Pennsylvania Supreme Court Ruled on Keystone Rx LLC v. Bureau of Workers' Compensation Fee Review Hearing Office

Weber Gallagher Simpson Stapleton Fires & Newby LLP

In a surprise reversal of lower court opinion, the Pennsylvania Supreme Court just decided Keystone Rx LLC v. Bureau of Workers’ Compensation Fee Review Hearing Office (Compservices Inc./AmeriHealth Casualty Services), ___ A.3d ___, 2021 WL 6057884 (Pa., filed Dec. 22, 2021), reversing, 223 A.3d 295, 2019 WL 6754832 (Pa. Commw., filed December 12, 2019, Leadbetter, S.J.). In reversing the Commonwealth Court, the Supreme Court has established that a non-treating provider, such as a pharmacy, does not need to be given either notice or an opportunity to defend in Utilization Review (UR) proceedings. On the one hand, this ruling arguably disenfranchises non-treating providers from having a say in the outcome of a legal proceeding affecting their bills. On the other hand, as the Court confirms, there is no clear constitutionally protected property interest in “goods and services” dispensed, as these providers were entitled only to an “expectation of payment,” not to an actual payment. Thus, there is no due process violation where there is no notice or opportunity to defend.

In Keystone Rx, compensation was paid to an injured worker for a 2014 injury. Facing significant medical bills, the carrier filed a UR Request regarding prescribed medications that were dispensed by Keystone Pharmacy. Those prescriptions were found to be unreasonable and unnecessary. A Compromise and Release ultimately decided the case. But thereafter, Keystone filed applications for medical fee review to secure payment. The Medical Fee Review section awarded payment for compound creams and Naprelan tablets. The carrier requested a hearing, and the Hearing Officer agreed with the carrier that the treatment was not causally related to the work injury and, that the treatment was unreasonable and unnecessary.

Keystone appealed to the Commonwealth Court, which acknowledged that a UR determination binds the Fee Review Hearing Officer and that since the medications at issue were found to be unreasonable and unnecessary, Keystone could not challenge the validity of the UR process. But in an action (which the Supreme Court labeled “unconventional”), the Commonwealth Court went on to hold that moving forward, in a case “where an employer, insurer, or an employee requests UR, a provider which is not a ‘health care provider’ as defined in the Act, such as a pharmacy, testing facility or provider of medical supplies, must be afforded notice and an opportunity to establish a right to intervene under the usual standards for allowing intervention.” Here the Commonwealth Court cited due process concerns to underpin their reasoning.

In a significant win for the UR administrative process, the Supreme Court blocked the above unconventional ruling. To clarify, the Court found that non-treating providers have no protected property interest in their billings, thus, there is no triggering of their due process rights and/or a potential violation. What these non-treating providers do have is a “mere expectation” of payment, pending a UR result. Thus, the Bureau is not required to notify these non-treating providers of the proceedings, nor do these providers have a constitutionally protected opportunity to defend their bills as part of these proceedings.

Comment: This ruling raises at least one interesting question, as pointed out by Judge Wecht in his concurring opinion. Will non-treating providers be free to pursue direct actions against injured workers for non-payment of their bills, and will such actions be supported by the courts given the terms and conditions of the Pennsylvania Workers’ Compensation Act? Weber Gallagher’s Pennsylvania workers’ compensation attorneys will keep you updated with any decisions and answers to these questions as they arise in future WG Alerts!

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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