Pennsylvania Supreme Court Denies Pharmacy’s Demand to Intervene in Utilization Review Process

Harrisburg, PA – On December 22, 2021, the PA Supreme Court issued a Decision that addresses a frequent question regarding the Utilization Review process.  In Keystone RX v Bureau of Workers’ Compensation Fee Review Hearing Office, the Supreme Court held that a non-treating provider, such as a pharmacy, does not have a right to intervene in the Utilization Review process and that by disallowing their participation, the due process rights of the non-treating provider have not been violated.

By way of background, after an employee suffered a work-related injury, the insurer requested Utilization Review.  The Utilization Review determined that the treatment at issue, including prescriptions that were filled by Keystone RX, was not reasonable or necessary.  Keystone RX did not participate in the UR process.  When its bills were not paid, Keystone RX filed an Application for Fee Review. The Fee Review Hearing Officer concluded that Keystone RX could not challenge the findings of a UR via the fee review process.  Keystone RX appealed to the Commonwealth Court arguing that its due process rights had been violated because the Act does not allow non-treating providers to participate in the UR process, even though UR Determinations are binding on them.

The Commonwealth Court upheld the Decision of the Fee Review Hearing Officer concluding that at Fee Review Hearing Officer cannot address in the Fee Review setting the reasonableness and necessity of treatment. However, the Court acknowledged that there were due process issues for non-treating providers, such as a pharmacy, since they are precluded from participating in the UR process. Therefore, the Commonwealth Court established a remedy for this issue by promulgating a new rule that “for UR procedures occurring after the date of this Opinion, where an employer, insurer or employee requests UR, a provider which is not a healthcare provider as defined by the Act must be afforded notice and an opportunity to establish a right to intervene under the usual standards for allowing intervention.”

The matter was then appealed to the PA Supreme Court.

The PA Supreme Court noted that the Commonwealth Court in effect found the UR provisions of the Workers Compensation Act to be constitutionally deficient since it did not afford non-treating providers with appropriate procedural due process. The Supreme Court disagreed.  Focusing on whether the Pharmacy’s due process rights had been violated, the Supreme Court notes that a pharmacy does not have a constitutionally protected property interest in goods or services found unreasonable or unnecessary since they were never entitled to payment under the Act.  Rather, they simply have an expectation of payment.  Absent a constitutionally protected property interest, there is no violation of due process.  The Supreme Court also held that the Commonwealth Court erred by engrafting into the Act the requirement that non-treating providers receive notice and an opportunity to intervene in the UR proceedings.

This is a significant decision and a clear victory for employers and insurance carriers.  There was tremendous uncertainty with regard to the rule promulgated by the Commonwealth Court including how notice was to be provided, how the Employer was supposed to know which non-treating providers were involved and the validity of a Utilization Review conducted when non-treating providers were not provided with adequate notice as required by the Commonwealth Court.  And, if a previously conducted UR was declared invalid, what rights would the Employer retain with regards to challenges to that treatment.

Justice Wecht filed an interesting Concurring Opinion addressing, somewhat prospectively and speculatively, what remedies the pharmacy may have in this situation. Justice Wecht concluded that since the treatment at issue was deemed not reasonable or necessary, it is therefore not related to the work-related injury. If the treatment is not related to the work-related injury, then there is no prohibition on the provider billing the employee directly for the treatment found not reasonable or necessary.

For more information or questions, please contact any of TT&H’s Pennsylvania workers’ compensation practitioners.