Beutler England Clinic (Cheryl Brown) v. Market Basket No. 27

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

05-952

BEUTLER ENGLAND CLINIC (CHERYL BROWN)

VERSUS

MARKET BASKET NO. 27

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APPEAL FROM THE
OFFICE OF WORKERS’ COMPENSATION - DISTRICT 3
PARISH OF CALCASIEU, NO. 04-03236
SAM L. LOWERY, WORKERS’ COMPENSATION JUDGE

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MARC T. AMY
JUDGE

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Court composed of Jimmie C. Peters, Marc T. Amy, and Elizabeth A. Pickett, Judges.

AFFIRMED.

PETERS, J., dissents and assigns written reasons.

Thomas A. Filo
Cox, Cox, Filo, Camel & Wilson, L.L.P.
723 Broad Street
Lake Charles, LA 70601
(337) 436-6611
COUNSEL FOR PLAINTIFFS/APPELLANTS:
Beutler England Chiropractic Clinic
Cheryl Brown

Rusty J. Savoie
Adams and Reese, LLP
339 Florida Street, 2nd Floor
Baton Rouge, LA 70801
(225) 615-8400
COUNSEL FOR DEFENDANT/APPELLEE:
Market Basket No. 27

John S. Bradford
William B. Monk
Stockwell, Sievert, Viccellio, Clements
& Shaddock, L.L.P.
One Lakeside Plaza, Fourth Floor
Lake Charles, LA 70601
(337) 436-9491
COUNSEL FOR:
Southwest Louisiana Hospital Association, Amicus Curiae

Floyd J. Falcon, Jr.
Avant & Falcon
Post Office Box 2667
Baton Rouge, LA 70821
(225) 387-4462
COUNSEL FOR:
Louisiana American Federation of Labor and
Congress of Industrial Organizations, Amicus Curiae

John E. Galloway
Galloway, Johnson, Tompkins, Burr & Smith
29466 Frost Road
Livingston, LA 70754
(225) 686-8664
COUNSEL FOR:
F. A. Richard & Associates, Inc., Amicus Curiae

Stephen W. Glusman
Glusman, Broyles & Glusman, LLC
Post Office Box 2711
Baton Rouge, LA 70821
(225) 387-5551
COUNSEL FOR:
Louisiana Association of Self Insured Employers, Amicus Curiae
Louisiana Association of Business and Industry, Amicus Curiae

Denis Paul Juge
Juge, Napolitano, Guilbeau, Ruli,
Frieman & Whitely
American Plaza, Building D
2645 O’Neal Lane
Baton Rouge, LA 70816
(225) 754-7000
COUNSEL FOR:
Cambridge Integrated Services, Amicus Curiae
Crawford & Company, Amicus Curiae

Christopher R. Philipp
Post Office Box 2369
Lafayette, LA 70502-2369
(337) 235-9478
COUNSEL FOR:
Louisiana Municipal Risk Management, Amicus Curiae

Edward R. Wicker, Jr.
Barrasso, Usdin, Kupperman,
Freeman & Sarver, L.L.C.
LL&E Tower, Suite 1800
909 Poydras Street
New Orleans, LA 70112
(504) 589-9700
COUNSEL FOR:
Helmsman Management Services Company, Amicus Curiae
Employers Insurance of Wausau, Amicus Curiae
Liberty Mutual Insurance Company, Amicus Curiae

Perry R. Staub, Jr.
Mark E. Van Horn
Larry E. Demmons
Taggart, Morton, Ogden, Staub,
Rougelot & O’Brien, L.L.C.
2100 Energy Centre
New Orleans, LA 70163
(504) 599-8500
COUNSEL FOR:
First Health Group Corporation, Amicus Curiae

Cory R. Cahn
Entergy Services, Inc.
639 Loyola Avenue, 26th Floor
New Orleans, LA 70113
(504) 576-5533
COUNSEL FOR:
Entergy Services, Inc., Amicus Curiae

AMY, Judge.

Beutler England Chiropractic Clinic filed a disputed claim form in workers’

compensation court, alleging that services billed pursuant to the workers’

compensation fee schedule were not fully paid by an employer’s insurer. It seeks

payment of the full amount billed. The defendants contend that Beutler England

contracted to receive only 85% of that permitted under the fee schedule. The

workers’ compensation judge granted the employer’s exception of lack of subject

matter jurisdiction, finding that the matter did not arise out of the workers’

compensation statutes. Beutler England appeals. For the following reasons, we

affirm.

Factual and Procedural Background

This case involves a determination of whether the workers’ compensation court

has jurisdiction to consider a claim filed by a health care provider against an

employer and insurer for reductions made pursuant to a preferred provider

organization agreement, or PPO.

The record establishes that Cheryl Brown was employed by Market Basket #27

at the time she sustained a work-related injury. She sought treatment from Dr. Carol

Beutler, a chiropractor and partner of the Beutler England Clinic.1 According to Dr.

Beutler, Ms. Brown reported “AIG” as her insurance provider. The clinic billed for

the services rendered pursuant to the Louisiana Fee Schedule. AIG Claim Services,

Inc. paid eighty-five percent of the fee charged.

Beutler England filed the disputed claim form initiating this matter in May

2004. The disputed claim form named Market Basket #27 as Ms. Brown’s employer

1
Testimony indicates that, at the time treatment was sought, Beutler England Clinic was
operating as “England Masse.” Although Beutler England was subsequently formed, Beutler
England retained the billing responsibility for Ms. Brown’s case and has pursued this matter before
the court. For ease of discussion, we refer only to Beutler England throughout.

and “AIG Claim Service” as Ms. Brown’s insurer. The form reflects Beutler

England’s complaint as “Underpayment of medical bills; penalties and attorney fees

for arbitrary and capricious handling of this claim.”

The defendants, Market Basket #27 and AIG Claim Services, Inc., assert that

the reduced reimbursement rate is applicable in this case since Beutler England is part

of the First Health Preferred Provider Organization. The record reflects that, in 1998,

the predecessor of Beutler England joined the First Health Preferred Provider

Organization Network. The agreement memorializing that agreement, entitled “First

Health Preferred Provider Agreement,” was entered into the record. As pointed out

by the defendants, a portion of the agreement relates to workers’ compensation claims

and references a reduced rate for workers’ compensation claims.2 The defendants

also point to an agreement between First Health and AIG Claim Services, Inc.

whereby First Health permitted AIG Claim Services, Inc., to access the First Health

PPO network.

2
The agreement contains the following clause in an appendix:

D. Reimbursement from Workers’ Compensation Payors for services rendered
to occupationally ill/injured employees shall be as follows:

(1) If any state law or regulation establishes rules or guidelines
for the payment of health care services, reimbursement shall
not exceed 85% of the maximum amount payable under such
rules or guidelines. Any procedure code which is unvalued
shall be reimbursed pursuant to Section A, Paragraph (3), of
this Appendix. This rate of reimbursement shall apply
whether such rules or guidelines are in existence at the time
of execution of this agreement or established at a later time.

(2) In the absence of any state law or regulation set forth in
Section D, Paragraph (1), reimbursement shall be the method
set forth in Section A, Paragraphs (1), (2) and (3) of this
Appendix, but in no event shall reimbursement exceed the
usual and customary charge for the services as determined by
First Health or Payor.

2

The defendants filed an exception of lack of subject matter jurisdiction. They

argued that Beutler England’s claim is not merely a fee dispute, but requires

consideration of the legality of two related PPO contracts. The defendants asserted

that consideration of this type of contractual claim has not been specifically

delineated in a grant of authority to the Office of Workers’ Compensation. Following

a hearing, at which time the workers’ compensation judge also heard evidence related

to the merits of the suit, the workers’ compensation judge granted the exception.3

Beutler England appeals, assigning the following as error in its brief to this

court:

1. The Office of Workers’ Compensation Hearing Officer erred in
finding that it lacked subject matter jurisdiction over the claims
asserted by BEUTLER ENGLAND CHIROPRACTIC CLINIC
(“BEUTLER ENGLAND”) for underpayment of workers’
compensation medical bills pursuant to LSA-R.S. 23:1203 and
LSA-R.S. 23:1034.2 and for penalties and attorney fees pursuant
to LSA-R.S. 23:1201(F)(4).

2. The Office of Workers’ Compensation Hearing Officer erred in
failing to enter judgment after full and complete trial on the
merits in favor of claimant, BEUTLER ENGLAND, for the
amounts discounted below both the actual charges and the
Louisiana Fee Schedule for services rendered to workers’
compensation patient, Cheryl Brown.

3
In granting the exception of lack of subject matter jurisdiction, the workers’ compensation
judge adopted written reasons for ruling rendered in a case stated to be factually similar. In that case,
the workers’ compensation judge stated:

Whether these contracts “arise out of” or “merely relate to” or somehow in
some metaphysical sense exist in both spheres concurrently really does not make
much difference in so far as this exception is concerned in a situation where the
business practices of these workers’ compensation related corporations are governed
by, or at least influenced by, state and federal statutes arguably in need of a judicial
determination as to whether conflicts or constitutional issues are present.

The decision of this court is that for the reasons that I have taken pains to
explain, issues involving contractual arrangements between and among the medical
providers and insurance carriers and other related commercial entities are outside of
the constitutional jurisdiction of the court.

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3. The Office of Workers’ Compensation Hearing Officer erred in
failing to enter judgment after full and complete trial on the
merits in favor of claimant, BEUTLER ENGLAND, for statutory
penalties and reasonable attorney fees under LSA-R.S.
23:1201(F)(4).

We note that, in addition to the briefs of the parties, a number of amicus curiae briefs

have been filed with this court addressing the merits of the claim and advocating their

respective positions.

Discussion

Subject Matter Jurisdiction

Beutler England frames the question as one of a fee dispute between it as the

health care provider and the employer/insurer, asserting in its brief to this court that:

“Nowhere in the 1008 claim form does claimant seek redress for anything other than

underpayment of medical bills and penalties and attorney fees associated therewith.”

Beutler England denies that it is seeking to have contracts rescinded or that it is

seeking any relief provided by the Louisiana Civil Code. Instead, it contends that its

cause of action arises solely under La.R.S. 23:1203 and its pursuit of penalties and

attorney’s fees is controlled exclusively by La.R.S. 23:1201(F)(4). Thus, Beutler

England contends, the action is within the jurisdiction of the Office of Workers’

Compensation pursuant to La.R.S. 23:1034.2. We conclude that the issues are not so

simple.

In considering the parameters of the subject matter jurisdiction of a workers’

compensation court, we turn first to the Louisiana Constitution, Article 5, § 16 which

provides that “[e]xcept as otherwise authorized by this constitution or except as

heretofore or hereafter provided by law for administrative agency determinations in

worker’s compensation matters, a district court shall have original jurisdiction of all

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civil and criminal matters.” Along with this constitutional declaration of jurisdiction,

we consider related statutory authority, including La.R.S. 23:1310.3(E), which

provides:

Except as otherwise provided by R.S. 23:1101(D) and 1378(E),
the workers’ compensation judge shall be vested with original, exclusive
jurisdiction over all claims or disputes arising out of this Chapter,
including but not limited to workers’ compensation insurance coverage
disputes, employer demands for recovery for overpayment of benefits,
the determination and recognition of employer credits as provided for in
this Chapter, and cross-claims between employers or workers’
compensation insurers for indemnification or contribution.

Jurisprudence has established that the statute’s inclusion of the phrase, “disputes

arising out of this Chapter,” is a particular one in that disputes merely relating to

workers’ compensation provisions have not been found to be within the jurisdiction

of the workers’ compensation court. See Ellender’s Portable Bldgs., Inc. v. Cormier,

00-1724 (La.App. 3 Cir. 6/6/01), 787 So.2d 601; Covington v. A-Able Roofing, Inc.,

95-1126 (La.App. 3 Cir. 3/6/96), 670 So.2d 611; Cajun Bag and Supply v. Baptiste,

94-1218 (La.App. 3 Cir. 3/1/95), 651 So.2d 943. Given the constitutional grant of

jurisdiction to the state’s district courts, La.R.S. 23:1310.3 is narrowly construed by

the courts and will not be read more broadly than its specific language. Cajun Bag,

651 So.2d 943.

Louisiana Revised Statutes 23:1034.2 provides for the workers’ compensation

reimbursement schedule, a portion of which Beutler England contends specifically

confers jurisdiction in the present case. It provides, in pertinent part:

F. (1) Should a dispute arise between a health care provider and
the employee, employer, or workers’ compensation insurer, either party
may submit the dispute to the office in the same manner and subject to
the same procedures as established for dispute resolution of claims for
workers’ compensation benefits.

5

Our review of the claims made and the applicable statutory authority indicates

that this matter is not one that is within the jurisdiction of the workers’ compensation

court. Certainly, La.R.S. 23:1310.3 and La.R.S. 23:1034.2 appear to broadly indicate

that fee disputes and workers’ compensation insurer disputes are within the workers’

compensation court’s jurisdiction. However, the claim in this case is not a

straightforward fee or insurance dispute. Instead, given the context of the case and

the underlying contracts that will necessarily be considered, the initial issue which

must be resolved is whether Beutler England contracted to receive less than the fee

charged pursuant to the Louisiana Fee Schedule. If so, it must be determined whether

that contract can coexist with La.R.S. 23:1034.2. Although Beutler England contends

that it does not seek recision of a contract, its broad claim of a fee dispute cannot be

fully considered outside of the defendants’ contractual defense. Thus, the threshold

question in this case sounds in contract, not the workers’ compensation provisions.

There is no specific grant of jurisdictional authority to the workers’ compensation

court to consider this type of question. Rather, at this stage in the proceeding, the

issue to be resolved merely relates to the workers’ compensation provisions.

However, after a determination is made as to the amount of the fee that may be

charged, any remaining claims for insufficient payment, penalties, and attorney’s fees

will remain and may then be brought in the workers’ compensation court.

Due to our conclusion that the exception of lack of subject matter jurisdiction

was properly granted, discussion of Beutler England’s remaining assignments of error

is pretermitted.

6

DECREE

For the foregoing reasons, the ruling of the workers’ compensation judge is

affirmed. All costs of this proceeding are assigned to the appellant, Beutler England

Chiropractic Clinic.

AFFIRMED.

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NUMBER 05-952

COURT OF APPEAL, THIRD CIRCUIT
STATE OF LOUISIANA

BEUTLER ENGLAND CLINIC (CHERYL BROWN)

VERSUS

MARKET BASKET NO. 27

PETERS, J., dissenting.

I respectfully disagree with the majority in this matter and would reverse the

WCJ’s grant of the exception of lack of subject matter jurisdiction. I find that the

OWC does have subject matter jurisdiction to determine whether a health care

provider who provides treatment to an injured employee in the workers’

compensation context is entitled to receive the amount allowed by the fee schedule

as opposed to an amount less than the fee schedule in accordance with a PPO contract

discount. Essentially, while I agree with the majority that the specifics of the PPO

contract are not properly within the OWC’s jurisdiction, I find that Beutler England’s

claim for payment for treatment of Ms. Brown does not implicate the PPO contract

because the PPO contract, whatever its provisions, may not be interposed to defeat

the statutory obligation to provide necessary medical care for an employee within the

fee schedule limits.

Specifically, the employer is obligated by La.R.S. 23:1203(A) to “furnish all

necessary drugs, supplies, hospital care and services, medical and surgical treatment,

and any nonmedical treatment recognized by the laws of this state as legal.” This

obligation “is limited to the reimbursement determined to be the mean of the usual

and customary charges for such care, services, treatment, drugs, and supplies, as

determined under the reimbursement schedule annually published pursuant to R.S.

23:1034.2 or the actual charge made for the service, whichever is less.” La.R.S.

23:1203(B). Importantly, pursuant to the fee schedule statute, La.R.S.

23:1034.2(F)(1), “[s]hould a dispute arise between a health care provider and the

employee, employer, or workers’ compensation insurer, either party may submit the

dispute to the office in the same manner and subject to the same procedures as

established for dispute resolution of claims for workers’ compensation benefits.”

Thus, clearly, the claim for payment of medical expenses not only arises out of the

Workers’ Compensation Act, but there is also an express statutory provision granting

OWC jurisdiction in case of a dispute between a health care provider and an

employer/insurer for such payment.

Nevertheless, the defendants have attempted to interpose the PPO contract as

a defense to full payment and assert that the attendant issues remove the dispute from

the jurisdiction of the OWC. However, La.R.S. 23:1033 provides that “[n]o contract,

rule, regulation or device whatsoever shall operate to relieve the employer, in whole

or in part, from any liability created by this Chapter except as herein provided.” As

set forth above, the employer’s liability for medical care is statutorily limited by the

lesser of either the amount allowed in the fee schedule or the actual charge, not by the

amount provided in a PPO contract. Accordingly, to the extent that the PPO contract

purports to further limit the employer’s liability for medical care, it runs afoul of

La.R.S. 23:1033 and may not serve as a basis to reduce the amount owed to Beutler

England for the treatment of Ms. Brown. Because the PPO contract may not serve as

a basis to reduce the amount owed for the treatment of Ms. Brown, Beutler England’s

claim is properly before the OWC pursuant to La.R.S. 23:1034.2(F)(1) as a garden-

variety medical expense claim. Whatever remaining rights the defendants have vis-à-

2

vis the PPO, in light of the Workers’ Compensation Act’s express disallowal of

contracts in contravention of its provisions, is another issue for another forum.

Finally, I do note the in-depth policy discussions on both sides of the issue

regarding the PPO contract. However, whatever the wisdom of allowing or not

allowing PPO contract discounts to invade the workers’ compensation arena, I find

that the legislature has addressed the issue through La.R.S. 23:1033 and that any

change in that regard must come from the legislature.

Accordingly, I would reverse the judgment below and remand the case for a

determination on the merits.

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