Texas Mut. Ins. v. Vista Community Medical
| Decision Date | 13 November 2008 |
| Docket Number | No. 03-07-00682-CV.,03-07-00682-CV. |
| Citation | 275 S.W.3d 538 |
| Parties | TEXAS MUTUAL INSURANCE COMPANY, Liberty Mutual Insurance Company, Zenith Insurance Company and Zurich American Insurance Company, Appellants, v. VISTA COMMUNITY MEDICAL CENTER, LLP, d/b/a Vista Medical Center Hospital; Christus Health Gulf Coast; and The Texas Department of Insurance, Division of Workers' Compensation, Appellees. |
| Court | Texas Court of Appeals |
Thomas B. Hudson Jr., Robin A. Melvin, Christopher H. Trickey, P. M. Schenkkan, Graves, Dougherty, Hearon & Moody, P.C., Steven M. Tipton, Flahive, Ogden & Latson, P.C., Nicholas Canaday, III, Office of the Atty. Gen., Dudley D. McCalla, Heath, Davis & McCalla, P.C., Mary Barrow Nichols, Mary Barrow Nichols, Gen. Counsel, Austin, for Appellants.
David F. Bragg, Law Office of David F. Bragg, P.C., Eric G. Carter, The Carter Law Firm, Austin, for Appellees.
Before Justices PATTERSON, WALDROP and HENSON.
This appeal concerns a challenge to the validity of a rule promulgated by the Texas Department of Insurance, Division of Workers' Compensation,1 regarding hospital fee reimbursement for inpatient services to injured workers' compensation patients. See 22 Tex. Reg. 6264-308 (July 4, 1997) (originally codified at 28 Tex. Admin. Code § 134.401), repealed, 33 Tex. Reg. 5319 (July 4, 2008). Appellee Vista Community Medical Center, LLP, d/b/a Vista Medical Center Hospital filed suit against the Division and appellant Texas Mutual Insurance Company in a medical fee reimbursement dispute seeking a declaratory judgment that the "Stop-Loss Exception" in Rule 134.4012 was invalid. Another hospital, appellee Christus Health Gulf Coast, and several insurance carriers, including appellants Liberty Mutual Insurance Company, Zenith Insurance Company, and Zurich American Insurance Company, intervened and sought competing declarations regarding the validity of Rule 134.401. The trial court severed the parties' claims for declaratory relief and, after a bench trial, issued a final judgment granting declaratory relief in favor of the hospitals and rejecting the Division's interpretation of the Stop-Loss Exception. Because we conclude there was error in the trial court's judgment, we affirm the trial court's judgment in part, and reverse and render in part.
In 1989, the Texas Legislature enacted a new Workers' Compensation Act that restructured workers' compensation law in Texas. See Tex. Lab.Code Ann. §§ 401.001-506.002 (West 2006 & Supp. 2008).3 The Act charged the Division with the difficult task of developing medical fee reimbursement guidelines that would ensure quality medical care for injured workers and achieve effective medical cost control. Id. § 413.011; see also Patient Advocates v. Texas Workers' Comp. Comm'n, 80 S.W.3d 66, 71 (Tex.App.-Austin 2002), aff'd in part, rev'd in part, 136 S.W.3d 643 (Tex.2004). To satisfy its legislative mandate to balance these competing legislative policy goals, the Division adopted the 1992 hospital reimbursement guideline, which was invalidated by this Court in 1995 for lack of a reasoned justification. See Texas Hosp. Ass'n v. Texas Workers' Comp. Comm'n, 911 S.W.2d 884, 885-86, 888 (Tex.App.-Austin 1995, writ denied) (). In the wake of this Court's decision, the Division adopted the 1997 guideline, including the Stop-Loss Exception, at issue in this appeal. See 22 Tex. Reg. 6264.
With certain exceptions, the 1997 guideline provides that hospitals are to be reimbursed for inpatient admissions under a standard per diem methodology based on the category of admission. See generally Rule 134.401(c)(1)-(2). The 1997 guideline also specifies two exceptions to the standard per diem reimbursement methodology. Id. 134.401(c)(2)(C). These two exceptions apply on a case-by-case basis and include the "Trauma-Burn-HIV," or "TBHIV," exception, and the Stop-Loss Exception. See id. 134.401(c)(5) & (6). Only the Stop-Loss Exception is at issue in this appeal.
With regard to the Stop-Loss Exception, Rule 134.401(c)(6) provides:
Stop-loss is an independent reimbursement methodology established to ensure fair and reasonable compensation to the hospital for unusually costly services rendered during treatment to an injured worker. This methodology shall be used in place of and not in addition to the per diem based reimbursement system. The diagnosis codes specified in paragraph (5) of this subsection are exempt from the stop-loss methodology and the entire admission shall be reimbursed at a fair and reasonable rate.
(A) Explanation
(i) To be eligible for stop-loss payment the total audited charges for a hospital admission must exceed $40,000, the minimum stop-loss threshold.
(ii) This stop-loss threshold is established to insure compensation for unusually extensive services required during an admission.
(iii) If audited charges exceed the stop-loss threshold, reimbursement for the entire admission shall be paid using a Stop-Loss Reimbursement Factor (SLRF) of 75%.
(iv) The Stop-Loss Reimbursement Factor is multiplied by the total audited charges to determine the Workers' Compensation Reimbursement Amount (WCRA) for the admission.
(v) Audited charges are those charges which remain after a bill review by the insurance carrier has been performed. Those charges which may be deducted are personal items (e.g., telephone, television). If an on-site audit is performed, charges for services which are not documented as rendered during the admission may be deducted. The formula to obtain audited charges is as follows: Total Charges-Deducted Charges = Audited Charges.
(B) Formula. Audited Charges × SLRF = WCRA.
(C) Example. Total Charges: $108,000; Deducted Charges: $8,001; Audited Charges: $99,999. $99,999 × 75% = $74,999.25 (WCRA).
Rule 134.401(c)(6). In addition, Rule 134.401 also defines the terms "Stop-Loss Payment," "Stop-Loss Reimbursement Factor," and "Stop-Loss Threshold." Id. § 134.401(b)(1)(F)-(H). Stop-Loss Payment is "[a]n independent method of payment for an unusually costly or lengthy stay." Id. § 134.401(b)(1)(F). Stop-Loss Reimbursement Factor is "[a] factor established by the Commission to be used as a multiplier to establish a reimbursement amount when the total hospital charges have exceeded specific stop-loss thresholds." Id. § 134.401(b)(1)(G). Stop-Loss Threshold is "[the] Threshold of total charges established by the Commission, beyond which reimbursement is calculated by multiplying the applicable Stop-Loss Reimbursement Factor by the total charges identifying that particular threshold." Id. § 134.401(b)(1)(H).
Rule 134.401 also sets forth certain general information as follows: All hospitals must bill their "usual and customary charges." Id. § 134.401(b)(2)(A). Hospital reimbursement for acute care hospital inpatient services rendered shall be the lesser of pre-negotiated rates between the hospital and insurance carrier, the hospital's usual and customary charges, or reimbursement as set out in subsection (c) of Rule 134.401 for the particular admission. Id. § 134.401(b)(2)(A)(i)-(iii). Additional Reimbursements as outlined in subsection (c)(4) will be determined on a case-by-case basis within the guidelines established for the specific services rendered. Id. § 134.401(b)(2)(B). Finally, all hospital charges are subject to audit as described in the Commission's rules. Id. § 134.401(b)(2)(C).
In 2001, with health care costs rising, the Division began to see a corresponding rise in the number of medical fee disputes between hospitals and insurance carriers. Under the labor code, a health care provider dissatisfied with a carrier's payment can file an administrative dispute with the Division. See Tex. Lab.Code Ann. § 413.031(a) (West Supp.2008). A Division employee known as a medical dispute resolution officer, or MDRO, reviews the complaint and documentation filed by the provider and the carrier and determines the appropriate reimbursement due the provider under the labor code and the Division's rules. See id. § 413.031(c); 28 Tex. Admin. Code § 133.307 (2007). If either party is dissatisfied with the MDRO's decision that party can request a hearing before an Administrative Law Judge at the State Office of Administrative Hearings (SOAH). See Tex. Lab.Code Ann. § 413.031(k).4 Under the labor code, the ALJ issues the final administrative order. See id. §§ 402.073(b) (West Supp.2008), 413.031(k). But a party may seek judicial review of the ALJ's order in a Travis County District Court under the substantial evidence rule. See id. § 413.031(k-1).
Many of these administrative fee disputes concerned the applicability of the Stop-Loss Exception. The hospitals argued that the Stop-Loss Exception applied whenever the audited charges for a particular admission exceeded $40,000. The hospitals thus urged that whenever the audited charges for a particular admission exceeded $40,000, reimbursement should be paid at 75% of the total audited charges using the Stop-Loss Reimbursement Factor in Rule 134.401. See Rule 134.401(c)(6)(A)(iii). The insurance carriers disagreed and argued that reimbursing a hospital admission at 75% of the total audited charges anytime those charges exceeded $40,000 would produce a windfall for the hospitals and defeat the statutory objective of achieving effective medical cost control. Accordingly, the carriers urged that, in addition to total audited charges exceeding $40,000, a hospital must prove that an admission involved "unusually costly" and "unusually extensive" services, before the Stop-Loss Exception applied. Essentially, the carriers argued that the hospitals must satisfy a two-pronged test before reimbursement under the Stop-Loss Exception applied.
When resolving...
To continue reading
Request your trial
-
TJFA, L.P. v. Tex. Comm'n On Envtl. Quality
...courts “have, in certain circumstances, construed” those terms as being directory rather than mandatory, Texas Mut. Ins. Co. v. Vista Cmty. Med. Ctr., L.L.P., 275 S.W.3d 538, 552 (Tex.App.-Austin 2008, no pet.); see Chisholm, 287 S.W.2d at 945. Statutory provisions that “are included for th......
-
Tex. State Bd. of Pharmacy v. Witcher
...S.W.2d 432, 443 (Tex.1994) (“Not every statement by an administrative agency is a rule.”); Texas Mut. Ins. Co. v. Vista Cmty. Med. Ctr., LLP, 275 S.W.3d 538, 555 (Tex.App.–Austin 2008, pet. denied) (noting it is “well-established that not every administrative pronouncement is a rule”); Brin......
-
Vista Med. Ctr. Hosp. v. Tex. Mut. Ins. Co.
...extensive services to receive reimbursement under the stop-loss method.” See Texas Mut. Ins. Co. v. Vista Cmty. Med. Ctr., LLP, 275 S.W.3d 538, 548–51 (Tex.App.-Austin 2008, pet. denied)( Vista I ). The Texas Supreme Court denied review.The present litigation Among the medical-fee disputes ......
-
Dorsey v. Dep't of Workforce Servs., Workforce Appeals Bd.
...to every word, clause, and sentence and not rendering any part of it superfluous or meaningless.”); Texas Mut. Ins. Co. v. Vista Community Med. Cntr., LLP, 275 S.W.3d 538, 549 (Tex.App.2008) (stating that courts “must read the rule as a whole, giving meaning and purpose to every part”); Can......