KRISTEL C. BUCK-ULRICK, Employee, v. TRI CITY ENTERS. and SFM MUT. INS. CO., Employer-Insurer/Appellants, and FAIRVIEW HEALTH SERVS., Intervenor.
WORKERS’ COMPENSATION COURT OF APPEALS
MAY 13, 2008
MEDICAL TREATMENT & EXPENSE - SURGERY; STATUTES CONSTRUED - MINN. STAT. § 176.011, SUBD. 24; RULES CONSTRUED - MINN. R. 5221.0700, SUBP. 2.A.(2). Where the implant surgically installed in treatment of the employee’s work injury was provided by the manufacturer for use by trained personnel in a hospital setting and the employee had no direct personal contact with the manufacturer, the respondent hospital remained the health care provider “actually furnishing” the service or supply to the employee under Minn. R. 5221.0700, subp. 2.A.(2), and the entity “who furnishes” the service under Minn. Stat. § 176.011, subd. 24, and the compensation judge properly declined to order that the manufacturer should have billed the insurer directly for the implant, rather than billing the hospital, which in turn billed the insurer.
Determined by: Pederson, J., Rykken, J., and Johnson, C.J.
Compensation Judge: Danny P. Kelly
Attorneys: Mark J. Fellman, St. Paul, MN, for the Respondent Employee. Andrew W. Lynn, Lynn, Scharfenberg & Assocs., Bloomington, MN, for the Appellants. Gregory G. Heacox, Heacox, Hartman, Koshrl, Cosgriff & Johnson, St. Paul, MN, for the Respondent Intervenor.
WILLIAM R. PEDERSON, Judge
The employer and insurer appeal from the compensation judge’s determination that the manufacturer or supplier of an artificial disc implanted during the employee’s surgery is not a health care provider as defined by Minn. Stat. § 176.011, subd. 24, so as to require the manufacturer or supplier to submit its charges for the “article or supply” directly to the insurer, rather than through the hospital. We affirm.
On February 28, 2003, and April 22, 2004, Kristel Buck-Ulrick [the employee] sustained injuries arising out of and in the course of her employment with Twin City Enterprises [the employer]. On both dates the employer was insured for its workers’ compensation liability by SFM Mutual Insurance Company [SFM].
On December 12, 2006, the employee underwent an anterior spinal stabilization procedure with “Prodisc arthroplasty” performed by Dr. John Sherman at Fairview Southdale Hospital [Fairview]. The artificial disc used during the employee’s surgery was manufactured by Synthes Spine. Fairview did not keep disc implants in stock and specifically ordered the ProDisc for the employee’s surgery from Synthes Spine. Fairview subsequently sent a bill to SFM for its medical services, which included a $14,926.00 charge for “supply implants.” SFM does not dispute the reasonableness or necessity of the employee’s care and treatment, nor that the charge represented Fairview’s usual and customary charge for the service rendered. SFM contends, however, that Fairview was not entitled to bill SFM for the disc implant actually supplied by Synthes Spine. Consequently, SFM has refused to pay Fairview for its charges relating to the implant.
On May 11, 2007, SFM filed a Medical Request seeking a determination as to its obligation to pay Fairview for the artificial disc. An Administrative Conference was held before a mediator/arbitrator on June 15, 2007, and, by decision issued June 18, 2007, the mediator/arbitrator determined that, pursuant to Minn. R. 5221.0700, “the medical supplier, and not the medical facility where the surgery took place, is responsible for billing the insurer directly for the medical supplies at issue in this case.” Fairview filed a Request for Formal Hearing on July 18, 2007.
The parties’ dispute came on for hearing before a compensation judge on October 5, 2007, and the record closed on October 29, 2007, upon the submission of written closing arguments. The issue identified for determination by the judge was whether Fairview was entitled to submit charges directly to SFM for the artificial disc implanted during Fairview’s treatment of the employee’s back injury.
The only testimony at trial was provided by Mr. Robert McCoy, vice president of revenue management at Fairview. Mr. McCoy testified that Fairview is a licensed health care provider responsible for all of the services and supplies provided to patients within its facilities. As such, Fairview contracts with manufacturers for various articles used by Fairview in providing medical care to its patients, including the ProDisc implant used in this case. With regard to back surgeries such as the employee’s surgery, Mr. McCoy explained that once the surgery is scheduled, the surgeon chooses the artificial disc to be implanted from Fairview’s list of pre-approved manufacturers. Fairview then procures the disc from the manufacturer and pays the manufacturer directly. At the conclusion of Fairview’s service, that is, the surgery, Fairview submits a bill to the payer for all charges involved with the service. Fairview’s bill includes the cost of the artificial disc to Fairview plus a markup of an undisclosed amount.
In a Findings and Order issued November 27, 2007, the compensation judge determined that Synthes Spine is a supplier and not a health care provider under the statute and rules. He further found that Fairview, the health care provider in this case, was entitled to bill SFM for the employee’s disc implant. Consequently, the judge found that Fairview may bill for its usual and customary charges, and he ordered SFM to make payment accordingly. The employer and SFM appeal.
In cases where an injured employee is treated at a hospital with more than 100 beds, such as Fairview Southdale, a workers’ compensation payer is liable for payment of “85 percent of the provider’s usual and customary charge, or 85 percent of the prevailing charges for similar treatment, articles, and supplies furnished to an injured person when paid for by the injured person, whichever is lower.” Minn. Stat. § 176.136, subd. 1b(b). SFM concedes that Fairview submitted its usual and customary charge but contends that the compensation judge erred as a matter of law in his interpretation of Minn. R. 5221.0700, governing provider responsibilities.
Minn. R. 5221.0700, subp. 2A(2), provides:
A. Charges for services, articles, and supplies must be submitted to the payer directly by the healthcare provider actually furnishing the service, article, or supply. This includes, but is not limited to the following:
* * *
(2) equipment, supplies, medication not ordinarily kept in stock by the hospital or healthcare provider facility, purchased from a supplier for a specific employee.
For purposes of Chapter 5221 of the Minnesota Rules, the term “health care provider” is definedby Minn. Stat. § 176.011, subd. 24, which provides that “‘Health care provider’ means a physician, podiatrist, chiropractor, dentist, optometrist, osteopath, psychologist, psychiatric social worker, or any other person who furnishes a medical or health service to an employee under this chapter.” (Emphasis added.) Minn. R. 5221.0100, subp. 15, defines “service” or “treatment” “as any procedure, operation, consultation, supply, product, or other thing performed or provided for the purpose of curing or relieving an injured worker from the effects of a compensable injury. . . .”
The compensation judge found that the artificial disc, ProDisc, is not ordinarily kept in stock by Fairview and that Fairview ordered the disc from Synthes Spine specifically for the employee. But he also found that Synthes Spine is a supplier and not a health care provider. As such, he concluded that Fairview was entitled to bill SFM directly for the disputed artificial disc and was entitled to payment of 85% of its usual and customary charge.
SFM argues that when Minn. Stat. § 176.011, subd 24, and Minn. R. 5221.0100, subp. 15, are read together, it is clear that Synthes Spine qualifies as a health care provider, because Synthes Spine furnished a medical service (i.e., a supply) for the purpose of curing or relieving the employee from the effects of her compensable injury. As such, because the ProDisc used in this case was not ordinarily kept in stock by Fairview, and because it was purchased specifically for the employee, the plain language of Minn. R. 5221.0700, subp. 2A(2), requires Synthes Spine to submit its charges directly to SFM. In fact, SFM contends, the instant case presents exactly the circumstances contemplated by the rule. Therefore, SFM maintains, the judge’s order requiring payment to Fairview must be reversed. We are not persuaded.
One of the purposes of Minn. R. 5221.0700 is to prevent a health care provider from including on its billing statement the services and charges provided by another health care provider under referral from the treating doctor, thus avoiding the problem of markup for services provided by another business entity but billed by the referring provider. Subpart 2A(1) and (2) of the rule then provide examples of the types of charges for services, supplies, and articles that are often referred out. SFM contends that subparagraph (2) of the rule precisely covers the case before us.
We acknowledge that subparagraph (2) of the rule might appear to apply to the charge at issue in this case. However, that provision must be read in conjunction with subpart 2A, which specifies that the charges are to be submitted by the health care provider actually furnishing the service. Here, Synthes Spine did not furnish any medical or health service to the employee when it sold its ProDisc implant to Fairview, and Fairview did not refer the employee to Synthes Spine. In fact, as the manufacturer of the implant, Synthes Spine has no contact whatsoever with Fairview’s patients. The ProDisc implant, or “supply,” standing alone, had no value to the employee when it arrived at Fairview from the manufacturer; as merely one small part of the employee’s surgical procedure, the ProDisc implant cannot reasonably be considered an independent medical service that was actually “furnished” “to an employee” as contemplated by Minn. Stat. § 176.011, subd. 24. Rather, this implant was provided by the manufacturer for use by trained personnel in a hospital setting. Given these circumstances, Fairview remained the health care provider “actually furnishing” the service or supply under Minn. R. 5221.0700, subp. 2A(2).
Our acceptance of SFM’s position in this case would transform virtually every manufacturer of custom medical devices into health care providers, subject to the rules and responsibilities of the workers’ compensation system. In the absence of more explicit direction, we decline to interpret the rule in this manner. Because Synthes Spine did not furnish this disc implant to the employee within the meaning of the statute and rules - - Fairview did - - the compensation judge properly concluded that Fairview was entitled to bill SFM for the device, and we affirm.
 The intervenor/respondent in this case is Fairview Health Services, and our use of “Fairview” throughout this decision refers to Fairview Health Services and its facilities, including Fairview Southdale Hospital.