A Medical Provider’s Trash is an Insurer’s Treasure

In a recent ruling in the matter of Powell v. Automatic Equipment Sales of Norfolk, Inc., JCN 1961810 (Nov. 30, 2021), the Full Commission affirmed the Deputy Commissioner’s Opinion that the medical provider application at issue was barred by the doctrine of laches.

In Powell, the claimant suffered an injury by accident on May 11, 1999, and was awarded medical benefits and temporary total disability for periods of disability through January 15, 2001.

On July 5, 2020, the medical provider sought payment for services provided to the claimant in February, September, and October 2000. In their defense, the defendants argued that the doctrine of laches barred the application as the medical records pertaining to the medical care in question had been destroyed prior to filing the application pursuant to the provider’s document retention policy.

Discovery depositions of the medical provider’s practice manager and the insurer’s claims manager revealed that not only had the pertinent medical records been destroyed years before the medical provider application was filed, but that the minimal amount of medical bills only allowed the adjuster to establish that the bills were not paid as they were originally billed – but did not establish an underpayment.

The provider argued that under the Commission’s precedent in Ceres Marine Terminals v. Armstrong, 59 Va. App. 694, 703 (2012), the medical bills are prima facie evidence that the charges are reasonable. The Commission in Powell referenced the finding in Curro/Va. Spine Inst. v. Fairfax (City of) Police, JCN 2249752 (Nov. 9, 2011), where it was found that the medical bills support that the charges are reasonable – and that should be considered by the fact-finder along with other evidence. The Commission opined in pertinent part that:

Although the absence of medical records may not necessarily impact the medical provider’s prima facie evidence that the charges were reasonable as it pertains to the prevailing community rate at the time, the medical provider’s billing evidence does not provide sufficient information to adequately address the requisite issues of medical causation or necessity of the claimant’s treatment, which prompted the charges. Due to the medical provider’s delay in filing the application, the defendants were no longer able to request the medical records to fully prepare their defense to the medical provider’s application.

Ultimately, the Commission agreed with the Deputy Commissioner’s decision finding that “the medical provider’s destruction of the pertinent medical records demonstrates an abandonment of its claim against the defendants and prejudice to the defendants.”

While it is anticipated that counsel for medical providers will adapt their approach given the ruling in Powell, this is a significant win for insurers given that there are likely some existing cases to which this ruling is applicable. Our firm is already reviewing our pending medical provider cases in order to assess whether the Commission’s recent ruling has any bearing on those matters and are updating our clients accordingly.

Click here to read the full Opinion.

Should you have any questions about the issues discussed here or other legal issues, please do not hesitate to contact the lawyers at Ford Richardson.

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