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Burgess v. Sewerage & Water Board of New Orleans

Supreme Court of Louisiana

June 29, 2017



          JOHNSON, Chief Justice

         In this workers' compensation case, the claimant, Darvel Burgess, filed a Disputed Claim for Compensation after his employer, Sewerage & Water Board of New Orleans ("S&WB"), refused to pay a $13, 110.02 outstanding bill for prescription medications from Injured Workers Pharmacy ("IWP"). The underlying legal issue is whether the injured employee is entitled to his choice of pharmacy, or whether that right belongs to the employer under the Louisiana Workers Compensation Act ("LWCA"). We granted this writ application to resolve a split in our circuit courts of appeal on this issue. After review, we hold the choice of pharmacy in a workers' compensation case belongs to the employer.


         Darvel Burgess sustained a work-related injury on October 13, 2008. On September 18, 2012, Mr. Burgess filed a Disputed Claim for Compensation against his employer, S&WB, asserting in part a dispute over unpaid medical bills and entitlement to penalties and attorney fees. The matter was submitted to the Louisiana Office of Workers' Compensation ("OWC") solely on briefs and exhibits. The only disputed issues presented to the OWC judge were unpaid bills from IWP and Advanced Neurodiagnostic Center, as well as Mr. Burgess' entitlement to penalties and attorney fees as a result of S&WB's failure to timely pay these bills.[1]

         In his brief submitted to the OWC, Mr. Burgess asserted he is entitled to have all necessary and related medical treatment and prescriptions paid by his employer pursuant to La. R.S. 23:1203(A).[2] He argued the unpaid bills were related to treatment for his work-related injury, including medications prescribed by his treating physician, and as such were reasonable and necessary. Mr. Burgess further requested an award for penalties and attorney fees. S&WB argued it is not responsible for the outstanding IWP bill pursuant to La. R.S. 23:1142(B) because it notified all injured workers on October 10, 2011, that henceforth Corvel Caremark Pharmacy program was the approved provider for prescription services and failure of the injured worker to use the pharmacy card provided may result in non-payment of medications. Additionally, S&WB noted IWP was notified on April 12, 2012, that it was not an approved pharmacy provider for S&WB's workers' compensation claims and bills submitted by IWP would be denied.

         On June 18, 2015, the OWC judge issued a judgment ordering S&WB to pay the outstanding $13, 110.82 bill from IWP and all outstanding medical expenses owed to Advanced Neurodiagnostic Center "via the fee schedule." The OWC judge awarded Mr. Burgess a $2, 000 penalty and $2, 000 in attorney fees due to S&WB's failure to timely pay these bills. S&WB suspensively appealed the judgment, but only as to the IWP bill.

         The court of appeal affirmed in a 2-1 decision. Burgess v. Sewerage & Water Board of New Orleans, 15-0918 (La.App. 4 Cir. 2/3/16), 187 So.3d 49 ("Burgess I."). In so doing, the Fourth Circuit concluded the choice of pharmacy belongs to the employee, not the employer. 187 So.3d at 57. The court noted La. R.S. 23:1203(A) requires the employer to provide the employee with all necessary prescription medication. Id. at 51. The court of appeal referenced an Alabama case, Davis Plumbing, Inc. v. Burns, 967 So.2d 94 (Ala. Civ. App. 2007), which held the choice of pharmacy under a similar Alabama statute belonged to the employee. Id. at 52. In addition, the court analyzed each Louisiana appellate court case on the subject and the differing outcomes. The court of appeal concluded that Louisiana is overwhelmingly a patient's choice state, observing that twenty-three other states expressly provide for employer choice of treating physician and three limit the employee's choice to a list provided by the state agency. Id. at 57. In addition, the court noted the LWCA contains no provision granting the employer the right to select the pharmacy that the employee must use. To the contrary, the LWCA obligates the employer to pay for the employee's reasonably necessary prescription medication and contains no exception for situations in which the employer objects to the pharmacy the employee selects. Id. The court also rejected S&WB's reliance on La. R.S. 23:1142(B) in an attempt to obtain the benefit of the choice of pharmacy, finding prescription medication is not part of "nonemergency diagnostic testing or treatment" under the statute, and further noting the purpose of the statute is to allow the employer to contest unnecessary or unreasonable medical care, not to allow employers to bargain shop. Id. at 57-58.

         Judge Lobrano dissented, finding a determination of whether the employee is entitled to his choice of pharmacy did not end the inquiry of whether payment of the disputed pharmacy expenses is due or in what amount. Id. at 58. (Lobrano, J., dissenting). She noted IWP is an out-of-state provider, and La. R.S. 23:1203(A) provides in pertinent part, "[m]edical care, services, and treatment may be provided by out-of-state providers or at out-of-state facilities when such care, services, and treatment are not reasonably available within the state or when it can be provided for comparable costs." Further, La. R.S. 23:1203(B) limits the employer's obligation to " determined under the reimbursement schedule...pursuant to R.S. 23:1034.2, or the actual charge made for the service, whichever is less." Id. at 58-59. Judge Lobrano found the record lacked any evidence of whether IWP fit the criteria for a permissible out-of-state provider under La. R.S. 23:1203(A) or any evidence of the reimbursement schedule set forth in La. R.S. 23:1034.2, and the OWC judge erred by failing to consider these issues. Id. at 59. Judge Lobrano opined the case should be remanded to the OWC to determine whether pharmacy expenses are due to IWP as an out-of-state provider, and if so, the amount of expenses due pursuant to the reimbursement schedule. Id.

         S&WB sought supervisory review in this court. While the application was pending, this court rendered its opinion in Lafayette Bone & Joint Clinic v. Louisiana United Business SIF, 15-2137 (La. 6/29/16), 194 So.3d 1112, which addressed, but did not decide, the choice of pharmacy issue. In that case, the claimants, who were injured in the course of their employment, were treated by physicians at the Lafayette Bone & Joint Clinic ("LB&J"). During the course of treatment, the physicians prescribed medications which were dispensed directly to claimants by LB&J employees. 194 So.3d at 1115. On June 5, 2008, the workers' compensation payor, Louisiana United Business SIF ("LUBA"), sent letters to LB&J and its physicians, stating that LUBA would no longer pay for prescription medications directly dispensed by LB&J and directing LB&J physicians to issue future prescriptions to be filled by local retail pharmacies. Despite these notices, LB&J continued to dispense prescription medications directly to claimants throughout 2008 and to submit requests for reimbursement to LUBA. LUBA declined payment, citing its June 5, 2008 notice. LB&J filed a disputed claim with the OWC, seeking to recover the costs of the medications dispensed, along with penalties and attorney fees. Id. After a trial on the merits, the OWC issued judgment in favor of LB&J, but ordered that recovery for medications dispensed after June 5, 2008, was limited by La. R.S. 23:1142(B) to $750 for each claimant. The OWC refused to award attorney fees and penalties in light of LUBA's notice to LB&J. The court of appeal reversed, awarded attorney fees and penalties, and removed the $750 cap. Id. at 1116.

         The majority of this court reversed the court of appeal's modification of the $750 cap and otherwise affirmed. As a threshold matter, this court noted the split in the circuits on the choice-of-pharmacy issue, including Burgess I, but found the evidence presented did not raise a tenable employee choice issue because the evidence and testimony did not establish that the injured employees in these cases made an affirmative choice of LB&J as their prescription medication provider. Id. at 1117-18. However, this court further found the choice-of-pharmacy issue was not dispositive of the $750 cap issue:

Nor would resolution of the choice-of-pharmacy issue be dispositive of the matters before the court. As we have stated, these cases hinge on LSA-R.S. 23:1142(B)'s admonition that a "health care provider may not incur more than a total of seven hundred fifty dollars in nonemergency diagnostic testing or treatment without the mutual consent of the payor and the employee." In these cases, we conclude hereinafter that the plaintiff/health care providers did not have the consent of the payor, LUBA, even if they had obtained the consent of the injured employees, to dispense prescription medications after June 5, 2008.

Id. at 1118.

         This court found LUBA's authorization for the employees to obtain medical treatment from LB&J physicians did not encompass the dispensing of prescription medications by LB&J. Specifically, this court reasoned:

Even though, prior to June 5, 2008, LUBA may have obligated itself to reimburse the plaintiff/health care providers for prescription medications dispensed to injured employee patients during in-office medical treatment by LB & J physicians, LUBA's June 5, 2008 letter notified LB & J and its physicians that it would no longer pay for LB & J dispensed prescription medications; therefore, any ongoing consent to, or authorization of, in-office dispensing of prescription medications by LB & J physicians was terminated.

Id. at 1119.

         This court limited LB&J's recovery to $750 of medication costs after it was notified that it would not be reimbursed for medications it dispensed. Id.

         In light of our decision in Lafayette Bone & Joint, this court granted S&WB's writ application and remanded the case to the court of appeal for reconsideration:

Writ granted. The case is remanded to the Court of Appeal for re-briefing and reconsideration in accord with this Court's decision in Lafayette Bone & Joint Clinic v. Louisiana United Business SIF, et al c/w Lafayette Bone and Joint Clinic v. Guy Hopkins Construction Co., Inc., et al., 15-2137 c/w 15-2138 (La. 6/29/16), ___ So.3d ___.

Burgess v. Sewerage & Water Board of New Orleans, 16-0416 (La. 9/16/16), 206 So.3d 199.

         On remand from this court, the court of appeal reaffirmed its original decision. Burgess v. Sewerage & Water Board of New Orleans, 15-0918 (La.App. 4 Cir. 11/23/16), 204 So.3d 1014 ("Burgess II"). In particular, the court of appeal found Lafayette Bone & Joint was factually distinguishable from the instant case and thus inapposite. 204 So.3d at 1016. As it did in Burgess I, the court found in favor of the employee on the choice-of-pharmacy issue. The court noted Lafayette Bone & Joint involved physician-dispensed medication, a factual situation within the scope of La. R.S. 23:1142(B), whereas this case involved an outside pharmacy dispensing medication. As such, the Burgess II court held that the dispensing of prescription medication does not constitute "nonemergency diagnostic testing or treatment" and thus does not trigger the application of La. R.S. 23:1142(B). Id. at 1016-18.

         Judge Lobrano again dissented based on reasons similar to those in her original dissent regarding out-of-state providers. Id. at 1018. (Lobrano, J., dissenting). Further, because IWP is an out-of-state provider, she also found the instant case distinguishable from Lafayette Bone & Joint, which addressed the applicability of La. R.S. 23:1142(B) to instances in which an in-state provider of pharmaceuticals incurred expenses without the consent of the employer. Id. at 1019.

         S&WB filed a second writ application with this court, which we granted. Burgess v. Sewerage & Water Bd. of New Orleans, 16-2267 (La. 2/24/17), ___ So.3d ___.


         In this case we are initially called upon to determine whether, under the LWCA, it is the injured employee or the employer who is entitled to choose the pharmacy to furnish prescription medications to the claimant. Our decision is premised on the proper interpretation of parts of the LWCA. Such considerations are questions of law and reviewed by this court under a de novo standard of review. Catahoula Par. Sch. Bd. v. Louisiana Mach. Rentals, LLC, 12-2504 (La. 10/15/13), 124 So.3d 1065, 1071. After our review, we "render judgment on the record, without deference to the legal conclusions of the tribunals below. This court is the ultimate arbiter of the meaning of the laws of this state." Id.

         The employer's duty under the LWCA to furnish prescription medication is set forth in La. R.S. 23:1203 ...

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