Lake Charles Memorial Hospital (Gregory Leday) v. Al Copeland Investments, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

10-784

LAKE CHARLES MEMORIAL HOSPITAL (GREGORY LEDAY)

VERSUS

AL COPELAND INVESTMENTS

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APPEAL FROM THE
OFFICE OF WORKERS’ COMPENSATION, DISTRICT 3
PARISH OF CALCASIEU, NO. 05-01593
SHELLY DICK, WORKERS’ COMPENSATION JUDGE AD HOC

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JAMES T. GENOVESE
JUDGE

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Court composed of Jimmie C. Peters, James T. Genovese, and David E. Chatelain,*
Judges.

AFFIRMED AND RENDERED.

John V. Quaglino
Juge, Napolitano, Guilbeau, Ruli, Frieman & Whiteley
3320 West Esplanade Avenue North
Metairie, Louisiana 70002
(504) 831-7270
COUNSEL FOR DEFENDANT/APPELLANT:
Al Copeland Investments
_____________________
*Honorable David E. Chatelain participated in this decision by appointment of the Louisiana
Supreme Court as Judge Pro Tempore.

Judy Y. Barrasso
Edward R. Wicker
Barrasso, Usdin, Kupperman, Freeman & Sarver, L.L.C.
909 Poydras Street, Suite 2400
New Orleans, Louisiana 70112
(504) 589-9700
COUNSEL FOR DEFENDANT/APPELLANT:
Al Copeland Investments

Thomas A. Filo
Cox, Cox, Filo, Camel & Wilson, L.L.C.
723 Broad Street
Lake Charles, Louisiana 70601
(337) 436-6611
COUNSEL FOR PLAINTIFF/APPELLEE:
Lake Charles Memorial Hospital

GENOVESE, Judge.

Al Copeland Investments (Copeland) appeals a workers’ compensation

judgment in favor of Lake Charles Memorial Hospital (LCMH), awarding LCMH

additional compensation for medical services rendered to one of Copeland’s injured

employees, a statutory penalty, and an attorney fee. LCMH has answered the appeal,

seeking additional attorney fees for work done on appeal. We affirm the judgment

in all respects. Additionally, we render judgment in favor of LCMH and against

Copeland, awarding an additional attorney fee for work performed on appeal.

FACTS

Gregory LeDay, an employee of Copeland, was injured in a work-related

accident for which he sought treatment at LCMH. LCMH billed Copeland for the

medical treatment it provided to Mr. LeDay. Copeland forwarded the bill to CorVel

Corporation (CorVel) for bill review services. CorVel adjusted the bill in accordance

with the Louisiana Workers’ Compensation Act’s (LWCA) fee schedule1 and further

reduced the amount charged by applying a preferred provider organization (PPO)

discount per CorVel’s contract with LCMH.2 Copeland paid the bill as per CorVel’s

recommendation.

LCMH filed the present action for what it alleged was an underpayment of its

bill. The workers’ compensation judge (WCJ) ruled in favor of LCMH, finding that

Copeland had not proven that there was a contract between Copeland and CorVel that

entitled Copeland to take the additional discount under the PPO. The WCJ awarded

1
Pursuant to La.R.S. 23:1034.2, the director of the Office of Workers’ Compensation is
charged with the responsibility of establishing a reimbursement schedule and with adopting the rules
and regulations for the establishment and implementation of same.
2
The record contains a copy of CorVel’s Preferred Provider Organization “CorCare” Hospital
Agreement with LCMH.

LCMH $36.75 for the underpayment, a $2,000.00 statutory penalty, and an attorney

fee of $3,500.00. Copeland appeals, and LCMH has answered the appeal.

ASSIGNMENTS OF ERROR

Copeland asserts on appeal that “[t]he trial court erred in finding that

Copeland[] did not meet its burden of proving that it had an agreement with CorVel

Corporation to access CorVel’s preferred provider network discounts.” Additionally,

Copeland contends that “[t]he trial court erred in granting a penalty and an attorney[]

fee in this matter.”

LCMH has answered the appeal, seeking an award of additional attorney fees

for work performed on appeal.

LAW AND DISCUSSION

Copeland argues on appeal that the trial court erred in finding that it failed to

prove the existence of an agreement between Copeland and CorVel. As set forth

below, even if such an agreement had been proven, Copeland was still not entitled to

reduce the amount of payment by applying a PPO discount due to lack of notice.

Therefore, we pretermit a discussion of this assignment of error.

The issue of the legality, vel non, of PPO contracts whereby an employer pays

a health care provider for services rendered to an injured employee at a negotiated

amount below that statutorily provided by the LWCA’s reimbursement schedule has

now been decided by our supreme court in its recent decision of Agilus Health v.

Accor Lodging North American, 10-800 (La. 11/30/10), __ So.3d __. In Agilus, our

supreme court held that “the LWCA does not prohibit PPO agreements providing for

discounted fees for workers’ compensation services to health care providers.”

Id. at __. However, that pronouncement does not resolve all of the issues set forth in

the present appeal.

2

Cognizant of the issue having been raised in other cases, the supreme court’s

opinion in Agilus expressly notes the following:

The plaintiff in the instant case did not argue to this court that the
defendants did not give proper notice pursuant to the requirements of
La.R.S. 40:2203.1. The plaintiffs raised the issue in their pre-trial
memorandum, but failed to argue this position in the court of appeal and
to this court. While notice under La.R.S. 40:2203.1 is an issue in
similar cases, because this issue was not raised in connection to this
writ application, we will not reach it in this opinion.

Id. at __ , n.4 (emphasis added).

In the instant matter, however, the notice provision in La.R.S. 40:2203.1

is at issue. It is, therefore, incumbent upon this court to consider this issue. We do

so mindful of the recent jurisprudence. Gunderson v. F.A. Richard & Assocs., Inc.,

09-1498 (La.App. 3 Cir. 6/30/10), 44 So.3d 779; Cent. La. Ambulatory Surgical Ctr.,

Inc. v. Payless Shoesource, Inc., 10-86, 10-91, 10-92, 10-96, 10-97, 10-99, 10-100,

10-115, 10-117, 10-118 (La.App. 3 Cir. 7/28/10), __ So.3d __, rev’d in part on

reh’g, 2010 WL 4146106 (La.App. 3 Cir. 10/20/10), __ So.3d. __. In each of these

cases, just as in the matter before us, claims were brought by health care providers

who asserted that they were improperly being paid in workers’ compensation cases

at reduced rates pursuant to PPO agreements instead of the rates provided by the

LWCA fee schedule. Additionally, in each of these cases, the health care provider

argued that even if the PPO contracts were valid and held not to be violative of the

LWCA, they were nonetheless unenforceable due to the failure of the employer to

give the requisite notice under La.R.S. 40:2203.1 (Title 40 notice).3 To the contrary,

3
Louisiana Revised Statutes 40:2203.1 (emphasis added) provides, in pertinent part, as
follows:

A. Except as otherwise provided in this Subsection, the requirements of this
Section shall apply to all preferred provider organization agreements that are
applicable to medical services rendered in this state and to group purchasers as
defined in this Part. The provisions of this Section shall not apply to a group

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the employer asserted that the notice provisions were inapplicable to workers’

compensation patients.

This court in Gunderson, 44 So.3d at 787 (footnote omitted), finding the notice

provisions in La.R.S. 40:2203.1 to be applicable, reasoned that “when

purchaser when providing health benefits through its own network or direct provider
agreements or to such agreements of a group purchaser.

B. A preferred provider organization’s alternative rates of payment shall not
be enforceable or binding upon any provider unless such organization is clearly
identified on the benefit card issued by the group purchaser or other entity accessing
a group purchaser’s contractual agreement or agreements and presented to the
participating provider when medical care is provided. When more than one preferred
provider organization is shown on the benefit card of a group purchaser or other
entity, the applicable contractual agreement that shall be binding on a provider shall
be determined as follows:

(1) The first preferred provider organization domiciled in this state, listed on
the benefit card, beginning on the front of the card, reading from left to right, line by
line, from top to bottom, that is applicable to a provider on the date medical care is
rendered, shall establish the contractual agreement for payment that shall apply.

(2) If there is no preferred provider organization domiciled in this state listed
on the benefit card, the first preferred provider organization domiciled outside this
state listed on the benefit card, following the same process outlined in Paragraph (1)
of this Subsection shall establish the contractual agreement for payment that shall
apply.

(3) The side of the benefit card that prominently identifies the name of the
insurer, or plan sponsor and beneficiary shall be deemed to be the front of the card.

(4) When no preferred provider organization is listed, the plan sponsor or
insurer identified by the card shall be deemed to be the group purchaser for purposes
of this Section.

(5) When no benefit card is issued or utilized by a group purchaser or other
entity, written notification shall be required of any entity accessing an existing
group purchaser’s contractual agreement or agreements at least thirty days prior to
accessing services through a participating provider under such agreement or
agreements.

C. A preferred provider organization agreement shall not be applied or used
on a retroactive basis unless all providers of medical services that are affected by the
application of alternative rates of payment receive written notification from the entity
that seeks such an arrangement and agree in writing to be reimbursed at the
alternative rates of payment.

D. In no instance shall any provider be bound by the terms of a preferred
provider organization agreement that is in violation of this Part.

4

La.R.S. 40:2203.1 states that it applies to ‘all preferred provider organization

agreements that are applicable to medical services rendered in this state and to group

purchasers as defined in this Part,’ it in fact, means all such agreements.” Consistent

therewith, this court in Central Louisiana Ambulatory Surgical Center, Inc.,

__ So.3d. at __, opined as follows:

We conclude and hold that the specific notice provisions of La.R.S.
40:2203.1 apply to workers’ compensation patients in a PPO network.

Our decision on the necessity of notice is consistent with the very
recent opinion of our court in Gunderson v. F.A. Richard & Associates,
Inc., 09-1498 (La.App. 3 Cir. 6/30/10), [44 So.3d 779]. We agree
entirely with Gunderson.

We agree with the reasoning in the foregoing opinions and find no reason to

deviate from their holdings. Accordingly, we incorporate the analyses of these

opinions as though set out herein in full. That being the case, even if an agreement,

oral or otherwise, existed between Copeland and CorVel, because the record is clear

that Title 40 notice was not given to LCMH nor was any benefit card issued,

Copeland was not permitted to take advantage of the discounted rates to which it

purports to be entitled to under the PPO agreement.

For the foregoing reasons, we conclude that Copeland failed to fully pay for the

medical expenses of its injured employee as required by La.R.S. 23:1203. This

underpayment of medical expenses subjects Copeland to the imposition of a penalty

and attorney fee unless the claim was reasonably controverted or resulted from

conditions over which the employer had no control. La.R.S. 23:1201(F)(2).

On the issue of the WCJ’s award of a statutory penalty, we agree with and

choose to follow Central Louisiana Ambulatory Surgical Center, Inc.,

5

__ So.3d at __,4 wherein we stated on rehearing:

While Defendants may have a plausible argument on the
impropriety of awarding penalties under La.R.S. 23:1201(F)(4) based on
the validity of the PPO discount agreement, the argument is untenable
with regard to the notice provisions of La.R.S. 40:2203.1. Gunderson
v. F.A. Richard & Associates, Inc., 09-1498 (La.App. 3 Cir. 6/30/10),
[44 So.3d 779], explained that La.R.S. 40:2203.1 was clear and
unambiguous. When a statute refers to “all preferred provider
organization agreements,” it means just that. Defendants in these
consolidated cases were aware of these clear provisions and cannot
escape their applicability with protestations of ambiguity.

Based on the failure to comply with the notice requirements of La.R.S. 40:2203.1,

even if a contractual right to the PPO discount had been established by Copeland, we

find no manifest error5 in the WCJ’s award of a $2,000.00 statutory penalty.

The WCJ also awarded LCMH a $3,500.00 attorney fee. On the issue of the

attorney fee award, we likewise find no manifest error in the WCJ’s attorney fee

award of $3,500.00.

We also find that LCMH is entitled to an additional attorney fee for work

performed on appeal. We, therefore, render an attorney fee award of $2,500.00 in

favor of LCMH for work performed on appeal.

DECREE

For the foregoing reasons, we affirm the judgment in all respects. Additionally,

we render judgment in favor of Lake Charles Memorial Hospital and against Al

Copeland Investments in the amount of $2,500.00 as an additional attorney fee

4
Having found no prohibition in the taking of PPO discounts in workers’ compensation
matters, our supreme court in Agilus did not reach the issues of penalties and attorney fees.
5
“The determination of whether an employer or insurer should be cast with penalties and
attorney fees in a workers’ compensation action is essentially a question of fact. Factual findings
are subject to the manifest error or clearly wrong standard of review.” Authement v. Shappert Eng’g,
02-1631, p. 12 (La. 2/25/03), 840 So.2d 1181, 1188-89 (citing Banks v. Indus. Roofing & Sheet
Metal Works, Inc., 96-2840 (La. 7/1/97), 696 So.2d 551).

6

necessitated by the present appeal. We assess all costs of this appeal to Al Copeland

Investments.

AFFIRMED AND RENDERED.

7