Kennen Daniel v. Point to Point Directional Drilling, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

13-1407

KENNEN DANIEL

VERSUS

POINT TO POINT DIRECTIONAL DRILLING, INC.

**********

APPEAL FROM THE
OFFICE OF WORKERS’ COMPENSATION – DISTRICT 3
PARISH OF CALCASIEU, NO. 11-03297
CHARLOTTE L. BUSHNELL, WORKERS’ COMPENSATION JUDGE

**********

JIMMIE C. PETERS
JUDGE

**********

Court composed of John D. Saunders, Jimmie C. Peters, and Billy Howard Ezell,
Judges.

AFFIRMED IN PART AS AMENDED;
REVERSED IN PART; AND RENDERED.

Eric J. Waltner
Allen & Gooch, A Law Corporation
P. O. Box 81129
Lafayette, LA 70598-1129
(337) 291-1400
COUNSEL FOR DEFENDANTS/APPELLANTS:
Point to Point Directional Drilling, Inc.
The Gray Insurance Company

Mark Zimmerman
4216 Lake Street
Lake Charles, LA 70605
(337) 474-1644
COUNSEL FOR PLAINTIFF/APPELLEE:
Kennen Daniel

PETERS, J.

The defendants, Point to Point Directional Drilling, Inc. and The Gray

Insurance Company, appeal from a workers’ compensation judgment awarding the

plaintiff, Kennen Daniel, medical treatment for his work-related mental injury,

penalties and attorney fees, and full reimbursement for his past medical treatment.

For the following reasons, we reverse that part of the judgment awarding

reimbursement to Blue Cross/Blue Shield for amounts paid for Mr. Daniel’s

medical treatment; amend the judgment to award Mr. Daniel $2,000.00 in penalties

for the defendants’ failure to reimburse Mr. Daniel his out-of-pocket expenses, and

affirm the remainder of the judgment as amended. Additionally, we award Mr.

Daniel an additional $5,000.00 in attorney fees for work performed on appeal.

DISCUSSION OF THE RECORD

On June 27, 2008, Point to Point Directional Drilling, Inc. (Point to Point), a

Welsh, Louisiana drilling company, employed Kennen Daniel as a laborer. On that

day, Mr. Daniel, who was nineteen years old, was involved in a multiple-vehicle

accident near Newton, Texas. While there exists no dispute over the fact that Mr.

Daniel was in the course and scope of his employment with Point to Point at the

time of the accident, the facts of the accident are necessary to explain the disability

issue before the court.

At approximately 9:20 p.m. on June 27, 2008, Mr. Daniel and his crew chief

were traveling to Welsh from a Texas job, and eastbound on U.S. Highway 190

near Newton, Texas. Each was driving a company truck, and Mr. Daniel was in

the lead and pulling a trailer. Approximately one mile west of the crash site, an

erratically driven vehicle passed Mr. Daniel. Soon thereafter, the vehicle crossed

the centerline of the highway, sideswiped a westbound truck and trailer, and then

struck another truck and trailer head-on, before coming to rest in the eastbound

lane. To avoid the accident taking place immediately before him, Mr. Daniel

veered into the westbound lane and struck the first truck hit by the erratically

driven vehicle. His vehicle then came to rest in the eastbound lane, at which time

Mr. Daniel found himself trapped in the wreckage of his truck. Approximately

twenty minutes later, his crew chief was able, with the use of his truck, to rip off

the truck’s door and steering wheel to free him.

Immediately Mr. Daniel and other Point to Point employees began assisting

the other trapped wreck victims. While attempting to assist these other individuals,

Mr. Daniel encountered the wreckage of the other vehicles and observed the

horribly severed corpse of the precipitating driver, the severely crushed driver of

the truck hit head on, a screaming passenger, as well as other victims.

Approximately thirty minutes later, emergency-response personnel reached the

scene and took over the rescue operation. By this time, Mr. Daniel was obviously

overcome with what he had experienced, and his crew chief directed him to sit

down away from the wreckage. An ambulance subsequently transported him to a

hospital in Jasper, Texas. When he arrived at the hospital at approximately 11:05

p.m., the emergency room personnel treated him for facial and left arm lacerations,

a left corneal abrasion, and contusions on both knees. He was then released to

return home.

Within two weeks of the accident, Mr. Daniel began experiencing the

symptoms of Post-Traumatic Stress Disorder (P.T.S.D.), including nightmares,

survival guilt, and insomnia. In order to cope with his overwhelming emotions, he

began drinking heavily and abusing illegal and prescription drugs. While

continuing to work for Point to Point after the accident, Mr. Daniel sought

treatment for his symptoms at the Institute for Neuropsychiatry (Institute) in Lake

2

Charles, Louisiana. However, he did not effect a workers’ compensation claim for

his medical condition. Instead, he sought payment of the treatment from his

parents’ health insurance policies.

Mr. Daniel’s first appointment at the Institute occurred on April 22, 2009,

and Nurse Practitioner Sarah Hairgrove oversaw his treatment from that date

through his discharge on November 23, 2010. Ms. Hairgrove diagnosed Mr.

Daniel as suffering from Bipolar Disorder, co-morbid with substance abuse, and

P.T.S.D. Initially he responded to treatment and was released to work without

restrictions on June 10, 2009. However, on May 20, 2009, Point to Point

terminated Mr. Daniel’s employment based on a failed drug test. Mr. Daniel

continued his relationship with the Institute until he was discharged by Ms.

Hairgrove on November 23, 2011. The reason for his discharge from the Institute

was his failure to comply with his medication treatment and to attend his

appointments and therapy sessions.

However, even before the Institute discharged him from its care, Mr. Daniel

sought other treatment for his condition. On July 8, 2009, he checked himself into

G & G Holistic Addiction Treatment, Inc. (G & G), a North Miami Beach, Florida

drug-rehabilitation center. The treatment team at G & G diagnosed Mr. Daniel as

suffering from Bipolar Disorder and P.T.S.D., as had the Institute, but added

alcohol and cannabis dependence to that diagnosis. The records from G & G

indicate that Mr. Daniel’s substance abuse/dependence was his primary problem,

and his P.T.S.D. and Bipolar Disorder were secondary. Although Mr. Daniel

entered G & G’s intensive residential program, he only stayed enrolled eighteen

days. On July 26, 2009, G & G discharged him as a patient for his non-compliance

with his treatment.

3

Nine months and two days later, on April 28, 2011, Mr. Daniel sought

treatment for his drug-dependency problems from New Beginnings at Lake

Charles, LLC (New Beginnings), an addiction treatment and rehabilitation center.

The initial diagnosis at New Beginnings was that of opiate, cocaine, cannabis, and

sedative/hypnotic drug dependency. However, Mr. Daniel could not maintain the

program requirements at New Beginnings, either. On May 16, 2011, he was

released from New Beginnings against medical advice and, the next day, sought a

psychiatric evaluation at Calcasieu Oaks Behavior Clinic (Calcasieu Oaks), a Lake

Charles psychiatric hospital. His initial diagnosis at Calcasieu Oaks was Bipolar

Disorder, poly-substance abuse, and depression. He remained at Calcasieu Oaks

until May 24, 2011, at which time he returned to New Beginnings. However, the

next day, he left New Beginnings against medical advice.

In addition to the treatment provided by these health care providers, Mr.

Daniel also received treatment from his family physician, Dr. Mark E. Clawson, a

Jennings, Louisiana family practitioner, from Yvonne H. Krielow, a nurse

practitioner at The Clinic of Welsh, LLC, and the Lake Charles Memorial Hospital

and Jennings American Legion Hospital emergency rooms. On numerous

occasions, his mental condition required that he be transported to and from the

facilities by ambulance.

By certified mail dated April 26, 2011, Mr. Daniel’s counsel made demand

on Point to Point for medical treatment and indemnity benefits related to his June

27, 2008 work-related accident. When Point to Point did not affirmatively respond

to this demand, on May 2, 2011, he filed a disputed claim against Point to Point

seeking a judgment for indemnity and medical benefits, penalties and attorney fees,

and interest for the work-related injuries he suffered as a result of the June 27,

4

2008 accident. Point to Point and its insurer, The Gray Insurance Company

(hereinafter referred to collectively as Point to Point), filed pleadings denying Mr.

Daniel’s entitlement to either indemnity or medical benefits and further asserted

that his right to indemnity benefits had prescribed. As an alternate defense, Point

to Point asserted that Mr. Daniel had forfeited his right to benefits pursuant to the

fraud statutes, La.R.S. 23:1208 and/or La.R.S. 23:1208.1. Following a hearing, the

workers’ compensation judge (WCJ) granted Point to Point’s exception of

prescription as to the indemnity benefits. The WCJ executed a written judgment to

this effect on August 27, 2012, and this issue is not before us.

The matter proceeded to a trial on the merits on May 2, 2013. At the start of

the trial, the parties stipulated that the June 28, 2007 accident occurred during the

course and scope of Mr. Daniel’s employment with Point to Point and that the only

issues to be resolved pertained to medical benefits. Upon completion of the

evidentiary phase of the trial, the WCJ took the matter under advisement.

Thereafter, on September 26, 2013, the WCJ rendered oral reasons for judgment

finding that Mr. Daniel suffered a mental injury as a result of his work-related

accident and that his allegedly fraudulent statements did not reach the level

required for proving fraud under the Louisiana Workers’ Compensation Act. The

WCJ further held that Point to Point was not entitled to the $750.00 cap for non-

authorized medical treatment provided for in La.R.S. 23:1142 and ordered it to

reimburse Blue Cross/Blue Shield in full for any medical benefits it paid pursuant

to La.R.S. 23:1205. 1 Finally, the WCJ awarded Mr. Daniel $2,000.00 in penalties

based on Point to Point’s failure to pay medical benefits and $10,000.00 in attorney

fees.

1
Blue Cross/Blue Shield of Texas was his father’s health insurer. Blue Cross/Blue
Shield of Louisiana was his mother’s health insurer.
5

Subsequently, Mr. Daniel filed a motion for new trial to address the issue of

reimbursement for the out-of-pocket expenses paid by his mother for his treatment.

However, following Point to Point’s petition for a suspensive appeal, he

voluntarily dismissed that motion and, instead, raised the issue in his answer to the

appeal.

On appeal, Point to Point raises six assignments of error:

1. It was legal or manifest error to deny 23:1208 when the
claimant admitted at trial that he lied in his deposition because
he thought that if he told the truth it would hurt his Worker’s
[sic] Compensation claim;

2. It was legal or manifest error to deny 23:1208 given the
misrepresentations to the medical providers;

3. The court applied the wrong standard in evaluating whether
there had been a violation of 23:1208;

4. It was legal or manifest error to not apply 23:1212 and to Order
reimbursement to health insurance, a nonparty, of 100% of their
payments;

5. It was legal or manifest error to find that 23:1142 was
inapplicable;

6. It was legal or manifest error to award penalties and attorney’s
fees[.]

In his answer to appeal, Mr. Daniel raises four assignments of error:

1. Clarification of the judgment awarding medical benefits.

2. Additional $2,000.00 penalty for failure to reimburse $4,500.00
out-of-pocket-expense paid to G & G Holistic.

3. Litigation Expenses.

4. Additional attorney fees for work done on Appeal.

OPINION

It is well settled that an appellate court reviews the factual findings of a

workers’ compensation judge pursuant to the manifest error—clearly wrong

6

standard of review. Poissenot v. St. Bernard Parish Sheriff’s Office, 09-2793 (La.

1/9/11), 56 So.3d 170. Additionally, a question of law is reviewed by determining

if the workers’ compensation judge’s ruling is legally correct or incorrect. Magbee

v. Fed. Express, 12-77 (La.App. 3 Cir. 12/12/12), 105 So.3d 1048.

Fraud

Point to Point’s first three assignments of error all question the correctness

of the WCJ’s denial of its La.R.S. 23:1208 fraud defense. Its first assignment is

based on Mr. Daniel’s admission that he testified untruthfully during his deposition

because he felt the truth would hurt his claim. Its second assignment is based on

his inaccurate statements to the medical providers regarding his pre-accident drug

use. In its third assignment, Point to Point argues that the WCJ applied the wrong

standard for finding no violation of La.R.S. 23:1208. Since all three assignments

are related, we will address them together.

The fraud provision at issue is found in La.R.S. 23:1208, which provides in

part:

A. It shall be unlawful for any person, for the purpose of
obtaining or defeating any benefit or payment under the provisions of
this Chapter, either for himself or for any other person, to willfully
make a false statement or representation.
....

E. Any employee violating this Section shall, upon
determination by workers’ compensation judge, forfeit any right to
compensation benefits under this Chapter.

In Jim Walter Homes, Inc. v. Guilbeau, 05-1473, pp. 5-6 (La.App. 3 Cir.

6/21/06), 934 So.2d 239, 243, this court cited the parameters applicable to the

La.R.S. 23:1208 fraud defense:

Under the unambiguous and clear language of the statute, an
employer claiming that an employee has violated La.R.S. 23:1208
must prove ―that (1) there is a false statement or representation, (2) it
is willfully made, and (3) it is made for the purpose of obtaining or
7

defeating any benefit or payment.‖ Resweber v. Haroil Constr. Co.,
94-2708, p. 7 (La.9/5/95), 660 So.2d 7, 12. If the WCJ finds that all
three of ―these requirements are met, Section 1208 applies and its
forfeiture provisions must be enforced.‖ Id. at 14.

The determination by a WCJ as to whether a claimant has made
a false statement, willfully, for the purpose of obtaining workers’
compensation benefits is a finding of fact, and is, therefore, subject to
the manifest error standard of review. Phillips v. Diocese of Lafayette,
03-1241 (La.App. 3 Cir. 3/24/04), 869 So.2d 313. However, we must
keep in mind that La.R.S. 23:1208(E) is penal in nature. Any statute
that is penal in nature must be strictly construed in favor of the one
receiving benefits under that chapter of the law. Fontenot v. Reddell
Vidrine Water Dist., 02-439 (La.1/14/03), 836 So.2d 14; Olander v.
Schillilaegh’s, 04-725 (La.App. 3 Cir. 3/23/05), 899 So.2d 97.

The evidentiary record establishes that despite his young age at the time of

the June 28, 2008 accident, Mr. Daniel had a significant substance use and abuse

history. In fact, Dr. Clawson’s2 medical records establish that on October 5, 2000,

he diagnosed Mr. Daniel as suffering from attention deficit disorder and prescribed

Adderall. At the time, Mr. Daniel was eleven years old. When Mr. Daniel was

fourteen years old, Dr. Clawson saw Mr. Daniel for a personal consultation

following the divorce of his mother and father. At that time, Dr. Clawson

prescribed Strattera, an attention-deficit/hyperactivity-disorder medication to Mr.

Daniel. Two years later, in September of 2005, Dr. Clawson’s medical record

indicates that he prescribed Lexapro to Mr. Daniel for depression. However, his

handwritten note stated that the Strattera had begun to cause Mr. Daniel to feel

depressed, and the change of medication was in response to that complaint. This

change of medication was added to the Adderall, and Mr. Daniel was instructed to

return in one month.

During high school, Mr. Daniel began consuming alcohol, and he

experimented with marijuana, mushrooms, ecstasy, and perhaps other illegal

substances. The fraud defense is raised because of the contradictory statements by
2
Dr. Clawson has previously been identified as Mr. Daniel’s family physician.
8

Mr. Daniel concerning the extent of his alcohol and illegal substance use prior to

the June 28, 2008 accident.

During direct examination at trial, Mr. Daniel testified that the nature of his

drug and alcohol use prior to June of 2008, was occasional or recreational.

Additionally, he denied ever using cocaine prior the accident. He did not recall if

he denied a social use of drugs to the emergency room personnel immediately after

the accident, but also suggested that he was overwhelmed from the circumstances

of the accident at that particular time.

With regard to the extent of his past substance abuse, Mr. Daniel had stated

in his deposition that he smoked marijuana approximately fifteen times during high

school, but denied using any other type of illegal substances prior to the accident.

However, the records of New Beginnings indicated that when he participated in the

initial assessment process on April 28, 2011, he related a history of having

consumed a twelve pack of beer per week beginning at the age of fifteen; smoking

half an ounce of marijuana and snorting half an ounce of cocaine daily since the

age of seventeen; and ingesting two to three pills of ecstasy on weekends since

turning eighteen years of age. On May 10, 2011, a subsequent chemical

use/mental health intake form was completed indicating that Mr. Daniel began

drinking at the age of fifteen and that he mostly drank beer and bourbon during his

high school years; that he tried mushrooms one time at the age of sixteen; and that

he began using Hydrocodone, Roxicodone, methadone, and, once or twice, ecstasy

at the age of eighteen. The form further states that Mr. Daniel began using

marijuana daily at age seventeen, which varied between a half and one ounce daily

beginning in June of 2008. Finally, it states that Mr. Daniel began using cocaine at

the age of nineteen and that his use became problematic between June of 2008 and

9

January of 2009. 3 Additionally, Mr. Daniel, in an undated Treatment Plan

Assignment, wrote that his use of alcohol began at fifteen, marijuana at seventeen,

and cocaine at eighteen.

When confronted with the New Beginnings records at trial, Mr. Daniel

admitted that he began smoking a gram of marijuana every day or every other day

when he was seventeen and that both his one-time-mushroom use at sixteen and his

one-to-two-time-ecstasy use at eighteen were accurate. However, he was adamant

that he never used cocaine until two weeks after the June 28, 2008 accident or that

he used Hydrocodone, Roxicodone, or methadone when he was eighteen years old.

When questioned why the New Beginnings’ records indicated that his cocaine use

began at eighteen, he admitted that he had taken several substances prior to his

admission into New Beginnings and that he was probably high at the time this

information was gathered from him. In fact, an April 29, 2011 blood test revealed

that he tested positive for Benzodiazepine, cocaine, methadone, and marijuana.4

Ms. Hairgrove testified that when Mr. Daniel entered the Institute, he

described his prior drug use as sporadic, and he stated that only after the accident

did he begin using on a daily basis. Based on the description provided her, she

concluded that Mr. Daniel was a recreational user of alcohol and marijuana.

However, when confronted with the New Beginnings records, she stated that his

drug use prior to the accident was clearly greater than what he had reported to her.

With regard to his prior marijuana use, Mr. Daniel testified that it existed as

a near-daily rate for approximately two years prior to his employment with Point to

3
Notably, this use began near or after the time of the accident at issue in this litigation.
4
This finding was despite the fact that the technician’s assessment at the time was that
Mr. Daniel was calm; fully oriented; had an appropriate affect and intact linear thought process
and memory; and that his cognitive function, abstraction, and insight at the time of the intake
process was normal.
10

Point and that he stopped using marijuana one month prior to high school

graduation in order to pass the drug screening test for employment. When asked

why in his deposition he reported using marijuana only fifteen times during high

school, Mr. Daniel stated that he answered as he did because of nervousness. After

his answer, the following exchange occurred between him and Point to Point’s

counsel:

Q. Sir, when you say ―nervousness‖, were you nervous about how
it would affect your case if you told me that you used marijuana
before the accident at that frequency?

A. Repeat the question?

Q. Yes, sir. When you say you didn’t tell me because of
nervousness, were you nervous that if you told me the truth about how
much marijuana you used before the accident, that it may hurt your
workers’ compensation case?

A. In all honesty, yes.

With regard to when his depression began, Mr. Daniel testified at trial that

he could not recall when or if he was diagnosed with depression prior to his work

accident. When asked whether he had been prescribed anti-depression medication

before the accident, he stated that he did not know.5

Having all this evidence before it, the WCJ, in denying Point to Point’s fraud

defense, stated:

The Court does not find that this case reaches the level of
severity to show fraud for the purposes of collecting workers’
compensation benefits. This accident was bad and we see few events
that are as gruesome and brutal. For these reasons, judgment is
rendered in favor of the claimant and against the defendant.

After reviewing the record, we find no error in the WCJ’s denial of Point to

Point’s fraud allegations. With regard to Mr. Daniel’s statements to the medical

providers, we find that those statements regarding his pre-accident drug use, even

5
At his deposition, Mr. Daniel denied ever being diagnosed or treated for depression.
11

if inaccurate, were not made for the purpose of obtaining workers’ compensation

benefits. In fact, all of the statements made to the health care providers concerning

his past history were made before the filing of his workers’ compensation claim.

In Resweber v. Haroil Construction Co., 94-2708, p. 10 (La. 9/5/95), 660

So.2d 7, 14 (emphasis added), the seminal case on La.R.S. 23:1208, the supreme

court, in comparing the application of La.R.S. 23:1208 to La.R.S. 23:1208.1

(previous injuries), stated:

We therefore hold that Section 1208 applies to any false
statement or misrepresentations, including one concerning a prior
injury, made willfully by a claimant for the purpose of obtaining
benefits, and thus is generally applicable once an accident has
allegedly occurred and a claim is being made. Section 1208.1, on the
other hand, applies to false statements or misrepresentations made
pursuant to employment-related inquiries regarding prior medical
history such as in an employment application or some post-
employment questionnaire and not to statements made in relation to a
pending claim.

Accordingly, we find no error in the WCJ’s denial of Point to Point’s fraud

defense based on any allegedly inaccurate statements made by Mr. Daniel prior to

his claim for compensation.

We likewise find no error with regard to Mr. Daniel’s statements during his

trial testimony. Mr. Daniel admitted that he misrepresented his pre-accident drug

use in his deposition testimony. His reason for the inaccuracy was his nervousness.

However, nervousness does not equate to willfulness. We further find that it was

reasonable for the WCJ to discount Mr. Daniel’s response to the suggestion

proposed by defense counsel for the cause of his nervousness. Although Point to

Point claims that Mr. Daniel willfully lied in order to obtain workers’

compensation benefits, we note that his response was to a question framed by

defense counsel which prompted that specific statement and, in considering Mr.

Daniel’s fragile mental state, all he has been through subsequent to his horrifying
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work accident, and his relatively young age (twenty-two years at the time of his

deposition), it was not unreasonable for the WCJ to find that he was, in fact,

nervous about revealing the full extent of his prior drug use.

We further find that any discrepancy between Mr. Daniel’s statements

regarding a prior depression diagnosis were inadvertent and inconsequential. Mr.

Daniel was sixteen years old on the date in question, and Dr. Clawson’s records do

not contain a definitive depression diagnosis at that time. Accordingly, we find

that any discrepancy between his deposition and trial testimonies did not result in a

willful misrepresentation made for the purpose of obtaining workers’

compensation benefits.

Finally, we find no merit in Point to Point’s argument that the WCJ applied

an inappropriate standard in finding no violation of La.R.S. 23:1208. The standard

applied in such cases is as follows:

Once it has been determined that a false statement or representation
has been made, the WCJ must make a factual determination as to
whether, based on the record, the statement or representation was
willfully made ―specifically to obtain benefits, and thus to defraud the
workers’ compensation system,‖ such that benefits should be forfeited.
Issa v. LL & G Const., Inc., 02-1215, p. 8 (La.App. 1 Cir. 3/28/03),
844 So.2d 912, 917, writ denied, 03-1875 (La.10/31/03), 857 So.2d
480.

Fontenot v. State ex rel. Dep’t of Health and Hosps., 12-1265, p. 4 (La.App. 1 Cir.
4/2/13), 116 So.3d 695, 698, aff’d in part; rev’d in part on other grounds, 13-1004
(La. 9/13/13), 123 So.3d 161.

Although Point to Point argues that the WCJ’s use of the term ―severity‖ in

its oral reasons for judgment in effect heightens its burden of proof from a

preponderance of the evidence to something more stringent, we disagree with its

assertion—establishing the level of fraud or the purpose or intent behind the

statement has always been required as part of the standard applicable by the WCJ.

13

In addressing the type of statements that result in forfeiture of benefits, the

Resweber court explained:

However, [plaintiff] argues that, if read as written, the statute is too
broad because it will result in the forfeiture of benefits for any false
statement that is made, regardless of how inconsequential. This
argument fails to recognize that the statute does not require the
forfeiture of benefits for any false statement, but rather only false
statements that are willfully made for the purpose of obtaining benefits.
It is evident that the relationship between the false statement and the
pending claim will be probative in determining whether the statement
was made willfully for the purpose of obtaining benefits. A false
statement which is inconsequential to the present claim may indicate
that the statement was not willfully made for the purpose of obtaining
benefits. Clearly, an inadvertent and inconsequential false statement
would not result in forfeiture of benefits.

Resweber, 660 So.2d at 16.

With this standard in mind, as clarified by Resweber, it is reasonable to find

that the WCJ did not believe Mr. Daniel’s inaccurate statements rose to the level of

fraud, fraud in this context meaning willfully made for the purpose of obtaining

benefits, so as to subject him to forfeiture pursuant to La.R.S. 23:1208.

Accordingly, we find no merit in the first three assignments of error, and we affirm

the judgment of the WCJ denying Point to Point’s fraud defense.

La.R.S. 23:1212

In its fourth assignment of error, Point to Point argues that the WCJ erred by

failing to apply the provisions of La.R.S. 23:1212 and by ordering it to reimburse

Blue Cross/Blue Shield, a non-party, for one hundred percent of the benefits it paid

in relation to Mr. Daniel’s treatment pursuant to La.R.S. 23:1205.

Louisiana Revised Statutes 23:1205(B) provides:

Any company which contracts for health care benefits for an
employee shall have a right of reimbursement against the entity
responsible for the payment of workers’ compensation benefits for
such employee if the company paid health care benefits for which
such entity is liable. The amount of reimbursement shall not exceed
the amount of the entity’s liability for the workers’ compensation
14

benefit. In the event the company seeks recovery for such in
conjunction with a claim against any other party brought by the
employee, the company may be charged with a proportionate share of
the reasonable and necessary costs, including attorney fees, incurred
by the employee in the advancement of his claim or suit.

Louisiana Revised Statutes 23:1212, on the other hand, provides:

A. Except as provided in Subsection B, payment by any person
or entity, other than a direct payment by the employee, a relative or
friend of the employee, or by Medicaid or other state medical
assistance programs of medical expenses that are owed under this
Chapter, shall extinguish the claim against the employer or insurer for
those medical expenses. This Section shall not be regarded as a
violation of R.S. 23:1163. If the employee or the employee’s spouse
actually pays premiums for health insurance, either as direct payments
or as itemized deductions from their salaries, then this offset will only
apply in the same percentage, if any, that the employer of the
employee or the employer of his spouse paid the health insurance
premiums.

B. Payments by Medicaid or other state medical assistance
programs shall not extinguish these claims and any payments made by
such entities shall be subject to recovery by the state against the
employer or insurer.

Although the provisions of these statutes are conflicting, La.R.S. 23:1205(B)

has been held to provide a specific exception to the general rule under La.R.S.

23:1212. Thus, any insurance company which contracts to provide health benefits

to an employee, and who provided such benefits, has a right of reimbursement

from any party responsible for providing workers’ compensation benefits for the

employee. Chailland Bus. Consultants v. Duplantis, 03-2508, 03-2509 (La.App. 1

Cir. 10/29/04), 897 So.2d 117, writ denied, 04-2922 (La. 2/4/05), 893 So.2d 878;

Ryan v. Blount Bros. Constr., 40,845 (La.App. 2 Cir. 4/19/06), 927 So.2d 1242,

writ denied, 06-1219 (La. 9/15/06), 936 So.2d 1272; see also Oliver v. City of

Eunice, 11-1054 (La.App. 3 Cir. 6/6/12), 92 So.3d 630, writ denied, 12-1570 (La.

10/12/12), 98 So.3d 874.

15

Still, in the matter before us, we find that the WCJ erred in ordering Point to

Point to reimburse Blue Cross/Blue Shield for any benefits it paid as Mr. Daniel’s

health insurer. Blue Cross/Blue Shield has not intervened in this matter and,

therefore, is not a party to this suit. We note that in the case relied on by Mr.

Daniel, the health insurer intervened in the workers’ compensation claim. Noe v.

Basile Police Dep’t, 12-333 (La.App. 3 Cir. 11/7/12), 103 So.3d 689. Accordingly,

we reverse that portion of the WCJ’s judgment which awards reimbursement to a

non-party.

La.R.S. 23:1142

In its next assignment of error, Point to Point argues that the WCJ erred in

finding that the provisions of La.R.S. 23:1142 were inapplicable to this matter. It

argues that this finding is manifestly erroneous under the factual scenario presented

because it provided Mr. Daniel medical treatment immediately after the accident

for his left knee and because its May 11, 2011 answer admits that the accident was

work-related and that no denial of medical benefits had occurred. It further relies

on a May 26, 2011 letter to Mr. Daniel’s counsel, in which its counsel advised:

As to medical benefits, I understand that there have been no denials
but rather that the company does not have any information that
medical benefits have been received or sought since 2008. As such,
please be advised that reasonable, necessary and related medical
benefits are being approved. Please produce copies of medical
records since July of 2008 which evidence the reasonableness,
necessity and relatedness of any medical benefits being sought. Also
please advise what doctors the plaintiff wishes to treat with for these
issues.

Finally, Point to Point notes that it stipulated in its October 20, 2011 pretrial

statement that there was an accident within the course and scope of Mr. Daniel’s

employment, ―with some injury[,]‖ and that all submitted medical bills had been

16

―correctly and timely paid subject to 23:1142b and the health insurance credit

issue[.]‖

Mr. Daniel testified that he did not obtain pre-authorization from Point to

Point because he and his parents were only focused on him receiving help for his

mental condition and drug dependency. Furthermore, he stated that he was not

even aware that his mental injury qualified as a work-related injury.

Brenda Guillot, the adjustor on this claim, first testified that Mr. Daniel’s

request for medical benefits was not denied by Point to Point, as evidenced by its

May 13, 2011 answer, which states:

16.

Defendants, POINT TO POINT DIRECTIONAL
DRILLING, INC. and THE GRAY INSURANCE COMPANY,
show that the averment on the lawsuit that medical benefits have been
denied is incorrect and as such it is denied.

However, when confronted with allegations denying the existence of a work-

related injury or his entitlement to medical benefits, Ms. Guillot admitted that

Point to Point initially denied Mr. Daniel’s request based on a lack of supporting

medical evidence and because of his pre-accident drug use and pre-existing mental

condition.6 Still, she suggested that although Point to Point’s pleadings denied Mr.

Daniel’s claim, she never specifically denied his claim.

6
The following allegations were included in Point to Point’s answer:

3.
Defendants . . . admit that on June 16, 2008 the claimant was in the course and scope of
the employment when involved in an accident; the existence or occurrence of injury therein,
however, is denied for lack of information sufficient to justify a belief therein.

7.
Defendants . . . deny that the claimant has sustained an injury and/or a loss of earnings
capacity for lack of information sufficient to justify a belief therein. Defendants require strict
proof of any and all allegations.

8.
17

Despite its initial denial, Ms. Guillot testified that Point to Point paid the

$750.00 cap to Lake Charles Memorial Hospital, New Beginnings, the Jennings

American Legion Hospital, and G & G and $485.00 to the Institute for

Neuropsychiatry. She further admitted that the amount owed pursuant to the

workers’ compensation fee schedule to each of these health care providers would

exceed the statutory cap. In response to questioning from the WCJ, she stated that

Point to Point limited the reimbursement to these providers to the cap amount

because no prior approval was obtained for the treatment provided. During direct

examination, she explained that the La.R.S. 23:1142 rule was invoked because

―[w]e, as an insurance company . . . we don’t want to be cold or anything to that

sort per se.‖ However, when pressed for the factual reasoning behind the

application, she stated, ―If there’s no pre-approval of non-emergency charges, they

are assessed at a $750 cap.‖

Louisiana Revised Statutes 23:1142(B) places a $750.00 cap on costs for

non-emergency diagnostic testing or treatment received by an employee in the

absence of the employer’s prior approval of the testing/treatment. However, no

such cap exists when the provided health care arose from an emergency situation

or when the employer denies that the employee’s claim is compensable. La.R.S.

23:1142(C) and (E).7

Defendants . . . deny that the claimant is entitled to receive . . . medical benefits or any
other workers’ compensation benefits whatsoever for lack of information sufficient to justify a
belief therein. Defendants require strict proof of any and all allegations.
7
The exception to the $750.00 cap based on the employer’s denial of compensability is
provided by La.R.S. 23:1142(E):

Exception. In the event that the payor has denied that the employee’s
injury is compensable under this Chapter, then no approval from the payor is
required prior to the provision of any diagnostic testing or treatment for that
injury.

18

In Carradine v. Regis Corp., 10-529 (La.App. 3 Cir. 11/3/10), 52 So.3d 181,

which Mr. Daniel relies on and Point to Point quotes from extensively, this court

held that the exception provided by La.R.S. 23:1142(E) applies even in instances

where the employee undergoes pre-claim, unauthorized medical treatment if the

employer denies that the employee’s injury is compensable. In applying the statute

to the facts before it, the court stated:

Our decision to apply the exception in La.R.S. 23:1142(E) to
unauthorized medical expenses incurred before the employee decides
to claim workers’ compensation benefits ensures that claimants in this
situation are not unnecessarily deprived of reimbursements for
medical services which the employer is typically required to furnish.
Next, no employer who accepts that the employee has suffered a
compensable injury is deprived of the opportunity to participate in the
decision about what medical services will be furnished. Finally, no
employer is automatically deprived of the opportunity to take
advantage of the statutory cap created in La.R.S. 23:1142(B);
employers in this situation are simply required to choose between
disputing compensability and limiting their liability under the
statutory cap.

Id. at 193.

In applying the La.R.S. 23:1142(E) exception to this matter, the WCJ held

that Point to Point initially denied Mr. Daniel’s claim and, for that reason, it could

not rely on the $750.00 cap in repaying those medical expenses he incurred prior to

his compensation claim. As this is a finding of fact, it is reviewed pursuant to the

manifest error standard of review. Poissenot, 56 So.3d 170.

After reviewing the record, we find that it was reasonable for the WCJ to

conclude that Point to Point did, in fact, initially deny the compensability of Mr.

Daniel’s claim. We further find that although the facts in this matter vary slightly

from those presented in Carradine, that ruling still applies to deny Point to Point’s

application of the cap. Mr. Daniel did receive medical treatment immediately

following the June 28, 2008 accident for the cuts and bruises he experienced

19

during the actual collision. However, because he never sought workers’

compensation benefits prior to obtaining unauthorized treatment for his mental

injury, it was reasonable for the WCJ to find the medical-expense cap inapplicable

based on Point to Point’s initial denial of his claim.

Furthermore, because the WCJ was presented with conflicting evidence

pertaining to whether Point to Point denied Mr. Daniel’s claim, her finding on that

issue is not manifestly erroneous. Accordingly, the WCJ’s judgment finding that

Point to Point is not entitled to the $750.00 cap for non-authorized medical

treatment is affirmed.

Penalties and Attorney Fees

In its final assignment of error, Point to Point argues that the award of

penalties and attorney fees pursuant to La.R.S. 23:1201(E) was contrary to the law

and the evidence because Mr. Daniel’s medical expenses were paid by his father’s

health insurer, because he failed to obtain pre-authorization for that treatment, and

because once it was aware of his claim, its adjustor ―worked diligently to obtain

the medical bills and to pay each of the providers $750[.]‖ Finally, it argues that

because it reasonably relied on its fraud defense, Mr. Daniel’s claim was

reasonably controverted.

The penalty and attorney fee provisions in La.R.S. 23:1201, at the time of

Mr. Daniel’s work accident, provided in part:

E. Medical benefits payable under this Chapter shall be paid
within sixty days after the employer or insurer receives written notice
thereof.

F. Except as otherwise provided in this Chapter, failure to
provide payment in accordance with this Section or failure to consent
to the employee’s request to select a treating physician or change
physicians when such consent is required by R.S. 23:1121 shall result
in the assessment of a penalty in an amount up to the greater of twelve
percent of any unpaid compensation or medical benefits, or fifty
20

dollars per calendar day for each day in which any and all
compensation or medical benefits remain unpaid or such consent is
withheld, together with reasonable attorney fees for each disputed
claim; however, the fifty dollars per calendar day penalty shall not
exceed a maximum of two thousand dollars in the aggregate for any
claim. The maximum amount of penalties which may be imposed at a
hearing on the merits regardless of the number of penalties which
might be imposed under this Section is eight thousand dollars. An
award of penalties and attorney fees at any hearing on the merits shall
be res judicata as to any and all claims for which penalties may be
imposed under this Section which precedes the date of the hearing.
Penalties shall be assessed in the following manner:

(1) Such penalty and attorney fees shall be
assessed against either the employer or the insurer,
depending upon fault. No workers’ compensation
insurance policy shall provide that these sums shall be
paid by the insurer if the workers’ compensation judge
determines that the penalty and attorney fees are to be
paid by the employer rather than the insurer.

(2) This Subsection shall not apply if the claim is
reasonably controverted or if such nonpayment results
from conditions over which the employer or insurer had
no control.

(3) Except as provided in Paragraph (4) of this
Subsection, any additional compensation paid by the
employer or insurer pursuant to this Section shall be paid
directly to the employee.

(4) 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.

(5) No amount paid as a penalty or attorney fee
under this Subsection shall be included in any formula
utilized to establish premium rates for workers’
compensation insurance.

In Carradine, 52 So.3d at 194, this court stated that:

A claim for benefits has been reasonably controverted when the
employer ―engaged in a nonfrivolous legal dispute or possessed
factual and/or medical information to reasonably counter the factual
and medical information presented by the claimant throughout the
21

time he refused to pay all or part of the benefits allegedly owed.‖
Brown v. Texas-LA Cartage, Inc., 98-1063, p. 9 (La.12/1/98), 721
So.2d 885, 890. The decision to impose penalties and attorney fees is
essentially a factual issue subject to the manifest error or clearly
wrong standard of review. Authement v. Shappert Eng’g, 02-1631
(La.2/25/03), 840 So.2d 1181.

Ms. Guillot provided several excuses for Point to Point’s failure to comply

with La.R.S. 23:1201(E): Its reliance on La.R.S. 23:1142; its belief that Mr.

Daniel’s current problems were not work-related as his drug use and some mental

problems predated the accident; and its allegations of fraud. Pursuant to the

La.R.S. 23:1142 statutory cap, she stated that Point to Point paid $750.00 to Lake

Charles Memorial Hospital, New Beginnings, the Jennings American Legion

Hospital, the Institute, and G & G.

Ms. Guillot testified that she was not aware of Mr. Daniel’s claim until he

filed his disputed claim in April of 2011. She admitted that she learned nothing

further about his claim until Point to Point’s counsel provided her with the

subpoenaed medical records. Ms. Guillot agreed that a nurse case manager is

normally assigned to a claim to assist in obtaining medical information and in

determining the appropriateness of medical treatment. However, she stated that

this claim was not normal because all of Mr. Daniel’s treatment occurred before

Point to Point was even aware of his claim. Ms. Guillot further defended the lack

of a nurse case manager by explaining that she lacked the authority to assign such a

person and because the assistance garnered from a nurse case manager was

rendered moot since the treatment had already been provided. Although she

admitted that she had a hard time following this claim, she stated that a nurse case

manager would have experienced the same difficulty.

At the start of the trial, the parties stipulated that Mr. Daniel sought penalties

and attorney fees on only two issues: (1) Point to Point’s failure to reimburse the
22

$4,500.00 co-pay for his treatment from G & G; and (2) Point to Point’s

application of the $750.00 cap pursuant to La.R.S. 23:1142(B) to the health care

providers. In her oral reasons for judgment, the WCJ stated that Mr. Daniel was

entitled to a penalty of $2,000.00 and an attorney fee of $10,000.00 based on Point

to Point’s failure to pay the medical benefits.

The evidence reveals that Mr. Daniel faxed a request for payment of medical

expenses to Point to Point’s counsel on November 16, 2011. The health care

providers listed in the request are: Lake Charles Memorial Hospital; Jennings

American Legion Hospital; the Institute; Calcasieu Oaks; New Beginnings;

Acadian Ambulance; and Walgreens. The request states that the actual medical

records for these providers were already in Point to Point’s possession.

On October 2, 2012, Mr. Daniel faxed another request for payment of

medical expenses to Point to Point’s counsel, which listed outstanding balances of

$239.96 and $81.94 for Calcasieu Oaks and the Institute, respectively. On

December 10, 2012, he faxed a statement from G & G to Point to Point’s counsel,

which listed an outstanding balance of $3,641.21.

The payment history introduced by Point to Point lists the amounts and the

dates The Gray Insurance Company paid the health care providers in Mr. Daniel’s

workers’ compensation claim:

1. Acadian Ambulance Services: $1,032.72 on March 1, 2012.

2. Jennings American Legion Hospital: $750.00 on November 10,
2011.

3. Southwest Louisiana Hospital Association d/b/a Lake Charles
Memorial Hospital: $750.00 on November 28, 2011.

4. Acadian Ambulance Services: $660.05 on January 17, 2012.

5. Institute for Neuropsychiatry: $375.00 on January 10, 2012.

23

In Carradine, 52 So.3d at 194, we held that an employer’s reliance on the

statutory cap provided by La.R.S. 23:1142(B) was a ―nonfrivolous legal dispute, as

it is jurisprudentially supported.‖ However, we stated that this reliance does not

justify the employer’s failure to reimburse the employee for emergency care

received or the first $750.00 of non-emergency diagnostic testing or treatment

provided by each health care provider.

In this matter, Point to Point’s reliance on the statutory cap is supported as it

is a nonfrivolous legal dispute. Based on the medical records and the payment

history introduced into evidence, we find that Point to Point was put on notice

regarding the medical expenses by Mr. Daniel’s November 16, 2011 letter. While

its $750.00 payments to Jennings American Legion Hospital and Lake Charles

Memorial Hospital were within the sixty-day period allowed by La.R.S.

12:1201(E), its payment to the Institute was not timely. Moreover, there is no

record of any payment to Calcasieu Oaks or G & G. While Ms. Guillot stated that

she paid $750.00 to G & G and $458.00 to the Institute for Neuropsychiatry, her

testimony is not substantiated by any documentation with regard to G & G and is

only substantiated as to $375.00 with regard to the Institute.

We further find reasonable the WCJ’s implied finding that Point to Point

failed to reasonably controvert Mr. Daniel’s claim. Despite Ms. Guillot’s

complaint regarding the length of time between the provision of medical treatment

and her receipt of the associated medical records, we note that Mr. Daniel was still

undergoing treatment at New Beginnings on the date he filed his disputed claim

and that he would not enter Calcasieu Oaks until fifteen days after he filed his

claim. ―The employer or compensation insurer has a duty to investigate and make

every reasonable effort to assemble and assess factual and medical information in

24

order to ascertain whether the claim was compensable before denying benefits.‖

Delatte v. Pala Grp., LLC, 09-913, p. 12 (La.App. 1 Cir. 2/10/10), 35 So.3d 291,

299, writ denied, 10-562 (La. 5/7/10), 34 So.3d 865. In this instance Point to Point

did nothing to investigate Mr. Daniel’s claim. Rather, it relied on its fraud defense

to deny payment of his medical expenses. However, it fraud defense was based on

information it could not have possessed until after it obtained his deposition and

the medical records it relied on. Accordingly, we affirm the WCJ’s award of

penalties and attorney fees.

ANSWER TO APPEAL

Clarification of Medical Expenses

In his first assignment of error, Mr. Daniel seeks clarification of the WCJ’s

award of medical benefits. The WCJ held that Mr. Daniel proved that his mental

injury was work-related and that he was entitled to medical benefits. However, Mr.

Daniel argues that the judgment failed to specify whether the medical benefits

awarded included reimbursement of his out-of-pocket expenses of $4,500.00 for

his co-pay, his mileage to G & G in Florida, and $585.00 he paid to the Institute.

On October 2, 2012, Mr. Daniel faxed a request for reimbursement of

payments he made to the Institute in the amount of $585.00. This was followed by

an October 22, 2012 request for reimbursement of his out-of-pocket expenses of

$21.91 for travel insurance, $438.10 for air fare, and a $4,500.00 co-pay for his

treatment from G & G. During the trial, Mr. Daniel introduced evidence

establishing that the distance from his home to G & G in Lake Worth, Florida was

964 miles one way. Furthermore, Mr. Daniel’s mother, Kimberly Fox, testified

that she charged the $4,500.00 co-pay to her credit card, which she has since paid

off.

25

Ms. Guillot admitted that Mr. Daniel was not reimbursed the $4,500.00 co-

pay because, she said, it is ―uncustomary for us to reimburse any out-of-pocket

expense under the workers’ compensation statutes.‖ She further stated, ―I do not

reimburse out of pocket or anything off a bank statement or Visa statement or

anything of that such. I would have to reimburse the facility.‖

Based on the WCJ’s award of medical benefits and our affirmation of the

denial of Point to Point’s fraud defense, we find that Mr. Daniel is entitled to

reimbursement of his out-of-pocket expenses, including the $4,500.00 co-pay, his

payments to the Institute, and mileage to and from Florida. Based on this finding,

we further award Mr. Daniel an additional $2,000.00 in penalties based on Point to

Point’s failure to reimburse him for the $4,500.00 co-pay within the sixty days

allowed by La.R.S. 23:1201(E).

Litigation Expenses

In his next assignment of error, Mr. Daniel seeks a clarification that the court

costs assessed by the WCJ to Point to Point includes the litigation expenses

incurred by him in prosecuting his claim. These expenses, which were introduced

into evidence by Mr. Daniel during the trial, consist of court-reporter and medical-

record costs. In her oral reasons for judgment, the WCJ simply stated, ―Costs are

to be paid by the defendant.‖ The September 23, 2013 written judgment echoes

that statement.

Pursuant to La.R.S. 13:4533, which provides that the ―costs of the clerk,

sheriff, witness’ fees, costs of taking depositions and copies of acts used on the

trial, and all other costs allowed by the court, shall be taxed as costs[,]‖ we find

that Mr. Daniel’s litigation expenses are included in the costs that the WCJ

assessed to Point to Point. Accordingly, we amend the WCJ’s judgment to reflect

26

that the costs to be paid by Point to Point includes the $682.11 in litigation

expenses.

Additional Attorney Fees

In his final assignment of error, Mr. Daniel seeks additional attorney fees for

work performed by his counsel in defense of Point to Point’s appeal. Considering

the success his counsel has achieved in defending this judgment on appeal, we find

that Mr. Daniel is entitled to an additional $5,000.00 in attorney fees.

DISPOSITION

For the foregoing reasons, we reverse the judgment of the workers’

compensation judge awarding reimbursement to Blue Cross/Blue Shield; we render

judgment to award Mr. Daniel $2,000.00 in penalties based on Point to Point’s

failure to reimburse his $4,500.00 out-of-pocket expense; we amend the judgment

to clarify that the medical-benefit award includes reimbursement of Mr. Daniel’s

$4,500.00 and $585.00 out-of-pocket expenses, his mileage to and from Florida,

and the inclusion of the $682.11 litigation expense in the costs assessed to Point to

Point; and we affirm in all other respects. We further award Mr. Daniel an

additional $5,000.00 in attorney fees for work performed on appeal.

AFFIRMED IN PART AS AMENDED; REVERSED IN PART; AND
RENDERED.

27