DAVID M. FRIEL, Employee, v. GIBSON=S CONSTR. ENTERS., INC., and STATE FUND MUT. INS. CO., Employer-Insurer/Appellants, and THIRD PARTY SOLUTIONS, INC., Respondent.

 

WORKERS= COMPENSATION COURT OF APPEALS

DECEMBER 23, 2003

 

HEADNOTES

 

MEDICAL TREATMENT & EXPENSE - MEDICATIONS;  STATUTES CONSTRUED - MINN. STAT. ' 176.136; RULES CONSTRUED - MINN. R. 5221.4070, SUBP. 3.  In light of the increased specificity of this rule in the wake of the 1996 amendment to Minn. Stat. ' 176.136 that grants the commissioner authority to establish the reasonable value of medications, Minn. R. 5221.4070, subp. 3.C., is to be construed to limit an employer=s liability at 85% of the usual and customary charge for the prescription medication only when the medication is provided by a large hospital for inpatient use.  Minn. R. 5221.4070, subp. 3.A., contains no such limitation.  The clear and unambiguous language of the rule provides that the AWP, plus a dispensing fee, is to be the basis for charges for outpatient prescription medication.

 

Affirmed.

 

Determined by Pederson, J., Rykken, J., and Johnson, C.J.

Compensation Judge:  Gregory A. Bonovetz.

 

Attorneys:  Robert T. Lund, State Fund Mutual Insurance Company, Bloomington, MN, for Appellants.  Raymond P. Pepe, Kirkpatrick & Lockhart, Harrisburg, PA, for Intervenor/Respondent.

 

OPINION

 

WILLIAM R. PEDERSON, Judge

 

The insurer appeals from the compensation judge's conclusion that the insurer is liable, pursuant to Minn. R. 5221.4070, subp. 3.A., for the average wholesale price of the medication at issue plus a professional dispensing fee of $5.14 per medication, rather than for the Ausual and customary charges@ for such medication in non-workers= compensation contexts.  We affirm.

 

BACKGROUND^[1]

 

Between February 1, 2001, and January 18, 2002, Family Pharmacy in Moose Lake, Minnesota, dispensed thirty-four outpatient prescriptions to David Friel, which prescriptions were necessitated by a compensable workers= compensation injury that Mr. Friel had sustained in May of 2000.  Third Party Solutions, Inc. [TPS], as assignee of Family Pharmacy=s workers= compensation pharmacy claims, submitted the thirty-four claims related to Mr. Friel=s case to the insurer on the risk for Mr. Friel=s injury, State Fund Mutual Insurance Company [State Fund].  The amount charged by TPS was the average wholesale price of the medications plus a professional dispensing fee of $5.14 per medication, pursuant to Minn. R. 5221.4070, subp. 3.A.  State Fund subsequently paid all of the thirty-four medication claims in full.

 

On March 20, 2002, State Fund filed a Medical Request, seeking reimbursement from TPS in the amount of $847.43, alleging that TPS had charged State Fund, and that State Fund had paid, an amount for Mr. Friel=s medication that was Ain excess of the amount charged to cash payers@ and therefore an amount excessive under the law.  State Fund also requested a ruling on the definition of Ausual and customary price,@ as that phrase is used in Minn. Stat. ' 176.136 and accompanying rules.^[2]  An administrative conference was held, apparently  by telephone, on August 22, 2002, and State Fund failed to prevail in its request, the compensation judge concluding in part that A[t]he usual and customary price charged by Moose Lake Pharmacy for prescription medications obtained by an injured worker on account is the average wholesale price of the prescription medications plus a dispensing fee of $5.14" (emphasis added).  On October 21, 2002, State Fund filed a Request for Formal Hearing, listing as follows the specific issue in dispute:

 

Whether the charges by The Family Pharmacy (Moose lake, Minnesota), as collected by Third Party Solutions, for outpatient prescription medications exceeded those allowable by Minnesota Statutes Chapter 176.  Specifically, the employer and insurer contend that a pharmacy (via a third party billing service or otherwise) may not charge a workers= compensation insurer or self-insured employer a higher price for prescription medications than it charges a cash-paying or other walk-in customer a non-workers= compensation payer (e.g., a general health insurer).

 

The matter came on for consideration by a compensation judge on written submissions of the parties, with the record closing on March 4, 2003.  The issue presented to the judge, as stated in his Findings and Order filed March 27, 2003, was as follows:

 

Whether the employer and insurer=s liability for prescription medications provided for outpatient use shall be limited to the sum of the average wholesale price of the medication along with a professional dispensing fee or whether the employer and insurer=s liability for such medications is subject to other criteria including the usual and customary charge for the medication, some percentage of the usual and customary charge for the medication, the amount charged for cash-paying or walk-in customers.

 

At Finding 8 of his Findings and Order, the compensation judge concluded that, pursuant to Minn. R. 5221.4070, subp. 3.A., State Fund=s liability for the thirty-four prescriptions at issue was the average wholesale price of the medication on the date the medication was dispensed, plus a professional dispensing fee of $5.14 per medication.   At Finding 9, the judge explained that A[t]he above-cited rule [Minn. R. 5221.4070, subp. 3.A.], which specifically addresses prescription medications provided for outpatient use, does not include and makes no reference to >usual and customary charges,= charges for cash-paying recipients or amounts charged in non-workers= compensation scenarios.@  State Fund appeals.

 

STANDARD OF REVIEW

 

A[A] decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which [the Workers= Compensation Court of Appeals] may consider de novo.@  Krovchuk v. Koch Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).

 

DECISION

 

Minn. Stat. ' 176.135, subd. 1(a), provides that the employer of an injured worker Ashall furnish any . . . medicines . . . as may reasonably be required at the time of the injury and any time thereafter to cure and relieve from the effects of the injury.@  The subsequent section, Minn. Stat. ' 176.136, provides at subdivision 1(a) in part that A[t]he commissioner shall by rule establish procedures for determining whether or not the charge for a health service [compensable under section 176.135] is excessive.@  Minn. Stat. ' 176.136, subd. 1(a).  Subdivision 1(b) of that same section provides in part as follows:

 

The procedures established by the commissioner must limit, in accordance with subdivisions 1a, 1b, and 1c, the charges allowable for . . . health care provider treatment or services, as defined and compensable under section 176.135.  The procedures established by the commissioner for determining whether or not the charge for a health service is excessive must be structured to encourage providers to develop and deliver services for rehabilitation of injured workers.

 

Minn. Stat. ' 176.136, subd. 1(b).  Subdivision 1a of that same section provides in part that A[t]he liability of an employer for services included in the medical fee schedule is limited to the maximum fee allowed by the schedule in effect on the date of the medical service, or the provider=s actual fee, whichever is lower.@  Minn. Stat. ' 176.136, subd. 1a.  Subdivision 1b(a) of that section provides in part that A[t]he liability of the employer for treatment, articles, and supplies provided to an employee while an inpatient or outpatient at a small hospital shall be the hospital=s usual and customary charge.@  Minn. Stat. ' 176.136, subd. 1b(a).  Subdivision 1b(b) of that section provides further as follows:

 

The liability of the employer for the treatment, articles, and supplies that are not limited by subdivision 1a or 1c or paragraph (a) shall be limited to 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.  On this basis, the commissioner or compensation judge may determine the reasonable value of all treatment, services, and supplies, and the liability of the employer is limited to that amount.  The commissioner may by rule establish the reasonable value of a service, article, or supply in lieu of the 85 percent limitation in this paragraph.

 

Minn. Stat. ' 176.136, subd. 1b(b).  Subdivision 2 of section 176.136 provides in part that the commissioner, a compensation judge, or the court of appeals may determine whether a medical expense is excessive, among the criteria for that determination being if the expense Aexceeds the maximum permissible charge pursuant to subdivision 1, 1a, 1b, or 1c@ or Ais otherwise deemed excessive or inappropriate pursuant to rules adopted pursuant to this chapter.@  Minn. Stat. ' 176.136, subds. 2(1) and 2(4).

 

Several rules have been promulgated under authority of Minn. Stat. ' 176.136.  Minn. R. 5221.0500, subp. 1.B., provides in part that a billing charge for health care supplies provided to an injured employee is excessive if Athe charge exceeds the provider=s current usual and customary charge, as specified in subpart 2, item B, for the same or similar service, article, or supply in cases unrelated to workers= compensation injuries.@  Subpart 2.B.(1) of that same rule defines Ausual and customary charge@ as used in the statute to mean Athe amount actually billed by the health care provider to all payers for the same service, whether under workers= compensation or not, and regardless of the amount actually reimbursed under a contract or government payment system.@  Minn. R. 5221.0500, subp. 2.B.(1).  Minnesota Rules 5221.0700, subp. 1, provides that A[n]o provider shall submit a charge for a service which exceeds the amount which the provider charges for the same type of service in cases unrelated to workers= compensation injuries.@  Finally, Minn. R. 5221.4070, subp. 3, which contains provisions dealing exclusively with maximum pharmacy fees, provides at paragraph A. as follows:

 

The employer=s liability for compensable prescription medications provided for outpatient use by a large hospital, clinic, or an independent pharmacy shall be limited to the sum of the average wholesale price (AWP) of the medication on the date the medication was dispensed, and a professional dispensing fee of $5.14 per medication.

 

Paragraphs B, C, and D of this subpart address the employer=s liability for compensable nonprescription medications, prescription medication for inpatient use, and prescription medications provided by a small hospital, respectively.^[3]

 

In his memorandum, the compensation judge indicated that his decision was made in light of A[t]he clear, unambiguous language of the very specific [Minn. R. 5221.4070, subp. 3.A.],@ guided by Minn. Stat. ' 645.16's provision that unambiguous language in a statute Ashall not be disregarded under the pretext of pursuing the spirit@ and Minn. Stat. ' 645.26's provision that, A[w]hen a general provision in a law is in conflict with a special provision,@ and A[i]f the conflict between the two provisions be irreconcilable, the special provision shall prevail and shall be construed as an exception to the general provision,@ unless enactment of the general provision post-dates enactment of the special provision.  Minn. Stat. ' 645.25, subd. 1.  State Fund argues as follows:  (1) that pharmacy charges are ultimately subject to the entire Amedical fee schedule,@ which is comprised of Minn. Stat. ' 176.136, subds. 1 and 5, and Minn. R. 5221.4000 through 5221.4070 inclusive; (2) that, under that medical fee schedule, the charge for outpatient prescriptions specified in Minn. R. 5221.4070, subp. 3.A.Bthe average wholesale price of the medication plus a $5.14 dispensing fee--is only the maximum charge permissible for such medications; (3) that, under that same medical fee schedule, a workers= compensation insurer is liable for either that maximum charge identified in Minn. R. 5221.4070, subp. 3.A. or the current Ausual and customary@ charge paid to the pharmacy by nonworkers= compensation patrons for such medications, whichever is lower; and (4) that that Ausual and customary@ limitation is not in conflict with the Amaximum fee@ provision in Minn. R. 5221.4070, subp. 3.A., and so does not supersede it under Minn. Stat. ' 645.26, subd. 1.  We are not persuaded.

 

Prior to 1996, Minn. Stat. ' 176.136, subd. 1b(b), limited an employer=s medical liability to A85 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,@ with the added provision that A[o]n this basis , the commissioner or compensation judge may determine the reasonable value of all treatment, services, and supplies, and the liability of the employer is limited to that amount.@  In 1996, this subdivision was amended to provide that A[t]he commissioner may by rule establish the reasonable value of a service, article, or supply in lieu of the 85 percent limitation in this paragraph.@

 

From 1994 through 1999, the rule here at issue, on the basis of which the compensation judge made his decision, Minn. R. 5221.4070, subd. 3.A., provided for a limitation on pharmacy charges that distinguished only two kinds of expenses, prescription medications and nonprescription medications, the former being limited to the average wholesale price [AWP] plus a dispensing fee, the latter being limited to the lower of either that same amount or the actual retail price of the medication plus the dispensing fee.  In the year 2000, the rule was amended to subdivide the general prescription category into three specific categories, resulting in a rule addressing four separate categories of pharmaceutical dispensing: (A) outpatient dispensing of prescription medication by a large hospital or clinic or an independent pharmacy; (B) any dispensing of nonprescription medication; (C) inpatient dispensing of prescription medication by a large hospital; and (D) any dispensing of prescription medication by a small hospital.

 

It is clear to us, as it was to the compensation judge, that the increased specificity of the rule, in the context of the 1996 amendment to Minn. Stat. ' 176.136, granting the commissioner the authority to establish by rule the reasonable value of medications, is the persuasive factor in our construction of the applicable statutes and rules in this case.  Under Minn. R. 5221.4070, subp. 3.C., an employer=s liability for medications is limited to 85% of the usual and customary charge only when the prescription medication is provided by a large hospital for inpatient use, including an inpatient who is being discharged.  Minn. R. 5221.4070, subp. 3.A., contains no such limitation.  The clear and unambiguous language of the rule provides that the AWP, plus a dispensing fee, is the criteria for charges for outpatient prescription medication.  Accordingly, we affirm the compensation judge.