UR Nation End of Month Regulatory News Summary

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11th Circuit Rules in Favor of Air Ambulance Company in Billing Dispute

The 11th Circuit Court of Appeals ruled in Bailey v. Air Methods that the Airline Deregulation Act of 1978 governs the fees charged by air ambulance companies. In the case, Lenworth Bailey was involved in an automobile accident in Florida. His young son, Lemar Bailey, suffered life-threatening injuries. Air Methods Corporation (AMC) dispatched a rescue helicopter and flew Lemar Bailey 37 miles to a hospital in West Palm Beach. In exchange for its services AMC presented a bill in the amount of $27,975.90. State Farm paid $6,911 of the bill, representing 200% of the Medicare Part B fee schedule. Aetna, which was subrogated into the action, paid $3,681. AMC then billed Lenworth Bailey $17,382, which represented the unpaid portion of the bill.

Lenworth Bailey filed a declaratory relief action against AMC claiming that by seeking to collect the $17,382 AMC was violating the Florida Deceptive and Unfair Trade Practices Act, along with the Florida Consumer Collections Practices Act. The case was removed to federal court and eventually came before the 11th Circuit Court of Appeals, based in Atlanta.

The 11th Circuit said the Airline Deregulation Act of 1978 explicitly states that any state attempts to regulate an air carrier’s rates or services are preempted. “Congress left decisions related to prices to air carriers themselves.”

Trey Gillespie, with the Property Casualty Insurers Association, recently provided some interesting insight. He said that SB 471 federal legislation called the Isla Rose Life Flight Act was proposed by Sen. Jon Tester of Montana in 2017. The goal is to allow states and localities to regulate certain facets of air ambulance services if states choose to do so. The bill is named after Isla Rose Thompson, whose family was charged $56,000 by Airlift Northwest after Isla Rose Thompson was flown to a Montana hospital for heart surgery. Isla Rose Thompson survived, but the air ambulance bill wreaked havoc on the Thompson family. SB 471 is currently in the Senate Commerce, Science and Transportation Committee.

FDA Approves Non-Opioid Lucemyra for Opioid Withdrawal Treatment

The FDA announced that it has approved Lucemyra for opioid withdrawal treatment. Lucemyra, created by U.S. WorldMeds LLC, is a non-opioid drug also known as lofexidine. The drug is intended to facilitate abrupt discontinuation of opioids in adults. As many system participants know, opioid withdrawal symptoms may include anxiety, agitation, sleep problems, muscle aches, runny nose, sweating, nausea, vomiting, diarrhea and drug craving. Lucemyra reduces the body’s release of norepinephrine (a naturally occurring chemical in the body that acts as both a stress hormone and neurotransmitter) to suppress the neurochemical surge that produces opioid withdrawal symptoms.

FDA Cracking Down on Brand Name Drugmakers That Block Access to Generic Drugmakers

FDA Commissioner Scott Gottlieb announced new agency efforts to thwart “gaming tactics to delay generic competition.” In his statement, Mr. Gottlieb said that a generic drug developer generally needs 1,500 to 5,000 units of a brand name drug to perform tests and studies in order to obtain FDA approval. But the FDA said they have learned of tactics designed to make it hard for generic companies to purchase brand named drugs at fair value in the open marketplace. These tactics include placing restrictions in their commercial contracts with drug distributors, wholesalers or specialty pharmacies that limit sales to generic drug developers for testing. As a result the FDA has created a list of reference listed drug (RLD) inquiries. Mr. Gottlieb stated that the list consisted of companies that “have potentially been blocking access to the samples of their branded products.” The idea is that the list will increase transparency and help reduce unnecessary hurdles to generic drug development and approval.

Louisiana HB 579 Medical Marijuana Bill Headed to Gov. John Bel Edwards for Signature

Louisiana HB 579, which expands the list of medical conditions for which medical marijuana is allowed, appeared to be dead going into the final days of the regular legislative session. But surprisingly, the bill passed the House and now awaits the signature of Gov. John Bel Edwards. Gov. Edwards has not indicated whether or not he will sign it into law. The bill expands the list to include glaucoma, muscle spasms, intractable pain, post-traumatic stress disorder, and Parkinson’s disease. However, the bill specifically states that workers’ compensation payers “shall not be obligated or ordered to pay for medical marijuana in claims” arising under Louisiana’s workers’ compensation law.

North Carolina Industrial Commission Released Opioid Companion Guide Book

The North Carolina Industrial Commission released its new 51 page opioid Companion Guide. The purpose of the guide is to help employees, employers, carriers, health care providers, pharmacists, attorneys and other stakeholders in the North Carolina workers’ compensation system understand the new rules regarding opioid prescribing and pain management. According to the executive summary, Chapter 1 contains information on the application of the rules and provides guidelines for transitioning ongoing treatment into compliance with the rules. Chapter 2 contains information on first fill, acute phase, and chronic phase by rule topic. Chapter 3 addresses new requirements for prescribing an opioid antagonist under certain conditions. Chapter 4 elaborates on the consideration for non-pharmacological treatments for pain. Chapter 5 discusses treatment for substance abuse disorders.

The Supreme Court of California Heard Oral Arguments in King v. CompPartners

On May 29, the Supreme Court of California heard oral arguments in the case of King v. CompPartners. In 2008, Kirk King sustained a work-related back injury. At some point he was prescribed Klonopin to help with anxiety. After taking Klonopin for a few years his employer sent the Klonopin request to utilization review (UR). The UR vendor was CompPartners. A CompPartners UR physician, Dr. Sharma, reviewed the request. After referencing the MTUS, Dr. Sharma did not believe Klonopin was medically necessary. As a result, CompPartners sent notice to King and his treating physician that Klonopin was not approved. King ceased taking Klonopin and allegedly suffered seizures from the abrupt withdrawal. He sued Dr. Sharma for failing to warn him of the potential dangers of immediate cessation. The CA Court of Appeal held that Dr. Sharma had a duty to warn, and Dr. Sharma appealed the case to the Supreme Court of California.

During oral argument, Kirk King’s attorney, Patricia Law, argued that Dr. Sharma, who was in a position to make important medical decisions, was not competent to evaluate the specific clinical issues involved in the treatment request. She argued he did not have a clinical practice and he had no background in psychiatry (and Klonopin is a psychotropic drug). She argued that Dr. Sharma showed his incompetence by failing to include a weaning schedule.

CompPartners and Dr. Sharma were represented by Munger, Tolls & Olsen attorney Fred Rowley Jr. He argued that sometimes things go wrong in the process, and that workers’ comp is not a perfect process. But you have to stay within the system. “What you can’t do is go outside the system, said Rowley.” In other words, you can’t decide you’re unhappy with a UR doctor, or other system participant, and sue them directly. Your remedies are exclusively those provided by the workers’ comp system.

For a bit more background, in their Opening Brief before the Supreme Court, CompPartners gave some solid legal arguments why they believe a physician doing UR is not practicing medicine and does not owe a claimant a duty of care as would a treating doctor. King’s Respondent’s Brief presents several arguments that UR physicians make medical decisions concerning necessary medical treatment and therefore have a duty to warn. They analogize someone like Dr. Sharma to a private investigator hired by the insurance carrier to surveil an injured worker. They say that since a private investigator could be sued by an injured worker, so should Dr. Sharma since he was retained by CompPartners in a similar manner.

In CompPartners Reply Brief, we see two more solid legal arguments. First, the California Workers’ Comp Act precludes civil suits against employers, their carriers, their TPAs and other companies used to administer the UR process. For example, LC Sec. 4610.5 expressly defines an employer to include “the insurer of an insured employer, a claims administrator, UR organization, or other entity acting on behalf of them.” Second, CompPartners argues that King is suggesting a “new role” for UR physicians. In other words, UR physicians are now to act as “supplemental treating providers.” This is completely at odds with the Legislature’s plan as LC Sec. 4610, (a) and (c) say nothing about UR physicians providing treatment recommendations. Rather, their role is to review treatment requests made by the treating physician and confirm that such treatment is medically necessary pursuant to the treatment guidelines.

As you might suspect, everyone in the UR community is following this case very closely. Hopefully, the court will make its decision in a few months, as system participants have been waiting an extremely long time (about a year and a half) for this opinion.

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.