necessary. A copy of the claims log showing the dates and services in dispute is attached as Appendix AA.^[2]

This decision grants and denies in part the relief sought by Carrier as set forth below.

The hearing convened on February 2, 2005, before Administrative Law Judge (ALJ) Catherine C. Egan. Chris Trickey and Tom Hudson represented Carrier. Keith Gilbert represented Provider. William DeFoyd, D.C.; Nicholas Tsourmas, M.D.; and Alfred Ball testified for Carrier. Robert S. Howell, D.C., testified for Provider. There were no contested issues of notice or jurisdiction.

The hearing adjourned and, at the request of the parties, the record remained open for the filing of briefs regarding the admission of a deposition and other items with the ALJ. On February 16, 2005, Carrier filed a brief in support of the admission of the deposition of Sam Allen, D.C. Provider filed no response, and, on February 21, 2005, the deposition was admitted and the record closed.

I. BACKGROUND

___ (Claimant), a 58-year-old bilingual Hispanic female,^[3] sustained a work-related injury on ___, when she tripped over an electrical cord and fell to the ground. She reported sharp pain over her lower back region, which radiated into her right leg. On November 26, 2001, she went to Dr. Howell at Provider’s clinic, for treatment. Following an examination, Dr. Howell diagnosed Claimant as having a possible displacement of a lumbar intervertebral disc without myelopathy, facet syndrome, myalgia and myositis, and thoracic or lumbosacral neuritis or radiculitis.^[4] He initiated conservative chiropractic care that included joint mobilization, massage therapy, and electrical muscle stimulation. Aquatic therapy was added as part of Claimant’s treatment regime on or about December 21, 2001.

II. LEGAL ISSUES

Carrier denied payment to Provider under payment exception code “T” for “Treatment Guidelines” and “U”for “unnecessary treatment (without peer review).” Pursuant to 28 Tex. Admin. Code (TAC)133.304(c), when a carrier denies payment, the carrier must send an Explanation of Benefits (EOB) to the appropriate party with the proper exception code and a “sufficient explanation to allow the sender to understand the reason(s) for the insurance carrier’s action(s). 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 this section.”

Initially, Carrier’s explanation for denying the claim was “based on the TWCC Trmt Guideline’s Ground Rule 2, A, I-VII, change in the Patient’s clinical condition and/or progression has not been documented to support 1:1 therapy. Patient’s condition supports therapy in a group setting.”^[5] However in January 2002, Carrier began using rationale code “U” for services that were “deemed unnecessary medical treatment based on a review of the claim file, billing records and written review protocols established for appropriate health care treatment.”^[6] On January 16, 2002, Carrier began using the rationale code AT2″ which is described on the EOB as “the treatment/service provided exceeds medically accepted utilization review criteria and/or reimbursement guidelines established for severity of injury, intensity of service and appropriateness

of care.”^[7]

Provider filed a request for reconsideration with Carrier on the denied claims. Dr. Howell complained that the rationale provided by Carrier did not tell him the reason why the claim was

denied.^[8] Carrier refused to disclose the relevant protocols, criteria, and guidelines to Provider. Carrier did not retain Dr. Tsourmas or Dr. DeFoyd until late in 2004, well after this contested case proceeding began. Obviously, neither of them was involved in Carrier’s decision to deny this claim nor could they testify as to the meaning of the criteria and guidelines Carrier relied upon in the EOBs.^[9]

Mr. Ball explained that Carrier’s medically accepted utilization review criteria and its reimbursement guidelines established for severity, intensity, and appropriateness of care are “proprietary and confidential.” Neither of them were given to Provider.^[10] Although Mr. Ball agreed that under Rule 133.304(c), Carrier had a duty to provide Provider with a sufficient explanation to allow Provider to understand the reason or reasons Carrier denied the claims, he believes Carrier satisfied this requirement in its responses to Provider’s requests for reconsideration.^[11]

Even after Provider requested clarification, Carrier did not provide a sufficient explanation for denying Provider’s claim. The Commission’s rules required Carrier to provide on the EOB a sufficient explanation to allow Provider to understand the reason(s) for Carrier’s denial. Carrier did not furnish Provider with the relevant portions of its criteria and guidelines in response to

Provider’s request for the same. Carrier did not provide a sufficient explanation of its denial and did not prove that its basis for denial at the time of the denial of the claims was correct. Carrier cannot substitute at a much later date a reason or an explanation other than that provided by Carrier when it denied the claims. The physicians who testified at the hearing on behalf of Carrier were unable to testify regarding Carrier’s criteria and guidelines referenced in the EOBs. Under the Commission’s rules, Carrier’s explanation was insufficient. The ALJ will not permit Carrier to now substitute an

explanation that was not furnished in compliance with 28 TAC § 133.304. Therefore, where Carrier failed to timely submit a sufficient explanation of its denial, it is barred from denying the claim based on medical necessity.

III. WERE THE DISPUTE MEDICAL SERVICES

MEDICALLY UNNECESSARY?

A. IRO opinion and the Medical Record

On___, the IRO found that Claimant sustained an injury to her lower back with possible lower disc injury which supported the need to keep Claimant active through aquatic therapy and passive therapeutics.^[12] The IRO wrote:

The records support the need to get the patient active, and, depending on her physical condition, a time-limited course of aquatic therapy is appropriate. In addition, a time-limited course of passive therapeutics is appropriate in the management of her injury. The patient does have an MRI of the lumbar spine that reveals possible disc involvement in her current pain complex. The patient’s injury is in compliance with accepted practice algorithms for treating lumbar spine injury.^[13]

Dr. Howell noted in his initial evaluation that he was initiating aquatic therapy to minimize the stress to the injured area while increasing Claimant’s range of motion. On December 28, 2001, Claimant underwent lower extremity electro-diagnostic studies which showed a right S1 nerve root impairment and suggested a right S1 neuropathy. An MRI scan taken on January 9, 2002, showed “disc degeneration at L4-5 with 2 mm of central disc protrusion,” and disc degeneration at L5-S1 with no protrusion.^[14]

On January 15, 2002, following an examination, Dr. Howell noted that Claimant was exhibiting chronic sprain/strain injury to the lumbar spine and he continued aquatic therapy three times weekly for another four weeks. At the same time, Claimant was placed on one-to-one physical therapy for physical stretching and cardiovascular exercises. Dr. Howell documented that the one-on-one supervision was necessary because Claimant had no formalized training and needed spotting to avoid reinjuring herself. Once Claimant demonstrated that she could handle the increased demands of land based exercises, he would begin having her do weight bearing exercises.

On February 18, 2002, Dr. Howell documented that Claimant had shown significant improvement with the treatment plan. The pain in Claimant’s lumbar spine area was reduced as indicated by the Oswestry pain scale and both her strength and range of motion had improved. Dr. Howell prescribed further aquatic therapy, physical therapy, and phonophoresis.^[15]

In general, the aquatic therapy included running forward, backward, and sideways in the pool, using a ball to turn from side to side, raising her arms from under the water to the surface from various positions, and lowering her arms from the surface to underwater at times using a float.

Provider’s explanation for aquatic therapy included the following:

The medical necessity of aquatic therapy is simple. It is a commonly accepted fact in the medical community that healing tissues should never be overstressed. If Claimant were subjected to active therapy (resistive/progressive) exercise too quickly, the consequences may be detrimental. Re-injury, increased pain, and decreased range of motion are the most common side effects. This will of course increase the amount of time it takes to heal the soft tissues. The longer the time it takes to heal the more costly it is. This is not the goal of the TWCC or the guidelines it uses. By placing Claimant in water, her body weight or the affected area weight is reduced and stress is minimized significantly. By minimizing the stress on the injured area, range of motion will usually increase because the gravity factor is lowered therefore allowing for the naturally occurring sticking points of conventional progressive weights to be overcome with much more ease.^[16]

After the dates that the Disputed Service were provided, on March 28, 2002, Randy Vollrath, D.C., examined Claimant to render a medical evaluation for Carrier. After examining Claimant, Dr. Vollrath reported that she exhibited symptom magnification and could move around quite well when she was distracted. According to Dr. Vollrath, “the sequence and duration of treatment thus far has been excessive.” Dr. Vollrath recommended Claimant be placed on a home exercise program. It is clear from the letter that Provider was not copied on this letter.

B. Carrier’s Position and Evidence

Dr. Tsourmas is an orthopedic surgeon and works for Carrier as the medical director. Dr. Tsourmas reviewed Provider’s medical records to assess the medical necessity of the services in dispute. According to Dr. Tsourmas, he has referred patients to aquatic therapy when they suffered with lower extremity issues, such as a broken bone. He opined that during the time that a patient has to be careful with weight bearing exercises, short-term aquatic therapy is useful. However the patient should progress to a land-based program as soon as it can be tolerated because it is “more

efficacious regarding producing results with range of motion and strength.”^[17] Transitioning a patient from aquatic to land-based therapy may overlap, but not more than a few weeks-“Certainly not months or – or longer.”^[18]

As for this Claimant, Dr. Tsourmas testified that Claimant suffered with a protruded disc in her lower back. She had months of therapy, but no surgery. Following the passive modalities provided by Provider in November and December, Dr. Tsourmas opined, Claimant did not require aquatic therapy.^[19]

William D. DeFoyd, D.C., Carrier’s expert witness, practices at the Spine and Rehab Center and treats spinal injuries.^[20] Dr. DeFoyd reviewed the Claimant’s medical records including those

admitted into evidence. Dr. DeFoyd maintains that land-based therapy is preferable to aquatic therapy for several reasons. First, humans function on land, not in water. Second, it is easier to encourage a patient to do a home program if the exercises do not necessitate a pool. Finally, land-based exercise programs are generally less costly than aquatic programs. “quatic therapy is used in cases where the patient cannot tolerate a land-based program because of weight bearing intolerance.^[21]

Even though Carrier reimbursed Provider for one unit of aquatic therapy on three dates of service, December 21, 24, and 28, 2001, Dr. DeFoyd opined that Claimant did not require aquatic therapy at all-not even in a group setting.^[22] Dr. DeFoyd noted that Dr. Howell’s initial evaluation of Claimant did not include any evaluation of Claimant’s ability to tolerate land-based therapy. Without

such, he maintains Provider failed to show aquatic therapy was necessary. Dr. DeFoyd further excepts to Dr. Howell’s assertion that Claimant’s lack of formalized training justified the need for one-on-one therapy. All that was necessary, he explained, was for Provider to show Claimant how to do the therapy and make sure Claimant could do it correctly so Claimant could begin doing the exercises independently.

As for land-based physical therapy, Dr. DeFoyd opined that after the initial explanation over how to perform the exercises it was not medically necessary to provide this therapy one-on-one. According to Dr. DeFoyd, the exercise program was repetitive.^[23] Dr. DeFoyd also reviewed the office visits in dispute and found them not to be medically necessary because there was no longer a reason for Claimant to be seeing Provider. Dr. DeFoyd commented that Provider’s office notes were repetitive, provided little additional information and used the same language for each visit. More importantly, the notes show that Claimant was not getting better yet her treatment remained the same despite the office visits.

Likewise, Dr. DeFoyd stated that these passive treatments (massage therapy and electrical stimulation) were medically unnecessary because Claimant had already undergone passive modalities without any improvement. Continuing passive therapy, he argues, was not likely to be beneficial.^[24] Phonophoresis was performed in February 2002, even though it is a passive modality. This too, Dr. DeFoyd believed was medically unnecessary because at this point it “was not likely to cure or relieve the effect of her injury or increase her ability to obtain or retain employment.”^[25]

Under cross-examination, Dr. DeFoyd stressed that he did not think any therapy was necessary. Dr. DeFoyd argued, “I think the treatment was adverse, actually had a – – a negative effect upon the patient. I think that the Claimant’s case is actually a good example of that. This is a situation where a woman has a prolonged disability, ineffective treatment that’s recounted by multiple people, and that’s harmful to her. So I think that’s adverse.”^[26] Dr. DeFoyd further clarified that if only one patient could come in for group therapy, if the patient did not medically require one-on-one therapy, it should be billed as group therapy.^[27]

Mr. Ball currently serves as Carrier’s dispute analyst, but began as a nurse on an audit team reviewing spinal surgery and hospital bills. Mr. Ball affirmed that each time Carrier received a bill from Provider it issued an EOB. He did not testify that Carrier ever provided an explanation for denying the claims other than that described above.

C. Provider’s Position and Evidence

Dr. Howell, Provider’s owner, has been a licensed chiropractor in Texas since October 1990. Provider’s clinic is a 12,300 square foot facility with a junior Olympic indoor pool (77,000 gallons), a 1,000 square foot gym with modern weight lifting equipment, massage therapy rooms, examination rooms, physical therapy rooms, an adjusting room, a reception area, administrative offices, bathrooms with six showers inside them, a return-to-work area, and a chronic pain management area.^[28]

Dr. Howell explained that Claimant was older than the normal patient, now 61-years-old, and suffers with diabetes and high blood pressure. He diagnosed her as having “displacement of the lumbar intervertebral disc, facet syndrome, myalgia and myositis and thoracic or lumbosacral neuritis or radiculitis.”^[29] To treat her pain, Claimant was taking Celebrex, an anti-inflammatory pain reliever, and Skelaxin, a muscle relaxer.^[30] Dr. Howell testified that because she was older, suffered with diabetes, high blood pressure, had limited range of motion in her lumbar spine, was heavily medicated, a non-swimmer, and in severe pain, one-on-one therapy was justified.^[31] Under Provider’s treatment regimes, Dr. Howell maintains, Claimant’s range of motion and strength improved and her pain decreased.

D. ALJ’s Analysis

One-on-one Therapy in December 2001

The Carrier was required to show by a preponderance of the evidence that when it denied Provider’s claims for services provided to Claimant, the services were not medically necessary. Under the Commission’s rules, Carrier is required to provide an explanation for why it determined Provider’s medical services were not medically necessary. In December 2002, Carrier’s denial code contained sufficient explanation to Provider for the Provider to understand that Carrier did not believe one-on-one therapy was medically necessary and that the aquatic therapy could be provided in a group setting. Based on the evidence, Carrier properly paid for one unit of one-on-one aquatic therapy on December 21, 24, and 28, 2001, and properly denied three units of one-on-one aquatic therapy (disputed amount $468.00) on each of these dates of service.

Services Provided after January 1, 2002.

However, in January 2002, when Carrier changed the explanation code to “U” and “T2,” the definitions provided no explanation as it relied upon the Carrier’s confidential guidelines and policies which Carrier chose not to disclose.

Neither of Carrier’s experts could testify about why Carrier denied Provider’s claims at the time Carrier denied the claims. Carrier chose not to offer its “proprietary guidelines,” or any evidence explaining what its “proprietary guidelines” stated and how they supported Carrier’s rationale for denying the claims. Consequently, the ALJ finds that the Carrier failed to properly raise and preserve a medical necessity denial to the disputed service provided by Provider from January 2, 2002, through March 4, 2002. The ALJ further finds that Carrier failed to show by a preponderance of the evidence that when Carrier denied the claims, Provider’s services from January 2, 2002, through March 4, 2002, in the amount of $8,368.00 were not medically necessary.

IV. FINDINGS OF FACT

1. Claimant, a 58-year-old female, sustained a work-related injury on ___, when she tripped over an electrical cord and fell to the ground.
2. Claimant sought treatment from Dr. Howell, First Rio Valley Medical, P.A. (Provider), who initiated conservative chiropractic care that included joint mobilization, massage therapy, and electrical muscle stimulation.
3. On December 21, 2001, Provider placed Claimant on a one-to-one aquatic therapy program.
4. Provider requested reimbursement for aquatic therapy, electrical stimulation, massage therapy, therapeutic exercises, phonophoresis, and phonophoresis cream, from December 21, 2001, through March 4, 2002, (Disputed Services).
5. On December 21, 24, and 28, 2001 Texas Mutual Insurance Company (Carrier) issued an explanation of benefits (EOB), and paid for one unit of the four units billed each day for aquatic therapy.
6. Carrier denied reimbursement for three units per day of one-on-one aquatic therapy for December 21, 24, and 28, 2001, asserting that one-on-one aquatic therapy was not medically necessary as Claimant’s condition warranted group therapy.
7. Provider received a sufficient explanation from Carrier to understand the reason Carrier denied part of Provider’s claims for December 21, 24, and 28, 2001, in the amount of $468.00.
8. The Disputed Services provided on December 21, 24, and 28, 2001, should have been provided in a group setting.
9. It was not medically necessary to provide the Disputed Services on December 21, 24, and 28, 2001, to Claimant in a one-on-one basis.
10. In January 2002, Carrier denied reimbursement for the Disputed Services utilizing the denial code AU.-unnecessary treatment.
11. In erly January 2002, Carrier used the rationale code AU for its explanation that the services were Adeemed unnecessary medical treatment based on a review of the claim file, billing records and written review protocols established for appropriate health care treatment.
12. On January 16, 2002, Carrier began using the rationale code AT2″ which was defined in the EOB as the treatment services provided exceed medically accepted utilization review criteria and as reimbursement guidelines established for severity of injury, intensity of service and appropriateness of care.
13. Carrier refused to disclose to Provider the relevant utilization review criteria and reimbursement guidelines referred to in the EOBs asserting that they were proprietary and confidential.
14. Carrier’s failure to disclose to Provider the relevant utilization review criteria and reimbursement guidelines rendered insufficient Carrier’s explanation insufficient for Provider to understand Carrier’s reason(s) for denying Provider’s claim from January 2, 2002, through March 4, 2002, in the amount of $8,368.00.
15. Provider filed requests for reconsideration of the Disputed Services and asked Carrier to identify what criteria and guidelines it was using to deny Provider’s claims and to explain Carrier’s rationale behind its denial of the Disputed Services from January 2, 2002, to March 4, 2002.
16. Carrier denied the requests for reconsideration without disclosing the criteria and guidelines it used in reaching its decision to deny Provider’s claims.
17. By decision dated January 27, 2004, an Independent Review Organization (IRO), determined the Disputed Services were medically necessary.
18. By decision dated January 30, 2004, the Texas Workers’ Compensation Commission (Commission) granted Respondent reimbursement for the Disputed Services.
19. Carrier timely requested a hearing to contest the Commission’s decision.
20. 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 matters asserted.
21. A hearing was convened by Administrative Law Judge Catherine C. Egan on February 2, 2005, in the hearing rooms of the State Office of Administrative Hearings. The hearing adjourned and the record closed on February 21, 2005.
22. For the dates of service from January 2, 2002, through March 4, 2002, Carrier failed to show that the Disputed Services were not medically necessary to treat Claimant’s compensable injury.

V. CONCLUSIONS OF LAW

1. The Texas Workers’ Compensation Commission has jurisdiction to decide the issue presented pursuant to the Texas Workers’ Compensation Act, Tex. Lab. 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. Lab. Code Ann. ‘ 413.031(k) and Tex. Gov’t. Code Ann. ch. 2003.
3. Carrier timely requested a hearing in this matter pursuant to 28 Tex. Admin. Code (TAC) ” 102.7 and 148.3.
4. Notice of the hearing was proper and complied with the requirements of Tex. Gov’t. Code Ann. ch. 2001.
5. Carrier had the burden of proof in this matter, which was the preponderance of evidence standard. 28 TAC ” 148.21(h) and (i); 1 TAC ‘ 155.41(b).
6. When an insurance carrier makes or denies payment on a medical bill, the carrier must include on the EOB the correct payment exception code and a sufficient explanation to allow the sender (Provider) to understand the reason for the Carrier’s action. A general statement that simply states a conclusion in not sufficient. 28 TAC § 133.304(c).
7. Carrier’s explanation for denying the claims from January 2, 2002, though March 4, 2002, was legally inadequate as it failed to deny reimbursement in compliance with the Commission’s rules.
8. Because Carrier never denied reimbursement in compliance with the Commission’s rules for the disputed services from January 2, 2002, through March 4, 2002, Carrier is required to provide reimbursement.
9. Carrier failed to demonstrate that the Disputed Services from January 2, 2002, through March 4, 2002, were not reasonable and medically necessary for the treatment of Claimant’s compensable injury.
10. Provider is entitled to reimbursement for the Disputed Services from January 2, 2002, through March 4, 2002, as they were reasonable and medically necessary.
11. Provider is not entitled to reimbursement for the Disputed Services provided on December 21, 24 and 28, 2001, in the amount of $468.00.

ORDER

THEREFOREIT IS ORDERED that Texas Mutual Insurance Company reimburse First Rio Valley Medical, P.A., for the Disputed Services provided to Claimant from January 2, 2002 through March 4, 2002, in the amount of $8,368.00, plus any and all applicable interest.

Signed April 15, 2005.

CATHERINE C. EGAN
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

1. By Decision dated January 27, 2004, an Independent Review Organization (IRO) determined the Disputed Services were medically necessary.↑
2. The final column on the claims log is in dispute and is not dispositive of any issue in this matter.↑
3. Joint Ex. 8, Tab 148.↑
4. Joint Ex. 8, Tab 1 at 23.↑
5. Joint Ex. 8, Tab 1 at 229.↑
6. Joint Ex. 8, Tab 1 at 231.↑
7. Joint Ex. 8, Tab 1 at 238.↑
8. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol II at 9-13.↑
9. Ex. 16, Tab 1, Prefiled testimony of Dr. DeFoyd at 52.↑
10. Ex. 16, Tab 2, Prefiled testimony of Mr. Ball at 25-26.↑
11. Ex. 16, Tab 2, Prefiled Testimony of Mr. Ball at 27-28.↑
12. Joint Ex. 8, Tab 3 at 389-391.↑
13. Joint Ex. 8, Tab 3 at 390.↑
14. Joint Ex. 8, Tab 1 at 53.↑
15. Joint Ex. 8, Tab 1 at 49-51.↑
16. Joint Ex. 8, Tab 1 at 24 and 48.↑
17. Ex.16, Tab 3, Prefiled testimony of Dr. Tsourmas at 19-20.↑
18. Ex. 16, Tab 3, Prefiled testimony of Dr. Tsourmas at 28.↑
19. Ex. 16, Tab 3, Prefiled testimony of Dr. Tsourmas at 80-81.↑
20. Dr. DeFoyd has been a chiropractor for 18 years. Ex. 16, Tab 1, Prefiled Testimony at 9.↑
21. Ex. 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 21-24.↑
22. Ex. 16, Tab 1, Prefiled testimony of Dr. DeFoyd at 106.↑
23. Ex. 16, Tab 1, Prefiled testimony of Dr. DeFoyd at 146.↑
24. Ex. 16, Tab 1, Prefiled testimony of Dr. DeFoyd at 151.↑
25. Ex. 16, Tab 1, Prefiled testimony of Dr. DeFoyd at 155.↑
26. Ex. 16, Tb 1, Prefiled testimony of Dr. DeFoyd at 182. The ALJ removed Claimant’s name and inserted the word AClaimant to maintain the confidentiality of the patient’s name.↑
27. Ex. 16, Tab 1, Prefiled testimony of Dr. DeFoyd at 193.↑
28. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol. II, 5-6.↑
29. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol. II, 126.↑
30. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol. II, 127.↑
31. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol. II, 137.↑