Provider's 40 percent markup for comp patients fails to pass muster
Case name: Fredericksburg Orthopaedic Associates v. Fredericksburg Machine & Steel, LLC, No. 1714-12-2 (Va. Ct. App. 05/14/13).
Ruling: The Virginia Court of Appeals held that a medical provider was not entitled to the unpaid balance for the costs of the treatment it provided to an injured worker.
What it means: In Virginia, evidence that a provider charges more for treatment provided to workers' compensation patients does not establish that the charges are reasonable and necessary.
A worker suffered a work-related injury to his right shoulder. His medical provider performed surgery on his shoulder. The provider submitted a bill for his treatment to the employer. The employer paid a portion of the amount billed. The provider asserted that the employer owed the remaining balance. The chief financial officer of the provider testified that its standard fee schedule for workers' compensation patients charged 40 percent more for treatment than the standard fee schedule applicable to nonworkers' compensation patients. The CFO explained that its policy existed due to the additional overhead costs incurred in processing workers' compensation claims. The Virginia Court of Appeals held that the provider was not entitled to the unpaid balance for the treatment it provided to the worker.
The court pointed out that the workers' compensation law is designed to prevent a physician from overcharging for his services. Employers look to the prevailing rate in the community to challenge the reasonableness of a medical provider's charges. Here, the provider failed to provide evidence supporting its assertion that the medical charges, with the 40 percent surcharge, were reasonable and necessary. There was no evidence as to the extent of additional workers' compensation expenses in the case or the amount the worker would have been charged if he was a non-workers' compensation patient. The court found that the provider failed to show that the medical charges based on its general fee schedule were limited to the prevailing community rate.
A dissenting judge opined that the decision improperly shifted the burden of proving the reasonableness of the medical treatment to the provider and ignored evidence establishing the prevailing rate. The judge said that "simple arithmetic could have corrected the overcharge" and that the employer was allowed to pay only a fraction of the medical bills.
Read more at the WorkersComp Forum homepage.
August 12, 2013
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