August 19, 2019

PA Workers’ Comp News Alert: Commonwealth Ct. Says Pharmacy Has Right to Be Paid for Medical Service

On August 7, 2019, the Commonwealth Court of Pennsylvania issued an Opinion and Order in Workers First Pharmacy Services, LLC v. Bureau of Workers’ Compensation Fee Review Hearing Office (Cincinnati Insurance Co.), which dealt with the rights of pharmacies to be paid for medical services when an Employer does not accept liability in a Compromise & Release Agreement. The Pharmacy had prescribed Lidocaine and Diclofenac, which were dispensed to Claimant following a disputed work injury. Employer denied payment on all three invoices. The Pharmacy filed three Fee Review Applications.

The Medical Fee Review Section denied two applications as premature, but with regard to the third determined that Employer owed Pharmacy $1,650.00 plus interest for untimely payment. Employer requested a hearing to contest the Fee Review Determination, arguing that the Medical Fee Review Section lacked jurisdiction over the Pharmacy’s Fee Review Applications because Employer had no liability for Claimant’s injuries due to the Compromise & Release Agreement. However, the specific language of the Compromise & Release Agreement did not resolve the separate Fee Review litigation.

The Fee Review Hearing Officer issued an adjudication ultimately vacating the Fee Review Applications as all premature since the Employer did not accept liability for the work injury. The Pharmacy filed an Appeal of the Fee Review Hearing Officer’s adjudication, arguing that its due process rights were violated because the Compromise & Release Agreement was used to relieve both the Employer and Claimant from liability to the Pharmacy.

The Commonwealth Court analyzed that relevant statutory provision, Section 306(f.1)(7) of the Pennsylvania Workers’ Compensation Act and existing case law on the scope of Fee Review proceedings. The Court cited the Armour Pharmacy v. Bureau of Workers’ Compensation Fee Review Hearing Office case which we detailed in a prior Rawle WC Report dealing with the interplay of a Compromise & Release Agreement and a Fee Review Proceeding. In this case, the Court ruled the Employer may not take actions that prevent medical providers from being paid for care for injured workers. The Court cited the reasoning of Armour Pharmacy holding that the parties to a Compromise & Release Agreement cannot use the agreement to release themselves from liability to a provider who did not participate in the agreement. Interestingly, the Court determined that Employer accepted responsibility for the debt to Pharmacy when it released Claimant from any obligation to pay Pharmacy in the Compromise & Release Agreement language and questioning at the settlement hearing before the Workers’ Compensation Judge. In this case, Employer’s lawyer included a provision in the settlement saying that (1) the injured worker was not obligated to pay for medicine he received, and (2) the insurer agreed to be bound by the separate fee review process used by medical providers to assert and protect their right to payment.

The Court concluded that Employer accepted responsibility for the debt. Therefore, the Fee Review Hearing Office had jurisdiction to decide the Fee Review Applications filed by Pharmacy. This case emphasizes the importance of drafting accurate, detailed and comprehensive language in settlement agreements on disputed work injury claims in order to avoid future liability for Employers to be responsible for payment of outstanding medical bills.

Zachary M. Rubinich is a partner in our Philadelphia office. He focuses his practice on the defense of insurance carriers, self-insured entities and third-party administrators against workers’ compensation claims in Pennsylvania. Based on his extensive experience, the Pennsylvania Bar Association Workers’ Compensation Law Section has certified him as Specialist in the practice of workers’ compensation law. Zach has handled all aspects of litigation before workers’ compensation judges, the Workers’ Compensation Appeal Board, the Commonwealth Court and the Pennsylvania Supreme Court.  He routinely counsels employers, insurance carriers and third party administrators on claims management, workplace safety, return-to-work programs, employment practices and risk management. Zach has been appointed to the following American Bar Association Tort Trial and Insurance Practice (TIPS) leadership positions: Vice-Chair of the Litigation and Trial Practice Committee; Vice-Chair of the Appellate Advocacy Committee; member of the Ethics and Professionalism Standing Committee; and member of the CLE Board Committee. These appointments will become effective in September 2019. He is currently Chair of the American Bar Association’s Tort Trial and Insurance Practice (TIPS) Workers’ Compensation and Employers’ Liability Law Committee for 2018-2019. He served as Vice-Chair of this committee for 2015-2016, 2016-2017 and 2017-2018. In addition, Zach served as Vice-Chair of the 2017-2018 American Bar Association Standing Committee for Diversity and Inclusion. Zach has been rated AV Preeminent by Martindale-Hubbell for the seventh consecutive year in 2019. He has been selected as a 2019 Pennsylvania Super Lawyer by Super Lawyers. He was selected as a Pennsylvania Rising Star by Super Lawyers from 2010 to 2014.

Zach can be reached directly at: (215) 575-4340 •

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