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Refusal to pay work-related medical treatment because a different entity was actual provider of billed services subjects employer to penalties.

July 1, 2017
Derry Township Supervisors and Selective Insurance Company of America v. WCAB (Reed), No. 751 C.D. 2016; Filed Jan. 30, 2017; Senior Judge Pellegrini

The claimant’s bills for physical therapy treatment were being submitted to the workers’ compensation carrier by pt Group, but the actual services were performed by The Physical Therapy Institute (PTI). According to an exception to Section 306(3)(iii) of the Act—billing based on the Medicare Fee Schedule—providers in existence on or before January 1, 1995, when the cost containment provisions were enacted, are grandfathered and can avoid billing in accordance with the Medicare Fee Schedule. The pt Group was not in existence in 1995. It owned the facility where physical therapy treatment was received and leased it and physical therapists to PTI for the purpose of treating workers’ compensation clients. PTI was in existence in 1995 and was the entity that submitted the bills to the workers’ compensation carrier. The carrier denied the bills because it believed pt Group performed the claimant’s physical therapy, not PTI. On appeal to the Commonwealth Court, the court considered the issue of whether the Workers’ Compensation Judge correctly found that the joint venture between PTI and pt Group was lawful, thereby enabling PTI to bill for the services rendered. The employer argued that, because pt Group was the actual provider, the services should be billed at the Medicare Part B fee reduction rate and that the insurance carrier did not violate the Act by not paying the bills. The Commonwealth Court disagreed and dismissed the employer’s appeal. According to the court, the Workers’ Compensation Judge did not abuse his discretion in imposing a 50% penalty, nor did he err in awarding unreasonable contest counsel fees, given the employer’s failure to provide any evidence establishing the alleged illegality of the joint venture. 


Case Law Alerts, 3rd Quarter, July 2017

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