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Employers Dictate Pharmacy Provider for Comp Claims

By Sherri Okamoto (Legal Reporter)

Monday, July 3, 2017 | 1071 | 0 | 78 min read

A divided Louisiana Supreme Court ruled last week that employers have the authority to select the pharmacy that fills an injured employee’s prescriptions.

This issue had created a split among the state’s lower appellate courts, with the 2nd and 4th circuits saying it’s the worker’s choice, and the 3rd and 5th saying the supplier of a worker’s medication was up to the employer.

At issue in Burgess v. Sewerage & Water Board of New Orleans was a $13,110.02 pharmacy bill. Darvel Burgess had racked up the charges from the Injured Workers' Pharmacy after a 2008 back injury.

IWP is a Massachusetts-based mail-order pharmacy service that sells medications on a lien basis. Its business model is focused on providing medications to individuals with chronic injuries from accidents that are covered by auto liability, property and casualty and workers' compensation insurance carriers.

The water board asked Burgess use the Corvel Caremark Pharmacy program instead, and it refused to pay the bill from IWP.

Workers’ Compensation Judge Robert Varnado ordered the board to pay IWP, and the board appealed.

After the 4th DCA upheld the judge’s decision in April 2016, the board petitioned the Louisiana Supreme Court for review.  

While the board’s appeal to the Supreme Court was pending, the Supreme Court issued a decision in the consolidated cases of Lafayette Bone & Joint Clinic v. LUBA and Lafayette Bone & Joint Clinic v. Guy Hopkins Construction Co. The court’s conclusion was that a payer's liability for physician-dispensed medications is limited by Louisiana Revised Statute 23:1142(B) to $750.  

After the Supreme Court decided the Lafayette cases, it ordered the 4th DCA to revisit the Burgess case and evaluate whether the newly announced precedent required a change in outcome.

On remand, the 4th DCA said it saw no reason to disturb its original ruling. It noted that Section 23:1142(B) applies to unauthorized, nonemergency “treatment,” and it reasoned that a doctor’s dispensing of medication is “treatment,” but the act of filling a prescription is not.

The water board filed a second request for review by the Supreme Court, which reversed the 4th DCA on Thursday.

While the Louisiana Workers’ Compensation Act expressly obligates an employer to furnish all the necessary medication to treat an employee’s industrial injury, the court noted that is silent as to who gets to pick the prescription medication provider.

The act says that a worker has the right to pick his treating “physician,” but the court reasoned that “physician” is a “very specific term” that does not encompass a pharmacy provider. Had the Legislature intended the worker to have a choice of pharmacists, the court posited that lawmakers would have used the more expansive phrase “health care provider,” which the act defines as inclusive of pharmacies.

Since Burgess did not have a right to select the pharmacy of his choice, the court said there remained a question as to whether his employer had to pay for the medications he obtained from IWP.

The court said the Louisiana Workers’ Compensation Act obligates an employer to pay for services of out-of-state providers only “when such care, services and treatment are not reasonably available within the state or when it can be provided for comparable costs.”

Although it was undisputed that IWP was an out-of-state provider, the court said there had been no findings as to whether any in-state providers could furnish the same services for the same basic price.

The court said the case needed to be remanded to the Office of Workers’ Compensation.

Should the OWC find no in-state provider could match the services and prices of IWP, the court said the Louisiana Workers’ Compensation Act would limit IWP to payment in accordance with the state reimbursement schedule.

Additionally, the court said, even if IWP’s billed changes fall within the allowable rates under the reimbursement schedule, IWP would still have to prove the charges were reasonable.

The court went on to conclude that Section 23:1142(B) is applicable to the dispensing of medications from both pharmacists and physicians. So if the OWC determines IWP was authorized to provide services to Burgess, the court said, the board’s liability to the pharmacy would be capped at $750 unless the OWC finds the board consented to the payment of a higher amount.

Chief Justice Benette Johnson wrote separately to say she didn’t believe this last instruction was necessary. Based on the record before the court, she said, Section 23:1142(B) ought to limit IWP’s recovery to no more than $750, since it “clearly” dispensed medication to Burgess without the consent of the board.

Justices Jeff Hughes and James Genovese dissented. Hughes did not provide written reasons, but Genovese argued that an employee should be allowed to choose his own pharmacist because “quick access to medication is essential.”

He warned that the court’s decision “will subject the employee to the whim of the employer’s pharmacy,” when the current language of the Workers’ Compensation Act “does not give the employer any preference over the employee to choose a pharmacy.”

Attorneys Michael B. Miller and John Goehring represented Burgess before the Supreme Court.

Miller said he believed the Workers’ Compensation Act allows a worker to select all medical providers — not just a treating physician — and that he intends to ask the Supreme Court for a rehearing.

But, he said, he hadn’t been surprised by the court’s decision in Burgess, or its decision in Calvier v. Coburn Supply Co. 

The Calvier case had been his as well. In that case, the Supreme Court concluded that a worker’s right to choose a treating physician doesn’t encompass the right to select the physical therapist to provide a second opinion as to functional capacity.

“They’re horrible cases, both of ‘em,” Miller said.

Johnson and Hughes dissented from the Calvier decision, as did Justices Jeanette Knoll.

Knoll was the only one who provided written reasons for her dissent, saying she believed the Legislature needed to better clarify the obligations and entitlements provided under the Workers’ Compensation Act.

Wayne J. Fontana and Shannon Michele Frese of Roedel, Parsons, Koch, Blache, Balhoff & McCollister served as the defense attorneys in the Burgess case.

Fontana said Friday that the court’s ruling for that case was “a monumental and long-awaited victory for employers,” because it will help curb the “abuses” of pharmacies that were overcharging payers, and it makes it clear that the $750 cap “applies across the board to whoever is dispensing the pharmaceuticals.”

Troy Prevot, executive director of the LCTA Workers’ Comp, said he thought the pharmacy control became an issue in Louisiana only because of the practice of pharmacy repackaging and physician dispensing. He said it wasn’t just “outrageous pricing” that upset carriers — it was also the inability to track a worker’s drug use when the worker had “multiple avenues” for getting medication.

By being able to control where workers get medications, Prevot said, carriers will have the ability “to monitor prescription use” and make sure workers “are getting what they need, and not getting too much of something they don’t need.”

Workers will still be able to fill prescriptions at about 95% of all retail pharmacies in the state, Prevot said, but payers will be able to ensure “we get fair pricing,” too.

Defense attorney Jeffrey Napolitano of Juge, Napolitano, Guilbeau, Ruli & Frieman said he expected that the Burgess decision “is going to stop the proliferation of physician dispensing and repackaged medication” for Louisiana.

Napolitano, the defense attorney in the Lafayette cases, said he had been hoping the court would say employers could deny payments to unauthorized pharmacy providers completely, but he was happy the court said the $750 cap and the reasonableness requirement could be imposed.

He said these limitations will give payers “great bargaining power” over the cost of the expensive compound medications that have been increasingly prescribed to workers, and perhaps for other medical services, too.

Pharmacy costs have become an increasingly important part of comp claims in recent years. According to the latest data reported by the National Council on Compensation Insurance, prescription payments total more than $1 billion annually, representing an estimated 17% of the medical costs for workers’ compensation claims.

To read the Louisiana Supreme Court decision in Burgess, click here. 


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