Division of Longshore and Harbor Workers' Compensation (DLHWC)
CHAPTER 5-500 FEES/CHARGES
1. Purpose and Scope. This Chapter establishes the policy and procedures for the determination, evaluation, and/or payment (recovery) of fees or charges incurred by the OWCP (Special Fund), EC, or employee for medical treatment, services, or supplies under the LHWCA. The procedure for handling disputes on prevailing charges for medical services is also described. (See 20 C.F.R. sections 702.414 to .417.)
a. Chargeable Costs. The Director, OWCP or designee, ordering a special examination, shall charge the cost of the examination or review to the employer/carrier, or to the Special Fund established by section 44 of the Act (20 C.F.R. section 702.412). Examination costs shall be charged to the Special Fund only in cases involving Special Fund beneficiaries where the Director, DLHWC, has directly requested the examination (see PM 5-200.11).
b. Fee/Charge Standards.
(1) Prevailing Community Charge. All fees charged by physicians for the care of injured employees under the LHWCA, or any other charges for medical treatment or supplies within the purview of the Act, shall be limited to such charges as prevail for similar treatment, services, or supplies in the community in which the physician, medical facility, or supplier is located.
(2) Provider’s Customary Charge. Section 7(b) of the Act authorizes a change in treating physician or hospital where the medical charges “exceed the provider’s customary charges. When the Act was amended in 1984 to include this authority, the legislative materials stated “the doctor cannot charge more for Longshore clients than for other patients.” See, H. Rep. No. 1027, 98th Cong., 2d Sess., 130 Cong. Rec. 25,493, 25,500 (1984). Therefore, section 702.413 of the regulations limits the fee for medical services to the lower of the prevailing community rate or the provider’s customary charges for the same or similar services.
3. Fees for Medical Charges. It is DLHWC'S practice, in accordance with sections 7(b) and 7(g), to authorize the prevailing rates for similar services to the general public in the community in which the medical care provider is located. Medical fees are also limited to the provider’s customary charge. See 20 C.F.R. section 702.413. On October 2, 1995, final rules were published in the Federal Register establishing that the OWCP fee schedule (as described in 20 C.F.R. section 10.411) is to be used to determine the reasonable and customary amount of a medical fee where there is a dispute (Federal Register, Vol. 60, No. 190 at 51,346). If charges for the services appear unreasonable or the frequency and nature of services provided appear excessive, the case may be referred to the DD for action in accordance with paragraph 4 below.
4. Dispute Over Fees for Medical Services. Attempts should be made to informally resolve medical fee disputes whenever possible (see subparagraph b below). However, where resolution cannot be reached through informal means, the course of action to be followed should be determined by whether or not there is already a compensation order awarding medical benefits in effect in the case.
In a case where a compensation order has already been issued requiring the employer to pay the reasonable charges for medical services reasonably required by the injury and the disputed medical fee cannot be resolved informally, the procedures described in 20 C.F.R. 702.413-702.41 and in subparagraph c below should be used. If necessary, enforcement can be obtained through sections 18(a) or 21(d) of the Act.
If a compensation order awarding medical benefits has not been issued and (1) there is an underlying dispute concerning the compensability of the condition for which the treatment was provided, or (2) compensability is uncontested (e.g., the employer has instituted compensation payment for TTD and has disputed only the reasonableness of the medical provider’s fee), the case should be referred to the OALJ for hearing and adjudication of the claim. Without a compensation order awarding medical benefits, neither section 18(a) nor section 21(d) of the Act can be used for enforcement.
When DLHWC published the Longshore Act regulations, to implement the 1984 amendments, it provided the following guidance: “[t]he Department cautions that such actions as medical fee determinations cannot be taken unilaterally by any party, but must follow the process established by law and structured in the regulations.” 51 Fed. Reg. 4320, 4280 (1986)
In an All Assistant Deputy Commissioners memorandum dated August 28, 1987, the NO provided the following guidance:
Section 7(g) of the Act limits the charges for medical treatment or services to the prevailing community charge for such treatment or service. The authority to make initial medical fee determinations is under the jurisdiction of the deputy commissioner (20 CFR 702.407). Such determinations should not be made unilaterally by any party. If a dispute arises concerning whether a medical fee conforms to the prevailing community rate it should be brought to the attention of the deputy commissioner for resolution.
When such a dispute arises, the deputy commissioner should ask the parties to submit their position in writing. These submissions should be as specific as possible and should be accompanied by supporting evidence. The burden of proof is on the party who is raising the issue. If either party does not submit supporting evidence the deputy commissioner may issue a recommendation based upon the evidence submitted.
The memorandum further stated
Should an informal resolution of the fee dispute prove unsuccessful, the deputy commissioner should initiate the formal proceedings provided for in Section 702.414. The deputy commissioner should collect whatever additional evidence is necessary. An informal conference may be held with the parties. At the conclusion of these formal proceedings the deputy commissioner is to issue specific findings of fact on the fee in dispute. If the fee is found to be in conformance with the prevailing community rate the employer/carrier is to be advised that it is a reimbursable expense under Section 7 of the Act. If the fee is found to exceed the prevailing community rate or the provider’s customary rate, the findings of fact should indicate that the portion of the fee found to be excessive is not a reimbursable charge under Section 7 of the Act.
a. Burden of Proof. In Newport News Shipbuilding and Dry Dock Co. v. Dr. Sidney S. Loxley, et al., 934 F.2d 511, 24 BRBS 175(CRT)(4th Cir. 1991), cert. denied 112 S.Ct. 1941 (1992).the Fourth Circuit concluded “that a physician who seeks an order compelling full payment of his charges carries the burden of proof at the administrative hearing.” 24 BRBS @ 184(CRT)
The Court of Appeals rested its conclusion on the fact the formal hearings under the Act are conducted in accordance with section 556 of the Administrative Procedure Act (APA). The APA notes that “the proponent of a rule or order has the burden of proof.” This approach to assigning the burden of proof has been endorsed by the Supreme Court, in Director, OWCP v. Greenwich Collieries, 512 U.S. 267, 28 BRBS 43(CRT)(1994). Therefore, the party initiating a fee dispute has the burden of proof.
b. Initial Proceedings.
(1) The DD may, upon written complaint of an interested party, or upon the DDs own initiative, investigate any medical care provider or any fee for medical treatment, services, or supplies or the provider's customary charges.
(2) Where a dispute arises concerning the amount of a medical bill, the DD shall determine the prevailing community rate using OWCP Medical Fee Schedule to the extent appropriate, and where not appropriate, may use other state or federal fee schedules. The DD should also determine the provider’s customary charge (see subparagraph 2b(2). When necessary, the DD's investigation may include contacting the medical care provider on his/her own or through the District Medical Advisor (DMA) to clarify type of treatment and charges and the provider’s customary charge.
(3) If the DD determines that the fee is excessive, the DD or DMA may contact the medical care provider to advise that a particular fee has been found to be excessive. The medical care provider should be given the opportunity to voluntarily adjust the fee without further proceedings. If the medical care provider declines to adjust the fee, further proceedings described below in subparagraph c should be initiated.
(4) If the fee is found to conform to the prevailing community rate, the EC should be advised that the fee is a proper charge under section 7 of the Act. If the EC declines to pay the fee, or any portion of the fee, on the ground that the charge is excessive, further proceedings described below in subparagraph c should be initiated.
c. Further Proceedings.
(1) If the initial investigation is unsuccessful in resolving the dispute further proceedings may be undertaken by the DD to collect any additional evidence needed to make specific findings of fact. These proceedings may include, but not be limited to: an informal conference involving all interested parties; agency interrogations to the pertinent medical care provider; and issuances of subpoenas duces tecum for documents having a bearing on the dispute. A claim by the provider that the OWCP fee schedule does not represent the prevailing community rate will be considered only where the following circumstances are presented:
(a) where the actual procedure performed was incorrectly identified by medical procedure code;
(b) that the presence of a severe or concomitant medical condition made treatment especially difficult;
(c) the provider possessed unusual qualifications (board certification in specialty is not sufficient evidence in itself of unusual qualifications); or
(d) the provider or service is not one covered by 20 C.F.R. section 10.411(d)(1).
The above circumstances are the only ones which will justify reevaluation of the amount calculated under the OWCP fee schedule.
(2) The failure of any medical care provider to present any evidence required by the DD in these proceedings without good cause shall not prevent the DD from making findings of fact.
(3) At the conclusion of these proceedings, the DD is to issue findings of fact regarding the disputed fee. These findings of fact are to be issued over the signature of the DD and are to be mailed to all interested parties.
(4) If the DD finds the fee to be proper the findings of fact should state that it is a reimbursable expense under section 7 of the Act. If the fee is found to be excessive, the findings of fact should indicate that the portion of the fee found to be excessive is not a reimbursable charge under section 7.
Where a health care provider is successful in obtaining its full fee, the DD may include interest on the unpaid fee and award an attorney fee for work performed in obtaining the fee. Hunt v. Director, OWCP, 999 F.2d 419, 27 BRBS 84(CRT) (9th Cir. 1993).
(5) If any interested party is not satisfied with the findings of fact, a formal hearing may be required. If a formal hearing is not requested within thirty days of the mailing of the findings of fact, they become final (see 20 C.F.R. section 702.415) and are not appealable to the Benefits Review Board. Assuming there is a compensation order awarding medical benefits in effect in the case, the DD’s findings of fact that the fees are reasonable bring those fees within what is payable under the existing compensation order. Should the EC refuse to pay (or to pay in full), the claimant or medical provider can seek enforcement by requesting issuance of a supplementary order under section 18(a) of the Act declaring the amount of the unpaid fees plus interest to be in default. (See Lazarus v. Chevron USA, Inc., 958 F.2d 1297, 25 BRBS 145 (CRT) (5th Cir. 1992), concerning medical fees being within the meaning of “compensation” for the purposes of section 18(a).)
5. Formal Hearings. If a formal hearing is requested, the case is to be referred to the OALJ in accordance with current procedures. The DO should notify the Solicitor's Office and the NO by separate memorandum at the time of referral.
6. Effect of Adverse Decisions in Medical Fee Disputes.
a. If a final decision of the DD or an ALJ finds a fee excessive, the provider shall be given thirty days to make the necessary adjustment in the fee. If a final decision of a DD or an ALJ finds a fee reasonable the EC should pay promptly. Within thirty days after issuance of the DD's findings of fact any affected provider, employer or other interested party may request a formal hearing before an ALJ. If no request for a hearing is filed with the DD within thirty days the findings shall be final.
b. If the medical care provider still refuses to make the required readjustment, the provider shall not be authorized to provide further medical services or treatment (20 C.F.R. section 702.417). This removal of authorization only applies to the case in which the dispute arose. However, the DD may initiate debarment proceedings as indicated in PM 5-600 if such proceedings are warranted.
c. In cases where part of a fee has been disallowed, the DD will inform the claimant that he or she is not personally liable for payment of the disallowed charge. The medical care provider should be provided with a copy of the letter to the claimant.