PENNSYLVANIA CLIENT ALERT: Commonwealth Court Likely Expands Medical Fee Costs to Carriers

Client Alert: Commonwealth Court Likely Expands Medical Fee Costs to Carriers

Introduction

On March 21, 2024, the Pennsylvania Commonwealth Court rendered a significant interpretation in Williams v. City of Philadelphia (WCAB) regarding the scope of fee agreements in workers’ compensation cases. This Decision impacts self-insured employers, carriers and claimants regarding both medical costs and access to medical care.

Legal Precedents and Background

The case builds upon previous legal interpretations, notably Neves v. WCAB (American Airlines), where a 20% fee agreement on medical expenses was deemed, per se, reasonable. In the present case, the issue stemmed from the understanding of claimants regarding the allocation of fees, particularly concerning potential liabilities for medical expenses. Several Workers’ Compensation Judges had determined that claimants lacked a comprehensive understanding of the potential burden associated with assuming responsibility for the 20% deficit. Consequently, some judges refused to allow Fee Agreements for medical and opted to approve Fee Agreements exclusively for indemnity.

Court’s Decision and Rationale

The Court, through an examination of relevant statutes, notably Section 306(f.1)(7) of the Workers’ Compensation Act, delineated the boundaries of medical providers’ billing practices. It clarified that providers cannot directly “balance bill” claimants for any costs related to care provided under the Act, including differences between the billed amount and the payment made.

Analysis and Impact

The decision is poised to reshape legal dynamics in workers’ compensation cases. Attorneys are likely to leverage this clarity to enter into fee agreements encompassing both indemnity and medical expenses, thus ensuring a direct financial stake in their clients’ medical treatments. This development may complicate negotiations for settlements, particularly in cases involving extensive medical procedures.

Moreover, the ruling may inadvertently impede access to care issues for injured workers. Some medical providers, disinclined to accept reduced payments, might limit their services, especially in specialized surgical treatments.

Recommendations and Future Considerations

In response to the Williams decision, carriers must adapt their practices to comply with fee allocations outlined in fee agreements. This entails meticulous attention to detail in directing the approved fees to attorneys and away from medical providers as well as other preemptive measures against penalty petitions. If a fee review is initiated by the medical provider, the carrier’s responsibility for payment is restricted to their obligations outlined in the medical cost containment provisions of Section 306(f.1) and (3) of the Act.

Moreover, legislative interventions will be necessary to mitigate the burgeoning costs and uphold the interests of both employers and injured workers.

Interestingly, this ruling could also have an adverse impact on claimants; potentially leading to challenges in accessing medical care for injured workers. There’s a possibility that certain medical providers might be reluctant and/or refuse to treat injured workers, especially for specialized surgical procedures, given that they would only receive 80% of the permissible Act 44 fee.

Conclusion

The Williams decision signifies a pivotal moment in workers’ compensation law, delineating the contours of fee agreements and provider billing practices. Its ramifications are far-reaching, necessitating strategic adaptations by all self-insured employers, carriers, third party administrators and policymakers alike to navigate the evolving landscape of the medical aspects of workers’ compensation claims effectively, as this impacts, fee agreements, penalties, billing practices and fee review.

Questions regarding this Client Alert can be directed to Christopher L. Scott, Esquire at 717.237.7111 or cscott@tthlaw.com.