After a doctor prescribed several medications to Mr. Martinez, a pharmacy dispensed two of the medications and billed American Business, through its insurer, Cincinnati Insurance Company.

American Business denied payment on all of the invoices, asserting that Mr. Martinez had not sustained a work injury.

In response, the pharmacy filed three fee review applications.

American Business argued that the Medical Fee Review Section lacked jurisdiction over the pharmacy’s fee review applications because it had no liability for Mr. Martinez’s injuries.

Thereafter, American Business and Mr. Martinez reached a C&R agreement that they presented to a workers’ compensation judge (“WCJ”).

At a hearing on the C&R agreement, Mr. Martinez testified that American Business had agreed to settle without accepting liability for his injuries. He agreed that he would be responsible for any outstanding medical expenses, except for those related to the pharmacy’s fee review applications.

The bureau’s fee review hearing office determined that the pharmacy’s fee review applications were premature. It explained that American Business had denied liability for the work injury when Mr. Martinez filed his claim petition and continued to deny liability in the C&R agreement. Because American Business had not been adjudicated liable for the work injury, the hearing office lacked jurisdiction over the fee review contest, it concluded.

The pharmacy went to court, asserting that its due process rights had been violated because the C&R agreement was used to relieve both American Business and Mr. Martinez from liability to the pharmacy. The pharmacy argued that by agreeing to release Mr. Martinez from any liability to the pharmacy, American Business had made itself subject to and bound by the fee review process.

The Court’s Decision

The court ruled in favor of the pharmacy.

In its decision, the court pointed out that American Business had promised Mr. Martinez that he would not be liable for the pharmacy’s bills, regardless of the outcome of the litigation on the fee determinations.

However, the court declared, the parties to a C&R agreement could “not use the agreement to release themselves from liability to a provider who did not participate in the agreement.”

The court then determined that American Business, notwithstanding its position that there had not been a work injury, had accepted “responsibility” for the pharmacy’s invoice.

It reasoned that the C&R agreement stated that litigation of the pharmacy’s bills would continue in the fee review system and that Mr. Martinez would not be responsible for any payments to the pharmacy resulting from that litigation. In the court’s view, American Business had accepted “responsibility” for the debt to the pharmacy when it released Mr. Martinez from any obligation to pay the pharmacy in the C&R agreement.

Accordingly, the court concluded, the hearing office had jurisdiction to decide the three fee review contests on the merits.

The case is Workers First Pharmacy Services, LLC v. Bureau of Workers’ Compensation Fee Review Hearing Office, No. 1619 C.D. 2018 (Penn. Comm. Ct. Aug. 7, 2019). Attorneys involved include: Daniel J. Siegel, Havertown, for Petitioner. Alan M. Leff, Philadelphia, for Respondent.