Thomas Medical Group, Apmc (Eric Brewton) v. Stine, LLC

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

10-593

THOMAS MEDICAL GROUP, APMC (ERIC BREWTON)

VERSUS

STINE, LLC, ET AL.

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APPEAL FROM THE
OFFICE OF WORKERS’ COMPENSATION - # 2
PARISH OF RAPIDES, NO. 08-05501
JAMES L. BRADDOCK, WORKERS COMPENSATION JUDGE

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JOHN D. SAUNDERS
JUDGE

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Court composed of John D. Saunders, J. David Painter, and Shannon J. Gremillion,
Judges.

AFFIRMED.

Gremillion, J., concurs in parts and dissents in part and assigns written
reasons.

Roger Anthony Javier
The Javier Law Firm
1100 Poydras St., #800
New Orleans, LA 70163
(504) 599-8570
Counsel for Defendant/Appellant:
Zurich American Ins. Co.
Stine, LLC

Richard Bray Williams
Williams Family Law Firm, LLC
P. O. Box 15
Natchitoches, LA 71458-0015
(318) 352-6695
Counsel for Plaintiff/Appellee:
Thomas Medical Group, APMC (Eric Brewton)

SAUNDERS, Judge.

This appeal involves a dispute between a health care provider and an employer,

its insurer, and a third party administrator. The insurer’s third party administrator and

the health care provider were both parties to preferred provider agreements (PPO)

with First Health Group Corp (First Health). Despite the existence of this PPO

agreement, the health care provider, plaintiff/appellee Thomas Medical Group,

APMC (Thomas), which agreed to accept 90% of the statutory reimbursement

schedule established in the Louisiana Workers’ Compensation Act, filed a disputed

claim for compensation with the Office of Worker’s Compensation by which it

sought—and was awarded—the alleged underpayment amount of $51.66 plus a

penalty of $2,000.00 and attorney fees of $4,500.00 against the employer,

defendant/appellant Stine, LLC (Stine), and its insurer, defendant/appellant Zurich

American Insurance Company (Zurich). Stine and Zurich appealed the judgment.

Thomas answered the appeal, asserting that because there were two bills that were

discounted improperly, it was entitled to two awards of penalties. Thomas also seeks

additional attorney fees for defending the judgment on appeal. For the reasons that

follow, we affirm the workers’ compensation judge’s (WCJ) judgment.

FACTS

In January 2002, Gallagher Bassett Services, Inc. (Gallagher Bassett), entered

into a contract with First Health allowing Gallagher Bassett access to First Health’s

preferred provider network. In July 2005, Dr. James Knecht, a Natchitoches,

Louisiana, physician, contracted with First Health to become a member of First

Health’s preferred provider network.1 Dr. Knecht was asked to complete a

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Dr. Knecht and Dr. Joseph A. Thomas formed the Thomas Medical Group, a corporation
operating under Subchapter S. Three years later, Dr. Thomas died. Dr. Knecht is the sole physician
member of the Thomas Medical Group.

questionnaire that specifically queried his workers’ compensation practice as part of

this enrollment. In November 2006, Gallagher Bassett entered into a Third Party

Administrator Agreement with Zurich, whereby Gallagher Bassett agreed to

administer certain workers’ compensation claims for Zurich. Zurich provided

workers’ compensation insurance to Stine.

Dr. Knecht is a general practitioner in Natchitoches who accepts workers’

compensation cases only on referrals from employers. He employs Acadiana

Computer Services to perform his billing. He and his staff were not aware that

Stine’s employee, Mr. McDavid, was being seen pursuant to the PPO agreement until

an Explanation of Benefits (EOB) was received by his office. His staff alerted him

to the fact that First Health had taken a further PPO reduction from the statutory

reimbursement schedule that fixes the maximum amount a health care provider can

be reimbursed. Thomas then initiated this litigation.

The WCJ heard this matter and, for oral reasons handed down in another

matter, found that Stine and Thomas had not negotiated over the application of the

PPO agreement to the treatment of workers’ compensation patients, and that PPO

arrangements simply are not compatible with the statutory workers’ compensation

scheme. Therefore, the WCJ rendered judgment in favor of Thomas.

ASSIGNMENTS OF ERROR

Stine and Zurich assign as error:

(1) The WCJ’s ruling that the PPO contracts are not authorized by the Workers’

Compensation Act;

(2) The WCJ’s ruling that PPO agreements must be specifically authorized by

statute to have effect;

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(3) The WCJ’s ruling that they were arbitrary and capricious in reducing

payments to Thomas, thus subjecting them to penalties and attorney fees; and,

(4) The WCJ’s assessment of penalties and attorney fees.

Thomas assigns as error the WCJ’s ruling admitting evidence of the relationship

between First Health and a company known as Concentra, Inc., and FOCUS Health

Care Management, Inc.2 Thomas also assigns a error the ruling that Stine and Zurich

were only liable for a single penalty, as it contends each failure to properly reimburse

constitutes a separate violation of the Workers’ Compensation Act.

ANALYSIS

This Court has wrestled with this issue for the past several months. See Agilus

Health (Allison Taylor) v. Accor Lodging N. Am., 09-1049 (La.App. 3 Cir. 3/10/10),

32 So.3d 1120, writ granted, 10-800 (La. 6/18/10), 38 So.3d 312, and Central La.

Ambulatory Surgical Ctr., Inc. v. Payless Shoesource, Inc., 10-86 (La.App. 3 Cir.

7/28/10), ___ So.3d ___, on rehearing, (La.App. 3 Cir. 10/20/10), ___ So.3d ___.

We disagree with the WCJ that this matter hinges upon whether a PPO agreement

runs afoul of the Workers’ Compensation Act. Assuming that a PPO agreement is

valid, the defendants were not entitled to take any discount on the workers’

compensation reimbursement schedule. The dictates of La.R.S. 40:2203.1, which

requires advanced notice to the health care provider either in the form of a benefit

card that identifies the PPO or other written notice by the PPO to the provider at least

30 days in advance of services, were not followed. See Touro Infirmary v. Am.

Maritime Officer, 09-697 (La.App. 4 Cir. 11/9/09), 24 So.3d 948, and Gunderson v.

2
The last exhibit of which Thomas complains consists of documents reflecting the terms of
the settlement a class action suit, Gunderson v. F.A. Richard & Assocs., Inc., docket 2004-2417 of
the 14th Judicial District Court, Calcasieu Parish, Louisiana. The suit was settled releasing the
“affiliates, ” which included entities related to FOCUS and Concentra.

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F.A. Richard & Assocs., Inc., 09-1498 (La.App. 3 Cir. 6/2/10), 40 So.3d 418. Under

the plain terms of section 2203.1, unless this notice is provided, “[a] preferred

provider organization’s alternative rates of payment shall not be enforceable or

binding.” La.R.S. 40:2203.1(B).

Clearly, the lack of notice to Thomas that Mr. McDavid’s treatment would be

provided under the auspices of the PPO precludes enforcement of those discounts.

These notice provisions are statutorily mandated. They are clear and unambiguous.

Gunderson, 40 So.3d 418. The imposition of penalties by the WCJ is subject to

review under the manifest error standard. Wilczewski v. Brookshire Grocery Store,

08-718 (La.App. 3 Cir. 1/28/09), 2 So.3d 1214, writ denied, 09-456 (La. 4/13/09), 5

So.3d 170. We find that the record reasonably supports the imposition of penalties

under La.R.S. 23:1201(F)(4), which reads:

In the event that the health care provider prevails on a claim for
payment of his fee, penalties as provided in this Section and reasonable
attorney fees based upon actual hours worked may be awarded and paid
directly to the health care provider. This Subsection shall not be
construed to provide for recovery of more than one penalty or attorney
fee.

Because the notice provisions were not followed, the WCJ’s imposition of penalties

was not manifestly erroneous. See Central La. Amb. Surg. Ctr., Inc., 10-86 (La.App.

3 Cir. 10/20/10), ___ So.3d ___ (On rehearing).

We disagree with Thomas that each failure to reimburse at the proper rate

constitutes a separate violation for purposes of imposing penalties. Whether multiple

violations occur is a determination subject to review under the manifest error

standard. Wyble v. Acadiana Prep. Sch., 07-91 (La.App. 3 Cir. 5/2/07), 956 So.2d

722, writ denied, 07-1178 (La. 9/14/07), 963 So.2d 1004. Our supreme court has

directed us to “ferret out” these situations. See Fontenot v. Reddell Vidrine Water

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District, 02-439, p.18 (La. 1/14/03), 836 So.2d 14, 27. We have done so in cases

such as Ducote v. Louisiana Industries, Inc., 07-1536 (La.App. 3 Cir. 4/2/08), 980

So.2d 843, and Burnett v. Villiage of Esterwood, 09-680 (La.App. 3 Cir. 12/9/09), 25

So.3d 997.

In this case, the WCJ found, as fact, that it was a good-faith, single error made

by the benefits providers, i.e. that they could pay the negotiated lower prices for

health care services, that led to multiple bills being underpaid. Given these

circumstances, we cannot say that the WCJ erred in awarding a single penalty to

Thomas. Thus, we find the record reasonably supports the imposition of a single

penalty.

The WCJ awarded Thomas $4,500.00 in attorney fees. Louisiana Revised

Statute 23:1201(F)(4) allows a health care provider to collect an attorney fee based

on the actual hours worked. “The [WCJ] has great discretion in the award of

attorney’s fees and will not be disturbed absent manifest error.” Dietz v. Guichard

Drilling Co., 626 So.2d 79, 83 (La.App. 3 Cir. 1993).

In the case before us, Thomas’s attorney submitted an affidavit attesting that

as of October 19, 2009, he had worked 2.2 hours on the case. Since October 19,

2009, Thomas’ attorney has also prepared this case for trial and tried this case, along

with three others on these issues, in a trial that lasted an entire day. Given the great

discretion affording the WCJ on this issue, we find no error in its award.

Thomas also seeks additional attorney fees for work on appeal. The award of

additional attorney fees is warranted when the claimant successfully defends its

judgment. See Central La. Ambulatory Surgical Ctr., Inc.,10-86 (La.App. 3 Cir.

10/20/10), ___ So.3d ___ (On rehearing). “Generally, when an award for attorney’s

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fees is granted [by the WCJ], additional attorney’s fees are proper for work done on

appeal [so as] to keep the appellate judgment consistent with the underlying

judgment.” Wilczewski, 2 So.3d at 1226. Accordingly, we award Thomas an

additional $1,500.00 in attorney’s fees for work done on appeal.

Thomas assigned an error in the admission of certain documents. We consider

this assignment of error moot.

CONCLUSION

The issue of the validity of a PPO agreement to a workers’ compensation case

need not be addressed, because even if such an agreement were valid, the notice

required be given to the health care provider was not effected. Therefore, the PPO

was not allowed to discount the reimbursement below the workers’ compensation

reimbursement schedule. The judgment of the Workers’ Compensation Judge

awarding Thomas $51.66 is affirmed. Likewise, the notice provisions of the PPO

laws are clear and unambiguous. The failure to follow these dictates, yet to still

attempt to discount the health care provider’s reimbursement, warrants the imposition

of penalties. The single penalty of $2,000.00 is affirmed. Moreover, the award of

$4,500.00 in attorney fees is affirmed given the great discretion afforded the WCJ.

Finally, Thomas is awarded additional attorney’s fees for this appeal of $1,500.00.

AFFIRMED.

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STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

10-593

THOMAS MEDICAL GROUP, APMC (ERIC BREWTON)

VERSUS

STINE, LLC, ET AL.

GREMILLION, Judge, concurs in part and dissents in part.

I find that the attorney fees awarded by the WCJ are too high and should be

reduced. Thus, I dissent on this issue for the same reasons I assigned in my dissent

in Central La. Amabulatory Surgical Crt., Inc., 10-86 (La.App. 3 Cir. 10/20/10),

__So.3d__ (On rehearing). In all other respects I concur with the majority.