Newport News Shipbuilding and Dry Dock Co. v. Loxley

• Decision Date: 03 June 1991
• Docket Number: No. 90-1449,90-1449
• Citation: 934 F.2d 511
• Parties: NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, Petitioner, v. Dr. Sidney S. LOXLEY, Dr. Lawrence D. Bourgard, Director, Office of Workers' Compensation Programs, United States Department of Labor, Respondents.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 511

934 F.2d 511

NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, Petitioner, v. Dr. Sidney S. LOXLEY, Dr. Lawrence D. Bourgard, Director Office of Workers' Compensation Programs, United States Department of Labor, Respondents.

No. 90-1449.

United States Court of Appeals Fourth Circuit.

Argued Dec. 3, 1990.

Decided May 21, 1991.

As Amended June 3, 1991.

Lawrence Philip Postol, Seyfarth, Shaw, Fairweather & Geraldson, argued, Washington, D.C., for petitioner.

John Lucian Smith, Jr., Outland, Gray, O'Keefe & Hubbard, argued, Chesapeake, Va. (Michael S. Hertzig, Office of the Sol., U.S. Dept. of Labor, on brief), Washington, D.C., for respondents.

Before WIDENER and WILKINS, Circuit Judges, and MICHAEL, United States District Judge for the Western District of Virginia, sitting by designation.

MICHAEL, District Judge:

The Newport News Shipbuilding and Dry Dock Company ("NNS") appeals from an Order of the United States Department of Labor Benefits Review Board pursuant to Section 21 of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C.A. Sec. 921 (West 1986) ("the Longshore Act"). Because we find that the Administrative Law Judge's decision was supported by substantial evidence, we reverse the decision of the Benefits Review Board.

I.

The parties' dispute arose over payment for medical services which Dr. Loxley rendered to NNS employees. Under the Longshore Act, workers can select their own doctor; however, the Act limits the Employer's liability for the ensuing medical charges to the "prevailing rate." ¹ Because neither the Act nor its regulations define "prevailing rate," NNS computed this rate pursuant to the methodology it used in its self-insured health benefit plan. Finding that Loxley's charges on three particular services exceeded the prevailing rate, NNS refused to reimburse Loxley in full.

The issue before the administrative law judge was whether Loxley's charges were within the prevailing rate limitation pursuant to section 7 of the Act. At the hearing, NNS introduced evidence explaining that it determined the prevailing rate by using figures from its health benefits plan, a plan which was negotiated with the Shipyard Union and covers some 77,000 workers and dependents. Under this plan, NNS agreed to pay the insured medical charges in full if the fee for a specified service, defined by CPT codes, ² did not exceed the 80th percentile of charges for that particular service. ³ NNS incorporated this plan into its determination of the prevailing rate under the Longshore Act by using the 80 percent figure as the prevailing rate. Thus, when Loxley's charges exceeded its calculations of the prevailing rate for three CPT codes, NNS paid him only the amount represented by the 80th percentile.

At the administrative hearing, Loxley tendered his own testimony and that of Dr. Taylor, his expert. Besides admitting that he did not know what he, or other doctors in the area, charged for the disputed CPT codes, Loxley also presented no data which challenged use of the 80th percentile standard by NNS. Likewise, Dr. Taylor could not give either his charges or an estimate of the prevailing rate for the services at issue. Although he testified that Loxley's fees were fair, he conceded that he did not know the rates of other doctors and, without such information, he could not disagree with the Employer's statistical analysis. Moreover, Taylor stated that he had no problem with the Shipyard's use of the 80th percentile to determine the prevailing rate, although he thought its results were low. Taylor did offer some insight by explaining that the fees of specialists and generalists should not be computed in the same statistical base. NNS does not differentiate by specialty in computing the prevailing rates for the various CPT codes. However, in his testimony, Taylor could not articulate a method by which NNS could reasonably differentiate by specialization.

After hearing all of the evidence, the administrative law judge wrote an extensive opinion concluding that Dr. Loxley's charges exceeded the prevailing rate. He indicated that "the testimony of Drs. Loxley and Taylor fell far short of establishing that Dr. Loxley's charges fall within the [prevailing community rate]."

The Benefits Review Board ("the Board") reversed the administrative law judge's decision and disregarded his findings of fact. The Board disagreed with the lower court's determination that Loxley, as the proponent of an order requiring that NNS pay his charges in full, bore the burden of proof on the prevailing rates issue. After holding that NNS carried the burden of proof, the Board further disagreed with the administrative law judge's statement that, even if the burden fell on NNS, the employer had in fact met its burden. The Board concluded that "the employer's evidence is wholly insufficient to establish prevailing community charges for the medical services performed by Dr. Loxley."

II.

According to section 21 of the Longshore Act, the standard of review for an administrative law judge's decision is whether the record contains sufficient evidence to support the decision. If the evidence meets this standard, the administrative law judge's findings of fact are "conclusive upon the Board" and "the Board is not free to disregard them or draw other inferences which it thinks may be more reasonable." Newport News Shipbuilding & Dry Dock Co. v. Director, 681 F.2d 938 (4th Cir.1982).

Reserving for the moment the issue of which party bore the burden of proof, we will first examine whether the Board exceeded its powers of review by disregarding the administrative law judge's findings of fact. Contrary to the administrative law judge's determination that its conclusion would have been the same even if NNS carried the burden of proof, the Board found the employer's evidence lacking. We do not agree with the Board's interpretation of the evidence presented at the hearing, and we find that the Board erroneously expanded its scope of review by its independent analysis of the facts.

Contrary to the rule that the administrative law judge's findings of fact are conclusive upon the Board, the appellate panel nonetheless attacked the conclusion that the process by which NNS determined the prevailing rate was adequate. The Board found the evidence submitted by NNS lacking in several respects. First, the Board found that the data offered by NNS did not "represent a true sample of medical fees charged by physicians practicing in the community." The record shows, however, that NNS made a broad survey of fees which included at least 46,700 charges submitted by approximately 70 percent of the doctors in the Hampton Roads area. That NNS utilized data from its negotiated health benefits plan is of no consequence. Citing the Act's provision that the employer shall furnish all medical, surgical, and other related treatment, 33 U.S.C.A. Sec. 907(a) (West 1986), the Board concluded that using the 80th percentile to determine the prevailing rate did not satisfy the Act's requirements. However, the Board's analysis neglects provisions in the Act and the regulations that an employer's obligation for medical charges is limited to the prevailing rate. Id. at Sec. 907(g); 20 C.F.R. Sec. 702.413 (1990).

The Board also found that the survey of fees by NNS was "inherently flawed" because it did not distinguish on the basis of medical specialization. Focusing on provisions in the Act and regulations which dictate that the prevailing rate should be measured by charges for "the same or similar care," 33 U.S.C.A. Sec. 907(b), (g) (West 1986); 20 C.F.R. Secs. 702.413, 702.414 (1990), the Board criticized NNS for relying solely on the use of CPT codes to compare fees. The Board noted that without evidence that the services performed by other physicians whose charges made up the data base did in fact constitute the same or similar care as that rendered by Loxley, NNS could not sustain its burden under the Act.

Based on the evidence produced at the hearing, ⁴ the administrative law judge found unpersuasive Loxley's challenge that NNS should have limited its data to the fees of physicians practicing his specialty, orthopedic surgery. We agree. Although the evidence showed that in two of the three CPT codes involved, the prevailing rate figure was actually higher when NNS used the entire pool of charges than when it measured only the charges of orthopedic surgeons, ⁵ we find that making a distinction between generalists and specialists is not necessary.

A series of factors supports this conclusion. First, the CPT codes were designed by the medical profession as a uniform reference to designate medical, surgical and diagnostic services. The codes do not differentiate by specialist. That each code encompasses "same or similar" services is apparent from their very definitions. Furthermore, the Act and regulations discuss comparable treatment; they do not distinguish between medical providers. ⁶ The Board concluded that NNS should use a separate data base for specialists; however, it did not define specialist and ignored evidence in the record indicating that no such definition is practically available. ⁷ Because we find that use of the CPT codes is sufficient to define "same or similar care" under the Act, we hold that the employer need not differentiate between generalists and specialists in determining the prevailing rate.

We also find improper the Board's statement that NNS did not submit evidence demonstrating the charges to patients in the relevant geographical area who are covered under any other type of plan. The data used by NNS included over 46,700 charges made by approximately 1700 doctors; this represents greater than 70% of the physicians in the applicable geographic area. If the Act's prevailing rate limitation demands that an employer conduct a more-encompassing survey of medical fees, then even employers such as NNS, which has an unusually large...