Augmentation, Inc. v. Debra Harris – Before refusing to pay for prescribed medical treatment, pursuant to a court order in a workers’ compensation case, the employer must implement the utilization-review process or seek judicial review.

While working in the line and scope of her employment at Augmentation, Inc., Debra Harris injured her neck, left shoulder, and back, on April 3, 2011. Two years later Harris sued Augmentation, Inc. for worker’s compensation benefits. The parties reached a settlement agreement that was approved by the trial court on April 3, 2014, with medical benefits to remain open and Augmentation to pay for Harris’ future medical expenses.

In March 2015, Harris brought claims that Augmentation had failed to authorize, approve, and pay for medical treatment that had been prescribed by her treating physician. Specifically, her physician had ordered epidural steroid injections for Harris’ lower back injury. She also alleged that Augmentation had failed to reimburse her for mileage costs to and from appointments. Augmentation sought to and did take Harris’ physician’s deposition to determine whether the treatment, including the epidural injections, he was prescribing were related to Harris’ 2011 injury. Dr. Bailey testified that although Harris’ lumbar symptoms waxed and waned, she had never completely recovered from her 2011 injury. Nevertheless, there was testimony in the record from other physicians that Harris’ symptoms were consistent with an acute lumbar strain rather than a chronic injury.

Upon hearing, the trial court determined that Augmentation was in violation of the April 2014 order by “willfully and contumaciously” failing to provide for the medical treatment prescribed by Harris’ physician. The trial court further found that Augmentation both failed to implement the utilization-review process, set forth in Alabama Code (1975) § 25-5-293(g) that enables an employer to institute a utilization-review program to review claimed medical expenses for reasonable necessity, and failed to seek judicial review before refusing to pay for Harris’ treatment. The court ordered Augmentation to immediately pay for the prescribed medical treatment and awarded damages to Harris. Augmentation appealed to the Alabama Court of Civil Appeals. Augmentation, Inc. v. Debra Harris [Ms. 2150307], — So.3d — (Ala.Civ.App. Sept. 23, 2016).

Augmentation argued on appeal that the trial court erred in concluding that Augmentation had violated the April 2014 judgment; the trial court erred by finding Augmentation liable for Harris’ ongoing and future medical treatment; and the trial court erred by failing to allow meaningful discovery and by failing to conduct a trial on the merits to determine whether Augmentation was required by the April 2014 judgment to pay for Harris’ ongoing and future medical treatment.

1. Whether the Trial Court Failed to Permit Meaningful Discovery and Failed to Conduct a Trial on the Merits of the Dispute

The appellate court found that the trial court conducted four hearings, of which two were evidentiary hearings. It did not find any reversible error related to a failure to permit meaningful discovery.

2. Whether the Trial Court Erred in Determining that Augmentation Violated the April 2014 Judgment

Augmentation contended that the trial court improperly construed the April 2014 judgment to mean that Augmentation had accepted liability for Harris’ alleged injuries and agreed to authorize and pay for Harris’ medical treatment. Augmentation emphasized that the settlement agreement indicated that Augmentation contested Harris’ claim and that its agreement to pay for future medical treatment was subject to medical necessity, causation, and pre-authorization requirements as provided in the Alabama Workers’ Compensation Act. Regardless of any finding of liability, the trial court’s 2014 judgment specifically required Augmentation to provide for Harris reasonable and necessary medical treatment related to her compensable injury. The Alabama Court of Civil Appeals found that the trial court had not erred in construing the April 2014 judgment.

3. Whether the Trial Court Erred by Requiring Augmentation to Pay for All Future Medical Treatment Prescribed by Dr. Bailey

The Alabama Court of Civil Appeals, pulling no punches, stated: “We do not understand the trial court’s judgment to make such a blanket determination,”  in obligating Augmentation to pay for all of Harris’ future medical treatment with Dr. Bailey. (Ms. 2150307, p. 21). Rather the appellate court read the judgment to understand that Augmentation was responsible for paying for Harris’ related future medical treatment, the necessity of which Augmentation could seek to challenge. The 2014 judgment was specifically understood to refer to the prescription to plaintiff of muscle relaxers and anti-inflammatory patches for her chronic lumbar back strain. Therefore, the appellate court found no error by the trial court for determining that Augmentation was required to pay for Harris’ medical treatment that was not specifically provided for in the April 2014 judgment.

4. Whether the Trial Court Erred by Concluding That Augmentation, Inc.’s Decision to Refuse to pay for Harris’ Prescribed Medical Treatment Was Willful and Contumacious

The trial court based its finding of Augmentation’s willful refusal to pay on Augmentation’s failure to prove that it had a valid reason to believe that the treatment Dr. Bailey prescribed was not reasonable and necessary at the time Augmentation refused to pay for the treatment. The trial court found that Augmentation had not properly investigated or challenged its obligation to pay for the prescribed medical treatment before declining to pay, and as a result had no evidence whereby it could decline payment. The appellate court reflected that sanctions for contempt, such as those imposed against Augmentation, should not be implemented where there is a valid reason for the employer to question its liability to pay for medical expenses, but if the employer has willfully and contumaciously refused to provide medical expenses, such sanctions are warranted. See Travelers Indem. Co. of Illinois v. Griner, 809 So.2d 808, 814 (Ala. 2001); see also Ex parte Cowgill, 587 So.2d 1002, 1004 (Ala. 1991).

The Alabama Court of Civil Appeals found that Augmentation had immediately questioned Dr. Bailey about the necessity of the epidural steroid injection, and after Dr. Bailey responded with a note, Augmentation did not do any further investigation before refusing to pay for the injection. Augmentation had also refused to pay for muscle relaxers and anti-inflammatory patches for more than a year, without having sought information pertaining to the necessity of those prescribed treatments. The appellate court also noted Augmentation’s failure to implement the utilization-review process or seek judicial review. Thus, the trial court had not abused its discretion by finding that Augmentation’s failure to pay for Harris’ medical treatment was willful and contumacious.

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