Summary
In Timko we concluded that an insurer can violate Rule XVI(J) by failing to respond to a request for prior authorization even though the request was not mandated by Rule XVI(I)(1).
Summary of this case from In re Gauvin v. Microfilm Imaging, W.C. NoOpinion
W.C. No. 3-969-031
December 26, 2003
ORDER OF REMAND
The claimant seeks review of an order of Administrative Law Judge Harr (ALJ) which denied the claimant's request for the imposition of penalties based on the respondent — insurer's alleged failure to respond to several requests for the provision of home exercise equipment. The claimant contends the ALJ misinterpreted Rule of Procedure XVI (I)(2), 7 Code Colo. Reg. 1101-3 at 79. We agree and remand for entry of a new order.
The ALJ's findings may be summarized as follows. The claimant sustained a compensable injury in 1990 and underwent three cervical fusion surgeries. By at least September 2000, the claimant's exercise physiologist recommended to the treating physician, Dr. Roth, that the claimant purchase home exercise equipment to treat and relieve ongoing pain problems. The ALJ found that on September 18, 2000, February 26, 2001, and January 21, 2001, Dr. Roth or his nurse "impliedly or expressly requested authorization for this equipment" from the insurer. However, the insurer did not respond to these requests until at least May 9, 2003, when respondents' counsel issued a letter authorizing purchase of the equipment.
The claimant filed an application for hearing seeking penalties pursuant to "C.R.S. 8-43-204 [sic] and 8-43-305 and Rule XVI (J) for unreasonable delay or denial of prior authorization of medical care, including" the "denial of prescription for home exercise equipment., without following the requirements of Rule XVI (J)." The respondents filed a response stating as a defense that "penalties have been cured."
The ALJ denied the claim for penalties. The ALJ ruled there is "no persuasive evidence showing that Dr. Roth's recommendation for the home exercise equipment is a prescribed service warranting prior authorization for payment under" Rule of Procedure XVI (I)(1), 7 Code Colo. Reg. 1101-3 at 78-79. Because the ALJ concluded there was no violation of the rule, he did not reach the question of the reasonableness of the insurer's conduct.
I.
On review, the claimant contends, inter alia, that the ALJ failed to consider the impact of Rule XVI (I)(2), which provides that the "payer shall respond to all providers requesting prior authorization within seven (7) business days from receipt of the provider's completed request." The claimant argues that this provision, which first became effective November 30, 2001, was meant to change prior law which did not require insurers to respond to requests for prior authorization if a request for prior authorization was not required by the rules. We agree with this argument.
Initially, we note that penalties may be imposed under § 8-43-304(1), C.R.S. 2003, for failure to comply with a rule of procedure adopted by the Director of the Division of Workers' Compensation (Director). Violation of such a rule is equivalent to violating an "order" for purposes of § 8-43-304(1). However, the standard is not one of strict liability. Rather, the question is whether the insurer failed to take the action a reasonable insurer would have taken to comply with the rule. The reasonableness of the conduct is measured by an objective standard. Jiminez v. Industrial Claim Appeals Office, ___ P.3d ___ (Colo.App. No. 02CA2283, September 11, 2003); Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997).
Here, the issue is whether the ALJ correctly interpreted Rule XVI (I) in concluding that the insurer did not violate the rule. We note that principles governing the interpretation of administrative rules are essentially the same as those governing the interpretation of statutes. See Gerrity Oil and Gas Corp. v. Magness, 923 P.2d 261 (Colo.App. 1995), aff'd. in part, rev'd. in part, 946 P.2d 913 (Colo. 1997). Consequently, we should seek to effect the Director's intent, as long as it is consistent with the authorizing statute. Monfort Transportation v. Industrial Claim Appeals Office, 942 P.2d 1358 (Colo.App. 1997). In this regard, the best indicator of the Director's intent is the plain language of the rule, unless that interpretation produces an absurd result. See Humane Society of the Pikes Peak Region v. Industrial Claim Appeals Office, 26 P.3d 546 (Colo.App. 2001). To the extent there is any ambiguity, the rule should be construed so as to give sensible effect to all its parts. Further, we may consider the problem which the rule sought to remedy. Monfort Transportation v. Industrial Claim Appeals Office, supra; Henderson v. RSI. Inc., 824 P.2d 91 (Colo.App. 1991). Further, the Director is presumably aware of administrative rulings in prior cases when she enacts new rules. See Spanish Peaks Mental Health Center v. Huffaker, 928 P.2d 741 (Colo.App. 1996).
Applying these principles here, we note that the current version of Rule XVI (I)(1) states the prior authorization shall be requested in four specific situations. Generally these situations involve requests for medical services exceeding the limits established by the medical treatment guidelines, or the guidelines or fee schedule expressly require prior authorization. Use of the term "shall" ordinarily connotes a mandatory requirement. Aren Design, Inc. v. Becerra, 897 P.2d 902 (Colo.App. 1995).
However, Rule XVI (I)(2), which was newly enacted in 2001, provides that payers must respond to all providers requesting prior authorization. In this context, the ordinary meaning of the word "all" is "every" or "any whatsoever." American Heritage College Dictionary, Third Edition, 1993. Thus, the common and ordinary meaning of Rule XVI (I)(2) is that the "payer" must respond to "every" provider that requests prior authorization, regardless of whether the provider is one which is required to request prior authorization under the provisions of Rule XVI (I) (1). Otherwise, Rule XVI (I)(2) would state that the payer shall respond to every request for prior authorization which is submitted in accordance with the requirements of Rule XVI (I)(1).
Moreover, this conclusion is consistent with the history of Rule XVI (I) and our interpretation of the prior rule. Prior to the enactment of Rule XVI (I)(2), we interpreted the rule as mandating requests for prior authorization only in those cases specifically described in Rule XVI (I)(1). Consequently, we held an insurer could not be penalized for failing to comply with the provisions of the rule if a request for prior authorization was not required by the rules. See Terrones v. St. Francis Hospital, W.C. No. 3-887-322 (April 15, 1997). However, the Director has since adopted Rule XVI (I)(2) which indicates that payers are responsible for responding to every provider which requests prior authorization, or face the imposition of penalties as provided in Rule XVI (J)(6), 7 Code Colo. Reg. 1101-3 at 81.
The respondents argue that this interpretation will "frustrate the efficient expediting of requests for prior authorization" in cases where Rule XVI (I)(1) requires such requests. However, Rule XVI (J), to which Rule XVI (I)(2) refers, establishes a mechanism for resolving disputes concerning the provision of medical treatment outside the adjudicative process. Rule of Procedure XVI (J)(3), 7 Code Colo. Reg. 1101-3 at 80-81. As such, the rule provides an alternative to the expenditure of time and money which follows as a consequence of litigation. In our opinion, the Director has authority to require the parties to pursue this potentially more efficient and less expensive dispute resolution mechanism in all cases where there is a request for prior authorization. It is true that requiring the parties to adhere to the dispute resolution process in all cases where prior authorization is requested may slow the process in some cases where requests for prior authorization are mandatory, and that some disputes cannot be resolved without litigation. However, in our view the Director acted within her rule making authority by determining as a matter of policy that the potential savings of requiring the dispute resolution process in all cases of requests for prior authorization outweigh inefficiencies which may also result. Section 8-42-101(3)(a)(I), C.R.S. 2003 (authorizing adoption of rules governing utilization control requirements for the provision of medical treatment under the Act).
It follows that we disagree with the ALJ's conclusion that the insurers cannot violate Rule XVI (J) by failing to respond to requests for prior authorization in cases where the request is not mandated by Rule XVI (I)(1). To the contrary, Rule XVI (I)(2) creates a requirement that the insurer respond to all requests for prior authorization in accordance with the requirements of Rule XVI (J). Thus, to the extent the ALJ found that there could be no violation of Rule XVI (J) under the circumstances of this case, the order is set aside and the matter remanded for entry of a new order. However, in reaching this result we should not be understood as determining as a matter of law that the claimant proved a violation, or that the insurer acted unreasonably as a matter of law. We do not understand the ALJ to have resolved these issues, and because these issues involve questions of fact we may not resolve them as a matter of law. Section 8-43-301(8), C.R.S. 2003.
II.
The respondents assert we may uphold the ALJ's order because the claimant did not specifically plead the imposition of penalties for a violation of Rule XVI (I)(2) as required by § 8-43-304(4), C.R.S. 2003. We disagree.
The purposes of the specificity requirement of § 8-43-304(4) are to afford the respondents an opportunity to cure the specific violation and to provide the respondents notice of the basis of the claim for penalties against which they will have to defend. Varela v. Cedaredge Mercantile, W.C. No. 4-471-768 (July 18, 2003); Gonzales v. Denver Public School District No. 1, W.C. No. 4-437-328 (December 27, 2001).
Initially, we note the respondents have never asserted until now that the claimant failed specifically to plead the basis of the claim for penalties. This argument was not raised in the response to the application for hearing, it was not argued in the respondents' post-hearing position statement, and the argument was not raised at the time of the hearing. Consequently, we conclude this argument was waived because it was never raised to the ALJ. Kuziel v. Pet Fair, Inc., 948 P.2d 103 (Colo.App. 1997).
However, even if the argument had been raised, it would be without legal merit. The claimant's application for hearing listed as an issue penalties for failing to respond to a request for prior authorization of medical equipment in violation of the "requirements" of Rule XVI (J). The requirements of XVI (J) constitute the dispute mechanisms for "Contest of Request For Prior Authorization." 7 Code Colo. Reg. 1101-3 at 79. Rule XVI (I) concerns prior authorization, and Rule XVI (I)(2) expressly refers to Rule XVI (J) as the method for completing a "contest" of a request for prior authorization. Indeed, prior to the 2001 amendments, Rule XVI (I) and (J) were encompassed in the same rule. Under these circumstances, the mention of the factual and legal bases of the claim for penalties was sufficient to alert the respondents to the basis of the claim for penalties. Indeed, the respondents' response to the application for hearing alleged the violation had been "cured."
Further, our review of the transcript does not show the respondents expressed any surprise at the basis of the claim for penalties. To the contrary, before the hearing the respondents filed a motion to dismiss the claim for penalties based on the statute of limitations, and this motion reflects a detailed understanding of the basis of the claim. Thus, the issue of penalties was properly before the ALJ. Cf. Varela v. Cedaredge Mercantile, supra, (filing of request for penalties which alleged improper termination of benefits under Rule XI was sufficiently specific to implicate Rule IX (C)(1)(a) concerning termination of benefits based on finding of MMI).
The assertion that the application was insufficient because it mentions § 8-43-204 rather than § 8-43-304 is without merit. This is an obvious typographical error, especially because the application refers to § 8-43-305. Moreover, as noted above the respondents fully understood the claimant was seeking penalties under § 8-43-304 because they filed a pre-hearing motion to dismiss under § 8-43-304(5), C.R.S. 2003 (statute of limitations).
The respondents raise other arguments concerning the sufficiency of the evidence to support the imposition of penalties, the sufficiency of Dr. Roth's requests for prior authorization, and the ALJ's denial of the respondents' motion to dismiss based on the statute of limitations. These issues raise factual questions which were not resolved by the ALJ's order, and were apparently not considered because of the ALJ's legal conclusion that no penalty could be imposed for the insurer's alleged misconduct. Additionally, the ALJ made no specific findings with respect to the statute of limitations defense. Because the ALJ's order was not based on the arguments raised by the respondents, and because we lack authority to make findings of fact, it is premature to address these issues. On remand, the ALJ is free to rule on the respondents' defenses as he determines appropriate.
IT IS THEREFORE ORDERED that the ALJ's order dated August 5, 2003, is set aside and the matter is remanded for entry of a new order consistent with the views expressed herein. The new order shall be entered based on the existing record and further evidentiary proceedings are not authorized by this order.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Kathy E. Dean
Copies of this order were mailed to the parties at the addresses shown below on December 26, 2003 by A. Pendroy.
Judi Timko, 4660 S. Yosemite St., #9007, Greenwood Village, CO 80111-1227
Cub Foods, 15550 E. 6th Ave., Aurora, CO 80011-9000
Mary Anders, Liberty Mutual Insurance Co., P. O. Box 168208, Irving, TX 75016-8208
Jennifer E. Bisset, Esq., 1120 Lincoln St., #1001, Denver, CO 80203 (For Claimant)
D. Clay Thornton, Esq., 950 17th St., #2100, Denver, CO 80202 (For Respondents)