DECISION AND ORDER

Old Republic Insurance Company (Carrier) requested a hearing to contest the Medical Fee Dispute Resolution decision of the Texas Department of Insurance, Division of Workers’ Compensation (Division), ordering reimbursement for medications purchased by _____ (Claimant) from June 17, 2010, through August 31, 2010. This decision finds that Claimant is not entitled to any reimbursement and is further required to refund Carrier $4,001.78.

I. JURISDICTION, NOTICE AND PROCEDURAL HISTORY

This proceeding presented no contested issues of notice or jurisdiction. Therefore, those matters are set out in the findings of fact and conclusions of law without further discussion here.

On September 8, 2011, Administrative Law Judge (ALJ) Steven M. Rivas convened the hearing in this matter at the Austin offices of the State Office of Administrative Hearings (SOAH). Carrier appeared and was represented by Steve Tipton, attorney. Claimant was represented by Peter Rogers, attorney. The record was held open until September 30, 2011, to allow the parties an opportunity to submit legal briefing. The record closed on that date.

II. DISCUSSION

A.Applicable Law

The Texas Workers’ Compensation Act (Act) is found at Tex. Lab. Code § 401.001, et seq. Under the Act, workers’ compensation insurance covers all medically necessary health care, including all reasonable and necessary medical aid, examinations, treatments, diagnoses, evaluations, and services reasonably required by the nature of a compensable injury and reasonably intended to cure or relieve the effects naturally resulting from the compensable injury.^[1] The Act directs the Division to adopt rules governing the procedures by which reimbursement of covered medical charges is to be obtained.^[2]

Under Tex. Lab. Code § 413.014(d), a carrier is not liable for treatments and services requiring preauthorization unless preauthorization is sought and obtained by the claimant or healthcare provider.

The Division has adopted the Official Disability Guidelines (ODG) in 28 Tex. Admin. Code (TAC)§ 137.100, et seq. Pursuant to the ODG, an insurance carrier is not liable for costs of treatment or services provided in excess of the Division treatment guidelines unless the treatment or services were preauthorized in accordance with § 134.600.^[3]

Under 28 TAC § 134.600(p)(11) and (12), non-emergency health care requiring preauthorization includes drugs not included in the Division’s formulary and services that exceed or are not addressed by the Division’s adopted treatment guidelines or protocols and are not contained in a treatment plan preauthorized by the carrier.

B. Background

The parties presented considerable arguments regarding the extent of Claimant’s compensable injury, whether Claimant’s diagnosis is proper, and whether Claimant’s ongoing treatment is medically necessary to treat his injury. However, the issue before the ALJ is limited to whether Claimant required Carrier’s preauthorization for the medications he purchased in 2010. A brief summary of events leading up to the hearing on the merits may be helpful.

In ______, Claimant sought medical care for pain in his upper extremities and was initially diagnosed with tendonitis in his wrists. Claimant’s treating doctors next diagnosed him with reflex sympathetic dystrophy (RSD), now known as complex regional pain syndrome (CRPS)—the current diagnosis for which he had been treated for several years.^[4] Claimant’s current treating doctor, ___. Fyman, M.D., believes his current treatment has been effective, while other doctors believe his treatment, specifically his medication regimen, exceeds protocol and is not medically necessary.

On June 3, 2010, Claimant sought preauthorization for the following medications: Oxycodone, OxyContin, Gabitril, Temazepam, Xanax, Cymbalta, and Imitrex. On June 18, 2010, Carrier denied preauthorization on the basis that the prescribed dosages of these medications exceeded the Division’s ODG and were not medically necessary. The reasons for the denial were outlined in two separate reports issued by Sedgwick CMS.^[5] The denial incorporated a peer review performed by MES Solutions.^[6]

On June 24, 2010, Claimant sought reconsideration from the Carrier for these same medications, and they were again denied on the same basis. This denial incorporated a report on medical necessity drafted by Elite Physicians, Ltd.^[7]

Between June 17, 2010, and August 31, 2010, Claimant paid $16,989.93 for the prescribed medications noted above without preauthorization. On July 8, 2010, Carrier inadvertently submitted a payment to Claimant in the amount of $4,001.74. On August 19, 2010, Claimant filed a Request for Review by an Independent Review Organization (IRO) over the denied medications.

On September 9, 2010, the IRO reviewer found the following medications were medically necessary: Oxycodone, OxyContin, Gabitril, Temazepam, and Xanax.^[8] On October 7, 2010, Claimant filed a request for medical dispute resolution (MDR) with the Texas Department of Insurance, Division of Workers’ Compensation (Division) seeking additional reimbursement.

On May 9, 2011, the Division issued its Medical Fee Dispute Resolution Findings and Decision. The MDR manager found that Carrier’s denial of the medications in question was “unsupported” because the IRO previously concluded the medications were medically necessary. Although the MDR manager acknowledged that Carrier denied reimbursement because the medications were not preauthorized, it did not address the issue of preauthorization.

As such, the MDR awarded Claimant $12,087.54 for the medications deemed medically necessary and denied him $4,902.39 in reimbursement for the medication deemed not medically necessary by the MDR manager and the IRO. Thus, as reflected in the following table, Carrier was ordered to pay $8,085.80 in additional reimbursement.

Medications purchased from June 17, 2010, through August 31, 2010	$16,989.93
Amount for medications deemed not medically necessary Imitrex Relistor and Cymbalta	-4,902.39
Amount for medications deemed medically necessary OxyContin, Oxycodone, Gabitril, Temazepam, and Xanax	12,087.54
Amount previously submitted to Claimant by Carrier	-4,001.74
Amount Carrier ordered to pay by MDR	$8,085.80

C. Preauthorization issue

Under the Tex. Lab. Code § 413.014(d), a carrier is not liable for payment of services requiring preauthorization unless preauthorization is sought and obtained by the claimant or health care provider. There is no question Carrier denied preauthorization on June 18 and June 24, 2010, for the medications in question. The remaining issue is whether or not the medications required preauthorization by Carrier.

Medication that exceeds the ODG requires carrier preauthorization

Claimant asserted that because the IRO determined the medications in question were medically necessary, it need not address the issue of preauthorization. The ALJ finds no merit in this argument in light of there being no statute and rule that nullifies preauthorization following a finding of medical necessity by the IRO or the MDR. The ALJ agrees with Carrier’s contention that there is a difference in analyzing medical necessity versus whether medication requires preauthorization. As Carrier questions why if a subsequent finding of medical necessity trumped the preauthorization requirement, did Claimant initiate the preauthorization submission and reconsideration process for the medications in question. Claimant responded that by his mere request for preauthorization he did not concede that preauthorization was required.

Under the Division’s rule at 28 TAC § 137.100(f), a health care provider that proposes treatments and services which exceed, or are not included, in the treatment guidelines may be required to obtain preauthorization in accordance with § 134.600. As previously noted in the Division’s rule at § 134.600(p)(11) and (12), drugs not included in the Division’s formulary and services that exceed or are not addressed by the Division’s adopted treatment guidelines require preauthorization. Despite Claimant’s contention that he need not comply with the Division’s preauthorization requirements following an IRO finding of medical necessity, the applicable statutes and rules outlining and requiring preauthorization noted above clearly establish such requirements.

The medications in question required preauthorization from Carrier because they exceeded the ODG and were not on the Division’s formulary

Suzanne Novak, M.D., a contributing author of the ODG, testified on behalf of Carrier that she is knowledgeable and familiar with the ODG especially as it applies to pain management and medications.^[9] Dr. Novak testified the medications in question required preauthorization because they exceeded appropriate dosage levels under the ODG.

The ODG’s Pain Section recommends that opioid dosage levels not exceed 120 mg oral morphine equivalents (OME) per day. OxyContin and oxycodone are classified as opioids under the ODG’s Workers’ Compensation Drug Formulary (formulary).^[10] Dr. Novak testified Claimant’s OME dosage levels exceeded 2000 mg per day and, as such, exceeded the ODG recommended dosage levels. For this reason alone, these medications required preauthorization, according to Dr. Novak.

In addition to testifying about the dosage levels, Dr. Novak testified there was not enough information in the record to justify preauthorization of the medications. Dr. Novak testified that because the medications in question are highly addictive, the ODG requires a psychiatric evaluation “at minimum” be reviewed as part of the preauthorization process. The record contained one psychiatric evaluation that was performed in Austin, Texas, in 2006.

Dr. Novak also testified the ODG requires a risk/benefit analysis and drug screening as part of the preauthorization process for the medications in question. Neither was included in Claimant’s request for preauthorization. In addition, Claimant’s witness, Charles Crane, M.D., testified it would be prudent to perform a risk/benefit analysis and that blood panels and urinary drug screening would be beneficial in determining whether preauthorization was appropriate.

Dr. Novak acknowledged that the IRO found the medications were medically necessary to treat Claimant’s compensable injury. However, she also stated that the drugs exceeded the ODG and required more information before being preauthorized.

In addition to Dr. Novak’s testimony, the formulary recommends the medications in question be preauthorized. According to the formulary, all of the medications are categorized as “N,” meaning they are not on the formulary because they are “not recommended as a first-line treatment in the ODG.” Under the Division’s rules at § 134.600(p)(11), non-emergency healthcare requiring preauthorization includes drugs not included in the Division’s formulary. The formulary further states that preauthorization is recommended if the use of these drugs would be medically necessary.

D. Analysis and Conclusion

Preauthorization is required for “treatments and services that exceed or are not addressed by the Commissioner’s adopted treatment guidelines or protocols.”^[11] Petitioner contends that, because the medications were ultimately deemed medically necessary by the IRO and MRD, they were not subject to the Commission’s rules on preauthorization. Carrier argued that the necessity for preauthorization is not trumped by a subsequent finding of medical necessity and because the medications exceeded the ODG preauthorization was necessary. The ALJ agrees.

Carrier bears the burden to prove Claimant is not entitled to reimbursement for the medications in question. By showing Claimant did not obtain preauthorization before he purchased the medications in question, Carrier is not required to reimburse Claimant for the medications he purchased without preauthorization. In addition, the inadvertent payment Carrier made to Claimant in the amount of $4,001.74 should be refunded to Carrier.

III. FINDINGS OF FACT

1. In ________ (Claimant) suffered a work-related injury and during the course of treatment was diagnosed with complex regional pain syndrome.
2. On June 3, 2010, Claimant sought preauthorization for the following medications: Oxycodone, OxyContin, Gabitril, Temazepam, Xanax, Cymbalta, and Imitrex, which was denied by Old Republic Insurance Company (Carrier).
3. On June 24, 2010, Claimant sought reconsideration from Carrier for the same medications, which was also denied.
4. From June 17, 2010 through August 31, 2010, Claimant purchased $16,989.93 worth of the prescribed medications listed in Finding of Fact No. 3 without having obtained preauthorization from Carrier.
5. On July 8, 2010, Carrier inadvertently reimbursed Claimant $4,001.74 for the medications.
6. On August 19, 2010, Claimant filed a Request for Review by an Independent Review Organization (IRO) over the denied medications.
7. On September 9, 2010, the IRO reviewer found the following medications were medically necessary: Oxycodone, OxyContin, Gabitril, Temazepam, and Xanax.
8. On October 7, 2010, Claimant filed a request for medical dispute resolution (MDR) with the Texas Department of Insurance, Division of Workers’ Compensation (Division) seeking additional reimbursement from the Carrier.
9. On May 9, 2011, the Division issued its Medical Fee Dispute Resolution Findings and Decision, finding the medications were medically necessary and ordering $8,085.80 of additional reimbursement by Carrier.
10. On June 10, 2011, Carrier requested a hearing with the State Office of Administrative Hearings, seeking reversal of the Division’s decision.
11. The Division mailed notice of the hearing on June 14, 2011. The notice of hearing listed the time, place, and nature of the hearing; included a statement of the legal authority and jurisdiction under which the hearing was to be held; referred to particular sections of the statutes and rules involved, and included a short, plain statement of the matters asserted.
12. The hearing convened on September 8, 2011. Carrier appeared and was represented by Steve Tipton, attorney. Claimant appeared and was represented by Peter Rogers, attorney. The record closed on September 30, 2011, to allow the parties an opportunity to submit post-hearing briefing.
13. The Division’s Official Disability Guidelines (ODG) Pain Section recommends dosage levels for opioids (OxyContin and Oxycodone) not to exceed 120 mg oral morphine equivalents (OME) per day.
14. Claimant’s prescribed OME dosage levels exceeded 2000 mg per day, which exceeded the ODG’s recommended dosage levels for opioids.
15. The medications in question are categorized as “N” on the Division’s ODG formulary, meaning they are not on the formulary.
16. The prescribed dosage levels for OxyContin and Oxycodone exceed the Division’s ODG guidelines.
17. A psychiatric evaluation, risk/benefit analysis, and drug screening should have been included in the preauthorization process in order to establish that the medications prescribed to Claimant were appropriate.
18. The IRO and MDR did not address the issue of preauthorization.
19. A subsequent finding of medical necessity does not nullify the necessity for preauthorization.
20. Claimant is not entitled to additional reimbursement.
21. Carrier is entitled a refund of $4,001.74.

IV. CONCLUSIONS OF LAW

1. The Division has jurisdiction over this matter pursuant to Tex. Labor Code §413.031.
2. The State Office of Administrative Hearings has jurisdiction over matters related to the hearing in this proceeding pursuant to Tex. Gov’t Code ch. 2003.
3. Adequate and timely notice of the hearing was provided in accordance with Tex. Gov’t Code Ann. §§ 2001.051 and 2001.052 and 1 Tex. Admin. Code ch. 155.
4. The Division has adopted the Official Disability Guidelines (ODG) pursuant to 28 Tex. Admin. Code § 137.100, et seq.
5. The medications in question required preauthorization because they were drugs not included in the Division’s formulary. 28 Tex. Admin. Code § 134.600(p)(11).
6. The medications in question required preauthorization because they exceeded the Division’s ODG. 28 Tex. Admin. Code § 134.600(p)(12).
7. Carrier is not liable for reimbursement of the medications in question because the dosage levels exceeded the Division’s ODG and they were purchased without preauthorization. 28 Tex. Admin. Code § 137.100(d).
8. Carrier is not liable for reimbursement of the medications and is entitled to a refund of $4,001.74 for the inadvertent reimbursement for some of the medications. Tex. Labor Code § 413.014(d).

ORDER

THEREFORE IT IS ORDERED that ____ is not entitled to any reimbursement from Old Republic Insurance Company, and _____ shall reimburse Old Republic Insurance Company $4,001.74.

Signed November 30, 2011.

1. Tex. Lab. Code § 401.011(19) and (31).↑
2. Tex. Lab. Code § 413.011.↑
3. 28 Tex. Admin. Code § 137.100(d).↑
4. Carrier asserted there was much controversy over whether or not CRPS is a valid diagnosis for any patient.↑
5. Carrier’s Exhibit No. 13 at pages 124-126, and 133-137.↑
6. Id. at pages 121-123; the peer review was performed by ___. Brenman, D.O., board certified in Physical Medicine & Rehabilitation.↑
7. Id. at pages 127-132; the peer review was performed by Erick Shaw, D.O., board certified in Physical Medicine & Rehabilitation↑
8. The IRO decision contained inconsistent and unsupported conclusions. The IRO reviewer first “presumed” that in the past 15 years Claimant met some of the ODG criteria in making a proper diagnosis of CRPS even though no independent exam had ever confirmed or refuted this diagnosis. The reviewer next pointed out there had been controversy in treating patients with opiates for CRPS, yet still found the medications medically necessary with no explanation as to why they were proper in this instance. The IRO reviewer also noted that, although the ODG required psychiatric reports to accompany the use of these medications, none were present in Claimant’s file. The IRO reviewer concluded that “there may be some justification for the use of these medications,” yet cited no justification for them.↑
9. Dr. Novak is Board Certified in Anesthesiology and teaches pharmacology therapy at the University of Texas in Austin.↑
10. Carrier’s Ex. No. 8. Appendix A to the ODG.↑
11. 28 Tex. Admin. Code § 133.600(p)(11) and (12).↑