Christus Health Central Louisiana D/B/A Christus St. Frances Cabrini Hospital (Eric J. Manuel) v. Westaff (Usa), Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

WCW 11-1493

CHRISTUS HEALTH CENTRAL LOUISIANA D/B/A
CHRISTUS ST. FRANCES CABRINI HOSPITAL (ERIC J. MANUEL)

VERSUS

WESTAFF (USA), INC., ET AL.

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APPEAL FROM THE
OFFICE OF WORKERS’ COMPENSATION - # 2
PARISH OF RAPIDES, NO. 11-01771
JAMES L. BRADDOCK, WORKERS’ COMPENSATION JUDGE

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ELIZABETH A. PICKETT
JUDGE

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Court composed of Elizabeth A. Pickett, Shannon J. Gremillion, and Phyllis M.
Keaty, Judges.

WRIT GRANTED AND MADE PEREMPTORY.

Joseph Payne Williams
Richard Bray Williams
Williams Family Law Firm, LLC
Post Office Box 15
Natchitoches, LA 71458-0015
(318) 352-6695
COUNSEL FOR APPLICANT:
Christus Health Central Louisiana

Thomas Allen Filo
Cox, Cox, Filo, Camel & Wilson
723 Broad Street
Lake Charles, LA 70601
(337) 436-6611
COUNSEL FOR APPLICANT:
Christus Health Central Louisiana

Jeffrey John Warrens
Johnson, Stiltner & Rahman
P. O. Box 98001
Baton Rouge, LA 70898-8001
(225) 231-0652
COUNSEL FOR RESPONDENT:
LWCC
Westaff, Inc.

Dennis Paul Juge
Juge, Napolitano, Guilbeau, Ruli, Frieman & Whiteley
3320 W. Esplanade Ave. N.
Metairie, LA 70002
(504) 831-7270
COUNSEL FOR RESPONDENT:
LWCC
Westaff, Inc.

PICKETT, Judge.

In these three consolidated writ applications, the relator, Christus Health

Central Louisiana d/b/a Christus St. Frances Cabrini Hospital (Christus Health) seeks

supervisory writs from the judgment of the Office of Workers’ Compensation (OWC)

granting a motion to compel discovery.

STATEMENT OF THE CASE

All three cases are attempts by Christus Health to increase the amount of

payments for medical services and treatments rendered to injured workers as

outpatients. Christus Health has sought recovery from the employers, Westaff (USA),

Inc., Crossroads, Inc., and Bamburg Steel Buildings, Inc., and their insurer, the

Louisiana Workers’ Compensation Corporation (collectively, LWCC). Christus

Health claims that LWCC failed to pay the correct amount in medical benefits for the

injured workers, pursuant to the pertinent provisions of the Louisiana Workers’

Compensation Act (LWCA) and the Louisiana Workers’ Compensation Fee

Reimbursement Schedule (Reimbursement Schedule).

In the course of conducting discovery, LWCC submitted interrogatories and

requests for production of documents aimed at collecting information regarding

Christus Health’s actual costs for the medical services rendered and the contractual

amounts that Christus Health has agreed to accept as payment for these services and

treatments from other insurance companies or other payors.1 Christus Health objected

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For instance, Interrogatory number 7 reads, “Please set forth your true out-of-
pocket costs for providing the services and items associated with the medical charges
at issue in the present proceeding.” Interrogatory number 8 reads, “Please specify any
and all data and methodologies utilized in arriving at the calculation of your true out-
of-pocket costs as set forth within your response to the previous interrogatory.”
Interrogatory number 10 reads, “Please state whether you have at anytime entered into
a contractual fee arrangement with any entity in relation to the payment
amount/recoverable charges associated with the services sued upon herein. If your
response is in the affirmative, please state the effective dates of any such contractual
fee arrangement, the parties to the contractual fee arrangement and the specific dollar
amounts agreed upon within the contractual fee arrangement in relation to the medical
services sued upon herein.” And, Interrogatory number 11 reads, “Please state

to this discovery, claiming that the information sought was irrelevant and could not

lead to the discovery of any relevant evidence. Moreover, Christus Health asserted

that the discovery was overly burdensome and was meant to be oppressively costly

and time consuming on the part of the relator. Furthermore, Christus Health claimed

that much of the information sought was proprietary or otherwise confidential or

privileged information. LWCC filed motions to compel the discovery, and the OWC

judge conducted one hearing as to all three cases, with the consent of all parties, since

the issues were identical in all three cases. The trial court granted the motions to

compel. Christus Health seeks reversal of these rulings.

SUPERVISORY RELIEF

This court has stated, AThe exercise of supervisory jurisdiction by appellate

courts is within their plenary power. La. Const. art. 5, ' 10. Appellate courts

generally will not exercise such jurisdiction unless an error in the trial court’s ruling

will cause the petitioner irreparable injury or an ordinary appeal does not afford an

adequate remedy. Stevens v. Patterson Menhaden Corp., 191 So.2d 692 (La.App. 1

Cir.1966), writ denied, 250 La. 5, 193 So.2d 524 (1967).@ Borrel’s, Inc. v. City of

Marksville, 05-48, p. 1 (La.App. 3 Cir. 6/1/05), 904 So.2d 938, 939.

DISCUSSION

Trial courts in Louisiana are vested with broad discretion in regulating pretrial

discovery, and an appellate court will not disturb a trial court’s rulings on discovery

issues absent a clear showing of abuse. Moak v. Ill. Cent. RR. Co., 93-0783 (La.

1/14/94), 631 So.2d 401.

whether you have ever accepted Medicare payment for the services sued upon herein.
If your response is in the affirmative, please state the amount of said payment.”
Amended interrogatories seeking more in-depth information regarding the amount of
payments accepted for the services at issue from other payors, including Medicaid,
were also submitted. Additionally, the respondents sought documents verifying the
foregoing information in requests for production.

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As discussed above, Christus Health claims that LWCC underpaid for medical

benefits associated with injured workers. In each of the cases before us, LWCC

contracted with a third party to review the bills presented to LWCC for payment from

health care providers who did not have a contractual arrangement with LWCC for the

payment of services, including Christus Health. LWCC then paid for the outpatient

services rendered at a lower rate than the Reimbursement Schedule.

The LWCA provides in La.R.S. 23:1203(B):

The obligation of the employer to furnish such care, services,
treatment, drugs, and supplies, whether in state or out of state, 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. Any out-of-state provider is also to be subject to the
procedures established under the office of workers’ compensation
administration utilization review rules.

Pursuant to the above mandate by the legislature, La. Admin. Code tit. 40, § 2507,

entitled “Outpatient Reimbursement”, provides:

Outpatient hospital and ambulatory surgery services will be reimbursed
at covered charges less a ten percent (10%) discount. The formula for
calculating payment amount is:

(BILLED CHARGES) - (NONCOVERED CHARGES) =
COVERED CHARGES x .90 = PAYMENT AMOUNT

If a patient is admitted as an outpatient, however; is in the hospital
overnight, this will be considered outpatient services. When patient is in
hospital by midnight census of day two, this becomes an inpatient
admission, thus services are paid at per diem rate.

In addition, all procedures which can safely be performed as outpatient
procedures shall be reimbursed as such. (Reference the utilization
Review Rules, Chapter 27).

For a hospital admission to be subject to inpatient reimbursement, it must
be medically necessary and not solely for the convenience of the payor.

LWCC argues that it may present evidence to evaluate the reasonableness of

the charges billed by Christus Health. The materials sought in the motion to compel

discovery would allow the WCJ to compare the amount of reimbursement that the

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medical provider has been willing to accept in full payment for the same or similar

services from other payors. Christus Health contends that the materials are irrelevant,

whereas LWCC contends that the jurisprudence demands that the WCJ conduct such

an analysis.

LWCC relies heavily on the first circuit’s opinion in Johnson Bros.

Corporation v. Thibodaux Regional Medical Center, 00-1673 (La.App. 1 Cir.

9/28/01), 809 So.2d 430. After the insurer paid an additional amount that had been

demanded by the medical provider, the insured/employer filed a claim against the

medical provider seeking to recoup the additional money. The medical provider had

computed its charges based strictly on its charges that it deemed appropriate.

However, the employer argued that those charges were improperly inflated.

In Johnson Bros., the medical benefits at issue included medical “hardware”

that had been used to repair the employee’s fractured legs. Moreover, because of the

extensive injuries to the employee, the WCJ found, and the appellate court agreed,

that the medical provider’s charges in that instance fell under the “outliers” provisions

of the reimbursement schedule, La. Admin. Code tit. 40, § 2519. Thus, due to the

extensive nature of the injuries involved, these charges were permitted to exceed the

usual and customary charges that would apply in an ordinary hospitalization. The first

circuit went on to find that the WCJ erred by not determining whether the “outlier”

charges were reasonable, pursuant to La.R.S. 23:1291.

In this case, LWCC seeks to obtain through discovery the actual costs of

services and the amount Christus Health is willing to accept as full payment from

other insurers in order to determine if the Reimbursement Schedule rates are

reasonable. The legislature empowered the OWC to come up with a fee schedule,

which is based on “the mean of the usual and customary charges.” La.R.S.

23:1203(B). We find that the Reimbursement Schedule, for the purposes of the OWC,

sets forth reasonable rates for services. Thus, the materials sought in discovery are

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irrelevant. We also find that disclosure of contractually negotiated rates is unduly

burdensome. Exercising our supervisory authority, we reverse the WCJ and deny the

motion to compel discovery.

LWCC argues that the amount of reimbursement that the relator is willing to

accept from other payors is relevant to these cases, citing Agilus Health v. Accor

Lodging North America, 10-800 (La. 11/30/10), 52 So.3d 68. The court in Agilus was

facing a case where the health care provider had entered into a contract with the

insurer involved in that case wherein the provider had contractually agreed to accept

a lower payment than that which would have been recoverable under the

Reimbursement Schedule. The supreme court concluded that a provider is free to

contract for a lower fee than would otherwise be recoverable under the fee schedule,

and that if the provider does so contract, the provider is bound to accept the lower of

the two possible charges. In this case, Christus Health was not contracted with

LWCC to provide services at a lower rate than the rates in the Reimbursement

Schedule. Therefore, Agilus Health is distinguishable.

DISPOSITION

The application for supervisory writs filed by Christus Health is granted. The

motion to compel discovery is denied.

WRIT GRANTED AND MADE PEREMPTORY.

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