AIA Applauds Favorable Court Decisions Regarding Workers’ Comp in Texas

Recent, favorable appellate and Texas Supreme Court decisions related to medical fee guidelines in the workers’ compensation system were applauded Thursday by the American Insurance Association (AIA).

A Texas appellate court has handed down a favorable ruling in the Texas Medical Association (TMA) v. Texas Workers’ Compensation Commission (TWCC) case, which upheld the new 125 percent medical fee schedule for workers’ comp claims. Soon after, the Texas Supreme Court issued a favorable decision in the TWCC v. Patient Advocates of Texas litigation, which challenged the 1996 medical fee guidelines, the auditing of provider bills by carriers, and the one-year limitation on filing disputes.

“Even though the 1996 fee guidelines have been supplanted by the new fee schedule that became effective last fall, the Supreme Court’s decision is important because it terminates the possibility of re-opening reimbursements made according to the 1996 guidelines,” said Fred Bosse, AIA vice president, southwest region. “It also sets an extremely strong precedent that if an appeal was to be heard of the appellate court decision, the Supreme Court would uphold the new fee schedule as well.”

Following is a brief summary of the main rulings by the Texas Supreme Court:

• 1996 Medical Fee Guidelines: The Supreme Court stated that TWCC provided an adequate “reasoned justification” for the fee guidelines. The court noted that TWCC adopted the guidelines to “move Texas towards a median cost position in comparison with other states.”

• Maximum Allowable Reimbursements (MARs): The court rejected Patient Advocates’ argument that TWCC was without statutory authority to set maximum allowable reimbursement levels for particular medical services. The court held that although Patient Advocates was correct that TWCC did not have specific statutory authority to set MARs, “establishing the MARs for medical treatments and services is an implied power that is reasonably necessary for TWCC to carry out the Legislature’s intent.” The court noted that the statute authorized TWCC to establish medical guidelines “designed to achieve effective medical cost control.”

• Services Without an MAR: If a particular medical treatment did not have a specific MAR, the TWCC rules required the carrier to reimburse the service according to a methodology of the carrier that would “result in fair and reasonable reimbursement” and ensure that “similar medical procedures provided in similar circumstances receive similar reimbursements.”

• Carrier Audits of Medical Audits: Patient Advocates had argued, and the appellate court had agreed, that permitting insurers to audit a medical provider’s bills was somehow an illegal delegation of TWCC’s auditing authority to a private entity. The Supreme Court rejected this argument and overruled the appellate court on this issue. The Supreme Court noted that TWCC fully retains and exercises its statutory authority to audit both insurers and medical providers. The rule allowing carriers to audit medical providers’ bills was not a delegation of this responsibility, but rather was a process that permits a fair and balanced approach to the payment of medical bills by specifying responsibilities and limitations on actions of both the carrier and the provider.

• One Year Limitation on Filing Disputes: Patient Advocates argued that the one year limitation to file a request for medical dispute resolution lacked statutory authority. The court rejected this argument because the one year limitation “is consistent with the express duties the Legislature confers upon TWCC” to establish a medical dispute resolution process.