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At a Glance:
Title:
453-05-2167-c1
Date:
November 1, 2005

453-05-2167-c1

November 1, 2005

DECISION AND ORDER

Fidelity and Guaranty Insurance Company (Petitioner) contests the assessment of an administrative penalty against it by the Texas Workers’ Compensation Commission (Respondent or Commission).[1] The Commission asserts that Petitioner failed to timely process and take final action on a properly completed medical bill within 45 days of receipt of the bill in violation of Tex. Lab. Code § 408.027 and 28 Tex. Admin. Code § 133.304. The Administrative Law Judge (ALJ) finds that the Commission failed to prove that the Petitioner committed a violation.

I. PROCEDURAL HISTORY

The State Office of Administrative Hearings (SOAH) has jurisdiction over this matter pursuant to § 415.034 of the Texas Workers’ Compensation Act (the Act), Tex. Lab. Code Ann. ch. 401 et seq. The hearing was conducted pursuant to the Administrative Procedure Act, Tex. Gov't Code Ann. ch. 2001, as provided in Tex. Lab. Code Ann. § 415.034.

A hearing in this matter convened on June 7, 2005, and reconvened on July 21, 2005, before ALJ Wendy K. L. Harvel. The record closed on September 16, 2005, after the parties filed written briefs. Petitioner appeared and was represented by John Pringle, attorney. The Commission appeared and was represented by Yvonne Williams, an attorney in the Commission’s APA Litigation Division.

II. APPLICABLE LAW

A. Texas Labor Code

Respondent asserts that Petitioner violated Section 408.027 of the Texas Labor Code. This section provides that the insurance carrier shall pay the provider not later than the 45th day after the carrier receives the charge unless the amount of the payment or the entitlement to payment is disputed.[2] The statute further provides that if the carrier disputes the amount of payment the carrier shall send to the Commission, the health care provider, and the injured employee a report that sufficiently explains the reasons for the reduction or denial or payment.

B. Commission Rules

The applicable Commission Rules provide that, with some exceptions, an insurance carrier shall take final action on a medical bill not later that then 45th day after the date the insurance carrier receives a complete medical bill.[3] A complete medical bill is defined by rule as a bill that: is submitted timely; is on the Commission-prescribed form and includes the information required by the instructions for the form; includes correct billing codes, and contains required supporting documentation.[4]

III. EVIDENCE

A. The Commission’s Evidence and Argument

The Commission presented evidence that the health care provider provided medical services from February 18, 2002, through February 25, 2002.[5] The provider billed the Petitioner for the services, and sent the bills on March 1, 2002.[6] Petitioner paid the bills on July 8, 2002.[7]

The Commission also presented the testimony of Delfino Serna, an enforcement program manager in the Commission’s Compliance and Practices Division. Mr. Serna testified that Petitioner should have either paid, denied, or requested a refund within 45 days of receiving the bill from the provider. On rebuttal, the Commission presented the testimony of Allen McDonald, the Director of Medical Review. He testified that he would have expected Petitioner to pay the provider, rather than dispute the claim, based on the Explanation of Benefits (EOB) he reviewed.

The Commission argues that Petitioner paid a bill 85 days late (calculated from the date the bill was received). The Commission argues that the appropriate administrative penalty is $1,367.00.

B. Petitioner’s Evidence and Argument

Petitioner presented the testimony of Dr. Timothy Fahey and Maria Alejandro. Dr. Fahey is a chiropractor who is on both the designated doctor list and on the approved doctor list. He testified that he performed a peer review of the case, including a review of medical records and other documentation. Based on his review, he noted that there were multiple diagnostic codes used for areas that did not include the compensable body part. He further noted that the bills the provider submitted to the Petitioner did not include the information required. For example, some of the CPT codes did not include a modifier when a modifier was required. On cross-examination, he admitted that if he reviewed a bill with an F denial code, he would expect that the carrier would issue partial payment.

Ms. Alejandro, an insurance adjuster for Petitioner’s third-party adjuster, testified that she adjusted the claim in this case. She testified she determined that the bills submitted included treatment to areas of the body that did not relate to the compensable injury in this case. She testified that she hired Dr. Fahey to review the bills. On cross-examination, she admitted that she does not audit bills, rather she investigates compensability issues.

Petitioner argues that the 45-day deadline in the applicable statute and rule never began to run because the medical bills were incomplete. Petitioner notes that Respondent did not include in its notice of hearing any citation to the rule that dictates how an insurance carrier should handle an incomplete bill. Thus, Petitioner argues, Respondent cannot attempt to include that allegation at the hearing.

IV. ANALYSIS

The ALJ finds that the Petitioner did not violate either section cited by the Commission in its notice of hearing because the Petitioner did not receive complete bills from the health care provider. As Dr. Fahey testified, modifiers were not present on some of the CPT codes when they were required.[8] Furthermore, Dr. Fahey testified that Box 15 on the TWCC-62 forms should have indicated when the claimant was first seen for his injury. The box is blank.[9] Finally, appropriate supporting documentation was not included. The Evaluation/Management Ground Rules of the 1996 Medical Fee Guideline provide instructions that are necessary for the correct reporting and billing of evaluation and management procedure codes.[10] When a follow-up consultation is performed, a report must be provided including recommendations for management modifications, and advice on a new plan of care responsive to changes in the patient’s status.[11] Dr. Fahey testified that the provider’s bills did not include a report sufficient to meet those requirements. His testimony was not controverted. The provider also failed to provide a treatment plan as required by the Medicine Ground Rules.

Because the provider did not provide complete medical bills, the 45-day deadline was not triggered. Although the Commission argued at hearing that its rules require insurance carriers to take certain actions when they receive an incomplete medical bill, and that Petitioner did not take those actions, the Commission did not include a reference to these rules in its notice of hearing or statement of matters asserted. Therefore, Petitioner did not have notice of an alleged violation of these rules and without notice, the ALJ cannot find a violation on this issue. To do so would be a violation of due process.

Based on the evidence presented the ALJ finds that Petitioner did not violate either Tex. Lab. Code § 408.027 or 28 Tex. Admin. Code § 133.304. Therefore, no administrative penalty may be imposed.

V. FINDINGS OF FACT

  1. Fidelity & Guaranty Insurance Company (Petitioner) provides Texas workers’ compensation insurance for certain employers.
  2. A health care provider provided services to a workers’ compensation claimant from February 18, 2002, through February 25, 2002.
  3. The health care provider billed Petitioner on March 1, 2002, for the February services.
  4. Petitioner paid the bills on July 8, 2002.
  5. The bills Petitioner received did not contain proper modifiers on certain CPT codes, when a modifier was required.
  6. The bills did not contain information indicating when the claimant was first seen for his injuries, as required by the instructions for completing the form.
  7. The bills did not contain appropriate supporting documentation, which was required by the instructions for completing the form.
  8. The bills Petitioner received were incomplete.
  9. The Petitioner is not required to deny or pay an incomplete bill within 45 days.
  10. On December 19, 2002, the Commission sent the Petitioner a Notice of Violation(s) letter, stating that Petitioner had failed to timely pay a complete medical bill. The Commission’s Notice of Violation letter did not contain any allegations regarding, or references to, its rules for handling incomplete bills.
  11. On November 12, 2002, Petitioner requested a hearing before the State Office of Administrative Hearings to contest the Commission’s finding.
  12. Notice of the hearing was mailed to Petitioner on December 10, 2004. 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.
  13. Administrative Law Judge (ALJ) Wendy K. L. Harvel convened the hearing on June 7, 2005, and reconvened the hearing on July 21, 2005. Petitioner appeared and was represented by John Pringle, attorney. The Commission appeared and was represented by Yvonne Williams, an attorney in the Commission’s APA Litigation division. The record closed on September 16, 2005, after the parties submitted written briefs.

VI. CONCLUSIONS OF LAW

  1. 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. § 415.034.
  2. Pursuant to the provisions of Tex. Lab. Code Ann. § 415.032, the Commission served Petitioner with Notice of Violation(s) dated December 19, 2002,alleging a violation of Tex. Lab. Code § 408.027, and 28 Tex. Admin. Code § 133.304.
  3. Petitioner timely filed a written request for a hearing contesting the Notice of Violation(s) as provided by Tex. Lab. Code Ann. §§ 415.032 and 415.034.
  4. Petitioner did not violate Tex. Lab. Code § 408.027 or 28 Tex. Admin. Code § 133.304 when it did not act on an incomplete medical bill within 45 days.
  5. Based on the above Findings of Fact and Conclusions of Law, Petitioner has not committed an administrative violation, and the requested administrative penalty is not warranted.

ORDER

IT IS ORDERED that Fidelity and Guaranty Insurance is not to be assessed an administrative penalty.

Signed November 1, 2005.

WENDY K. L. HARVEL
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. The Texas Workers’ Compensation Commission was transferred to the Workers’ Compensation Division of the Texas Department of Insurance effective September 1, 2005.
  2. Texas Labor Code § 408.027 was amended in 2005. This case is governed by the statute in effect in 2002.
  3. 28 Tex. Admin. Code § 133.304.
  4. 28 Tex. Admin. Code § 133.1(a)(3).
  5. Resp. Ex. 1, at 10-12.
  6. Resp. Ex. 1, at 3-5.
  7. Resp. Ex. 1, at 6.
  8. Pet. Ex. 1, at 71-73.
  9. Pet. Ex. 1, at 71, et seq.
  10. Medical Fee Guideline, Evaluation/Management Ground Rules.
  11. Medical Fee Guideline, Evaluation/Management Ground Rules Section IX.D.3.
End of Document
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