Thursday, September 4, 2014

Work-Related Medical Expenses - Who is entitled to Payment?

In the event of a compensible work injury, Employers and their workers' compensation Insurers are responsible for the payment of indemnity wage loss benefits and the payment of medical expenses which are reasonable, necessary and related to the work injury.

At times, during the delay associated with the litigation of a claim petition, the medical expenses may be paid by another public or private insurer. When this occurs, the parties must determine which entity is entitled to receive payment/reimbursement for any work-related medical expenses, which are awarded by the WCJ.

The simple question of medical expense payments may become complicated.

Evans v. WCAB (Highway Equipment and Supply Company), is a recent decision of a panel of the Commonwealth Court of Pennsylvania at No. 2252 C.D. 2013, authored by Judge McCullough on June 30, 2014, which addresses these medical expense reimbursement issues.

Factual and Procedural background

On January 20, 2009, Employee was awarded ongoing total disability indemnity wage loss benefits and medical expenses for a work injury which occurred in April 2007.

On February 16, 2009, Employee counsel informed Employer of the amount owed to Claimant and submitted a subrogation lien of Highmark Blue Shield for medical expenses paid in the amount of $29,995.59.

On February 27, 2009, Employee counsel filed a Penalty Petition for Employer's failure to timely pay the January 2009 award.

Employee evidence included: (1) Healthcare Recoveries (Highmark vendor) October 8, 2008 letter and statement for medical expenses of $29k paid by Highmark to Geisinger Medical Center; (2) Healthcare letter for agreement for payment of 20% of amount, paid as an attorney fee to Claimant counsel.

WCJ Penalty Petition Decision

WCJ Concluded Employer violated the Act.
Directed Employer to pay $29k to the health care provider, less the 20% attorney fee.

Employee Appealed to WCAB

Employee argued the $29k should be paid directly to employee, with statutory interest, minus the 20% attorney fee.

WCAB Remanded

WCJ Remand Decision

Submission of the October 8, 2008 Healthcare Recoveries letter proved that a subrogation lien had been established before the WCJ January 2009 decision.
(really? wasn't the lien letter presented on Feb 16, after the Jan 20 decision?).

On this basis, payment was not to Employee, rather payment was to Healthcare Recoveries.
No interest was payable.

[WCJ would not allow Employer to take evidence that the Highmark lien was moot because Geisinger repaid the $29k medical expenses to Highmark.]

Employee WCAB Appeal II

WCAB Decision II

WCAB affirmed WCJ remand decision.
Subrogation lien had been established before WCJ Decision,
Lien was properly preserved in accord with Boeing Helicopters v. WCAB (Cobb), (Pa. Cmwlth. 1998). 

WCAB held Frymiare v. WCAB (D. Pileggi & Sons), (Pa. Cmwlth. 1987) did not compel medical expense payment directly to Employee.
Here, (unlike Frymiare)  Healthcare Recoveries had protected the Highmark Blue Shield subrogation interest.
As Employer evidence of Highmark-Geisinger repayment was beyond the scope of WCAB remand, the WCJ properly declined to accept this evidence.

Commonwealth Court Appeal - Employee arguments

(1).  WCJ erred in failing to order medical expense payments directly to Employee.
(2).  WCJ erred in failing to award interest.
(3).  WCJ erred in determining that Highmark's subrogation lien had not been waived.

Commonwealth Court Decision

(1).  The second paragraph of section 319 provides a health care insurer with a right of subrogation.
These subrogation rights are not automatic or self-executing.
The party asserting these rights must exercise reasonable diligence.
This has been interpreted as asserting one's subrogation rights during the pendency of the claim proceedings.
[See: Independence Blue Cross v. WCAB (Frankford Hospital), 820 A.2d 868, 872 (Pa. Cmwlth. 2003.].

The Court concluded, medical expenses were not directly payable to Employee in this case, as Employee submitted into evidence the October 8, 2008 Healthcare Recoveries letter stating the Highmark Blue Shield subrogation lien.

This letter established that an agreement* for the subrogation lien was in place before the WCJ initial claim petition decision. Therefore the Frymiare decision does not compel a medical expense payment to this Employee!

*[note: this agreement was between employee counsel and Healthcare/Highmark] .

(2).  Interest was not payable to employee on the unpaid medical expenses as employee was not entitled to this payment.

(3). Highmark preserved and did not waive its subrogation lien.

The Commonwealth Court decision in Frymiare warrants further discussion regarding this medical expense payment issue. 

In Frymiare,  the claimant was awarded work comp indemnity wage loss benefits and reimbursement of his personal payments of medical expenses.
The claimant's private health insurer made some medical expense payments, but it did not seek subrogation in the claim petition proceedings. Claimant was not awarded these amounts.

The Commonwealth Court held that the claimant was entitled to payment of the medical expenses.
Employer/Insurer may not avoid their responsibility to pay for work-related medical expenses, on the basis that some other source may have initially defrayed theses medical costs.
In the absence of the assertion of a subrogation lien from his health insurer, claimant was entitled to payment for these medical expenses. (presumably, by contract, claimant would be responsible to repay his health insurer.)


1. Employers and Insurers must determine if there are any payments of work-related medical expenses by any private health insurer plan, whether it be employer-funded or employee funded.

In order to avoid these time consuming and costly post-claim decision issues, it behooves the parties to document the rights/responsibilities regarding all outstanding work-related medical expenses.

This review includes the right of reimbursement to Medicare/Medicad for any conditional payments

2. Attorneys - determine if you can reach a stipulation with Employee counsel as to the identity and amount any medical expense liens and which entity is entitled to reimbursement, in the event of a WCJ award. 

3. Employer/Insurers, do not spend 20% of the amount due!
Do not ask the claimant attorney to represent the interests of an employer-funded plan. 
Have your legal counsel submit any necessary documentation of the subrogation interest. 

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