The process of filing insurance claims can be time-consuming, demanding careful attention from all parties involved. In a recent ruling by the First Circuit Court of Appeal in Louisiana, the importance of timely and exhaustive pursuit of administrative remedies before seeking judicial review in insurance payment disputes was underscored. The case of Southern Framers of Louisiana, LLC (Southern Framers) sheds light on the consequences of premature legal action, emphasizing the need to explore alternative avenues, such as administrative proceedings, before resorting to the courts. Through an examination of Southern Framers’ dispute with a healthcare provider, this ruling serves as a valuable reminder for future litigants to exhaust administrative remedies diligently and consider the proper timing and procedures in pursuing legal recourse.
After Rafael Diaz (Mr. Diaz) injured his shoulder during the scope of his employment with Southern Framers, he underwent rotator cuff surgery which Dr. Richard Texada performed at Doctor’s Hospital of Slidell d/b/a Sterling Surgical Hospital (Hospital). Following Mr. Diaz’s surgery, the Hospital sent a bill for $33,133.41 to Southern Framers’ insurance carrier Louisiana Homebuilders Association-Self Insured Fund (Carrier). On behalf of Southern Framers, the Carrier paid $8,887.80 to the Hospital, indicating what they believed was a “reasonable reimbursement for services” in Mr. Diaz’s surgery. As a result, the Hospital filed an administrative review according to their rights within Louisiana Administrative Code Title 40, pt. I, § 5149 (Title 40), for this underpayment of the Hospital’s services.
Neither Southern Framers nor the Carrier responded to the administrative review. Instead, they filed a “Disputed Claim for Compensation” with the Office of Workers’ Compensation (OWC), stating that the unpaid portion of the original $33,133.41 bill was unreasonable. Southern Framers took this claim further, alleging that even the $8,887.80 previously paid to the Hospital by the Carrier was an overpayment and demanded reimbursement. The Hospital responded to the OWC complaint, raising multiple objections, including prematurity, and disputing the claims for reimbursement. At the hearing, the OWC judge sustained the Hospital’s prematurity objection, finding that Southern Framers and the Carrier failed to follow the administrative remedies of Title 40. The OWC judge called this claim “an attempt to circumvent the procedure that’s supposed to streamline and make the payments go quicker and faster without going through the hearing process.”
Southern Framers subsequently appealed the OWC decision, arguing that the administrative remedies in Title 40 are limited to the healthcare provider and are thus not available for the employer-payor. Based on this, Southern Framers claimed that the OWC committed a reversible error in dismissing its claim for failure to follow the Title 40 remedies. After reviewing Southern Framer’s arguments on appeal, the First Circuit Court acknowledged the provider verse payor distinction in Title 40, which indicates that the payor has no independent entitlement to seek administrative review. However, the First Circuit Court pointed out that the Hospital has invoked its right to pursue administrative remedies. So, the First Circuit Court concluded that judicial review of Southern Framers’ claims before an administrative review would “thwart the purpose” of the Title 40 remedies. Moreover, Southern Framers’ claims could eventually be resolved through administrative proceedings. Therefore, the First Circuit Court affirmed the OWC decision to grant the Hospital’s prematurity objection.
Of note to future litigants, this decision highlights the importance of diligently attempting to resolve claims through alternative means, like administrative proceedings, before heading to court. Courts may be unwilling to hear claims that are premature or untimely in some other manner, so proceed accordingly.
Written by Berniard Law Firm Blog Writer: Gina McKlveen
Other Berniard Law Firm Articles on Prematurity: What is a ‘dilatory exception for prematurity,’ and how does it change the course of a case or controversy?