New Louisiana Case: $750 Cap Limits Carrier’s Physician Dispensing Liability

| | Utilization Review

Toms La Supreme Court Case Article for July 2016

The Louisiana Supreme Court has addressed a case in which a provider prescribed and dispensed prescription medication, then claimed it was not subject to the $750 cap. In Lafayette Bone & Joint Clinic v. LUBA, injured workers Charles Morris and Charles Poole both treated at the Lafayette Bone & Join Clinic. Both were prescribed and dispensed prescription medications. Louisiana United Business Self Insured Fund (LUBA) sent letters to Lafayette Bone & Joint Clinic stating LUBA would not pay for future prescription medications directly dispensed by the clinic and that future prescriptions must be filled by local pharmacies. It was LUBA’s position that while Charles Morris and Charles Poole had LUBA’s approval to treat at the Lafayette Bone & Joint Clinic, that did not obligate LUBA to pay for all prescription medications dispensed by Lafayette Bone & Joint Clinic.

Despite the warning letters, Lafayette Bone & Joint Clinic continued to dispense prescription medications. This included seven prescriptions for Charles Morris and five for Charles Poole. The clinic took the position that because the workers were allowed to treat at the clinic, any medications deemed necessary by the clinic’s physicians should also be covered by LUBA. Thereafter, true to their warning, LUBA refused payment on all requests for reimbursement after the letters were sent.

Lafayette Bone & Joint Clinic then filed disputed claim forms with the Office of Workers’ Comp (OWC), seeking to recover $2,829 for the medications, along with attorneys fees and costs. OWC had a hearing in which they ruled LUBA was only liable for $750 for each injured employee. OWC said that since the medications were dispensed as nonemergency treatment by the provider without the consent of LUBA, per LSA-R.S. 23:1142(B), $750 per injured worker was the maximum LUBA owed.

Lafayette Bone & Joint Clinic appealed to the Louisiana Court of Appeal. The basis of the appeal was that the clinic should be awarded the full $2,829 plus attorney’s fees and costs. A strong argument in their favor was that LUBA had refused to pay the $750 per injured worker when liability was clear. The Louisiana Court of Appeal ruled that LUBA was liable for the full $2,829 for the medications by Lafayette Bone & Joint Clinic, and also awarded attorney’s fees and costs. LUBA appealed to the Louisiana Supreme Court.

The Supreme Court ruled that Lafayette Bone & Joint Clinic acted without LUBA’s approval when it dispensed the additional medications after they got the letters. Specifically, the Supreme Court ruled that LSA-R.S. 23:1142(B) required that LUBA give consent to anything over $750. And the letters were clear evidence that LUBA did not approve of any additional dispensing. Therefore, the Supreme Court found that LUBA’s liability was capped at $750 for each worker. However, the Supreme Court agreed with the Court of Appeal to award attorney’s fees and costs against LUBA. They ruled LUBA had an obligation to pay the $750 for each worker early on, after liability was clear, and did not. In other words, while LUBA did have a reasonable basis to object to anything beyond $750 per injured worker, LUBA did not have a reasonable basis to object to the $750 itself for each injured worker.

Overall, this is a good case for insurers in Louisiana. The only mistake made by LUBA was to refuse to pay the $750 per injured worker as soon as practicable after liability was reasonably clear. Had LUBA paid the $750 early on, LSA-R.S. 23:1142(B) would have protected them from having to pay anything further, and LUBA would have likely been awarded attorney’s fees and costs, instead of Lafayette Bone & Joint Clinic.

It will be interesting to see if other carriers operating in Louisiana adopt this tactic. At a minimum, this case sends a clear message that just because a carrier allows an injured worker to treat with a particular clinic, that clinic is not automatically afforded the right to dispense medications for more than $750 without the carrier’s approval.

Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.