Court of Appeals Explains Burden of Proof in Medical Fee Dispute Appeals
Flahive, Ogden & Latson won a landmark case this week that will control how medical fee disputes are handled before the State Office of Administrative Hearings. In Facility Insurance Corporation v. Patients Medical Center, No. 03-17-00666-CV, the court agreed that the SOAH judge had improperly placed the burden of proof on the carrier at the contested case hearing. The court concluded that this was “legal error” that required a reversal and a new CCH. The carrier was represented by Flahive Shareholder, Steve Tipton.
The case arose after an injured worker underwent permanent implantation of an internal spinal cord stimulator to help control pain from an injury she sustained while moving a desk at work. The provider requested preauthorization to perform two surgical procedures because the stimulator had migrated. The carrier preauthorized the requested procedures.
After surgery, the provider billed the carrier $94,640.48. That bill identified charges for the two preauthorized CPT codes as well as several others. Carrier paid the provider $2,345.75, explaining that most of the billed charges exceeded the preauthorization and asserting that it was entitled to pay the remainder at a reduced, contracted rate. The provider requested reconsideration, which was denied.
The provider then sent the carrier a “corrected” bill, which omitted some of the previous CPT codes appearing on the original bill, and accompanied the corrected bill with a request for “2nd level of reconsideration.” The carrier denied payment on the corrected bill, asserting that the corrected bill was not timely.
The provider requested medical dispute resolution from the Division. A medical dispute resolution officer issued a decision, in which she awarded the provider additional reimbursement in the amount of $20,495.78. The carrier requested a Contested Case Hearing at SOAH, after which the ALJ issued a Decision and Order.
The SOAH Order concluded that the carrier had “failed to carry its burden that Provider is not entitled to $20,495.78” in additional reimbursement and ordered the carrier to pay the provider that sum. The carrier appealed the SOAH Order to district court in Travis County, where the district judge affirmed the SOAH Order.
The carrier appealed to the Court of Appeals. In that appeal, the carrier contended, among other things, that the ALJ improperly shifted the burden of proof from the provider to the carrier, requiring it to “disprove the amount [of additional reimbursement] calculated by the MDRO.” The carrier argued that the provider carried the burden of proof on its claim to the additional amount owed even throughout proceedings at SOAH. The Court of Appeals agreed.
The SOAH hearing comprises, essentially, yet another step in the statutorily prescribed process initiated by a provider via its filing of an administrative dispute with the Division on its claim for reimbursement after being denied payment by a carrier. See Tex. Lab. Code § 413.031(a) (“A party, including a health care provider, is entitled to review of a medical service provided or for which authorization of payment is sought if a health care provider is . . . denied payment or paid a reduced amount for the medical service rendered . . . .”); 28 Tex. Admin. Code § 133.250(i) (“If the health care provider is dissatisfied with the insurance carrier’s final action on a medical bill after reconsideration, the health care provider may request medical dispute resolution . . . .”); see also Texas Mut. Ins. Co., 275 S.W.3d at 544. Therefore, the Division (and, in turn, SOAH) is the adjudicative body charged with determining whether the provider is entitled to payment on its reimbursement claim—in other words, in determining whether the provider is entitled to the “relief” it seeks in the form of reimbursement.
In this administrative-adjudicative context, the salient dispute remains a constant throughout the MFDR process, including the hearing at SOAH: to how much reimbursement is the provider entitled? Indeed, the MFDR process continues until ultimately decided by SOAH precisely because the dispute “remains unresolved” until that point. See Tex. Lab. Code §§ 413.031(k), 413.0312(a),(b), (d), (e). Similarly, it is the provider’s claim to a certain amount of reimbursement refused by a carrier that initiates the MFDR process, an inherent part of which is the SOAH hearing. By invoking the MFDR process, the provider is seeking to change the status quo—the status quo being that the carrier has refused to pay a reimbursement claim. Furthermore, the provider is the party seeking “affirmative relief” (in the form of reimbursement) throughout the entire review process under the workers’ compensation regime, despite a carrier’s challenging a reimbursement award at any given stage within the MFDR context. Cf. Manbeck v. Austin Indep. Sch. Dist., 381 S.W.3d 528, 532–33 (Tex. 2012) (holding that school-district carrier under Act “never sought affirmative relief” by merely availing itself of “the administrative phase of the [Act’s dispute resolution] process” in seeking review of Division’s decision on extent of worker’s compensable injury). It follows that the provider is the party “seeking relief” on its reimbursement claim from the Division and, by extension of the Division’s exclusive jurisdiction and delegation to SOAH, from that tribunal as well. Thus, the provider carries the burden of proof in de novo contested-case hearings at SOAH conducted on the provider’s claim to reimbursement.
The court wrote that the ALJ’s improper burden-shifting rendered the Legislature’s grant of a Contested Case Hearing to the carrier useless, reasoning that “if an ALJ may simply uphold the decision of the MDRO on the basis of the MDRO’s decision itself, there is a lack of any meaningful review, despite the Legislature’s express provision for a SOAH hearing.” Accordingly, the court reversed the trial court’s order, which had affirmed the SOAH Decision, and remanded the cause to the Division for further proceedings consistent with the court’s opinion.
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