Troyer v. Vertlu Mgmt. Co., A10–1930.

• Court: Minnesota Supreme Court
• Writing for the Court: ANDERSON
• Citation: Troyer v. Vertlu Mgmt. Co., 806 N.W.2d 17 (Minn. 2011)
• Decision Date: 17 August 2011
• Docket Number: No. A10–1930.,A10–1930.
• Parties: Ronald E. TROYER, Employee, v. VERTLU MANAGEMENT COMPANY/KOK & LUNDBERG FUNERAL HOMES, and State Auto Insurance Company Relators,andHealthEast Care System, Respondent.

806 N.W.2d 17

Ronald E. TROYER, Employee,

v.VERTLU MANAGEMENT COMPANY/KOK & LUNDBERG FUNERAL HOMES, and State Auto Insurance Company Relators,andHealthEast Care System, Respondent.

No. A10–1930.

Supreme Court of Minnesota.

Aug. 17, 2011.

Syllabus by the Court

The entity that provides a service, article, or supply directly to an employee in its final, usable form is the “health care provider actually furnishing” the service, article, or supply under Minn. R. 5221.0700, subp. 2A (2009), and is entitled to charge the payer directly for the service, article, or supply.

A compensation judge's authority under Minn.Stat. § 176.136, subd. 1b(b) (2010), is limited to determining the lower of 85 percent of (1) the provider's usual and customary charge, or (2) the prevailing charge for similar treatment, articles, and supplies furnished to an injured person when paid for by the injured person.

Robin Simpson, Radd Kulseth, Aafedt, Forde, Gray, Monson & Hagar, P.A., Minneapolis, MN, for relators.

Todd J. Thun, Thun Law Office, P.A., Minneapolis, MN, for respondent.

Andrew W. Lynn, Lynn, Scharfenberg & Associates, Minneapolis, MN, for amicus curiae Insurance Federation of Minnesota.Roderick C. Cosgriff, Heacox, Hartman, Koshmrl, Cosgriff & Johnson, P.A., St. Paul, MN, for amicus curiae Fairview Health Services.

OPINION

ANDERSON, PAUL H., Justice.

Ronald Troyer suffered a work-related injury to his lower back while working for Vertlu Management Company and Kok & Lundberg Funeral Homes. Troyer underwent surgery at St. Joseph's Hospital, a facility owned by HealthEast Care System. Troyer's injury required surgical implantation of a spinal cord stimulator. Vertlu's workers' compensation insurance provider, State Auto Insurance Company, paid part but not all of the expenses associated with Troyer's surgery. State Auto asserted that the withheld portion of the expenses was attributable to a price markup added by HealthEast to the price paid by HealthEast for the implant hardware used in Troyer's surgery. State Auto further asserted that under Minn. R. 5221.0700, subp. 2A (2009), the manufacturer of the implant hardware should be required to charge directly for the implant hardware. The compensation judge assigned to hear State Auto's claim determined that HealthEast could charge directly for the implant hardware. The judge also concluded that a compensation judge does not have the authority to determine a reasonable price for the implant hardware below 85 percent of HealthEast's usual and customary price. The Workers' Compensation Court of Appeals affirmed, and Vertlu and State Auto petitioned for a writ of certiorari. We affirm.

The facts in this case are not in dispute. Ronald Troyer was an employee of relators Vertlu Management Company and Kok & Lundberg Funeral Homes. In the course of his employment, Troyer suffered an injury to his lower back. Vertlu was insured for workers' compensation liability in Minnesota by relator State Auto Insurance Company. Vertlu and State Auto admitted liability for Troyer's injury. Troyer was hospitalized at St. Joseph's Hospital, a facility owned by respondent HealthEast Care System. On August 27, 2008, Troyer underwent lower back surgery to relieve the effects of his injuries. This surgery included the implantation of an Implantable Pulse Generator (IPG) spinal cord stimulator implant system. The IPG system was manufactured by Advanced Neuromodulation Systems, Inc. (ANS) and consisted of four components. St. Joseph's does not usually keep these components in stock. In this case, St. Joseph's ordered the components at the direction of Troyer's physician specifically for use in Troyer's surgery. The components were delivered to St. Joseph's by ANS.

In surgeries such as Troyer's, it is common for ANS representatives to be present in the operating room during surgery to consult with the surgeon if necessary.¹ But the representatives do not enter the “sterile field”: a ten-foot-radius sterile zone around the patient. Also, the actual surgery is done by the surgeon, and participation by the ANS representatives is limited to answering any questions that the surgeon might have.

HealthEast's usual and customary charge ² for the ANS components totals $73,320. CorVel, a health care pricing consulting firm, requested the invoices for the ANS components from HealthEast on behalf of Vertlu and State Auto. But HealthEast refused to provide the invoices, asserting that the price paid by HealthEast was confidential and proprietary in nature. Upon the recommendation of CorVel, Vertlu and State Auto made full payment to HealthEast for all charges except the charges for the implant hardware used in Troyer's surgery. For the implant hardware, Vertlu and State Auto paid a total of $24,440.³ HealthEast claims an unpaid balance of $37,822, which represents the difference between 85 percent of its usual and customary charge, and the price that Vertlu and State Auto actually paid to HealthEast.

On March 9, 2009, HealthEast filed a medical request with Vertlu and State Auto, asking that the balance of its bill be paid, along with penalties for late payment. Vertlu and State Auto responded on May 7, 2009, asserting that under Minn. R. 5221.0700, subp. 2A ⁴ (providing that charges for services, articles, and supplies must be submitted to the payer by the “health care provider actually furnishing” the service, article, or supply), HealthEast was obliged to furnish the actual cost invoice of the implant components, or demonstrate that it kept the implant components in stock on a regular basis. ⁵

The matter was heard before a compensation judge and the judge found that Vertlu and State Auto were liable for the unpaid balance. The judge rejected Vertlu and State Auto's arguments that ANS was the health care provider that actually furnished the surgical implants within the meaning of Minn. R. 5221.0700, subp. 2(A). The judge also rejected Vertlu and State Auto's argument that the judge had the authority to determine a reasonable value of the implant hardware that was lower than 85 percent of the usual and customary charge under Minn.Stat. § 176.136, subd. 1b(b) (2010).⁶

The Workers' Compensation Court of Appeals (WCCA) affirmed the compensation judge. Troyer v. Vertlu Mgmt. Co., 2010 WL 4057563 (Minn. WCCA Oct. 4, 2010). First, the WCCA concluded that HealthEast, not ANS, was the health care provider of the implant hardware. Id. at *6. The WCCA therefore held that HealthEast was entitled to directly charge for the implant hardware. Id. at *7. Second, the WCCA affirmed the compensation judge's holding that the judge lacked authority to determine the reasonable value of the implant hardware at less than 85 percent of HealthEast's usual and customary charge. Id. at *9. Vertlu and State Auto petitioned our court for a writ of certiorari and raised two issues on appeal. First, was HealthEast entitled to directly charge for the implant hardware used in Troyer's surgery? Second, did the compensation judge have the authority to determine a reasonable price for the implant hardware below 85 percent of HealthEast's usual and customary price?

I.

The first issue before us is whether HealthEast was entitled to charge Vertlu and State Auto directly for Troyer's surgical implant hardware. This issue is primarily one of rule construction. Rule construction is a question of law. St. Otto's Home v. Minn. Dep't of Human Services, 437 N.W.2d 35, 39–40 (Minn.1989). We review de novo questions of law determined by the WCCA. Owens ex rel. Owens v. Water Gremlin Co., 605 N.W.2d 733, 735 (Minn.2000).

Billing for workers' compensation health care services is governed by Minn. R. 5221.0700, subp. 2A, which provides that “[c]harges for services, articles, and supplies must be submitted to the payer directly by the health care provider actually furnishing the service, article, or supply.” Subpart 2A includes several specific situations in which health care providers must charge directly for services, articles, and supplies. One of these situations is found in subpart 2A(2), which specifies that subpart 2A includes “equipment, supplies, and medication not ordinarily kept in stock by the hospital or other health care provider facility, purchased from a supplier for a specific employee.” Applying subpart 2A to this case requires us to examine (1) whether ANS is a health care provider and (2) whether HealthEast or ANS “actually furnish[ed]” the implant hardware.

Health Care Provider

Minnesota Rule 5221.0700, subp. 2A, by its terms, only applies to health care providers. It is undisputed that HealthEast is a health care provider. But the WCCA concluded that ANS is not a health care provider, and therefore could not be required to directly charge for the implant hardware. Troyer, 2010 WL 4057563, at *6. HealthEast argues that the WCCA correctly concluded that ANS is not a health care provider, and therefore does not fall under Minn. R. 5221.0700, subp. 2A. Both Vertlu and State Auto assert that the WCCA erred when it determined that ANS is not a health care provider.

A “health care provider” is defined in Minn.Stat. § 176.011, subd. 12a (2010), as “a physician, podiatrist, chiropractor, dentist, optometrist, osteopath, psychologist, psychiatric social worker, or any other person ⁷ who furnishes a medical or health service to an employee under this chapter....” (Emphasis and footnote added.) A “service” is further defined in Minn. R. 5221.0100, subp. 15 (2009), as “any ... supply, product, or other thing ... provided for the purpose of curing or relieving an injured worker from the effects of a compensable injury under Minnesota Statutes, section 176.135, subdivision 1.” Taken together, these definitions establish that a health care provider may be “any other person” who furnishes “any ... thing ... provided for the purpose of curing or relieving an injured worker.” Minn.Stat. § 176.011, subd. 12a; Minn. R. 5221.0100, subp. 15. It appears...