The recent billing dispute case of McDonnell v. Renegade Oil Tools, Inc.,[1] shows once again how difficult it is for employers and carriers to limit surgical implant costs to a reasonable amount given the current provisions of the Louisiana Workers’ Compensation Fee Schedule.

McDonnell v. Renegade Oil Tools, Inc.

In this billing dispute case, spine surgeon Dr. Mark McDonnell filed five separate disputed claims for compensation against Stonetrust Commercial Insurance Company alleging underpayment of invoices for surgical implants after Stonetrust refused to pay the full amount of the manufacturers’ invoices and instead reimbursed the amount they believed to be reasonable. The cases were consolidated and the trial court ruled in favor of Dr. McDonnell, finding that the invoices were reasonable and that Stonetrust owed full reimbursement. Stonetrust appealed.

At the heart of this dispute is the fact that the Louisiana Workers’ Compensation Fee Schedule does not set a specific reimbursement rate for surgical implants and, instead, states that plastic and metal implants are to be reimbursed at the invoice cost plus 20%. Despite this, La. R.S. 23:1203(B) limits reimbursement to the mean of the usual and customary charges for such care and services, as determined under the reimbursement schedule or the actual charge for the service, whichever is less. Moreover, La. R.S. 23:1034.2(D) leaves open the possibility that medical fees – even though falling within the amounts set forth in the reimbursement schedule – may be deemed unreasonable, unnecessary, or not “usual and customary” and, therefore, not subject to compensation under certain circumstances. The courts understand that there was a legislative intent behind the Workers’ Compensation Law that the reasonableness of medical costs is an important consideration.

In taking their position that the surgical implant invoices were unreasonable, Stonetrust relied heavily on the testimony of their expert in medical coding, reimbursement, and fee schedules. It appears that the expert conducted cost comparisons from other implant manufacturers, as well as taking into consideration amounts Medicare would reimburse in reaching his conclusion. The expert also testified as to his opinion that implants do not vary significantly by brand due to FDA oversight.

Third Circuit Ruling

The Third Circuit disagreed with the assignments of error raised by Stonetrust and affirmed the decision of the trial court. The Court found that the workers’ compensation judge had not committed manifest error in finding that the prices charged by Dr. McDonnell for the implants at issue were reasonable. They pointed out that there was no evidence that Dr. McDonnell had any involvement in setting the manufacturers’ prices for the implants, and that his office had simply passed along the invoices to Stonetrust for payment. The Third Circuit also noted that Stonetrust had pre-authorized each one of the surgeries, including the fact that the medical implants and billing were to be facilitated through Dr. McDonnell’s office. Finally, the Court gave weight to Dr. McDonnell’s testimony that the particular brand of implant he ordered was somehow superior to other products on the market and that they gave an advantage to his patients by increasing their likelihood of experiencing reduced pain and reducing the possible need for future surgeries.

The Upshot for Employers and Carriers

For employers and carriers, this case is a clear example of the difficulty in trying to contain surgical implant costs after a procedure has been authorized and performed. Until the legislature is finally able to pass a bill providing stricter parameters for implant reimbursement, employers and carriers should attempt to negotiate these costs before they are incurred.

[1] McDonnell v. Renegade Oil Tools, Inc., 2022 La. App. LEXIS 1791 (La. App. 3 Cir., Oct. 19, 2022).