ALJ Cannot Determine Rights Under Contracts for Medical Services

An administrative law judge cannot determine rights under contracts for medical services, according to a recent decision from the Benefits Review Board. 
 
In Watson (Wardell Orthopaedics) v. Huntington Ingalls Industries, the employer voluntarily paid all benefits arising from the claimant’s knee injury, including medical benefits.  However, the employer paid one provider less than half its claimed invoice, alleging that a series of contracts the employer had with its health insurance company and that insurer’s affiliates allowed it to pay reduced fees for the medical provider’s services.  Over the employer’s objection, the administrative law judge determined she had authority over the dispute.  The employer filed an interlocutory appeal to the Benefits Review Board.

The Board began its analysis of the issue presented by recognizing that Section 19(a) of the Act grants an ALJ “full power and authority to hear and determine all questions in respect of such claim.”  This statute has been interpreted as allowing an ALJ to hear and determine contractual issues that are necessary to the resolution of a claim.  For example, an ALJ may determine rights under a workers’ compensation insurance policy.  However, the U.S. Fifth Circuit Court of Appeals has held that Section 19(a) does not grant jurisdiction for an ALJ to consider contractual issues wholly unrelated to a claim for compensation. 
 
The Board determined that the ALJ could consider the amount of fees due to the medical provider, but could not adjudicate whether the contracts with the health insurer entitled the employer to reduced fees.  The Board found that the primary issue before the ALJ was the amount of fees to which the medical provider was due.  The Board recognized that the medical provider could bring its own claim for these fees, and the ALJ had the authority to determine the amount of the fees at the prevailing community rates.  However, the Board held that interpreting the contracts the employer had with its health insurer was not “in respects” of a claim, and could not be considered by the ALJ.  According to the Board, “[i]nterpretation of these contracts goes beyond that which is necessary to resolve the claim under the Act.”

Watson (Wardell Orthopaedics) v. Huntington Ingalls Industries, BRB No. 16-0545 (6/30/17).