State ex rel. Haylett v. OHIO BUR. OF WORKERS'COMP., 98-675.

• Decision Date: 29 December 1999
• Docket Number: No. 98-675.,98-675.
• Citation: 720 NE 2d 901,87 Ohio St.3d 325
• Parties: THE STATE EX REL. HAYLETT v. OHIO BUREAU OF WORKERS' COMPENSATION ET AL.
• Court: Ohio Supreme Court

87 Ohio St.3d 325

720 NE 2d 901

THE STATE EX REL. HAYLETT v. OHIO BUREAU OF WORKERS' COMPENSATION ET AL.

No. 98-675.

Supreme Court of Ohio.

Submitted May 18, 1999.

Decided December 29, 1999.

Stewart Jaffy & Associates Co., L.P.A., Stewart R. Jaffy and Marc J. Jaffy, for relator, and urging issuance of the writs for amicus curiae, Ohio AFL-CIO.

Betty D. Montgomery, Attorney General, and Dennis L. Hufstader, Assistant Attorney General, for respondent Ohio Bureau of Workers' Compensation; and James A. Barnes, Assistant Attorney General, for respondent Industrial Commission.

Vorys, Sater, Seymour & Pease, L.L.P., Michael J. Canter and Jacklyn J. Ford, for respondent Anthem Blue Cross and Blue Shield.

Gallon & Takacs Co., L.P.A., and Theodore A. Bowman, urging issuance of the writs for amicus curiae, Ohio Academy of Trial Lawyers.

Garvin & Hickey, L.L.C., Preston J. Garvin and Michael J. Hickey, urging denial of the writs for amici curiae, Ohio Chamber of Commerce, Ohio Manufacturers Association, Ohio Chapter of the National Federation of Independent Business, and Ohio Farm Bureau.

Bricker & Eckler L.L.P., Charles D. Smith, Diane Richards Brey and James Burnes; Porter, Wright, Morris & Arthur and Theodore G. Fisher, urging denial of the writs for amici curiae, MCO League of Ohio and Ohio Association of Managed Care Organizations.

PFEIFER, J.

At issue in this case is the constitutionality of the MCO program. Haylett argues that the MCO program violates Section 35, Article II of the Ohio Constitution because it is an improper delegation of authority to a private entity. We disagree. She also argues that MCOs violate due process when they terminate a claimant's medical treatment without providing prior notice and a prior hearing. We agree that the MCO program as currently administered can lead to deprivations of due process. However, based on the facts of this case, we determine that Haylett was not deprived of due process. Accordingly, we deny the writ.

A statute is presumed to be constitutional and every reasonable presumption will be made in favor of its validity. State ex rel. Michaels v. Morse (1956), 165 Ohio St. 599, 603, 60 O.O. 531, 533, 138 N.E.2d 660, 664; State ex rel. Dickman v. Defenbacher (1955), 164 Ohio St. 142, 147, 57 O.O. 134, 137, 128 N.E.2d 59, 63. Accordingly, any doubt as to constitutionality is resolved in favor of the validity of the statute. Id.

The HPP/MCO Program

The MCO program was created as part of an overall plan, enacted by the General Assembly in R.C. 4121.44 and 4121.441, to more efficiently manage the medical aspects of workers' compensation claims. A committee composed of individuals from business, labor, medical providers, and the BWC staff designed the major components of the HPP, including the MCO program. The committee included representatives from the AFL-CIO, the Ohio Civil Service Employees Association, the Communications Workers of America, and the Ohio Trial Lawyers Association.

On March 28, 1995, the committee reached unanimous agreement on key aspects of the BWC's HPP. Following public hearings, the BWC promulgated a series of administrative rules in Ohio Adm.Code Chapter 4123-6 to implement the HPP.

Under the new program, the BWC administers the HPP and monitors the MCO program, including certifying each MCO and individual provider. The BWC also conducts regular recertification reviews. The BWC exclusively determines whether a claim is compensable and what conditions are allowed, subject only to an appeal to the Industrial Commission. Ohio Adm.Code 4123-6-043(A); XXXX-X-XXX. The BWC authorizes the release of state funds to pay the medical claims. Ohio Adm.Code 4123-6-043(A); XXXX-X-XXX(A). The BWC works with the MCO, the employer, the employee, and the provider to effect a course of treatment that promotes a safe and speedy return to work. Ohio Adm.Code 4123-6-043(B). The medical aspect of each claim is managed by an MCO. The MCO must promptly notify the BWC of an employee's industrial injury. While the BWC determines the compensability of a claim, the MCO works "in conjunction with the employer, employee, attending physician, and the [BWC to] seek a course of medical or rehabilitative treatment that promotes a safe return to work." Ohio Adm.Code 4123-6-043(B).

During the life of a medical claim, the MCO performs utilization reviews, as in the case of Haylett. Utilization reviews ensure that only medical services and supplies that are medically necessary for the diagnosis and treatment of allowed conditions and that are causally related to those conditions will be considered for payment. The MCO must submit all medical bills to the BWC. Ohio Adm.Code 4123-6-11. The BWC then authorizes payment and sends it to the MCO for reimbursement to the individual provider.

The MCO program has a mandatory dispute resolution process that is available to employees, employers, and providers. Ohio Adm.Code 4123-6-16. The MCO is required to provide two levels of independent review that must be completed within twenty-one days. Ohio Adm.Code 4123-6-16(C). The MCO must notify the BWC if the dispute has not been resolved within that period of time. At that time, the BWC conducts its own independent review and issues an order. Ohio Adm.Code 4123-6-16(D). Either party may appeal this order to the Industrial Commission.

Section 35, Article II, Ohio Constitution

Section 35, Article II of the Ohio Constitution provides that "laws may be passed establishing a state fund to be * * * administered by the state, determining the terms and conditions upon which payment shall be made therefrom. * * * Laws may be passed establishing a board which may be empowered to * * * collect, administer and distribute such fund, and to determine all rights of claimants thereto." Section 35, Article II has been interpreted as a permissive grant of authority to the General Assembly and not a limitation upon its authority. State ex rel. Michaels v. Morse, supra, 165 Ohio St. at 603, 60 O.O. at 533, 138 N.E.2d at 663.

Haylett contends that Section 35, Article II of the Ohio Constitution was violated because the BWC transferred its duty to administer the workers' compensation system to a private entity.

MCOs manage only the medical aspect of state-funded workers' compensation medical benefits claims. MCOs coordinate treatment plans and review the plans to ensure that a claimant's treatment is medically necessary for the diagnosis and treatment of the allowed conditions. MCOs reimburse medical providers with payment received from the BWC. MCOs do not determine the compensability of claims.

The BWC supervises MCOs and continually monitors and evaluates their performance. The BWC regularly reviews the certification of each MCO. The BWC makes the final decision as to payment and issues payment from the State Insurance Fund to MCOs so they can reimburse individual medical providers.

Any decision by an MCO regarding treatment or payment is nonbinding and subject to multiple levels of review. The final decision as to any aspect of the claim lies with the Industrial Commission. Under the MCO program, injured employees receive the same benefits as under the previous system.

R.C. 4121.62(A)(1) enables the Administrator of Workers' Compensation to "[c]ontract with any public or private person for the rendition of rehabilitation services." The BWC has contracted with private persons and entities to perform independent medical examinations and disability assessments, to review medical files, and to pay hospital bills. The state also contracts with outside financial advisers for advice concerning and management of money in the state fund.

We do not agree that the MCO program constitutes an attempt to privatize the state's workers' compensation system in violation of Section 35, Article II of the Constitution. See State ex rel. Turner v. United States Fid. & Guar. Co. of Baltimore (1917), 96 Ohio St. 250, 117 N.E. 232 (legislation authorizing employers to self-insure for workers' compensation upheld as constitutional). The state supervises the MCOs and makes the final decision as to the award and payment of compensation. Further, injured employees are entitled to receive the same benefits they would have received under the prior system. We hold that the MCO program is not an improper delegation of authority to a private entity and therefore does not violate Section 35, Article II of the Constitution on that ground.

Haylett also argues that an MCO can terminate medical treatment and that the termination can only be appealed by using the mandatory dispute resolution process. Haylett contends that this process results in delays and hardships that violate Section 35, Article II.

Under the prior system, the BWC could refuse to authorize payment for treatment without advance notice or a hearing. BWC claims examiners, who usually had no formal medical training, conducted medical reviews for reasonableness and necessity. If the BWC terminated authorization for continued treatments, the claimant could appeal that decision to the Industrial Commission. At that time, the claimant was afforded his or her first opportunity to submit additional evidence or argument. This process normally took several months to complete. The MCO dispute resolution process mandates two independent reviews by medical experts within weeks of the MCO's initial determination. If the claimant receives an adverse decision, the claimant is given an explanation for the denial and has the opportunity to submit additional evidence. Employers and providers may also take advantage of this process. Mandatory deadlines ensure that the dispute resolution process moves quickly.

We do not believe that a dispute resolution process that provides for two reviews by medical experts over a period of less than a month and that affords a claimant the opportunity to submit additional information in support of the treatment requested constitutes a...