Second Injury Fund Not Entitled to Audit Medical Expenses Paid by Insurer in Workers’ Compensation Case

In the First Circuit case of Nationwide Agribusiness Insurance Company v. State Workers’ Compensation Second Injury Board2020 WL 3287042, 2019-1101 (La.App. 1 Cir. 6/18/20), the Second Injury Board appealed a summary judgment granted in favor of the Nationwide Agribusiness Insurance Company (“Nationwide”) that awarded reimbursement of $231,046.26 for workers’ compensation benefits paid on behalf of an injured worker, plus legal interest.

Nationwide Agribusiness Insurance Company v. State Workers’ Compensation Second Injury Board – Background

The underlying facts of the claim were undisputed. An injured worker suffered two accidents in the course and scope of his employment with the same employer, with medical evidence supporting that the injuries from the first accident merged with the injuries from the second accident to create a greater disability. Nationwide settled the injured employee’s case and then filed a claim with the Second Injury Board seeking reimbursement for workers’ compensation benefits paid as a result of the merger of the two job-related injuries. The Board denied Nationwide’s claim, prompting Nationwide to file a petition in the district court seeking review of the decision.

Nationwide then filed a motion for summary judgment supported by documents establishing that all required elements of the Second Injury Fund claim had been met. The Board did not file an opposition. At the hearing on the motion for summary judgment, the Board conceded that Nationwide was entitled to reimbursement from the Second Injury Fund, but claimed they had the right to audit bills and payments to determine whether such expenses were “reasonable and necessary” prior to the district court awarding reimbursement. The district court rejected the Board’s argument and awarded Nationwide reimbursement in the amount of $231,046.06 plus legal interest from the date of judicial demand until paid. The Board appealed.

First Circuit Court of Appeal Ruling

On review, the First Circuit Court of Appeal upheld the ruling of the trial court, finding that the Board had the opportunity to challenge the medical expenses in an opposition to Nationwide’s motion for summary judgment or by an audit prior to the hearing, but failed to do so. Additionally, there was no limit on the trial court’s authority to award reimbursement or to condition any award upon an audit of the expenses. Finally, the First Circuit rejected the Board’s argument that they were statutorily protected from having to pay legal interest, interpreting La. R.S. 23:1378(A)(4)(a) as only shielding the Fund from having to reimburse interest, penalties, or attorney fees paid by an employer or insurer, but not from liability for legal interest on a judgment against the Board or Second Injury Fund.