Miller v. Potomac Hosp. Foundation

• Decision Date: 11 December 2007
• Docket Number: Record No. 0751-07-2.
• Court: Virginia Court of Appeals
• Parties: Nancy J. MILLER v. POTOMAC HOSPITAL FOUNDATION and Reciprocal of America/Virginia Property & Casualty Insurance Guaranty Association.

653 S.E.2d 592

50 Va. App. 674

Nancy J. MILLER v. POTOMAC HOSPITAL FOUNDATION and Reciprocal of America/Virginia Property & Casualty Insurance Guaranty Association.

Record No. 0751-07-2.

Court of Appeals of Virginia, Richmond.

December 11, 2007.

Wesley G. Marshall for appellant.

Bryan J. Olmos (Joseph F. Giordano; Semmes, Bowen & Semmes, on brief), Vienna, for appellees.

Present: FRANK, CLEMENTS, JJ., and COLEMAN, S.J.

FRANK, Judge.

Nancy J. Miller (claimant) appeals a decision of the Workers' Compensation Commission (commission), arguing that the commission erred (1) in finding that the deputy commissioner did not have the jurisdiction to order the Virginia Property & Casualty Insurance Guaranty Association (Guaranty Fund) to make payment to a medical provider when payment was already made by a third-party insurer, (2) in invoking the doctrine of imposition to reverse a final opinion of the deputy commissioner that was not appealed by Potomac Hospital Foundation (employer) or the Guaranty Fund, and (3) in finding that penalties could not be assessed against the Guaranty Fund. For the following reasons, we reverse the decision of the commission and remand this case to the commission for further proceedings consistent with this opinion.

BACKGROUND

Claimant suffered a compensable injury to her back on March 24, 2002. On July 22, 2005, the commission affirmed the deputy commissioner's award of medical benefits and temporary total disability benefits to claimant.

In 2006, claimant filed several applications for reimbursement of her out-of-pocket medical expenditures, including co-payments and prescriptions, and for payment of her treating physician, Dr. Cindy Zhang, in the amount of $95,030. That amount covered claimant's treatments over a four-year period beginning in June 2002.

A hearing on these claims took place before the deputy commissioner on May 11, 2006. At the hearing, the Guaranty Fund argued that, because claimant's private health insurance paid the claims from Dr. Zhang, it was not the Guaranty Fund's responsibility to make further payment.¹ The Guaranty Fund acknowledged that Dr. Zhang was treating claimant for her compensable injury.

On June 27, 2006, the deputy commissioner issued an opinion ordering employer and/or the Guaranty Fund to "attempt" to pay Dr. Zhang for claimant's treatments,² in the amount of

[50 Va. App. 980]

$95,030, though these payments had already been made by claimant's private health insurance.³ The deputy commissioner reasoned that, while the medical provider may be receiving a double payment, it remained the Guaranty Fund's responsibility to pay for these treatments. Whether the medical provider reimburses the private health insurer after receiving payment from the Guaranty Fund, or rejects the Guaranty Fund's payment because it has already received payment, were "issues that the Commission cannot order or enforce."

The Guaranty Fund had 20 days to appeal the decision by filing a request for review with the commission. The Guaranty Fund did not do so, nor did it pay Dr. Zhang. Instead, on July 20, 2006, the Guaranty Fund sent Dr. Zhang a letter requesting health insurance claim forms and "an invoice indicating payments are due in this matter." The letter further informed Dr. Zhang that "all bills ... will be reviewed to determine that the procedures are both reasonable and necessary ... and that the charges are of the usual, customary and reasonable fees specific to [Dr. Zhang's] geographic area." The Guaranty Fund promised payment "upon receipt of this information." The Guaranty Fund did not send a copy of this letter to claimant.

On August 14, 2006, claimant requested the commission to issue a show cause against the Guaranty Fund for failing to attempt to pay Dr. Zhang in compliance with the June 27, 2006 opinion. Claimant also requested that the commission assess against the Guaranty Fund her attorney's fees and costs in her attempts to enforce the order. The commission sent a letter August 22, 2006, giving the Guaranty Fund seven days to respond before the commission ruled on the show cause request.

The Guaranty Fund responded, stating that it had not received a reply from Dr. Zhang to their July 20, 2006 letter. After the delay in waiting for a response, the Guaranty Fund used the health care insurance forms claimant had submitted at the May 11, 2006 hearing, and had submitted these forms within their office for "bill review" on a "rush" status. The Guaranty Fund also suggested that part of the delay was attributable to the departure of the initial adjuster from the Guaranty Fund's employment. The Guaranty Fund maintained the position that they were entitled to audit Dr. Zhang's bills to ensure that they were consistent with the prevailing local rate for similar treatment.

On September 13, 2006, the deputy commissioner ruled that the Guaranty Fund's explanation was not "adequate to justify failure to comply with [the June 27, 2006] Opinion." Specifically, the deputy commissioner did not believe that the opinion allowed the Guaranty Fund to conduct any "medical audit for usual, customary and reasonable treatment" before paying Dr. Zhang's bills. The deputy commissioner ordered the Guaranty Fund, pursuant to Code § 65.2-713,⁴ to "pay sanctions to claimant's counsel for his repeated attempts to have the [Guaranty] Fund abide by the Opinion."

The Guaranty Fund requested review of the deputy commissioner's opinion by the full commission. Before the full commission reviewed the case, the Guaranty Fund paid Dr. Zhang $71,725.85, and stated in a letter to Dr. Zhang that "no further payments are due."

The commission issued its review opinion on February 28, 2007, affirming in part, reversing in part, and vacating the assessment of penalties against the Guaranty Fund. As to the assessment of penalties, the commission held:

However, the Commission may not assess a penalty against the [Guaranty] Fund. The Commission has previously ruled that attorney fees cannot be assessed against the Guaranty Fund and we find no reasons to distinguish precedence. In Quinn v. Flowers Transport, Inc., VWC File No. 197-02-82 (September 17, 2002), the Commission, referring to the Guaranty Fund, stated: "No penalty can be assessed against the Fund." Also, in Price v. Johnston Memorial Hospital, VWC File No. 207-09-52 (January 4, 2005), the Commission noted that the Guaranty Fund was a creature of statute to pay claims of insolvent insurers, analogized it to the Uninsured Employer's Fund, and determined that penalties pursuant to Code [§] 65.2-713 could not be assessed against the Guaranty Fund.

The commission further found that the Guaranty Fund had "waived their right to review and reduce Dr. Zhang's medical bills in accordance with Code § 65.2-605 by failing to raise such defense to the amount [at the May 2006 hearing] and by failing to appeal the Deputy Commissioner's specific findings in his June 2006 Opinion."⁵ However, the commission determined that, in ordering the Guaranty Fund to pay Dr. Zhang, the deputy commissioner had "exceeded his statutory jurisdiction." The commission ruled

[t]hat part of the June Opinion which exceeds the Commission's authority is unenforceable. Thus, we will utilize our equitable powers grounded in the doctrine of imposition to correct this mistake.

It is clear that, if Dr. Zhang has not received payment for services rendered and addressed in the June Opinion, the employer is responsible for payment of such. However, if Dr. Zhang has already been paid, we do not have the authority to order a third party reimbursement and any payment to Dr. Zhang above the $95,030.00 would constitute an inappropriate double payment. We find that ordering double payment to the medical provider, in the expectation that the provider might accept the payment and make a refund to the third party, is no different than ordering a direct payment to the third party. The Commission does not have the authority to do indirectly what it cannot do directly and, in such circumstances, the parties are left to the appropriate civil remedies.

This appeal follows.

ANALYSIS

This appeal does not present a case of conflicting evidence or a dispute concerning the commission's findings of fact. The issues before us are purely issues of law. On appeal, we are "not bound by the legal determinations made by the commission. `We must inquire to determine if the correct legal conclusion has been reached.'" Cibula v. Allied Fibers & Plastics, 14 Va.App. 319, 324, 416 S.E.2d 708, 711 (1992) (quoting City of Norfolk v. Bennett, 205 Va. 877, 880, 140 S.E.2d 655, 657 (1965)), aff'd, 245 Va. 337, 428 S.E.2d 905 (1993).

Jurisdiction to Order Payment

Claimant argues that the commission erred in "concluding it did not have jurisdiction to order the employer to pay medical expenses to the health care provider in a dispute between an employer, an employee, and a health care provider."⁶

The commission ruled that the deputy commissioner's order of payment to Dr. Zhang both "exceeded his statutory jurisdiction" and "exceeded the Commission's authority." It seems that the commission erroneously equated the legal concept of "jurisdiction" with "authority." Essentially, the commission ruled that it could entertain a collateral attack on the deputy commissioner's June 2006 opinion because the deputy commissioner had no jurisdiction to order payments to Dr. Zhang.

A review of our case law reveals that "jurisdiction" and "authority" are two very different concepts. In Nelson v. Warden, 262 Va. 276, 552 S.E.2d 73 (2001), the Supreme Court of Virginia outlined the "`necessary distinction to be drawn ... between the power of a court to adjudicate a specified class of cases, commonly known as subject matter jurisdiction, and the authority of a court to exercise that power in a particular case.'" Nelson, 262 Va. at 281, 552 S.E.2d at 75 (quoting Moore v. Commonwealth, 259 Va. 431, 437, 527 S.E.2d 406, 409 ...