TOYOTA MOTOR MANUFACTURING, KENTUCKY, INC. VS. LAWSON (STEPHANIE), ET AL.
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RENDERED: NOVEMBER 6, 2009; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-002386-WC
AND
NO. 2009-CA-000064-WC
TOYOTA MOTOR MANUFACTURING,
KENTUCKY, INC.
v.
APPELLANT/CROSS-APPELLEE
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-02-71165
STEPHANIE LAWSON
APPELLEE/CROSS-APPELLANT
AND
HON. JOHN W. THACKER AND
HON. JOE W. JUSTICE,
ADMINISTRATIVE LAW JUDGES, and
WORKERS’ COMPENSATION BOARD
APPELLEES/CROSS-APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: LAMBERT, MOORE, AND VANMETER, JUDGES.
MOORE, JUDGE: Toyota Motor Manufacturing USA, Inc., appeals from an
opinion and order of the Workers’ Compensation Board, reversing an opinion and
order of an Administrative Law Judge (ALJ) finding a knee surgery, proposed by
Appellant Stephanie Lawson, to be non-compensable on the ground that it was not
reasonable and necessary for the cure and relief of Lawson’s work-related injury.
The Board reversed the ALJ based solely upon its conclusion that Toyota had
failed, as required, to reopen the underlying award and file a separate medical fee
dispute within thirty days of its denial of Stephanie Lawson’s proposed surgery
through its utilization review procedure.
In addition to Toyota’s petition, Lawson cross-petitions this Court,
arguing the ALJ’s finding that her proposed surgery was unreasonable and
unnecessary was not supported by substantial evidence.
As to Toyota’s appeal, finding the Board committed error, we reverse.
Regarding Lawson’s cross-appeal, we remand to the Board for further findings.
I. STATEMENT OF FACTS
On November 13, 2001, while working for Toyota, Lawson sustained
an injury to her right knee, due to deep squatting and long periods of sitting, stair
climbing and getting in and out of cars. This matter was initially resolved via a
settlement agreement approved on July 13, 2005.
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On or about August 20, 2007, Mark G. Siegel, M.D., Lawson’s
treating orthopedic doctor, requested preauthorization from Toyota to perform a
lateral retinacular reconstruction on Lawson’s right knee. Toyota referred Dr.
Siegel’s request to GENEX Services, Inc. for utilization review (i.e., to review the
requested health care services for medical necessity and appropriateness). In its
report, dated August 27, 2007, GENEX recommended that Toyota approve
Lawson’s proposed surgery.
On September 12, 2007, Lawson moved to reopen her award for the
purpose of seeking Temporary Total Disability (TTD) and Permanent Disability
(PD) income benefits, based upon the worsening of her injury. In relevant part, the
motion stated that:
2. After the workers’ compensation settlement was
approved, the Plaintiff continued treating with her
treating orthopedic surgeon, Dr. Mark G. Siegel.
Plaintiff’s work-related injury has worsened to the extent
that Dr. Siegel has now recommended additional surgical
intervention. Once Plaintiff undergoes said surgical
intervention, the Plaintiff anticipates that she will not be
at maximum medical improvement and will be
temporarily totally disabled. Furthermore, the Plaintiff
anticipates that her condition has worsened to the extent
that she is now entitled to additional permanent disability
benefits. Subsequently [sic], Plaintiff moves to reopen
her workers’ compensation claim for a worsening of her
work-related injury.
On September 13, 2007, Lawson served her motion upon Toyota and
the Office of Workers’ Claims. On that same date, Irene Slater at GENEX called
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Dr. Siegel and said the case had been extended pending an independent medical
evaluation.
On September 20, 2007, Martin G. Schiller, M.D., evaluated Lawson
for an independent medical examination on behalf of Toyota. His report
recommended against further surgery on Lawson’s knees. Subsequent to the
independent medical examination, Lawson’s proposed surgery was cancelled.
On October 8, 2007, Toyota filed a response denying the claims
asserted in Lawson’s motion to reopen her award.
On October 22, 2007, Lawson’s motion to reopen her award was
sustained to the extent the claim was reopened and assigned to an ALJ for further
adjudication. At the March 12, 2008 benefit review conference, Lawson and
Toyota identified as contested issues “the medical fee dispute/compensability of
surgery” and “TTD.”
On May 23, 2008, the ALJ dismissed Lawson’s claims. Specifically,
the ALJ held that
the [surgery] recommended by Dr. Siegel is not
reasonable or necessary for the cure and/or relief of the
claimant’s work injury. Accordingly, the Administrative
Law Judge finds in favor of the defendant/employer on
the medical fee dispute. And, as the medical fee dispute
is decided in favor of the defendant/employer, no income
benefits for temporary total disability are payable.
On June 4, 2008, Lawson petitioned for reconsideration and argued
that Toyota had waived its right to contest the compensability of her proposed
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surgery because it had failed to timely reopen her award for the purpose of filing a
medical fee dispute. Her petition was denied on July 7, 2008.
Subsequently, Lawson appealed the ALJ’s May 23, 2008 order
denying compensability of her proposed surgery and TTD and the ALJ’s July 7,
2008 order denying reconsideration to the Board.
On November 20, 2008, the Board reversed the ALJ’s July 7, 2008
order with regard to the medical fee dispute, holding that, in order to contest
Lawson’s proposed surgical procedure, Toyota had a burden to timely file a motion
to reopen Lawson’s award within thirty days of August 27, 2008, which date was
the conclusion of Toyota’s utilization review process. Finding Toyota failed to do
so, the Board held that Toyota obligated itself to pay for her proposed surgery
regardless of any question of reasonableness or necessity. With regard to
Lawson’s claim for TTD, the Board remanded this issue to the ALJ for further
findings.
Toyota now appeals, contending that: 1) it had no obligation to reopen
Lawson’s claim and file a medical fee dispute within thirty days of the utilization
review; 2) if such obligation existed, Lawson waived it as an issue by not raising it
prior to the hearing in the matter; and 3) Lawson’s own filing to reopen her claim
made said obligation moot. In addition, Lawson cross-appeals, contending that
there was not sufficient evidence to support the ALJ’s finding that her proposed
surgery was unreasonable and unnecessary.
II. STANDARD OF REVIEW
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When we review a decision of the Worker’s Compensation Board, we
will only reverse the Board’s decision where the Board has overlooked or
misconstrued the controlling law or so flagrantly erred in evaluating the evidence
that a gross injustice has occurred. Daniel v. Armco Steel Co., 913 S.W.2d 797,
798 (Ky. App. 1995). Ultimately, we must review the ALJ’s decision to
accomplish this.
Regarding the ALJ’s decision, the Supreme Court of Kentucky has
held that when the ALJ finds in favor of the party with the burden of proof, then
the reviewing court will affirm the ALJ’s decision if it is supported by substantial
evidence. Special Fund v. Francis, 708 S.W.2d 641, 643 (Ky. 1986). However, if
the ALJ finds against the party with the burden of proof, then the reviewing court
may only reverse if the evidence compels a finding in the favor of the party with
the burden of proof. Daniel, 913 S.W.2d at 800; see also Lee v. Int’l Harvester
Co., 373 S.W.2d 418, 420-21 (Ky. 1963). In addition, as the finder of fact, the
ALJ, not this Court and not the Board, has sole discretion to determine the quality,
character and substance of the evidence. Whittaker v. Rowland, 998 S.W.2d 479,
481 (Ky. 1999) (quoting Paramount Foods, Inc. v. Burkhardt, 695 S.W.2d 418,
419 (Ky. 1985)). Not only does the ALJ weigh the evidence, but the ALJ may also
choose to believe or disbelieve any part of the evidence regardless of its source.
Whittaker, 998 S.W.2d at 481 (quoting Caudill v. Maloney’s Discount Stores, 560
S.W.2d 15, 16 (Ky. 1977)).
III. ANALYSIS
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We turn first to Toyota’s contention that the Board erred in reversing
the ALJ. Lawson contends, and the Board found, that the ALJ erred in making any
determination on the subject of a medical fee dispute because Lawson reopened
her award only on the ground that her condition had worsened. In order to bring
the issue of a medical fee dispute before the ALJ, Lawson asserts that it was
necessary for Toyota to have separately reopened her award for that purpose and
that incorporating the issue into her reopening was improper. We disagree.
We begin by stating that Lawson’s filing of a motion to reopen in
order to allege a worsening of her condition did not, by itself, operate to place the
issue of a medical fee dispute before the ALJ. In the recent case of Bartee v. Univ.
Med. Ctr., 244 S.W.3d 91 (Ky. 2008), the Supreme Court of Kentucky held that an
employer’s motion to reopen a workers’ compensation case to dispute certain
medical expenses does not place the issue of TTD before the ALJ. In Bartee, the
employee moved to reopen the case for a ruling on the question of entitlement to
TTD. That motion was denied as having been filed outside the time limitations set
forth in KRS 342.125(3) and (8). The benefit review conference memorandum
listed the sole issue as “medical fee dispute/compensability of surgery.”
Thereafter, the claimant asserted in her brief not only that the surgery was
compensable but also that she was entitled to TTD benefits from the date of the
surgery until her return to work. The ALJ awarded TTD benefits because he
believed it was a natural extension of the medical dispute. Alternatively, the ALJ
concluded that the principles of waiver and estoppel precluded the employer from
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objecting to the TTD award. The Board affirmed the ALJ’s award based upon
different reasoning.
In reversing, the Supreme Court held that 1) the employee had not
properly sought to invoke the jurisdiction of the ALJ to rule on the issue of TTD;
and 2) the principles of waiver and estoppel did not preclude the employer’s
objection to the TTD award because no evidence in the record demonstrated that
the employer either intentionally relinquished a known right, led the claimant to
believe that she would receive TTD benefits, or engaged in other conduct that
would warrant an equitable remedy.
The facts of the instant case are similar to those considered by the
Supreme Court in Bartee; the employee sought reopening of a claim to allege a
worsening of her condition and to affect her entitlement to permanent disability
and TTD on the ground of an anticipated surgery. The employer did not properly
follow statutory mandates for disputing the medical expense of the anticipated
surgery; instead, the issue of the medical fee dispute was “piggy-backed” onto the
employee’s motion. The ALJ allowed the issue of the medical expense dispute to
be heard and held the medical expense to be unnecessary. Finally, in reversing, the
Board held that the employer had failed to timely reopen the employee’s award.
However, the facts of the instant case are distinguishable from Bartee
because, upon careful review of the record, the issue of the medical expense
dispute was tried before the ALJ by consent of both parties. In Bartee, the issue of
TTD was never identified as contested at the benefit review conference, was held
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barred by the statute of limitations, and was raised for the first time in the
claimant’s brief before the ALJ. Here, Lawson referred to the proposed surgery
that was the subject of the ensuing medical expense dispute in her motion to
reopen and cited it as the basis for the additional TTD she was requesting. At the
March 12, 2008 benefit review conference, the parties identified the issue of
“medical fee dispute/compensability of surgery” and listed it as a contested issue.
Both parties extensively briefed the issue of the reasonableness and necessity of
the surgery before the ALJ. Finally, following the ALJ’s decision, Lawson stated
in her petition for reconsideration that “[Toyota] never filed a medical fee dispute
and instead forced [Lawson] to file a motion to reopen to seek the medical
treatment.”
In light of the above, it is disingenuous for Lawson to have placed the
issue of the medical fee dispute before the ALJ by briefing it and identifying it as a
contested issue at the benefit review conference and then argue that Toyota’s
failure to separately reopen her award precluded the ALJ from determining the
issue of the medical fee dispute. Moreover, in Lawson’s own words, it was
Lawson, and not Toyota, who “[moved] to reopen to seek the medical treatment.”
For reasons of equity, we hold that the medical fee dispute herein is the product of
a prospective motion by Lawson to compel Toyota to authorize medical treatment.
There is certainly nothing that prohibits an employee from preserving her rights by
filing a prospective motion, supported with a report from her treating physician, in
order to compel an employer to authorize medical treatment. See Bartee, 244
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S.W.3d 91. As such, however, it was unnecessary for Toyota to separately reopen
her award as Lawson had already done so, or consented to do so, for that purpose.
Next, Lawson contends that even if her claim was reopened for
purposes of a medical fee dispute, our holding in Phillip Morris, Inc. v. Poynter,
786 S.W.2d 124 (Ky. App. 1990), interpreting the mandates of KRS 342.020(1),
nevertheless estopped Toyota from contesting her proposed surgery. We disagree.
In relevant part, KRS 342.020(1) provides “[t]he employer, insurer, or
payment obligor acting on behalf of the employer, shall make all payments for
services rendered to an employee directly to the provider of the services within
thirty (30) days of receipt of a statement for services.” In Phillip Morris, we noted
that “we have reviewed KRS Chapter 342 and do not find any direct expression of
a procedure to be followed in [medical fee disputes].” We also considered the
Supreme Court’s decision in Westvaco Corp. v. Fondaw, 698 S.W.2d 837, 839
(Ky. 1985), wherein that Court required employers who wish to challenge a
medical or drug bill to file a motion to reopen. In construing both the statute and
the Supreme Court’s holding together, we held that
[w]ithout some penalty for failing to comply with its
dictates, Westvaco would be effectively negated. We do
not think that the Supreme Court intended that its opinion
become so much surplusage. As a result, we conclude
the board was correct in finding that [the employer]
waived whatever objection it might have had to the bills
submitted by [the employee] since no motion to reopen
was filed.
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Phillip Morris, 786 S.W.2d at 125. Consequently, this Court interpreted KRS
342.020(1) to mean that an employer has thirty days in which to pay the bill for
services rendered to an employee and that failure to do so forecloses the employer
from challenging it. Id.
Our 1990 holding in Phillip Morris, however, referred to only the dual
circumstances of services rendered to an employee and a bill for those services
received by an employer. It derived from our interpretation of the plain language
of KRS 342.020(1), which language, to date, remains unchanged. Moreover, our
holding in that case could not have considered or implicitly incorporated the issues
of utilization review or the regulations regarding preauthorization of medical
treatment upon which Lawson now relies because, at that time, they did not exist.
As part of the 1994 workers' compensation reform, KRS 342.035 required the
commissioner of the Department of Workers' Claims to promulgate administrative
regulations governing medical provider utilization review activities conducted by
an insurance carrier, group self-insurer or self-insured employer. Both Lawson and
the Board rely upon 803 KAR 25:190, which resulted from KRS 342.035. That
regulation, requiring every individual self-insured employer, group self-insurance
fund and insurance carrier to implement a utilization review and medical bill audit
program and submit a written plan describing the program to the commissioner for
approval, became effective September 19, 1995.
To summarize, the legislature has not incorporated the subject of
preauthorization for medical treatment into the plain language of KRS 342.020.
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Under that statute, the executive director of the Office of Worker’s Claims is
limited only to “promulgat[ing] administrative regulations establishing conditions
under which the thirty (30) day period for payment [for services rendered to an
employee] may be tolled.” Westvaco mandates only that the burden is on an
employer to timely challenge a medical bill for services rendered. Finally, our
holding in Phillip Morris did not consider issues of utilization review or
preauthorization. As such, we decline to expand our holding in Phillip Morris to
allow for estoppel under the circumstances of this case because 1) services have
not been rendered; and 2) there is no bill. We restate that an employee may
preserve her rights by filing a prospective motion, supported with a report from her
treating physician, in order to compel an employer to authorize medical treatment.
See Bartee, supra. Absent a bill for services rendered, however, there is nothing to
support that an employer is estopped from denying that medical treatment.
The Board may have thought that Lawson’s further contention, i.e.,
that the ALJ’s decision was not supported by substantial evidence, was necessarily
resolved by its conclusion that Toyota was estopped from contesting her surgery.
While the Board’s opinion recites roughly twenty pages of facts regarding the
evidence submitted in this case, it relied exclusively upon its conclusion that
Toyota was estopped from contesting Lawson’s surgery and altogether failed to
address the issue of whether the ALJ’s decision was based upon substantial
evidence. But we have found the Board’s conclusion to be in error. The issue of
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the medical fee dispute was properly before the ALJ and not barred on grounds of
estoppel.
We express no opinion on whether the ALJ’s decision was supported
by substantial evidence. KRS 342.290 mandates that a “decision of the board shall
be subject to review by the Court of Appeals.” Here, the Board has made no
decision regarding whether the ALJ’s denial of Lawson’s proposed surgery was
supported by substantial evidence, and “a reviewing court, circuit or appellate, may
not substitute its judgment for that of the Board.” American Bakeries Co. v.
Hatzell, 771 S.W.2d 333, 334 (Ky. 1989).
We therefore REVERSE the Board’s decision that Toyota was
estopped from contesting Lawson’s proposed surgery and REMAND to the Board
for further proceedings. On remand, the Board must resolve the issue of whether
the ALJ’s denial of Lawson’s proposed surgery was supported by substantial
evidence.
ALL CONCUR.
BRIEF FOR APPELLANT/CROSS
APPELLEE:
BRIEF FOR APPELLEE/CROSS
APPELLANT:
H. Douglas Jones
Kenneth J. Dietz
Florence, Kentucky
Charles W. Gorham
Lexington, Kentucky
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