Ariz. Appeals Court: Vendor-Reviewed Bills Standard in Workers’ Comp Industry

September 21, 2010

The Arizona Court of Appeals has affirmed a 2008 Maricopa County Superior Court decision that SCF Arizona paid a “reasonable amount” to two ambulatory surgical centers, rejecting their argument that SCF violated state law by using a bill reviewer to recommend what to pay.

Canyon Ambulatory Surgery Center and El Dorado Surgery Center (now known as Tucson Surgery Center) sought to force SCF, the state’s leading workers’ compensation carrier, to pay 100 percent of their billed charges, while SCF believed those billed charges were somewhat fictitious.

According to SCF, the dispute arose over payments determined by an outside vendor. The workers’ compensation insurer said it reviews medical bills for reasonableness where the reimbursement amounts are not established by a negotiated contract or by the Industrial Commission’s Medical Fee Schedule. The use of an outside vendor, such as Qmedtrix, to assist in reviewing such bills is standard within the insurance industry, it says.

SCF had paid the two surgery facilities $3.59 million for services rendered to injured workers. Those payment amounts were recommended by Qmedtrix.

The surgical centers then sued SCF seeking an additional $4.69 million, asking the court to rule that their billed charges were reasonable, although Canyon accepts 30 percent or less of billed charges from 82 percent of its payers, and El Dorado accepts 24 percent or less from 89 percent of its payers. SCF paid almost twice those amounts.

The centers appealed Judge Edward Burke’s ruling in which he wrote: “This court finds that [Canyon Surgery Center and El Dorado Surgery Center] have received the reasonable value of their services from SCF, if not more.” The Court of Appeals ruled in favor of SCF.

SCF Arizona General Counsel William Sheldon said, “This not only impacts workers comp carriers, but also the employers who ultimately pay the price of medical inflation in the comp system.”

“This ruling affirms the trial court’s finding that SCF’s payments, which are based on recommendations from Qmedtrix, are reasonable,” said attorney Mark Worischeck of Sanders & Park. “With this ruling, we now have four Arizona judges telling ambulatory surgery centers that they are not permitted to force their unreasonable and unregulated charges on workers’ compensation carriers in the State of Arizona.”

Jim Craft, an attorney for the surgery centers, said he plans to appeal the ruling to the Arizona Supreme Court.

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