Managing Managed Care: An Analysis of Managed Care Within Workers’ Compensation Claims
With the advent of the 1994 legislative amendments, the Florida Legislature completely overhauled the manner in which medical issues are analyzed in workers’ compensation cases. In 1994, the legislature created F.S. §440.134. Section 440.134 set forth a medical outline to be applied to injured workers within the workers’ compensation system. This outline created a managed care system similar to the HMO plans prevalent in private health care. Unfortunately, the new statutory scheme has spawned many questions and provided few answers.
In analyzing many of the most prominent issues created by the new managed care system, the authors first discuss how a carrier obtains approval for a valid managed care plan. Then how a managed care system should operate within the workers’ compensation realm is discussed. Within this section, the possible rights and obligations of claimants and insurance carriers within a managed care system, as well as issues that arise regarding litigation of managed care issues in the workers’ compensation system are addressed.
Applicability of Managed Care
Whether a managed care system takes effect in any given workers’ compensation situation depends greatly on an insurer adhering to administrative requirements. Before managed care was even an option, §440.13(2)(a) and (b) required carriers to provide, generally, all medically necessary remedial treatment and attendant care necessitated by a compensable injury. The courts were, subsequently, left to determine the rights and obligations inherent under §440.13(2)(a) and (b). However, after January 1, 1997, the legislature attempted to codify the bulk of the rights and obligations injured workers and carriers would share by enacting a mandatory statutory scheme. In fact, after January 1, 1997, all employers or insurers are required to provide medically necessary treatment to all employees through a managed care arrangement as provided in §440.134 et seq. The new statutory framework was an obvious attempt to eliminate much of the litigation over medical issues within workers’ compensation.
Before offering treatment through a managed care arrangement, an insurer must have a plan of operation, and such plan must be approved by the Agency for Health Care Administration (AHCA). See F.S. §440.134(4). The plan of operation must, at a minimum, adhere to the statutory requirements set forth in §440.134(5), (6), (7), (8), (9), (10), (11), (14), and (15). See also Fla. Admin. Code §59A-23.001 et seq. (1994). These statutory provisions require a carrier’s plan of operation to provide evidence that:
1) Covered services are available and reasonably accessible, §440.134(5).
2) A quality assurance program exists requiring medical care be provided consistent with prevailing medical standards, §440.134(6)(c). See also Fla. Admin. Code §59A-23.004 et seq.
3) The quality assurance program provides, among other rights, adequate methods of peer reviews, provision for the resolution of disputes, a process allowing employees a second opinion per specialty, and a provision for the selection of a primary care physician, §440.134(6)(c)(6), (7), (9), and (10).
Although by no means comprehensive, the above list illustrates several of the items that AHCA requires in a valid managed care plan of operation. If all the statutory requirements and rules are met, AHCA will approve the plan of operation. An insurer then has a valid managed care arrangement. See Fla. Admin. Code §59A-23.003 et seq. An insurer must follow the validation process for every entity or service area sought to be insured. See 59A-23.003(3). The authorization is valid only for a two-year period. Id. Finally, if greater than 50 percent of a controlling interest or ownership of a certified entity is transferred, a new application for authorization is required. Id.
Once these requirements are met, a carrier must require all care be received through the provisions of §440.134 et seq. In turn, it may avail itself of existent statutory protections. However, it is unclear what remedies are available for violations of the requirements explained above. Initially, it is clear a monetary fine may be assessed against the carrier. Section 440.134(22) allows AHCA to levy against carriers a monetary fine of $2500 for any nonwillful violation and $20,000 for each willful violation, with a cap of $10,000 for all nonwillful violations and $100,000 for all willful violations arising out of the same transaction. Additionally, AHCA may suspend or revoke a carrier’s managed care plan of operation. See §440.134(23).
However, in the absence of suspension or revocation, how does a monetary fine against a carrier aid, for instance, an injured worker who is prejudiced by a carrier’s violation of the applicable rule or statutes? Unfortunately, neither §440.134 nor applicable case law provide much guidance on this point. There is, however, one source of law on the issue. According to Farhangi v. Dunkin Donuts, 728 So. 2d 772 (Fla. 1st DCA 1999), a JCC may not strike the applicability of managed care, since no statutory provision exists granting a JCC such authority. Id. at 773–74. But in lieu of striking the applicability of managed care in its entirety, may a JCC suspend the enforcement of such provisions on the basis of some violation? Rather than striking managed care, the JCC would be holding that the carrier is estopped from relying on any protection offered by a provision it violated. The authority for this power would arise not from equity, but rather from powers necessary to enforce the purpose of §440.134. For example, if a carrier violated a JCC’s discovery order requiring production of grievance procedures, pursuant to Rule 4.150, Workers’ Compensation Rules of Procedure, the JCC has discretion to levy sanctions. Accordingly, a JCC could sanction a discovery violation by precluding the requirement of the filing of a grievance until such production was made. The alternative view is unpleasant to consider. To hold a JCC lacks such power would weaken the court’s ability to enforce §440.134 et seq., and catapult an injured worker into the grip of AHCA to seek redress or enforcement of rights under managed care. Such a result could create infinite frustration, and is quite arguably in conflict with the foundation principles of expedient processing of workers’ compensation claims. See §440.015.
Assuming a carrier fulfills all of its obligations in having a plan of operation approved, the next logical question is whether a carrier may add additional rights than those required by statute. Some have argued that if the minimum statutory requirements for a valid plan of operation are met, a carrier may then add additional rights. For example, as long as a claimant was afforded the right to a second opinion under the plan of operation, it is argued that the carrier could then provide itself the same right. As such, a carrier that satisfies the “minimum” requirements is then in the position to essentially provide itself with further, self-vested rights.
Claimants will invariably argue that carriers do not possess such a right. Several reasons are commonly cited for this opposing position. First and simplest, nowhere in any statute or rule is such a power bestowed upon carriers. An attempt to read in this additional ability would thus defeat the legislative mandate when it created managed care. Second, if carriers were allowed such a right, it would in effect create numerous, nonelected “mini-legislatures” out of these carriers as each crafts its own additional rights. Such an abundance of independent rulemakers would almost certainly lead to voluminous and inconsistent rights under managed care. Indeed, the “mini-legislatures” may create a wide array of rights and obligations that would effectively defeat the goal of an efficient and self-executing workers’ compensation system. See §440.015. Finally, claimants will argue if carriers were allowed to exceed the rights provided under §440.134 et seq. by any amount, there would exist no ceiling to the amount of rights a carrier may create. In turn, such unfettered power to add rights could yield certain draconian and unjust results. Unfortunately, the First DCA has not addressed the question of additional carrier rights.
Managed Care at Work
With a valid managed care system in place, the authors now turn attention to its actual application in processing claims. The operation of a managed care system can be analyzed by addressing two crucial issues: How is the managed care system meant to operate, and how is litigation handled that arises within the system?
How is managed care supposed to operate? It might be said that such a broad question cannot have a simple answer. Even the smaller details of the operation of managed care have no clear explanations, especially since courts have not had much opportunity to create precedence in this area. In this section the authors discuss how they believe the managed care statutory scheme should operate. Initially, as seen with HMO plans, all treatment under a managed care plan originates with some sort of gatekeeper, who in this system is a “medical care coordinator” (MCC). See §440.134(1)(i). An MCC will make all initial determinations as to the necessity of medical treatment for a particular claimant. If appropriate, the MCC will make referrals to specialists. In the event a specialist opines diagnostic tests or remedial treatment are reasonably and medically necessary, such treatment or tests should be provided. The claimant will continue to receive reasonably and medically necessary treatment from the specialist as long as the nature of the injury requires.
This basic framework sounds simple enough. However, as one steps through this framework many questions and issues arise. Initially, the article’s analysis begins with MCCs. There have arisen three interesting questions regarding medical care coordinators: 1) What type of specialty can be a MCC? 2) Who selects the MCC? and 3) What specific role does the MCC play in a claimant’s medical treatment?
As for the first question, §440.134(1)(i) defines a medical care coordinator to be a primary care provider licensed under either F.S. Ch. 458 or 459. In contrast, §440.134 (1)(k) defines a primary care provider to include the initial treating physician and, when appropriate, the continuing treating physician, who may be a family practitioner, general practitioner, or internist under Ch. 458; a family practitioner, general practitioner, or internist osteopath licensed under Ch. 459; a chiropractor licensed under Ch. 460; a podiatrist licensed under Ch. 461; an optometrist licensed under Ch. 463; or a dentist licensed under Ch. 466. On a plain reading of the statutes, although including the term “primary care provider,” the definition of medical care coordinator is statutorily restricted to a “primary care provider” under Ch. 458 or 459. The distinction comports with logic when one considers that as an MCC, a physician is responsible for overseeing the medical care of an injured worker. It would seem illogical to allow health care providers who are not medical doctors to serve as MCCs, especially when one considers the limited scope of the specialties licensed under Chs. 460, 461, 463, and 466.
The second question involves who can select the MCC. Unfortunately, neither case law nor statutes lend guidance as to who makes the initial selection. However, §440.134(6)(c)(10) does allow a claimant the right to select a primary care provider. As such, some may argue this provision allows the injured worker the right to make the initial selection of an MCC. At the very least, even if the carrier makes the initial selection of the MCC, the claimant, pursuant to §440.134(6)(c)(10), can arguably change the MCC. Therefore, it would appear that, even if it is unclear who can make the initial selection of the MCC, the claimant will eventually control who becomes the MCC either by making the initial selection or changing the carrier’s choice.
The last question pertains to the MCC’s role in authorizing diagnostic tests or treatment recommended by a treating specialist. Most carriers have taken the position that all diagnostic tests or treatment must be requested from the MCC, even in cases when the test or treatment has been recommended by an authorized treating specialist. Moreover, if an MCC disapproves of a specialist’s recommended test or treatment, carriers have required a claimant to file a grievance. Claimants, on the other hand, argue these tests or treatment can be authorized in the absence of an MCC’s approval, if the specialist opines the necessity of such a course of action. Claimants argue as such because in many instances, the test or treatment in question will involve medical issues outside the MCC’s field of practice. At the very least, as a specialist, the specialist is better suited to make the determination of medical necessity. It would appear the claimants’ position is more consistent with logic, because to allow otherwise could require an MCC to make crucial determinations in areas other than the MCC’s direct specialties. Additionally, if all requests for treatment and diagnostic tests must be referred to an MCC for approval, then one must ask: Why have any specialists?
Apart from the presence of MCCs as indicated above, a valid plan of operation must also allow claimants the right to obtain a second opinion per specialty and a one-time change per treating specialty. See §§440.134(6)(c)(9) and 440.134(10)(c). In fact, most carriers concede claimants’ entitlement to these rights. However, some carriers believe that although claimants can receive a second opinion and a change in treating specialist, the carrier has the authority to select the particular doctor. A few carriers have also inexplicably asserted that these two rights may not be exercised after a claimant reaches maximum medical improvement. These positions, however, do not seem to be supported by a clear and plain reading of the applicable statutes and rules. As for the authority to select the doctor, a clear and plain reading of both §§440.134(6)(c)(10) and 440.134(10)(c) would imply that the ability to obtain a second opinion or one-time change necessarily includes the right to select. To allow otherwise would defeat the objective of allowing claimants to obtain a second opinion or alternate treatment from a physician they trust. The claimant’s right to select is further buttressed by the fact that carriers have the right to select the identity of all physicians on the managed care list, so it would seem unjust to also allow them to select the identity of the claimant’s choice for a second opinion or one-time change in treating physician.
The MMI argument would also appear to be without merit. If the carriers’ argument on this point is taken to its logical extreme, a claimant may be precluded from ever exercising his or her right to a one-time change per specialty or a second opinion. Obviously, if a claimant exercises his or her right prior to reaching MMI, the issue is moot. However, if a claimant waits until after MMI is reached, a claimant will never be able to exercise the statutory right for a one-time change or a second opinion. Under such scenario, one must wonder what happens if the treating physician ceases to practice medicine. Additionally, considering that §440.134(2) requires carriers to provide claimants treatment for so long as a work-related injury requires, is a claimant restricted from seeking additional medical attention if a disagreement exists with the recommendation for an appropriate treatment plan after MMI? What if a claimant’s treating specialist opines that a claimant either needs or does not need surgery, and the claimant disagrees? Is the claimant required to unquestionably accept the opinion of a physician, simply because MMI has been reached? It would seem that a claimant’s right to obtain a second opinion or a one-time change was created for these situations, regardless of whether MMI is reached. As such, it would appear that a claimant should have the ability to select the identity of the physician for a second opinion or one-time change at any point.
Managed Care Litigation: Jurisdiction
Admittedly, very little case law exists interpreting §440.134 et seq. Further, the few cases that do exist do not lend meaningful guidance as to when and if a JCC may address managed care issues. Nonetheless, within this section the authors discuss the major issue inherent in managed care litigation: jurisdiction. The issue of jurisdiction arises in two ways. The first jurisdictional issue is whether a JCC can even address disputes that arise in managed care. The second issue is in what instances is a JCC’s jurisdiction invoked.
Many JCCs and practitioners have relied on the Farhangi case for the proposition that a JCC does not possess subject matter jurisdiction over managed care issues. See Farhangi, 728 So. 2d 772. The authors argue that such an interpretation is erroneous. In Farhangi, the First DCA confronted the issue of whether a JCC has the power to strike the applicability of a managed care plan in the absence of statutory support. Id. at 773. The JCC denied the claimant’s motion to strike the applicability of managed care on the basis that the employer/carrier had substantially complied with the notice requirements of §440.134. Id. at 773. On appeal, the First DCA affirmed and reasoned that a JCC has no authority to strike a managed care plan in its entirety, absent statutory support. Id. at 773–74. This holding is correct when one considers that as an administrative law judge, see City of West Palm Beach v. Burbaum, 632 So. 2d 145 (Fla. 1st DCA 1994), a JCC can only do what the legislature authorizes him or her to do. However, despite the court’s specifically worded holding, many practitioners have taken the position that the Farhangi holding precludes a JCC from presiding over any managed care issues. This reading is incorrect. In fact, the power to strike and the power to enforce the statutory requirements of §440.134 are strikingly different. One could easily surmise a JCC has the power to ensure the rights and obligations of the parties under §440.134 are met, and yet lack the power to strike a managed care plan in its entirety.
So if the Farhangi decision does not preclude a JCC from presiding over managed care issues, the question still exists: Does a JCC, nonetheless, have subject matter jurisdiction to address managed care issues? The answer must be yes. In fact, a clear and plain reading of §440.192(3) indicates that all applicable grievance procedures must be exhausted prior to the filing of a petition for benefits. As such, the statute clearly provides that even when a grievable event exists, the disagreement may ultimately come before a JCC. This conclusion is also supported by public policy. To allow otherwise would make a grievance committee not only an administrative body, but also a judicial one—a judicial body with no judges, rules of evidence or procedure, or judicial review. Such a result was not intended by the legislature, as indicated by §440.192(3).
Many practitioners also argue that a JCC lacks subject matter jurisdiction to adjudicate any managed care issue until such time as the grievance procedure is exhausted. Before the applicability of grievance procedures is discussed, it is crucial to understand how the legislature defined a grievance. definition, the grievance procedure is an informal administrative process that allows for the possible resolution of dissatisfaction with medical issues arising within managed care. Inherent in this definition is the fact that a grievance requires the expression of dissatisfaction with medical care. Once the dissatisfaction arises, §440.192(3) does provide that an injured employee must exhaust all applicable grievance procedures before filing a petition for benefits. Accordingly, in the face of dissatisfaction with medical care, a grievance must be filed prior to the filing of a petition for benefits, and consequently the vesting of a JCC’s jurisdiction.
However, the central issue arising with regularity regarding the applicability of grievance procedures is when a grievance must be filed. Initially, §440.134(17) specifically provides that an employee is relegated to receiving all necessary treatment within the managed care plan, provided the employer and carrier have provided notice to the employees of the arrangement. Such language seems to indicate that an injured worker is only relegated to the requirements of the managed care plan once proper notice is given. Accordingly, one must ask if injured workers are required to follow grievance procedures before receiving proper notification. In fact, how could an injured worker know how a grievance should be completed, or to whom a grievance is to be sent if that worker has never received proper notification? It would seem that §440.134(17) evidences a legislative intent for injured workers to follow the requirements of a managed care plan once the injured worker has received proper notification of the plan. This is not to say that in the absence of proper notification, a JCC would be striking the managed care plan in its entirety. Instead, the JCC would merely postpone the enforcement of the managed care plan until proper notification is given. Therefore, under this analysis, a grievance would not be required until such time as proper notice is given, as in the case of the discovery violation example discussed above. In contrast, the broader reading of Farhangi would prevent a JCC from postponing the enforcement of the grievance procedure even in the face of a carrier’s violation of the requirements set forth in §440.134.
Assuming notice has been given, the authors then consider what complaints require grievances. Initially, it is important to recognize that grievances require a dissatisfaction with medical care. As such, if an MCC or specialist has refused to recommend or authorize certain treatment, a claimant may be dissatisfied with such a decision and be required to file a grievance. However, it does appear that there are certain rights a claimant possesses under the managed care plan that when exercised do not require the filing of a grievance. These rights include those in which no expression of dissatisfaction with medical care exists. For example, §440.134(6)(c)(10) allows a claimant the right to select a primary care physician. Section 440.134(6)(c)(9) then allows a claimant the right to obtain a second opinion per specialty. Finally, §440.134(10)(c) allows a claimant the right to obtain a one-time change per specialty as long as requested from the medical care coordinator. Additionally, one must ask how an initial request for medical treatment can include the “dissatisfaction” required to invoke the grievance procedure. It is by definition a request made before any dissatisfaction can occur: an initial request. It would appear that simply requesting a court to authorize the rights conferred under each of the above situations is not necessarily an expression of dissatisfaction with medical care, rather it may be a simple request for an evaluation of a change in physician necessitated by a reason other than dissatisfaction. Of course, if the exercise of these rights is precipitated by dissatisfaction, a grievance is required. However, in the absence of an expression of dissatisfaction, it would appear that by definition, a grievance is not required.
The right to obtain a one-time change in treating specialist does require some further discussion, since §440.134(10)(c) requires a claimant to request the one-time change from the MCC. It is possible the requirement of requesting the change from the MCC may lead to a requirement of filing a grievance if an MCC disagrees. The necessity of making a request to the MCC, prior to receiving the one-time change, could simply be a mechanism to ensure that the MCC is kept abreast of an injured worker’s treatment history. In this instance, a grievance would not be necessary. However, the fact that the legislature required this advance request may indicate an intent to require a grievance if an MCC disagrees with the change. However, if the legislature enacted §440.134 et seq. with the intent of eliminating litigation, and the system is meant to be self-executing and efficient, this latter interpretation seems incorrect.
In sum, it appears that both injured workers and employer/carriers have obligations that must be fulfilled before a JCC is vested with jurisdiction over the enforcement of §440.134. On the one hand, employer/carrier must properly place claimants on notice of the existence and requirements of a prospective managed care plan. On the other hand, a claimant must file a grievance when necessary. However, arguably, a grievance may not be necessary for every conceivable request for services under §440.134. Indeed, it appears a grievance is required only when a claimant is expressing dissatisfaction within the managed care plan. In either event, there must be some recourse available for final review and enforcement of statutory provisions. To interpret the Farhangi decision to preclude a JCC from having jurisdiction over §440.134 would seem to fly in the face of the self-executing nature of Ch. 440 and applicable statutory language.
Managed care apparently is here to stay. The system is a theoretical attempt to pass more control over medical issues to health care providers and less to the courts. However, courts may not be completely eliminated from the equation, especially when disagreements arise. It is not surprising that with most vast legislative amendments many questions are created, and courts are left with the responsibility of providing answers. Managed care is no different. Many unanswered questions exist, and users must turn to the courts for guidance. This article was a humble attempt to provide some guidance as to how managed care should properly operate.
Mario L. Perez received his B.S. in criminal justice from Florida International University in 1994 and a J.D. from the University of Florida in 1997. He has represented both injured workers and insurance companies within workers’ compensation. Mr. Perez currently represents injured workers with the firm of Joann Hoffman, Moore, Baisden & Selwood.
Daniel Chang received an M.S. in computer science and engineering from the University of Florida in 1996 and a J.D. from the University of Florida in 1997. Mr. Chang is of counsel with the law office of Russel Lazega, working in the area of insurance litigation.
This column is submitted on behalf of the Workers’ Compensation Section, Steven P. Kronenberg, chair, and Pamela L. Foels, editor.