State News : Pennsylvania

The Commonwealth Court recently addressed the use of CBD oil in Schmidt v. Schmidt, Kirifides & Rassias, P.C., _ A.2d _ (Pa. Cmwlth. 2023).  There the claimant’s treatment for a back injury treatment was mostly pain management, for which he was prescribed various medications, and CBD oil.  The CBD oil was prescribed to avoid the use of increased narcotics.  The employer refused payment on the basis that CBD oil is not a pharmaceutical drug.  Consequently, the claimant filed a Penalty Petition.  The Workers’ Compensation Judge granted the Penalty Petition, concluding that the CBD oil was a medical supply under the Act, and was reasonable and necessary.  While the Judge ordered payment, she did not assess a penalty.

On appeal, the Workers’ Compensation Appeal Board reversed the decision and order of the WCJ.  The Board concluded that CBD oil could not be a reasonable and necessary medical treatment when the FDA has issued several warning letters to firms marketing CBD products for violating federal law.  The WCAB also reasoned that the claimant did not submit the required medical reports and forms to trigger the employer’s reimbursement obligations.  The claimant appealed to the Commonwealth Court.

As was the case in the medical marijuana decisions of Fegley and Appel, dealing with the issue of whether medical marijuana is payable as treatment for a work injury, the Commonwealth Court reversed the decision of the Board.  This decision, as did the medical marijuana reimbursement cases, reflected a lack of understanding by the Court regarding application of the Medical Cost Containment Regulations in Pennsyvlania.  If there is no submission of medical bills with reports, the time frame to issue payment under the Medical Cost Containment Regulations never starts to run.  In fact, in this matter, the claimant’s medical provider appears to have “prescribed” topical treatment and the Claimant, on his own volition, elected to change what was “prescribed” or recommended to be ingestible CBD oil.  Thus, the treatment that was subject to reimbursement may not have actually had been “prescribed” by the medical provider.

If all that is required is a “recommendation” by the medical provider for medical marijuana or a CBD product or any other potential treatment modality, do we no longer need to have specific prescription provided for this to be treatment for which a insurer/employer/carrier is required to issue payment for reimbursement?  Why are reimbursements to be treated differently than payment of a medical bill under the Act and Regulations?  A medical provider does not simply indicate in a note that he is prescribing or recommending “narcotics” or pain medication and the Claimant is then allowed to determine the type, dosage, and frequency of what pain medication they feel works best.  The narcotic medication is actually being prescribed by a physician in terms of type, amount, dosage and frequency. 

This may now not necessarily be the case in Pennsylvania with recent reimbursement cases being handed down by the Commonwealth Court.  The Court either did not consider this issue or lost sight of what actually happens when there is a prescription provided by a medical provider.  The Claimant now apparently simply gets “prescribed” medical marijuana or a CBD product and then has carte blanche to determine what he or she wants so as to obtain this “treatment” without any actual further guidance from his or her medical provider.

With narcotics or any other actual prescription, a Utilization Review can find it to be reasonable and necessary but at a lower dosage or frequency than what was actually prescribed by the treating physician if the matter is referred to utilization review.  With reimbursement cases, there will not be ongoing bills submitted along with office notes from the prescribing physician so as to trigger the time period to file for utilization review.   If the submission of the invoice by the Claimant is what triggers the need to file Utilization Review, it is the Claimant who is picking the strain and amount of medical marijuana or the type and amount of CBD product such that the Claimant may potentially be the “provider” subject to review since they are actually determining what is being purchased and used as “medical treatment” based upon a recommendation as opposed to an actual prescription.  If so, there is no reviewer of the same specialty, as is required to be the peer conducing Utilization Review, given the Claimant is not an actual medical provider such that a proper Utilization Review may not be able to be properly performed.  A Utilization Review of the “prescribing” doctor would not be able to comment on what is actually being prescribed if there is no actual prescription in terms of type, amount, dosage, frequency, which is what is present on a normal prescription should it be subject to utilization review.

Regardless of how one feels about the benefits of medical marijuana and CBD oil, there is an established body of law and procedures to deal with these very issues of prescription medication and recommended medical treatment. However, years established procedures are now being short-circuited by the Court in allowing for unregulated “prescriptions” and treatment in the form of medical marijuana and CBD products for which the employer is responsible.  This same issue could later be applied to other “treatment” modalities for which reimbursement is sought.  This could be recommendations for a “firm bed”, “soaking tub” or “transportation device” or other such “treatment” where the Claimant has carte blanch to interpret as they see fit and then seek reimbursement for what is “prescribed.”

Do any and all recommendations of a medical provider that result in the Claimant purchasing a something arguably related to treatment of a work injury now need to be reimbursed in Pennsylvania given the recent Court holdings concerning reimbursement or should payment for all medical treatment still be subject to the terms and provisions of the Act and corresponding Regulations before payment need be made for such “treatment”? The recent holdings are problematic as they allow for circumvention of the Act and Regulations and if they continue to be followed by the Court, can allow for potential abuses and deny Employers and Carriers the rights afforded under the Act and Regulations before payment is required to be remitted for treatment of a work-related injury.  The Pennsylvania Supreme Court has granted allowance of appeal in the Schmidt matter such that hopefully these issues can be further reviewed and properly addressed by the Court. 

Bradley R. Andreen, Esq.

Rulis & Bochicchio LLC 

In Fegley, as Ex'x of the Est. of Paul Sheetz, v. Firestone Tire & Rubber (WCAB), _ A.3d _ (Pa. Cmwlth. 2023) and Edward Appel v. GWC Warranty Corp. (WCAB), _ A.3d _ (Pa. Cmwlth. 2023), the Commonwealth Court held that workers’ compensation insurers must reimburse injured workers for medical marijuana where it has been determined that such treatment is related to the work injury and is reasonable and necessary.  The Court reversed the denial of the claimant’s penalty petition in spite of the employer’s objections that the Pennsylvania Medical Marijuana Act prohibited an insurer from covering the expenses for medical marijuana treatment and that marijuana is still an illegal, controlled substance under federal law.

As for the actual language of Section 2102 of the Medical Marijuana Act (MMA), the Court ruled that coverage is different and distinct from reimbursement and while the plain language of Section 2102 of the MMA states that insurers cannot be required to provide coverage for medical marijuana, there is no statutory language which prohibits insurers from reimbursing claimants who lawfully use medical marijuana to treat an accepted work injury when such treatment is medically reasonable and necessary.  So, carriers may not have to cover medical marijuana, but there is no language prohibiting them from reimbursing for medical marijuana.

As to the issue of the potential violation of federal law, the Court noted that Section 2013 of the MMA says that nothing in the MMA shall require an employer to commit any act that would put the employer or any person acting on its behalf (workers’ compensation carriers) in violation of federal law.  Under the Federal Drug Act, it is unlawful to “manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance.”  Despite this plain language of the statute, the Commonwealth Court reasoned that reimbursing an injured worker his out-of-pocket expenses for medical marijuana does not require a workers’ compensation carrier to do any of these prohibited activities. Apparently, the long-stated legal maxim of “One cannot do indirectly what one cannot do directly” did not bother the court.

While the Court has split hairs relative to the issue of “coverage” versus “reimbursement” so as to provide a potential pathway for the payment of medical marijuana, these decisions did not address a multitude of other issues that do not appear to have been raised in the litigation and which still need to be addressed.  Many employers and carriers, especially those public entities and health carriers that obtain federal funding may be cautious to even reimburse medical marijuana given it may lead to them facing issues with receiving federal funding.  When Ohio enacted its medical marijuana statute, it required university studies to be conducted but faced reluctance in Universities wanting to get involved with studying medical marijuana for fear it may lead to issues with their receiving federal funding. 

As for the other issues not addressed by the decisions, the payment for or reimbursement of medical marijuana is problematic in that such reimbursement would totally circumvent the Medical Cost Containment Regulations.  First, there obviously is no re-pricing mechanism for the payment of marijuana.  Thus, this may fall under the 80% provision for reimbursement.  However, the bigger issue is whether this is actually medical treatment.  There must be a medical provider who certifies that the Claimant meets the requirement of the Medical Marijuana Act to be certified to obtain a Medical Marijuana card to obtain the treatment.  However, there is no actual medical provider who actually prescribes any medical marijuana product, such as form, strain and amount.  When a medical provider prescribes narcotics for a patient, they provide the specific medication, dosage, frequency, and amount.  With medical marijuana, once the claimant is certified, they can go to a dispensary and essentially work with a salesperson to determine what form (leaf, vape, etc.), strain, amount, etc. to obtain.  There also is no re-pricing mechanism given medical marijuana is not payable under Medicare.  Thus, the reimbursement is most likely under the provision that provides for payment at 80% of the usual and customary charge for treatment provided for in 34 Pa. Code § 127.102.  However, there most likely are not sufficient reporting data available for carriers to determine what is the “usual and customary” charge such that the payment would be at 80% of the actual charge.  If the dispensary inflates the amount they are charging for the produce they are distributing, that may me carriers are paying more than they should for this “treatment.” 

Further, there is no medical provider upon which a Utilization Review can be filed.  If filed upon the certifying physician, the issue would be whether it was reasonable and necessary treatment for the Claimant to be certified for medical marijuana.  There is no peer that can conduct a review when the “medical provider” is a salesperson or a medical marijuana “pharmacist.”  Thus, the Employer/Carrier is denied the ability to conduct a Utilization Review.  These are issues that are going to eventually need to be addressed in litigation.  Until they are, there are going to be arguments against whether medical marijuana is to be reimbursed other than simply that the MMA does not require insurance “coverage” for payment of the same.

Bradley R. Andreen, Esq.

Rulis & Bochicchio, LLC

VNA of St. Luke’s Home/Hospice, Inc., v. Ortiz (WCAB) A.3d. No. 1312 and 1362 C.D. 2022 (Pa Cmwlth. 7/23/2024)

Holding- Under Section 413(a) of the Pennsylvania Workers Compensation Act, an employer who initially agrees to a Stipulation of Facts can set aside the Stipulation if it is shown that the Claimant/employee falsely provided information material to the Stipulation. Claimant, Elizabeth Ortiz was an administrative assistant who initially claimed a November 2017 work injury in the form of a left shoulder strain alleging that she fell while attempting to sit on a chair and injured her shoulder. In May of 2018, the Employer issued a notice of temporary compensation payable (NTCP) accepting a left shoulder strain. In June 2019, the Claimant filed a claim petition seeking to expand the work injury to a left shoulder rotator cuff tear and biceps tendon injury. In September 2019, the parties entered into a Stipulation of Fact, approved by the trial judge, for additional injuries, specifically a full thickness tear and a biceps tenodesis of the left shoulder. While Claimant was being paid total disability benefits in October 2020 and January 2021 the employer filed two Modification petitions asserting that Claimant had failed to respond to modified-duty job offers that would have paid her wages less than her average weekly wage. In the course of litigating the Modification petitions, newly discovered medical records disclosed to the Employer revealed that a left shoulder rotator cuff tear and biceps tendon injury pre-existed the November 2017 work accident. The Employer sought to set-aside the Stipulation of Facts accepting the expanded injury description based on the newly uncovered medical records. The WCJ had found that the Claimant repeatedly under oath falsely denied having suffered and being treated for the stipulated before the work accident. The Judge ruled that, inter alia, Employer’s request to set aside the September 2019 stipulation of facts was denied for lack of sufficient competent evidence. The Employer appealed to the WCAB, but the Board affirmed the WCJ’s refusal to set aside the stipulation. The Board treated the matter as a legal issue, as one of waiver, determining that there was no indication that the Employer lacked the opportunity to fully investigate the challenged finding before entering into the stipulation and that it failed to act properly in seeking relief. The Employer appealed to the Commonwealth Court who noted that this case boils down to how much an employer is expected to do by way of investigation and within what timeframe when a claimant misrepresents her condition and/or existence of prior injuries. The Court in an opinion written by Judge Leadbetter noted “turning to the extent to which Employer should have conducted a more rigorous investigation before entering the stipulation, it bears repeating that Claimant time and again misled Employer, her own surgeon, and the workers compensation tribunal as to pre-existing left shoulder issues. It was noted that the Employer was not seeking to set aside its original acceptance of the work injury (left shoulder strain). It was disingenuous for the Claimant to attempt to shift blame for her repeated misrepresentations when such false statements had the practical effect of complicating the proceedings. The Court reversed the Board in deciding that the stipulation could be set aside based on the false statements by the employee.

Paul C. Cipriano Jr., Esquire

Rulis & Bochicchio, LLC 

Notice Issue- Section 311 Business owned by Claimant.

Erie Insurance Property & Casualty v. Heater, No. 148 C.D. (2023)  (Pa Cwmlth -05/29/2024)

Where the Claimant is both the injured employee and employer/sole proprietor, the employer to whom the Claimant must provide notice of a work related injury  for compliance with Section 311 of the PA Workers Compensation Act, is the insurance company that bears the ultimate responsibility for the claim, which allows the insurer to complete a prompt and thorough investigation into the alleged work injury which would normally be performed by the employer. Claimant, David Heater, filed a work injury claim against his company, David W. Heater, a sole proprietorship for which he was employed. The WCJ granted his claim petition finding that he gave timely notice of his injury and that he was injured in the course and scope of his employment. Erie Insurance appealed to the Board which upheld the judge’s decision. Insurer then appealed to the PA Commonwealth Court arguing that Claimant should have been required to give notice to Insurer within 120 days of the injury and the judge’s finding that Claimant’s notice of the injury on himself, as Employer, was sufficient is inconsistent with the purpose of Section 311 of the Act, prejudicial to the Insurer and a violation of Insurer’s due process rights. Claimant responded that the Board did not err in affirming the WCJ’s decision because neither Section 311 of the Act, nor precedent interpreting that provision, required him to provide notice to the Insurer as the Employer received timely notice of the injury. The Commonwealth Court reversed the Appeal Board holding that under these circumstances where a claimant is both the injured employee and the sole proprietor/.employer, the “employer” to whom the claimant must notify of a work-related injury for the purposes of Section 311 in the insurer that bears the ultimate liability for the claim. This allows the insurer to ensure that prompt and complete investigation into the claimed injury, that would normally be performed by a disinterested employer, can be performed to protect stale claims, thereby meeting the purpose of Section 311. Because Claimant did not provide timely notice to Insurer under Section 311, “no compensation shall be allowed” and Claimant’s Claim petition is barred. 23-page decision by Hon. Renee Chon Jubelirer, President Judge.

Paul C. Cipriano Jr., Esquire

Rulis & Bochicchio, LLC

On January 27, 2023, the Commonwealth Court issued a memorandum opinion in City of Pittsburgh v. Ronald Dobbs (Workers’ Compensation Appeal Board), in which it expandedthe application of impairment rating evaluations to all injuries, including injuries that occurred prior to the enactment of Act 57.  The Court noted that Act 57, in which the impairment rating evaluation (IRE) process was initiated, limited its application to injuries sustained prior to its enactment on June 24, 1996.  Subsequently, however, the IRE process was declared null and void by the Pennsylvania Supreme Court in Protz v. Workers’ Compensation Appeal Board (Derry Area School District).  In striking down the entirety of Section 306(a.2), the Supreme Court held that the IRE process of Act 57 violated the nondelegation doctrine of the Pennsylvania Constitution.  The Pennsylvania General Assembly responded, and enacted the Act 111 Amendments to the Workers’ Compensation Act in 2018.  However, unlike Act 57, there was no specific provision in Act 111 that limited it application to injuries suffered prior to a specific date.  In Dobbs, the Court noted that Act 111 has since withstood several Constitutional challenges, and held that in the absence of any language within Act 111 limiting the date of injury, its application was extended to all injuries, including those injuries occurring prior to June 24, 1996.

Author: Melissa C. Petersen, Esquire

On January 2, 2024, the Pennsylvania Commonwealth Court issued what may be a decision that has significant effect upon workers’ compensation liability for insurers and self-insured employers, the pharmaceutical industry and may for injured workers as a consequence of the Decision.  In Federated Insurance v. Summit Pharmacy, the Court set aside the Bureau of Workers’ Compensation’s regulatory adoption and use of Red Book values as setting the Average Wholesale Price (AWP) to resolve payment disputes for pharmaceuticals.  It noted that doing so was inconsistent with the phrase AWP as utilized in Section 306(f.1)(3)(vi)(A) as has been interpreted by the Court.  If an agency’s regulations are inconsistent with the legislative intent of the statutory provisions, the regulations are invalid.  Thus, the Court invalidated utilizing Red Book values as to AWP when determining what amount needs to be paid under the Pennsylvania Workers’ Compensation Act and corresponding Medical Cost Containment Regulations when remitting payment for prescription medications.  The Court ordered the Bureau to promptly identify a “Nationally recognized schedule” of AWP which is to be utilized as being the basis of payment for prescriptions. 

This case had its genesis in a dispute over an alleged underpayment of approximately $72,500.00 for prescription medications.  The prescription bills submitted from 04/15/21 – 09/08/22 totaled $74,011.81 and payment was made by the carrier using the AWP of the drugs are reported in the National Average Drug Acquisition Cost Index (NADAC), which totaled $1,511.93.  The Bureau’s Fee Review Section issued determinations apply the costs per Red Book, based upon the cost containment regulations promulgated under the Act.  See 34 Pa. Code §§127.1 – 127.755; see also Section 306(f.1)(3)(vi)(A) of the Act, 77 P.S. §531(3)(vi)(A), which limits reimbursement for drugs and professional pharmaceutical services to “one hundred ten per centum of the … [AWP] of the produce, calculated on a per unit basis, as of the date of dispensing.” 

The Carrier argued that Red Book pricing was artificially inflated and did not accurately represent the actual AWP, which is what the Act required to determine pricing for pharmaceuticals.  It was noted that Red Book is a privately published, electronic compendium of pharmaceutical and over-the-counter “AWPs” available online.  The publisher of Red Book is IBM Watson, which has changed over the years.  It the statement policy, even IBM Watson indicated that, in most cases, the manufacturer’s AWP does not reflect the actual AWP charged by the wholesaler.  The values used in Red Book were what was reported by the manufacturer and IBM Watson did not independently analyze the data to ascertain the amounts paid by pharmacies to wholesalers.  Accordingly, it was asserted that Red Book values were inconsistent with the Act and cost containment provisions.  The Court looked to prior case law, Indem. Ins. Co. of N. Am. v. Bureau of Workers’ Comp. Fee Rev. Hearing Off. (Insight Pharm.) 245 A.3d 1158 (Pa. Cmwlth. 2021) to conclude that the plain meaning of AWP is a price which is an industry average and not one “charged by a single manufacturer,” and “is a number derived by averaging the wholesale prices of all manufacturers or wholesalers.”

While the Bureau adopted Red Book as AWP to be used in payment disputes, it was noted that an insurer may introduce evidence challenging the “accuracy” of the Red Book pricing.  Here the carrier challenged the use of Red Book on the basis that its values can never reflect an accurate AWP.  It was noted that NADAC pricing was based on the aggregated and averaged prices pharmacies typically pay for a drug at wholesale nationally. Whereas, Red Book pricing was chosen unilaterally by a drug’s manufacturer and was not a mathematical average.  It was not based upon an prices in actual wholesale transactions.  The prices under Red Book and NADAC differed considerably, especially for generic drugs.  An example was the acquisition price of a bottle of Prozac, which was $9.00.  The Red Book price for reimbursement was $2,000.00.  Thus, at payment of 110% of AWP, the carrier’s payment could be $2,200 under Red Book or $9.90 under NADAC. 

The Court agreed that the Bureau’s regulatory adoption of Red Book’s values as to AWP to resolve payment disputes was inconsistent with the phrase AWP as used in the Act and that an administrative agency’s regulations cannot conflict with the statutory intent.  Thus, they held as a matter of law that Red Book’s values could not be used as to AWP because they are inconsistent with the Act.  The Court however, did not indicate that NADAC is to be utilized.  Instead, it remanded and directed the Bureau to “promptly identify and publish” in the Pennsylvania Bulletin a “National recognized schedule to determine the AWP of prescription drugs” to be used to resolve payment disputes.

Thus, we are now left with a situation in which there is uncertainty as to what amount is payable for any prescription submitted for reimbursement.  It is uncertain as to when the Bureau may publish a new National recognized schedule.  Does this excuse or toll the payments to now be issued for prescription medications for which bills are submitted.  If payment is not made within 30 days of receipt of the bills, typically statutory interest is to start to accrue on the payment to be issued.  Should carriers now start to pay under NADAC and then if a different schedule is implemented, pay any difference in the amount payable along with interest on the additional payment.  The Bureau may well adopt NADAC.  However, it is not bound to do so.  It should be noted that with the drastic difference in the amount payable, pharmacies may elect to not fill some drugs for workers’ compensation claims.  In the Decision, the expert for the pharmacy indicated that the cost to fill a prescription is $12.50 per prescription such that the pharmacy would be losing money any time they fill a script for a mediation that has an AWP that does not provide for payment above this amount.  This could be problematic for injured workers if they are no longer able to secure certain mediations if pharmacies do not find it cost effective to provide.   However, with how inflated Red Book values are, it is obvious that pharmacies have been significantly profiting to the detriment of insurers and self-insured employers for years relative to the cost of prescription medications.  More likely than not there will be more comment and discussion about how to come up with a schedule that makes sense for all stakeholders.

The Medical Cost Containment Regulations were enacted back in 1994.  They may no longer be adequate in a number of ways in terms of addressing issues that arise in the workers’ compensation and fee review forums.  It may be time for the General Assembly of Pennsylvania to revisit the regulations, seek commentary from all stakeholders and to address any and all deficiencies that are arising either from the regulations not accurately reflecting the times as to payment for medical treatment and pharmaceuticals as well as addressing cases that have been rendered over time that appear inconsistent with the Act and regulations that have led to even further confusion over implementation and interpretation of the Act and Regulations.  This case is most likely going to have a significant financial impact upon carriers in Pennsylvania as well as pharmacies and injured workers’ may also feel the fallout.  However, other than simply forms the basis for determining the cost of prescription mediations moving forward, perhaps, it will provide the impetus for even more broad and sweeping changes regarding the payment of medical treatment under the Pennsylvania Workers’ Compensation Act.