In this case, the Supreme Court of Minnesota held that when a medical provider has not been put on notice of its right to intervene, it is not entitled to automatic payment of unpaid charges unless it shows that the lack of notice resulted in prejudice.
The employee claimed that as a result of a work-related low back injury, he was entitled to various workers’ compensation benefits including a low back fusion surgery. The employer and insurer denied that the surgery was reasonable, necessary, or causally related to the work injury. The employee underwent the fusion surgery two months before the scheduled workers’ compensation hearing. His health insurer paid Lakeview Hospital. The health insurer and various providers were put on notice of right to intervene, but the parties did not realize that Lakeview Hospital had not been put on notice. The compensation judge found that the fusion surgery was related to the work injury, but, citing the IME as well as inaccuracies in the treating surgeon’s report, the judge also found that the surgery was not reasonable and necessary. He ordered the Employer and Insurer to reimburse the health insurer for the payments it had made toward the surgery, and further held that the Employer and Insurer could then seek reimbursement from the providers for the unreasonable and unnecessary surgery.
As ordered, the Employer and Insurer reimbursed the health insurer and filed a Medical Request, seeking reimbursement from the providers. Lakeview denied that it was required to reimburse the Employer and Insurer, and further argued that pursuant to the 1979 Minnesota Supreme Court case of Brooks v. Hendrickson, it was automatically entitled to full payment of its Spaeth balance because the parties had failed to put Lakeview on notice of its right to intervene. A second hearing was held in front of the compensation judge, at which Lakeview presented additional evidence regarding the reasonableness and necessity of the surgery. The compensation judge again held that the surgery was not reasonable and necessary, and Lakeview appealed to the WCCA. The WCCA reversed the compensation judge and found that the Brooks automatic reimbursement rule applied. Because the parties had failed to put Lakeview on notice of its right to intervene, Lakeview was automatically entitled to full payment of its Spaeth balance, regardless of whether or not the surgery was reasonable or necessary. The Employer and Insurer appealed.
The Supreme Court of Minnesota reversed the WCCA’s opinion. The Court agreed with the Employer and Insurer’s argument that Brooks and subsequent cases could be distinguished. In Brooks and in other Minnesota Supreme Court cases, the parties intentionally excluded a health or disability insurer from settlement negotiations. The Court’s aim in Brooks had been to motivate the parties to include such parties in settlement negotiations. The Court provided two main reasons why Brooks should not be extended to Gamble or other cases where a provider was not put on notice before a hearing on the merits.
First, at the time Brooks was decided in 1979, intervenors and potential intervenors had no remedy to protect their interests when they were excluded from settlement negotiations. Since Brooks, a system of rules and penalties has been promulgated to protect the rights of intervenors and potential intervenors. These rules adequately protect the rights of an interested party such as Lakeview, such that application of the Brooks automatic payment provision is unwarranted.
The Court’s second main reason for declining to extend Brooks was that Lakeview was not prejudiced by its absence from the first hearing. In Brooks, the health insurer was excluded from a settlement, and so it was faced with the burden of proving work-relatedness without the employee’s cooperation. In Gamble, the employee had already established work-relatedness at the first hearing. At the second hearing, the compensation judge revisited the reasonableness and necessity issue de novo, and Lakeview had an opportunity to present new evidence. As such, Lakeview’s interests were protected and not materially prejudiced.
Because WCCA reversed the compensation judge on the Brooks issue, it had not addressed Lakeview’s argument that the compensation judge’s findings regarding reasonableness and necessity were unsupported by substantial evidence. Thus, the Supreme Court remanded the case to the WCCA for consideration of this portion of Lakeview’s appeal. The deferential Hengemuhle standard of review will apply to this portion of Lakeview’s appeal.