Sullivan v. Barnett, AFL-CIO
| Citation | 139 F.3d 158,1998 WL 107983 |
| Decision Date | 13 March 1998 |
| Docket Number | AFL-CIO,No. 96-2140,96-2140 |
| Parties | Delores Scott SULLIVAN; William Battle; Anthony Cancila; Charles Matthews; Christopher Costello; Lisa Lex; Susan Hansen, On Their Own Behalf and on Behalf of All Similarly Situated Class Plaintiffs; Philadelphia Area Project On Occupational Safety and Health; The Philadelphia Federation of Teachers, Local 3,, v. Robert BARNETT, Secretary of Labor and Industry for the Commonwealth of Pennsylvania; Frank Beal, Director of the Pennsylvania Bureau of Workers Compensation; Constance B. Foster, Insurance Commissioner for the Commonwealth of Pennsylvania; Catherine Baker Knoll, Treasurer, Commonwealth of Pennsylvania; John P. O'Malley, Director, State Workers' Insurance Fund; American Manufacturers Mutual Insurance Company; Cigna Corporation; Continental Casualty Company; USF&G Insurance Company; Zurich American Insurance Company; School District of Philadelphia; Johnny J. Butler, Secretary of Labor and Industry of the Commonwealth of Pennsylvania; Richard A. Himler, Director of the Pennsylvania Bureau of Workers Compensation; Commercial Union Insurance Company; Donegal Mutual Insurance Company; Delores Scott Sullivan, William Battle, Louis Baumgartner, * Anthony Cancila, William C. Dillon,* Terrence Ervine,* Charles Matthews, Christopher Costello, Lisa Lex, Susan Hansen, Philadelphia Area Project on Occupational Safety and Health and Philadelphia Federation of Teachers, Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Lorrie McKinley (Argued), McKinley & Vonier, Philadelphia, PA, for Appellants Delores Scott Sullivan, William Battle, Anthony Cancila, Louis Baumgartner and Class Plaintiffs.
Alan B. Epstein, Jablon, Epstein, Wolf & Drucker, Philadelphia, PA, for Appellants Charles Matthews, Christopher Costello, Lisa Lex, Terrence Ervine, William C. Dillon, Susan Hansen, and Class Plaintiffs.
Thomas J. O'Brien, Galfand, Berger, Lurie, Brigham, Jacobs, Swan & Jurewicz, Philadelphia, PA, for Appellant Philadelphia Area Project on Occupational Safety and Health.
Linda M. Martin, Ralph Teti, Willig, Williams & Davidson, Philadelphia, PA, for Appellant/Intervenor The Philadelphia Federation of Teachers Local 3, AFL-CIO.
D. Michael Fisher, Attorney General, Susan J. Forney (Argued), Senior Deputy Attorney General, Calvin R. Koons, Senior Deputy Attorney General, John G. Knorr, III, Chief Deputy Attorney General, Chief, Litigation Section, Office of the Attorney General of Pennsylvania, Department of Justice, Harrisburg, PA, for Appellees Robert Barnett, Secretary of Labor and Industry for the Commonwealth of Pennsylvania; Frank Beal, Director of the Pennsylvania Bureau of Workers Compensation; Constance B. Foster, Insurance Commissioner for the Commonwealth of Pennsylvania; Catherine Baker Knoll, Treasurer, Commonwealth of Pennsylvania; John P. O'Malley, Director, State Workers' Insurance Fund; Johnny Butler, Secretary of Labor and Industry of the Commonwealth of Pennsylvania; Richard A. Himler, Director of the Pennsylvania Bureau of Workers Compensation.
Arthur Makadon, Robert McL. Boote (Argued), Burt M. Rublin, Cecelia E. Henry, Ballard, Spahr, Andrews & Ingersoll, Philadelphia, PA, for Appellees American Manufacturers Mutual Insurance Company, CIGNA Corporation, Continental Casualty Company, USF & G Insurance Company, Zurich American Insurance Company, Commonwealth Union Insurance Company.
Patricia F. Kerelo, Jan M. Ritchie, Schubert, Bellwoar, Cahill & Quinn, Philadelphia, PA, Stephen J. Springer, Jeffrey D. Hutton, Rawle & Henderson, Philadelphia, PA, Pamela Tobin, Labrum and Doak, Philadelphia, PA, for Appellee, School District of Philadelphia.
Robert E. Kelly, Jr., Duane, Morris & Heckscher, Harrisburg, PA, for Appellee Donegal Mutual Insurance Company.
Mark F. Horning, Shannen W. Coffin, Steptoe & Johnson, LLP, Washington, DC, Craig A. Berrington, Bruce C. Wood, American Insurance Association, Washington, DC, for Amicus Curiae American Insurance Association.
Michael W. Jones, Michael I. Levin & Associates, Huntingdon Valley, PA, for Amici Curiae School Boards Association Insurance Trust and Pennsylvania Pooled Risk Insurance for Municipal Entities Workers' Compensation Trust.
Before: MANSMANN, NYGAARD and GARTH, Circuit Judges.
The issue we must address on this appeal is whether Pennsylvania's Workers' Compensation Act, 77 Pa. Stat. Ann. § 531(5) and (6) (West Supp.1997), which provides for the supersedeas of an employee's medical benefits without prior notice or an opportunity to be heard, violates the requisites of procedural due process. We hold that it does. Accordingly, we reverse.
The Pennsylvania Workmen's Compensation Act ("the Act"), 77 Pa. Stat. Ann. § 1 et seq., establishes a compulsory insurance system for employers that provides compensation to employees who sustain work-related injuries and occupational diseases without regard to an employee's negligence. See 77 Pa. Stat. Ann. § 431. To guarantee the payment of an employee's claims, the Act requires employers to obtain insurance--either through a private insurance carrier or through the State Workmen's Insurance Fund ("SWIF")--or to self-insure. See id. § 501. When an employer purchases insurance, the insurance company assumes the employer's statutory liabilities. See id. §§ 501, 701.
On July 2, 1993, the Pennsylvania legislature amended the Act by enacting Act 44. The purpose of Act 44 was to contain the spiraling costs of medical treatment for work-related injuries. Codified at 77 Pa. Stat. Ann. § 531(5) and (6), Act 44 created a utilization review process under which the reasonableness and/or necessity of an employee's medical treatment could be reviewed. It is these provisions of Act 44 which create the utilization review process and the corresponding supersedeas that are challenged in this action. Utilization review is a process whereby medical providers assess the reasonableness or necessity of current, prospective, or past medical treatment.
Section 531(5) provides the mechanism by which utilization review is invoked. It states in pertinent part:
The employer or insurer shall make payment and providers shall submit bills and records in accordance with the provisions of this section. All payments to providers for treatment provided pursuant to this act shall be made within thirty (30) days of receipt of such bills and records unless the employer or insurer disputes the reasonableness or necessity of the treatment provided pursuant to paragraph (6)....
77 Pa. Stat. Ann. § 531(5) (West 1997) (emphasis added). Hence, an employer or insurer must pay an employee's medical expenses within thirty (30) days of receipt of the medical bills unless the employer or insurer requests utilization review. The decision to invoke utilization review is made independently by the employer or insurer.
Section 531(6) outlines the utilization review process. Section 531(6) provides:
... disputes as to reasonableness or necessity of treatment by a health care provider shall be resolved in accordance with the following provisions:
(i) The reasonableness or necessity of all treatment provided by a health care provider under this act may be subject to prospective, concurrent or retrospective utilization review at the request of an employe[sic], employer or insurer. The department shall authorize utilization review organizations to perform utilization review under this act. Utilization review of all treatment rendered by a health care provider shall be performed by a provider licensed in the same profession and having the same or similar specialty as that of the provider of the treatment under review. Organizations not authorized by the department may not engage in such utilization review.
(ii) The utilization review organization shall issue a written report of its findings and conclusions within thirty (30) days of a request.
(iii) The employer or the insurer shall pay the cost of the utilization review.
(iv) If the provider, employer, employe [sic] or insurer disagrees with the finding of the utilization review organization, a petition for review by the department must be filed within thirty (30) days after receipt of the report. The department shall assign the petition to a workers' compensation judge for a hearing or for an informal conference under [77 Pa. Const. Stat. Ann. § 711.1]. The utilization review report shall be part of the record before the workers' compensation judge. The workers' compensation judge shall consider the utilization review report as evidence but shall not be bound by the report.
77 Pa. Stat. Ann. § 531(6).
Thus, utilization review is invoked when an employee, employer, or insurer requests review of specific medical treatment performed. 1 The party seeking review submits its request to the Bureau of Workers' Compensation ("the Bureau") on a Bureau-prescribed form entitled "Utilization Review: Initial Request" ("Initial Request"). The Bureau reviews the Initial Request to ensure that it is properly completed--i.e., that all information required by the form is provided. See 34 Pa.Code § 127.452. The Bureau's review of the Initial Request does not address the legitimacy or lack thereof of the request for utilization review.
If the Initial Request is improperly completed (i.e., does not provide all pertinent information requested by the form), the Bureau denies the request for review and sends the form back to the party. If the Initial Request is completed properly, the request is approved and the party requesting review must serve a copy of the Initial Request upon the remaining interested parties, including the employee, the employer, the insurer, and the health care provider, as appropriate. See 34 Pa.Code § 127.452.
At this point, according to the Act's regulations, an employer or insurer with a Bureau-approved request may suspend payment for the medical...
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