STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
WYATT BROTHERS CONSTRUCTION ) and CNA INSURANCE COMPANY, )
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Petitioners, )
)
vs. )
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DEPARTMENT OF LABOR AND )
EMPLOYMENT SECURITY, DIVISION ) Case No. 00-2572 OF WORKERS’ COMPENSATION, )
)
Respondent, )
)
and )
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PAMELA J. WINDHAM, )
)
Intervenor. )
)
PARTIAL RECOMMENDED ORDER
Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing in Orlando, Florida, on October 25, 2000.
APPEARANCES
For Petitioners: Mark S. Spangler
Spangler, Mace & Zinaich, P.A.
401 North Mills Avenue, Suite B Orlando, Florida 32803
Timothy G. Schoenwalder
Hopping Green Sams & Smith, P.A.
123 South Calhoun Street Tallahassee, Florida 32301
For Respondent: Nancy Slaydon Terrel
Senior Attorney Department of Labor and
Employment Security
2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189
For Intervenor: Michael B. Murphy
The Stanley Wines Law Firm, P.A. Post Office Box 860
Winter Haven, Florida 33882-0860 STATEMENT OF THE ISSUES
The issues are whether CNA Insurance Company, the carrier, and Dr. Pamela J. Windham, a provider, complied with applicable procedural requirements governing carriers and providers in the utilization-review process.
The Administrative Law Judge bifurcated the case. This partial recommended order does not address the issues of the jurisdiction of the Division of Workers’ Compensation and the medical and psychological issues involved in the determination of whether the claimant has overutilized the services of
Dr. Windham.
PRELIMINARY STATEMENT
By Employer/Carrier’s Petition to the Division of Workers’ Compensation Regarding a Reimbursement Dispute and Disallowance of Payment by CNA Insurance Company to Pamela J. Windham, Ph.D., and Request for Hearing served May 18, 2000, Petitioners requested an order from the Division rejecting Dr. Windham’s claim for reimbursement, reversing an earlier decision by the
Division requiring CNA Insurance Company to pay Dr. Windham
$1288.25, and awarding Petitioners attorneys’ fees and costs.
The petition alleges that the claimant, who is not a party to this case, was injured on October 3, 1989, while employed by Wyatt Brothers Construction as a project manager. The injury was a closed-head injury sustained as a result of another motor vehicle striking the rear of the motor vehicle occupied by the claimant.
The petition alleges that, as a result of diagnostic work in connection with the covered injury, physicians discovered that the claimant had a benign cystic mass in the brain. The petition alleges that this condition was unrelated to the motor vehicle accident that had caused the covered injuries. On October 30, 1989, a surgeon allegedly performed a craniotomy to remove the cyst. Three years later, further diagnostic work allegedly revealed a persistent arachnoid cyst without interval change.
The petition alleges that physicians decided not to remove the cyst because it was not growing and the claimant was asymptomatic.
The petition alleges that Dr. Windham administered extensive diagnostic testing of the claimant in February 1990. Dr. Windham allegedly treated the claimant from February 11 through
December 31, 1990, for “adjustment issues.” As a result of additional diagnostic work performed in October 1990, Dr. Windham allegedly determined that the claimant was suffering from anxiety
and depression, and she allegedly recommended that the claimant continue to receive supportive therapy and rehabilitation with a focus on problem-solving and reasoning.
The petition alleges that Dr. Windham saw the claimant 23 times in 1991, 3 times in 1992, 2 times in 1994 (September 13 and
December 30), 18 times in 1995, 25 times in 1996, 15 times in
1997, 86 times in 1998, and 13 times in 1999. The petition alleges that the sessions in 1996 and 1997 involved family conflicts involving the claimant, his wife, and their daughter; the sessions in 1998 involved family and financial issues; and the sessions in 1999 involved family, financial, and marital issues.
The petition alleges that Dr. Windham has treated the claimant 202 times and billed CNA Insurance Company a total of
$43,820.
The petition alleges that CNA Insurance Company arranged for the initiation of a utilization review investigation on
February 10, 1999. The petition alleges that the purpose of the review was to determine if the psychological treatment provided by Dr. Windham was excessive in frequency and duration and whether it was reasonable and medically necessary, as related to the October 3, 1989, accident.
The petition alleges that a neuropsychologist and psychologist specializing in head trauma reviewed the claimant’s medical history and determined that Dr. Windham’s treatment
after, respectively, February 17, 1992, and December 1994 was medically unnecessary and excessive.
The petition alleges that CNA Insurance Company advised Dr. Windham of the findings of its utilization review investigation by letter dated November 18, 1999. The petition alleges that Dr. Windham received the letter on November 22.
The petition alleges that CNA Insurance Company mailed Dr. Windham a Carrier’s Notice of Disallowance on December 14,
1999. The petition alleges that Dr. Windham received the notice on December 23.
The petition alleges that, on February 22, 2000, Dr. Windham filed a petition regarding the reimbursement dispute, and, on March 1, 2000, CNA Insurance Company filed a response to
Dr. Windham’s petition.
The petition alleges that the carrier’s response alleged that the petition filed by Dr. Windham was improper for several reasons, including noncompliance with Section 440.13(7), Florida Statutes; a conflict of interest arising out of the fact that the same attorney represents the injured claimant and Dr. Windham; and the failure of Dr. Windham to file her petition within
30 days after receipt of the Carrier’s Notice of Disallowance. By Petition for Leave to Intervene filed July 6, 2000,
Dr. Windham requested leave to intervene in the case. The Administrative Law Judge granted the petition on July 28, 2000.
At the start of the hearing, the Administrative Law Judge resolved a novel, threshold issue adversely to Respondent and Intervenor. CNA Insurance Company was prepared to present evidence concerning the medical and psychological matters involving the utilization issue, but Respondent and Intervenor were not prepared to present such evidence. The Administrative Law Judge granted the request of Respondent and Intervenor to bifurcate the hearing to postpone taking their evidence on the medical and psychological matters that are part of the utilization issue and any rebuttal evidence that CNA Insurance Company may offer on this issue. Additional reasons for bifurcating the hearing were the expected duration of the hearing, relative to the single day of hearing time reserved, and the possibility that a ruling adverse to CNA Insurance Company in this partial recommended order would obviate the need for an additional hearing.
This partial recommended order contains limited findings concerning the medical and psychological matters involved in the utilization issue. These findings are intended strictly for context for the threshold issues involved in this partial recommended order. If any evidence taken in the evidentiary hearing yet to be scheduled requires the revision of any of the findings in this recommended order, the Administrative Law Judge will revise those findings, as dictated or supported by the evidence.
At approximately 8:00 p.m. of the day of the hearing, Intervenor orally moved to dismiss the petition on jurisdictional grounds. Acknowledging the right of a party to raise jurisdictional issues at anytime, the Administrative Law Judge declined to consider the issue due to the lateness of the hour and ordered the parties to address the issue in the remaining portion of the hearing, if any.
At the hearing, Petitioners called seven witnesses and offered into evidence 20 exhibits. Respondent called one witness and offered into evidence no exhibits. Intervenor called no witnesses and offered into evidence one exhibit. All exhibits were admitted except Petitioner Exhibit 8, which was proffered.
The Administrative Law Judge reserved ruling on Petitioner Exhibit 20; it is admitted.
The court reporter filed the Transcript on November 20, 2000.
FINDINGS OF FACT
On October 3, 1989, the claimant suffered injuries in a motor vehicle accident while in the scope and course of his employment with Petitioner Wyatt Brothers Construction (Wyatt Brothers). Petitioner CNA Insurance Company (CNA) was the workers’ compensation carrier for Wyatt Brothers at the time of the accident.
In the course of diagnostic work performed on the claimant, physicians discovered a cyst, which was surgically
removed. CNA reimbursed various providers for the removal of the cyst, as well as for diagnosis and treatment of post-surgical cognitive deficits.
One of the providers is Intervenor Pamela J. Windham, Ph.D. (Dr. Windham), a psychologist who works in Louisiana, which is where the claimant now lives. Dr. Windham began counseling the claimant on February 2, 1990, and has counseled him on more than 200 occasions in the ensuing 10 years.
In August 1999, CNA commenced a utilization review of the treatment provided the claimant by Dr. Windham. Certain peer review reports determined that the counseling that Dr. Windham had provided for the past several years had not been medically necessary or reasonable. In reliance upon these reports, CNA determined that the claimant had overutilized the services of Dr. Windham.
Three service dates are at issue in this case.
Dr. Windham counseled the claimant on July 23, August 10, and October 18, 1999. Each of the first two service dates bore charges of $462.50. The last service date bore a charge of
$416.25.
Dr. Windham submitted two invoices for the three service dates. The first invoice, which Dr. Windham signed on
September 3, 1999, contains the first two service dates. The second invoice, which Dr. Windham signed on November 3, 1999, contains the third service date. Each invoice reports Procedure
Code 97770, meaning cognitive skills development. CNA received the first invoice on October 4, 1999, and the second invoice on November 11, 1999.
By letter dated November 18, 1999, and received on November 22, CNA’s counsel advised Dr. Windham that the carrier had conducted a utilization review and, based on its investigation, had “probable cause to suspect overutilization and improper utilization as it relates to your treatment of this claimant.” Although the letter states that Dr. Windham is not deauthorized, it states that CNA intends to “seek penalties and reimbursement . . ..” The letter offers, as an alternative to an administrative review, a settlement agreement, although the letter does not identify acceptable settlement conditions. The letter does not indicate whether CNA intended to pay the three pending invoices.
By Notice of Disallowance dated December 14, 1999, and received on December 23, CNA, through its counsel but on its letterhead, informed Dr. Windham that it had concluded, based on the carrier’s utilization review, that “there has been overutilization and/or misutilization since the treatment has been excessive and not medically necessary.” The letter advises that CNA was thus disallowing reimbursement for the first two service dates and reimbursing the last service date “pending further review by the Division of Workers’ Compensation.” The letter does not indicate whether CNA would be reimbursing the
last service date in whole or, if not, how much the reimbursement would be.
The Notice of Disallowance concludes:
Please note that under section 440.13(7)(a), Florida Statutes, “Any health care provider
. . . who elects to contest the disallowance
. . . of payment by a carrier under [440.13] subsection (6) must, within 30 days after receipt of notice of disallowance . . . petition the division to resolve the dispute.” The 30 days begin to run from the date of [sic] this letter is received.
By Explanation of Review dated January 10, 2000, and received January 30, the carrier allowed $53 of the $416.25 invoiced for October 18, 1999. Accompanying the Explanation of Review was a check dated January 21, 2000, in the amount of $53 and payable to Dr. Windham.
On February 29, 2000, Dr. Windham filed with the Division of Workers’ Compensation (Division) a Petition to Division of Workers’ Compensation to Resolve the Dispute Regarding a Disallowance and Adjustment of Payments by CNA Insurance Companies to Pamela J. Windham, Ph.D. Identifying the three service dates discussed above as the reimbursements in dispute, the petition requests the Division to issue an order requiring CNA to reimburse Dr. Windham for the first two service dates in their entirety and the portion of the third service date for which Dr. Windham received only $53. The petition also asks the Division to require CNA to pay Dr. Windham’s reasonable attorneys’ fees.
By letter to CNA dated April 27, 2000, the Division acknowledged receipt of Dr. Windham’s petition for reimbursement. The letter states that the Division examined the dispute pursuant to Rules 38F-7.020 and 38F-7.602, Florida Administrative Code, and the 1997 Florida Workers’ Compensation Health Care Provider Fee for Service Reimbursement Manual (Manual). Noting that CNA had claimed that it was conducting a utilization review, the letter states: “While the Division supports the importance of utilization review by the carrier, there is no provision for holding bills during a utilization review investigation. Rule [38F-7.602(3)(b)1] requires carriers to pay or deny medical bills within 45 days.” The letter recommends that CNA pay the remaining $1288.25 due within 30 days of the date of the letter, denies Dr. Windham’s request for attorneys’ fees, and informs any substantially affected person of its right to an administrative hearing.
CNA later paid Dr. Windham the balance of the amount that she had billed for the October 18 service date, but declined to pay any part of the invoiced amounts for the first two service dates. Instead, CNA and Wyatt Brothers served, on May 18, 2000, the Employer/Carrier’s Petition to the Division of Workers’ Compensation Regarding a Reimbursement Dispute and Disallowance of Payment by CNA Insurance Company to Pamela J. Windham, Ph.D. In the petition, CNA and Wyatt Brothers requested an order from
the Division rejecting Dr. Windham’s claim for reimbursement and awarding Petitioners attorneys’ fees and costs.
The provisions authorizing managed care arrangements, pursuant to Section 440.134(2)(b), Florida Statutes, for treatment and care that are medically necessary did not take effect until January 1, 1997, and the parties do not contend that the managed-care provisions apply to this case. As a practical matter, the more intensive monitoring characteristic of managed care arrangements reduces the likelihood that a carrier will rely on utilization review to control costs. Partly for this reason, the Division has not been very active in recent years in pursuing claims of overutilization arising out of retrospective review.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter, subject to the jurisdictional issue yet to be resolved. Sections 120.57(1) and 440.13(3)(f) and (11)(c), Florida Statutes. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code.)
As noted above, the Administrative Law Judge has reserved the question whether the Division has jurisdiction of the underlying dispute. Resolution of this question requires a determination of whether the underlying dispute is properly characterized as a case involving a utilization issue.
Section 440.13(11)(c) provides:
The division has exclusive jurisdiction to decide any matters concerning reimbursement, to resolve any overutilization dispute under subsection (7), and to decide any question concerning overutilization under subsection (8), which question or dispute arises after January 1, 1994.
On the other hand, Judges of Compensation Claims retain jurisdiction over proceedings that, depending on the facts, may be closely related to utilization review proceedings. The court in Furtick v. William Shults Contractor, 664 So. 2d 288 (Fla. 1st DCA 1995)(per curiam), held that the Division has exclusive jurisdiction over overutilization questions, which require the examination of care that has already been authorized. The court noted that the carrier sought relief from certain physician’s billings for care, but not the deauthorization of the physician.
Addressing the proper scope of the reimbursement dispute, which the court found to be within the utilization review process, the Furtick opinion states:
This does not permit the employer to inject issues such as compensability [or] causal relation . . . into the utilization review process, as these matters do not avoid a payment obligation for care which has been authorized. [Citation omitted.] Instead, utilization review addresses the appropriateness of the level and quality of care, based on medically accepted standards. [Citation omitted.] Any inquiry into medical necessity in this context is generally limited to whether the care is appropriate to the diagnosis, [FN3] as within the range of reasonable practice parameters accepted by the doctor’s peers. [FN3 states: “Questions as to the diagnosis itself, apart from whether it was made within reasonable practice parameters, must be pursued before
the judge of compensation claims. This would ordinarily involve a medical dispute within the ambit of section 440.13(2)(j)3.a, Florida Statutes (1993).]
As already noted, the Administrative Law Judge will not consider Dr. Windham’s jurisdictional claim at this time. The partial recommended order to be issued after the remainder of the evidentiary hearing will resolve the jurisdictional claim, if it is dependent upon the facts. If not, the Administrative Law Judge may resolve the jurisdictional claim prior to an additional evidentiary hearing.
The utilization review undertaken by CNA became more practicable after legislative changes that took effect in 1994 and the Furtick decision, which recognized the exclusive jurisdiction of the Division over utilization cases.
Section 440.13(1)(u) defines "utilization review" as:
. . . the evaluation of the appropriateness of both the level and the quality of health care and health services provided to a patient, including, but not limited to, evaluation of the appropriateness of treatment, hospitalization, or office visits based on medically accepted standards. Such evaluation must be accomplished by means of a system that identifies the utilization of medical services based on medically accepted standards as established by medical consultants with qualifications similar to those providing the care under review, and that refers patterns and practices of overutilization to the division.
Section 440.13(6) requires carriers to perform utilization reviews and authorizes carriers to disallow or adjust
payments for services that have been overutilized. Section 440.13(6) states:
Carriers shall review all bills, invoices, and other claims for payment submitted by health care providers in order to identify overutilization and billing errors, and may hire peer review consultants or conduct independent medical evaluations. Such consultants, including peer review organizations, are immune from liability in the execution of their functions under this subsection to the extent provided in
s. 766.101. If a carrier finds that overutilization of medical services or a billing error has occurred, it must disallow or adjust payment for such services or error without order of a judge of compensation claims or the division, if the carrier, in making its determination, has complied with this section and rules adopted by the division.
Section 410.13(7) establishes the procedures for resolving disputes arising out of carriers’ determinations of overutilization. This section states:
Utilization and reimbursement disputes.
Any health care provider, carrier, or employer who elects to contest the disallowance or adjustment of payment by a carrier under subsection (6) must, within 30 days after receipt of notice of disallowance or adjustment of payment, petition the division to resolve the dispute. The petitioner must serve a copy of the petition on the carrier and on all affected parties by certified mail. The petition must be accompanied by all documents and records that support the allegations contained in the petition. Failure of a petitioner to submit such documentation to the division results in dismissal of the petition.
The carrier must submit to the
division within 10 days after receipt of the petition all documentation substantiating the
carrier's disallowance or adjustment. Failure of the carrier to submit the requested documentation to the division within 10 days constitutes a waiver of all objections to the petition.
Within 60 days after receipt of all documentation, the division must provide to the petitioner, the carrier, and the affected parties a written determination of whether the carrier properly adjusted or disallowed payment. The division must be guided by standards and policies set forth in this chapter, including all applicable reimbursement schedules, in rendering its determination.
If the division finds an improper disallowance or improper adjustment of payment by an insurer, the insurer shall reimburse the health care provider, facility, insurer, or employer within 30 days, subject to the penalties provided in this subsection.
The division shall adopt rules to carry out this subsection. The rules may include provisions for consolidating petitions filed by a petitioner and expanding the timetable for rendering a determination upon a consolidated petition.
Any carrier that engages in a pattern or practice of arbitrarily or unreasonably disallowing or reducing payments to health care providers may be subject to one or more of the following penalties imposed by the division:
Repayment of the appropriate amount to the health care provider.
An administrative fine assessed by the division in an amount not to exceed
$5,000 per instance of improperly disallowing or reducing payments.
Award of the health care provider's costs, including a reasonable attorney's fee, for prosecuting the petition.
Section 440.13(8) authorizes the Division to impose sanctions upon providers guilty of a pattern or practice of overutilization:
Pattern or practice of overutilization.
Carriers must report to the division all instances of overutilization including, but not limited to, all instances in which the carrier disallows or adjusts payment. The division shall determine whether a pattern or practice of overutilization exists.
If the division determines that a health care provider has engaged in a pattern or practice of overutilization or a violation of this chapter or rules adopted by the division, it may impose one or more of the following penalties:
An order of the division barring the provider from payment under this chapter;
Deauthorization of care under review;
Denial of payment for care rendered in the future;
Decertification of a health care provider certified as an expert medical advisor under subsection (9) or of a rehabilitation provider certified under s. 440.49;
An administrative fine assessed by the division in an amount not to exceed
$5,000 per instance of overutilization or violation; and
Notification of and review by the appropriate licensing authority pursuant to s. 440.106(3).
Section 440.13(11)(a) and (b) authorizes the Division to take certain actions against providers and carriers for certain violations of law:
Audits by division . . ..
The Division of Workers' Compensation of the Department of Labor and Employment Security may investigate health care providers to determine whether providers are complying with this chapter and with rules adopted by the division, whether the providers are engaging in overutilization, and whether providers are engaging in improper billing practices. If the division
finds that a health care provider has improperly billed, overutilized, or failed to comply with division rules or the requirements of this chapter it must notify the provider of its findings and may determine that the health care provider may not receive payment from the carrier or may impose penalties as set forth in subsection
(8) or other sections of this chapter. If the health care provider has received payment from a carrier for services that were improperly billed or for overutilization, it must return those payments to the carrier. The division may assess a penalty not to exceed $500 for each overpayment that is not refunded within 30 days after notification of overpayment by the division or carrier.
The division shall monitor and audit carriers to determine if medical bills are paid in accordance with this section and division rules. Any employer, if self- insured, or carrier found by the division not to be within 90 percent compliance as to the payment of medical bills after July 1, 1994, must be assessed a fine not to exceed 1 percent of the prior year's assessment levied against such entity under s. 440.51 for every quarter in which the entity fails to attain 90-percent compliance. The division shall fine an employer or carrier, pursuant to rules adopted by the division, for each late payment of compensation that is below the minimum 90-percent performance standard. Any carrier that is found to be not in compliance in subsequent consecutive quarters must implement a medical-bill review program approved by the division, and the carrier is subject to disciplinary action by the Department of Insurance.
In chronological order, the first procedural issue that arose during the hearing was whether Dr. Windham had timely filed her invoices with CNA.
Rule 38F-7.602(3)(a)2.b requires providers to submit an invoice within 21 days after treatment. The rule is silent as to
the penalty for noncompliance and does not appear to be jurisdictional. Dr. Windham clearly failed to comply with this deadline for the first invoice. Even treating the date of the first invoice as the date of submittal, September 3 is three days after the expiration of 21 days following the latter of the two covered service dates. If submittal were complete on mailing, the second invoice was timely, although CNA received it after the expiration of 21 days.
When making its determinations, the Division failed to notice Dr. Windham’s untimely submittal of at least the first invoice, and CNA failed to notice Dr. Windham’s noncompliance when preparing the prehearing stipulation. When the Administrative Law Judge asked counsel for CNA if he wished to amend the prehearing stipulation, he declined the invitation, evidently wanting a ruling on the other procedural issues addressed in this partial recommended order.
The treatment of the requirement of timely filing is instructive. Construing earlier provisions requiring the timely filing of provider invoices, court cases have routinely allowed late-filed provider invoices upon a showing of good cause and absence of prejudice to the carrier. See, e.g., McGehee v. Brevard Community College, 559 So. 2d 368 (1st DCA 1990); Newport Trucking v. Gonzalez, 497 So. 2d 690 (Fla. 1st DCA 1986); Watson v. Freeman Decorating Co., 455 So. 2d 1097 (Fla. 1st DCA 1984); and Florida Sod Co. v. Myers, 432 So. 2d 645 (Fla. 1st DCA 1983).
There is no authority to attempt to characterize as jurisdictional the requirement that providers timely file their invoices.
The next procedural issue is whether CNA timely disallowed the three invoices. Rule 38F-7.602(3)(c) gives carriers 45 days to “pay or deny” provider invoices. CNA received the first invoice on October 4 and the second invoice on November 11, 1999. The 45 days ran, respectively, on November 18 and December 26.
The November 18 letter does not address the two invoices, so it does not constitute their denial. The December
14 letter is untimely as to the first invoice and, if the denial is complete upon mailing, timely as to the second invoice, but only if the December 14 letter adequately informs Dr. Windham that the second invoice is denied.
However, failing to advise Dr. Windham of the exact extent of the denial, the December 14 letter is ineffective as a denial of her invoice. As noted below, the timeliness of
Dr. Windham’s petition challenging the disallowances is dependent upon the date on which she learned of these disallowances, and the December 14 letter does not inform her of material information.
The key question therefore is the consequence of CNA’s failure to timely pay or deny the two invoices. As is the case with the requirement of timely filing of provider invoices,
nothing in the rules, or statutes, makes this failure jurisdictional. There is no explicit provision in the statutes or rules that warns a provider that the failure to timely pay or deny a provider invoice means that the provider must pay the invoice.
Obviously, there is an important distinction between the requirements of timely filing of provider invoices and timely payment or denial of provider invoices. In the former, providers are motivated to file their invoices timely to obtain early payment. In the latter, carriers may be motivated to postpone paying provider invoices timely to obtain longer use of the money.
As noted above, Section 440.13(11)(b) provide sanctions for late-paying carriers. If a carrier fails to timely pay at least 90 percent of its claims in a calendar quarter, the Division “must” assess the carrier with a fine equal to one percent of the carrier’s assessment for the prior year. Thus, the Division has no discretion, but must assess a carrier failing to attain 90 percent compliance in a single calendar year a fine equal to four percent of the carrier’s levy for the preceding year. Additionally, Section 440.13(11)(b) requires the Division to fine any carrier not in 90 percent compliance, although the Division does not appear to have promulgated the rules authorized by this statute. For carriers that fail to attain 90 percent compliance in a second calendar quarter, Section 440.13(11)(b)
mandates that the Division require the carrier to adopt a compliance programs and authorizes the Division to refer the carrier to the Department of Insurance for disciplinary action.
The rules do not establish a consequence for failing to timely pay or deny a single claim. Also, the rules contemplate a certain self-help quality to the form of utilization review known as concurrent review. Concurrent review is the counterpart of retrospective review, which takes place after the carrier has been paid and requires the participation of the Division, which, as already noted, has not established an active presence, in recent years, pursuing claims of improper reimbursements arising out of retrospective review.
Rule 38F-7.522(7) defines concurrent review as:
Action taken by a carrier to identify potential abuse or misutilization, as it is occurring or prior to reimbursement, for the purpose of early intervention and corrective action.
Rule 38F-7.522(8) defines corrective action as:
Action taken by the carrier to prevent or interrupt abuse by providers and inappropriate reimbursements by the carrier.
Rule 38F-7.523(1)(b) identifies concurrent review and authorizes referrals to carrier review consultations, as part of the concurrent review process. Applicable to all types of utilization review, including concurrent review, Rule
38F-7.523(2) authorizes a carrier, as part of utilization review, to request the provider for additional documentation, to refer
the claimant for an independent medical evaluation, to refer the provider or invoice to carrier reviewer or medical consultants to determine utilization issues, and resolve provider requests for reconsideration. It is doubtful that a carrier could complete these tasks in a difficult case within 45 days; the Division’s contention that failure to do so means the carrier must pay the invoice renders the utilization review process a nullity in all but the simplest situations or reduces the utilization review process, in complex situations, to a simplified exercise in checking the arithmetic of invoices.
Returning to Section 440.13, the statutory framework of consequences to be imposed upon carriers that fail to timely pay claims is thoughtful. There is no consequence for failing to timely pay a relatively small number of claims. The Division erroneously relies on the last clause of Section 440.13(7) in contending that the right of a carrier to implement utilization review is dependent on its paying or denying all claims within the 45 days required by rule. This contention is wrong for two reasons. First, it proves too much. Any noncompliance with any rule, such as the use of the wrong form, would cause the carrier to lose the valuable right of utilization review, which enures directly to the benefit of carriers, but indirectly to the benefit of claimants, employers, and providers because it is an important device by which to prevent overutilization of services by some claimants and providers, which negatively impacts the
costs and benefits of workers’ compensation for the parties not guilty of overutilization.
Second, the Division’s contention fails to take into account the carefully wrought statutory consequences already in place to deter the untimely disposition of provider invoices by carriers, as well as the fact that the Division seems not to have taken advantage of the opportunity to develop one of these disincentives to untimely disposition of provider invoices. If a carrier exceeds this amount one time, it faces a significant monetary penalty in the amount of one percent of its prior year’s levy. If the Division believes that this penalty is insufficient, it should promulgate the rules anticipated by the legislation to add an additional monetary penalty. If the carrier exceeds the 10 percent noncompliance threshold a second time, it must, in addition to paying these fines, adopt a payment program and may be subject to disciplinary action by the Department of Insurance.
It may be easier, on a case-by-case basis, for the Division merely to require the carrier to pay the provider invoice, if the carrier is late, but the statutes do not authorize such action, as such. (The Division may wish to consider promulgating a rule that sets the fine based on the amount of the provider invoice; basing the fine on the amount of the provider invoice would remediate a shortcoming in the statute, which seems to base the noncompliance on 10 percent of
the number, rather than value, of provider invoices.) Even the Division’s rules do not authorize what appears may be the Division’s nonrule policy that payment is required whenever a carrier fails to timely pay or deny a provider invoice.
The next procedural issue is whether Dr. Windham timely filed her petition challenging CNA’s disallowance of her invoice. (As noted above, CNA eventually paid the second invoice in its entirety.) Section 440.13(7)(a) gives Dr. Windham 30 days “after receipt of notice of disallowance or adjustment of payment” to file her petition with the Division.
There is some question whether Dr. Windham should have realized upon receipt of the December 14 letter that CNA had denied her first invoice in its entirety. Without delving into the regulatory requirements imposed upon a notice of disallowance, it is sufficient to conclude that CNA may not fairly be the beneficiary of the confusion that it sowed.
One week after submitting her second invoice,
Dr. Windham received an letter from CNA’s attorney ominously mentioning “probable cause” and offering her a chance to settle the matter. The apparent attempt of this offensive letter to intimidate and confuse Dr. Windham is underscored by the complete omission of any mention of the pending invoices. A month later, Dr. Windham received a letter, from the same attorney who wrote her a month earlier, apparently denying the first invoice and an unspecified amount of the second invoice. A month and a half
later, Dr. Windham received a computer-generated document, evidently from a third-party administrator, denying the first invoice, denying part of the second invoice, paying part of the second invoice, and supplying a coded explanation of the action.
CNA created considerable confusion and not merely attributable to its handling of the second invoice. The signatory of the first letter, CNA’s attorney, essentially tried to threaten Dr. Windham, then tried to cause her to settle the dispute, and never addressed the pending invoices. The signatory of the second letter, the same CNA attorney, tried to shed his role as litigator and assume a role of third-party administrator, so that four weeks after his “probable cause” letter, he is now impassively passing upon one of many claims for reimbursement. Notwithstanding the addition of CNA letterhead to the second letter, Dr. Windham may fairly have treated the second letter as just another attempt by the inventive author of the first letter to secure her consent to some sort of settlement.
Under the circumstances of these three communications, it is unnecessary to consider the regulatory requirements for an effective communication from a carrier to a provider that a provider invoice has been paid or denied. In this case, the 30 days for contesting the disallowance did not begin until receipt of the third-party notice on January 30, 2000. Dr. Windham’s petition was thus timely when filed on February 29.
The final procedural issue is the burden of proof in a utilization case. The burden of proof is on the provider to show that her invoices do not reflect overutilization.
Section 440.13(7)(a) requires that a provider seeking payment file a petition. More importantly, the last sentence of Section 440.13(7)(a) warns that if the provider fails to file certain documentation, the petition is to be dismissed. By contrast, the last sentence of Section 440.13(7)(b) warns that if the carrier fails to file certain documentation, its objections are waived. This means that the provider would still be required to make its prima facie case, which means that the provider has the burden of proof.
The parties shall have ten days from the date of this partial recommended order in which to file a pleading identifying dates on which they are not available for the resumption of the evidentiary hearing. Absent such filings, the Administrative Law Judge shall set the remainder of the evidentiary hearing for a two-day period of his choosing in Orlando. The Administrative Law Judge shall retain possession of the Transcript and exhibits pending completion of the case.
CONCLUSIONS OF LAW
It is
RECOMMENDED that the Division of Workers’ Compensation enter a partial final order at this time determining that Dr. Windham timely filed her petition contesting the decision of CNA to
disallow her first invoice (the second invoice having since been paid in full) and CNA is not precluded from contesting whether the claimant has overutilized the services of Dr. Windham, subject to a subsequent determination concerning the jurisdiction of the Division over the utilization issue.
DONE AND ENTERED this 13th day of December, 2000, in Tallahassee, Leon County, Florida.
ROBERT E. MEALE
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 13th day of December, 2000.
COPIES FURNISHED:
Mary B. Hooks, Secretary
Department of Labor and Employment Security The Hartman Building, Suite 303
2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
Sherri Wilkes-Cape, General Counsel Department of Labor and Employment Security The Hartman Building, Suite 307
2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189
Mark S. Spangler
Spangler, Mace & Zinaich, P.A.
401 North Mills Avenue, Suite B Orlando, Florida 32803
Timothy G. Schoenwalder
Hopping Green Sams & Smith, P.A.
123 South Calhoun Street Tallahassee, Florida 32301
Nancy Slayden Terrel Senior Attorney Department of Labor and
Employment Security
2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189
Michael B. Murphy
The Stanley Wines Law Firm, P.A. Post Office Box 860
Winter Haven, Florida 33882-0860
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order must be filed with the agency that will issue the final order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 11, 2001 | Agency Final Order | |
| May 10, 2001 | Recommended Order | Provider failed to prove that two counseling sessions involving Workers` Compensation claimant were not overutilization. |
| Dec. 13, 2000 | Recommended Order | Worker`s Compensation Carrier`s failure to pay or deny a provider`s invoice within 45 days does not preclude carrier from resisting payment due to alleged over utilization of services. |
