DECISION AND ORDER

Texas Mutual Insurance Company (Carrier) requested a hearing to contest the July 16, 2004, Findings and Decision of the Texas Workers= Compensation Commission (Commission) authorizing reimbursement in the amount of $2,603.59 to First Rio Valley Medical, P.A., (Provider) for aquatic therapy,^[1] massage therapy,^[2] and therapeutic exercises,^[3] from December 10, 2003, through February 2, 2004, (Disputed Services).^[4] 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.^[5]

This decision denies the relief sought by Carrier and grants reimbursement to Provider for the Disputed Services.

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. At the request of the parties the record remained open for the filing of briefs regarding the admission of a deposition and other items. 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 29-year-old male, worked for a lumber company. On ___, Claimant experienced a sudden sharp pain in his lower back while lifting 90-pound bundles of roofing shingles. Claimant initially sought treatment for this compensable injury from Lynn Anderson, M.D. Dr. Anderson treated Claimant with electrical stimulation, ultrasound, heat packs, medications and therapeutic exercises. An orthopedic surgeon, Kip Owen, M.D., evaluated Claimant’s condition and ordered an MRI. The MRI scan was done on July 10, 2003, and revealed lumbar spine degenerative disc disease at the L5/S1. Claimant had not returned to work at this point and was getting worse. On December 9, 2003, Claimant went to Provider for treatment.

Claimant reported to Dr. Howell, Provider’s owner, that Dr. Owen had referred him to physical therapy for two weeks, but it did not help.^[6] He had also received electrical stimulation, ultrasound, and hot packs while being treated by Dr. Owen. Claimant informed Dr. Howell that when he returned to Dr. Anderson he received 21 treatments on a DRX-9000 machine and massage therapy. Following his examination of this patient, Dr. Howell diagnosed possible lumbar HNP, lumbar sprain/strain, and lumbar facet syndrome and treated him with aquatic therapy, massage therapy, and therapeutic exercises.^[7] Dr. Howell referred Claimant to Donald Kramer, M.D. for an evaluation of Claimant’s medication needs to address his pain. On January 7, 2004, Dr. Kramer prescribed Claimant Celebrex.^[8]

On February 17, 2004, Claimant underwent a mental health diagnostic interview to evaluate his readiness for work hardening. During his interview, Claimant reported experiencing a A60% improvement since the initial injury.^[9] Claimant was determined to be a good candidate for the work hardening program. On February 19, 2004, Claimant went to Jorge R. Guevara, M.D., for a Maximum Medical Improvement (MMI) assessment and impairment rating. Claimant reported that he was doing better and attending physical therapy sessions. Dr. Guevara found that Claimant had not reached MMI and recommended that his Acurrent therapy should continue for no less than an

additional two months and epidural injections should be considered.^[10] As indicated by subsequent reports from Jorge E. Tijmes, M.D., Claimant’s condition subsequently deteriorated, and a lumbar discogram was ordered.^[11]

II. LEGAL ISSUE

Pursuant to 28 Tex. Admin. Code (TAC) §133.304(c) when a carrier denies payment, the carrier must send an explanation of benefit (EOB) to the appropriate party with the proper exception code and “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.”

Crrier denied payment to Provider from December 10, 2003, through February 2, 2004, under payment exception code “U” for “unnecessary treatment (without peer review).”^[12] For the dates December 10, 2003, through January 22, 2004, Carrier’s explanation included the rationale code “RG,” 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.”^[13] On January 8, 2004, Carrier denied payment for aquatic therapy under payment exception code AY which refers to Apayment policy. Under the rationale code, Carrier used AN6″ which is defined as Aone hydrotherapy modality is coverable each day for the sole purpose of relieving muscle spasm, inflammation or edema. ^[14]

On January 26, 2004, under payment exception code “U,” Carrier began adding a rationale code of “YU” for “this service has been deemed unnecessary medical treatment based on a review of the claim file, billing records, and/or written review protocols established for appropriate health care treatment.”^[15] Carrier also added the rationale code “MZ”, with payment exception code “Y” which is defined as “the usual treatment session provided in the Home or office setting is 30 to 45 minutes.

The medical necessity of services for an unusual length of time was not documented.”^[16] After Provider requested reconsideration, Carrier added on all the claims a payment exception code “O” for “denial after reconsideration,” with a rationale code “YO”, for “reimbursement was reduced or denied after reconsideration of treatment/services billed.”^[17]

Dr. Howell testified that the explanation provided by Carrier for the rationale codes did not tell him why Carrier had denied these claims.^[18] He was unaware of any healthcare provided to Claimant that exceeded any published medically accepted utilization review criteria.^[19] Provider filed requests for reconsideration, provided additional information in support of the claims, and asked Carrier several questions to determine the basis for the denial of these claims.^[20] Carrier provided no further explanation to Provider’s request for additional information other than to deny the claims and add the above referenced codes.

Carrier did not retain Dr. DeFoyd until December 2004. Obviously, he was not involved in Carrier’s initial decision to deny this claim, nor did he clarify the guidelines to which Carrier was referring in the EOBs.^[21] When asked if he knew the protocol Carrier used to deny a procedure based on the “U” code, Dr. DeFoyd stated he was not an employee of Carrier’s and did not know the process Carrier followed.^[22] Dr. Tsourmas, who serves as Carrier’s medical director, testified that Carrier’s guidelines track the medical guidelines. However, when Dr. Tsourmas was asked to explain Carrier’s “RG” modifier, he could not do so.^[23]

Even after Provider requested clarification, Carrier did not provide a rationale for denying Provider’s claim other than to use the brief rationale codes listed above that failed to clarify what protocols, guidelines, and criteria Carrier relied upon in denying these claims. 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 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 now barred from now providing a previously undisclosed rationale for denying the claims based on lack of medical necessity.

III. WERE THE DISPUTED MEDICAL SERVICES

MEDICALLY UNNECESSARY?

A. IRO Decision and Medical Records

On June 10, 2004, the Independent Review Organization (IRO) issued its determination at the request of the Commission. The IRO found that once Claimant began treatment with Provider, Claimant “made subjective and objective improvement by 50% over the next two months after 5 months of no change.”^[24] The IRO concluded that the aquatic therapy, therapeutic exercises, and massage therapy from December 10, 2003, through February 2, 2004, were well documented, provided Claimant relief from his condition, and were medically necessary to treat Claimant’s condition.

The aquatic therapy included various warm-up exercises, running forward, backward, and sideways in the pool, and then progressed to resistance exercises that required the use of Claimant’s lumbar spine. Land-based therapeutic exercises were integrated into the program on January 12, 2004. Many of the exercises in both aquatic and physical therapy required the assistance of a chiropractic assistant.^[25]

B. Carrier’s Position and Evidence

Dr. Tsourmas, an orthopedic surgeon who works for Carrier as the medical director, reviewed Provider’s medical records to assess the medical necessity of the services in dispute. Dr. Tsourmas noted that the MRI taken of Claimant’s lumbar spine showed that he did not have a herniated disc, but suffered from degenerative change in his lower lumbar spine.^[26] According to Dr. Tsourmas,

active therapy from June to September 2003 was appropriate, but Claimant’s injury did not require aquatic therapy. Dr. Tsourmas maintains, Claimant had a “run of the mill low back strain” without nerve injury or herniated disc.^[27] In his opinion, Claimant should have continued with land-based therapy.

Dr. Tsourmas has referred patients for aquatic therapy when they suffered with lower extremity issues, such as a broken bone, and the patient needs the buoyancy of the water. He agrees that while a patient has to be careful with weight bearing exercises, aquatic therapy is useful, at least for the short term. However, he contends that 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.”^[28] Transitioning a patient from aquatic to land-based therapy may overlap, but not for more than a few weeks.^[29]

Dr. DeFoyd, Carrier’s expert witness, practices at the Spine and Rehab Center and treats spinal injuries.^[30] Dr. DeFoyd maintains there was no reason for Provider to initiate aquatic therapy as Claimant could already do land-based exercises. While he does not challenge the medical necessity of doing land-based therapy in January 2004, Dr. DeFoyd maintains that neither one-on-one therapy nor passive therapy was medically necessary.^[31] If Provider believed Claimant would not do the exercises at home and needed encouragement from Provider, then in his opinion, Provider should have documented this in the medical record because Provider was going beyond what is typical and what is acceptable medically.^[32] Under cross-examination, Dr. DeFoyd agreed that the mere fact that a medical procedure is not ultimately effective is no reason to deny the claim.^[33] Dr. DeFoyd also conceded that when he files a claim with Carrier he does not know if he is using the same guidelines or criteria used by Carrier.^[34]

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, reception area, administrative offices, bathrooms with six showers, a return-to-work area, and a chronic pain management area.^[35]

Dr. Howell explained that Claimant said that he had been treated with passive modalities and had not improved. Claimant complained that his pain level was a six out of ten. Based on the medical history provided by Claimant and his physical examination of Claimant, Dr. Howell diagnosed him as having lumbar sprain/strain and lumbar facet syndrome.^[36] According to Dr. Howell, all the services, including the one-on-one therapy, were medically necessary to treat Claimant because passive modalities had failed and Claimant was still in significant pain.

Dr. Howell elaborated that doing aerobic exercise in the water promotes physical conditioning, which in turn “creates positive health conditions.”^[37] In addition, Dr. Howell testified that aquatic therapy improves a patient’s psychological mood and reduces depression.^[38] According to Dr. Howell, patients warm up in the deep end of the pool to encourage the secretion of synovial fluid-a fluid that helps lubricate the joint. After the warm-up, the patient begins exercises that include running forward, backward, and sideways, to use all the major muscle groups in the body.

Dr. Howell maintains he was justified in referring Claimant to an hour of one-on-one therapy per visit. As a result of the disputed services, Dr. Howell testified, Claimant’s range of motion improved and his Oswestry pain level decreased.

D. ALJ’s Analysis

Carrier was required to show by a preponderance of the evidence that it properly denied Provider’s claims for services provided to Claimant due to lack of medical necessity. Under the Commission’s rules, Carrier is required to provide an explanation for why it determined Provider’s medical services were not medically necessary at the time it issues the EOBs. Carrier’s explanation codes and definitions provided insufficient information for Provider to understand the reasons for Carrier’s actions. Carrier’s own expert, Dr. Tsourmas, was unable to explain what Carrier meant in its definition of “RG.”

Despite Provider’s request for clarification about what criteria, guidelines, and protocols Carrier was referring to, Carrier failed to provide this information. Instead, Carrier added additional payment denial codes, with equally vague rationales, all apparently referring back to Carrier’s internal policies, criteria, and guidelines. Neither of Carrier’s experts could testify about why Carrier denied Provider’s claims at the time Carrier denied the claims and neither knew the contents of Carrier’s internal criteria, guidelines, and protocols. Carrier chose not to offer any evidence explaining what its guidelines stated or to clarify the rationale for denying the claims other than the global statement that they were not medically necessary. Consequently, the ALJ finds that Carrier failed to show by a preponderance of the evidence why it denied Provider’s claims.

In addition, the ALJ finds Carrier failed to show by a preponderance of the evidence that the Disputed Services provided by Provider to Claimant from December 10, 2003, through February 2, 2004, were not medically necessary. Claimant had not improved under the care of Dr. Anderson and Dr. Owen. He did improve under Provider’s care. Both Dr. Guevara and the IRO found that the care provided Claimant by Provider was medically necessary and relieved the effects of Claimant’s compensable injury. Even Dr. DeFoyd agreed thatjust because medical treatment is not ultimately effective is not justification for finding it was not medically necessary. The ALJ finds that Carrierfailed to carry its burden of proof and Provider is entitled to recover the amount due for the Disputed Services.

IV. FINDINGS OF FACT

1. ___Claimant), a 29-year-old male who worked for a lumber company, suffered a compensable injury to his lower back on ___, while lifting 90-pound bundles of shingles.
2. Lynn Anderson, M.D. initially treated Claimant; however, Claimant’s condition continued to deteriorate.
3. On July 10, 2003, Kip Owen, M.D., an orthopedic surgeon ordered a lumbar MRI on Claimant’s spine which revealed lumbar spine degenerative disc disease at the L5/S1.
4. Claimant had not returned to work and was getting worse when he presented to Dr. Howell, owner of First Rio Valley Medical, P.A. (Provider) on December 9, 2004.
5. Dr. Howell made a diagnosis of lumbar sprain/strain and lumbar facet syndrome and began treating Claimant with aquatic therapy, massage therapy, and therapeutic exercises.
6. Provider requested reimbursement for aquatic therapy, massage therapy, and therapeutic exercises from December 10, 2003, through February 2, 2004 (Disputed Services).
7. Claimant required one-on-one therapy so that Provider could show him how to do the exercises, make sure he did them properly, monitor and encourage him, and ensure he did not harm himself.
8. Texas Mutual Insurance Company (Carrier) paid for a small portion of the claims but denied reimbursement for the Disputed Services in the Explanation of Benefits (EOB) using the Commission denial code “U,” for “unnecessary treatment (without peer review).”
9. On the EOBs for the Disputed Service from December 10, 2003, through January 26, 2003, Carrier used the rationale code “RG” and the definition for this code, as its explanation to Provider for denying the claims.
10. The rtionale code ARG was defined by Carrier on the EOBs as the treatment/service provided exceeds accepted utilization review criteria and/or reimbursement guidelines for severity of injury, intensity of service and appropriateness care.
11. On Jnuary 26, 2003, Carrier began using rationale code AYU for Athis service has been deemed unnecessary medical treatment based on a review of the claim file, billing records, and/or written review protocols established for appropriate health care treatment.
12. Carrier refused to disclose to Provider the relevant protocols, utilization review criteria and/or reimbursement guidelines asserting they were proprietary and confidential.
13. By failing to disclose to Provider the relevant protocols, utilization review criteria and reimbursement guidelines, Carrier’s explanation was insufficient for Provider to understand Carrier’s reason(s) for the denial of these claims.
14. Provider filed a request for reconsideration with Carrier and asked Carrier to identify what criteria and guidelines it was using as a basis to deny the claim and to explain the rationale behind its denial of the disputed services.
15. Carrier denied the requests for reconsideration, adding additional denial rationale codes, but failing to provide the contents of the protocols, criteria and guidelines it relied upon.
16. By Decision dated June 10, 2004, an Independent Review Organization (IRO), determined the Disputed Services were medically necessary.
17. By decision dated July 16, 2004, the Texas Workers’ Compensation Commission (Commission) granted Provider reimbursement for the Disputed Services.
18. Carrier timely requested a hearing to contest the Commission’s decision.
19. 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.
20. 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 February 21, 2005.
21. Carrier failed to provide Dr. Howell with a sufficient explanation for denying Provider’s claims.
22. For the dates of service in question, Carrier failed to show that the Disputed Services were not medically necessary to treat Claimant’s compensable injury.
23. The Disputed Services provided by Provider to Claimant were medically necessary.

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 a 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 a Provider to understand the reason for the carrier’s action. A general statement that simply states a conclusion in not sufficient. 28TAC§133.304(c).
7. Carrier’s explanation for denying the claims 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, it is required to provide reimbursement.
9. Carrier failed to demonstrate that the Disputed Services 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 December 10, 2003, through February 2, 2004.

ORDER

THEREFOREIT IS ORDERED that Texas Mutual Insurance Company reimburse First Rio Valley Medical, P.A., for the Disputed Services provided to Claimant from December 10, 2003, through February 2, 2004, in the amount of $2,603.59, plus any and all applicable interest.

Signed April 19, 2005.

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

1. CPT Code 97113.↑
2. CPT Code 97124.↑
3. CPT Code 97110.↑
4. By Decision dated June 10, 2004, an Independent Review Organization (IRO) determined the Disputed Services were medically necessary.↑
5. The last column setting out the reasons for denying the claims is not dispositive of that issue as Carrier submitted cross-designation. The log does, however, list the correct dates, CPT codes, and description of services that are in dispute.↑
6. Joint Ex. 5, Tab 1 at 19.↑
7. Joint Ex. 5, Tab 1 at 20.↑
8. Joint Ex. 5, Tab 1 at 158.↑
9. Joint Ex. 5, Tab 2 at 419.↑
10. Joint Ex. 5, Tab 1 at 163.↑
11. Joint Ex. 5, Tab 2 at 439.↑
12. Joint Ex. 5, Tab 1 at 209. Carrier paid a portion of the one-on-one supervision billed for aquatic therapy and therapeutic exercisers as indicated on the claims log.↑
13. Id.↑
14. Joint Ex. 5, Tab 1 at 198-217.↑
15. Joint Ex. 5, Tab 1 at 217.↑
16. Joint Ex. 5, Tab 1 at 221.↑
17. Joint Ex. 5, Tab 1 at 218-239.↑
18. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol II, 9.↑
19. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol II, 11-12.↑
20. Joint Ex. 5, Tab 1 at 0313-333.↑
21. Ex. 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 52.↑
22. Ex 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 178.↑
23. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 57-58.↑
24. Joint Ex. 5, Tab 2 at 367.↑
25. Joint Ex. 5, Tab 1 at 53-148.↑
26. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 67.↑
27. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 69.↑
28. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 19-20.↑
29. Ex. 16, Tab 3, Prefiled Testimony of Dr. Tsourmas at 28.↑
30. Dr. DeFoyd has been a chiropractor for 18 years. Ex. 16, Tab 1, Prefiled Testimony at 9.↑
31. Ex. 16, Tab 1, Prefiled Testimony of Dr. DeFoyd at 605-608.↑
32. Ex. 16, Tab 3, Prefiled Testimony of Dr. DeFoyd at 615-616.↑
33. Ex. 16, Tab 3, Prefiled Testimony of Dr. DeFoyd 627.↑
34. Ex. 16, Tab 3, Prefiled Testimony of Dr. DeFoyd 629.↑
35. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at 5-6.↑
36. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol I, 11-13.↑
37. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol II, 17.↑
38. Ex. 16, Tab 4, Prefiled Testimony of Dr. Howell at Vol II, 19.↑