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Employers Group Spreading Word That Burgess Puts Medical Costs in Crosshairs

  • State: Louisiana
  • Topic: Top
  • - Popular with: Legal
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There's a new sheriff in town who won't allow price gouging on medications, or loopholes for exorbitantly priced, repackaged drugs. And soon, he'll be coming after high prices charged by outpatient clinics.

That's the message that some of Louisiana's heavyweight insurance defense attorneys will be spreading Monday at the Burgess Supreme Court Legacy Seminar in Baton Rouge, hosted by the Louisiana Association of Self Insured Employers, also known as LASIE. 

"We're telling employers that they need to put injured workers and physicians on notice that they're not going to be allowed to control who the pharmacy is, and employers need to hire a pharmacy benefits manager and take control of the pharmacy and the costs," said Matt Tierney, a Baton Rouge workers' compensation defense attorney who will speak at the seminar.

"Part of the purpose of the seminar is to show how the Burgess ruling can be used in litigation going forward, with respect to outpatient clinics," said New Orleans defense attorney Wayne Fontana, who led the winning side in Burgess v. Sewerage and Water Board of New Orleans.

In the landmark case, the Louisiana Supreme Court decided last June that state law allows employers to choose the pharmacy for the injured worker. It came after years of legal skirmishes, led by LASIE and employers. The self-insurer's group says the ruling signals a new look at workers' compensation laws in Louisiana, which for years have been interpreted more liberally in favor of workers, defense attorneys said. 

The ruling also opened up a new line of legal argument by declaring that reasonableness of medical costs are a crucial consideration in determining whether reimbursements are fair, Fontana said. 

At its core, Fontana said, the decision closed a giant loophole in Louisiana law. The state Legislature in 2011 attempted to rein in costs, and a state fee schedule limits reimbursement for medications to $750, unless higher costs are pre-approved by the payer.

But the schedule did not address re-packaged medications, and some providers were taking advantage of that by buying drugs at regular prices, repackaging them, putting new drug codes on them and charging workers' compensation carriers 10 to 12 times more, Fontana said.

The case began when Water Board worker Darvel Burgess injured his back in 2008. Although the Water Board had required Burgess to use a local pharmacy, he instead utilized Massachusetts-based Injured Workers' Pharmacy, a mail-order company. The bill for the pain medications topped $13,100, and the Water Board refused to pay.

Burgess filed suit, a workers' compensation judge sided with him and the Water Board appealed. Eventually, the state Supreme Court overruled an appeals court in the case and noted that state law grants the employee a choice of physician, but does not use the more expansive term "health care provider."

Based on that, the court said that the employer, not the employee, has the choice of pharmacy.

Already, employers may be feeling some relief because of the ruling. 

"We don't have any hard data yet, but anecdotally, yes, we're hearing from employers that medication costs are going down," said Gary Patureau, executive director of LASIE.

"If it had gone the other way, things would have been drastically worse for workers' compensation costs," Fontana said.

The high court also noted in the case that reasonable costs are an important consideration for any type of medical treatment, which opens the door for a legal attack on outpatient costs, Fontana said. Louisiana limits reimbursements to inpatient facilities on a per-diem basis, but outpatient centers get 90% of whatever they want to charge, with no ceiling, something that has sparked fury among employers and their insurers, he said. 

"There have been some outrageous demands by outpatient facilities," he said. "So, at some point, the court will have to review that and decide if outpatient charges are reasonable."

“Using the Burgess decision, payers can say, 'I’m not going to approve this fee at this facility when I have access to other facilities that will charge a fraction of that,'” Metarie defense attorney Jeff Napolitano, who also will speak at the seminar, said last year. “It gives the payer the power of the free market. They now have to compete on price.”

Also speaking at the seminar will be Metairie attorney Patrick Robinson, a former workers' compensation judge and former director of the state Office of Workers' Compensation. He noted that the seminar and other efforts may be needed to spread the word to employers about the far-reaching effect of the Burgess ruling. Only one court has cited Burgess in decisions in the 10 months since it was handed down.

"I don't know if that's a reflection of the fact that more cases haven't been litigated, or if we need to be more aggressive in educating people on what Burgess means," he said.

Denis Juge, Napolitano's law partner and a director in the firm Juge, Napolitano, Guilbeau, Ruli & Frieman, will also speak Monday. He is the author of "Louisiana Workers' Compensation," published by Lexis, and is a former adjunct professor with the Loyola University School of Law. 

The price of admission is $75, and the seminar counts for three hours of continuing education for attorneys, Patureau said. More information is available at LASIE.org.

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