Fernald v. Shaw’s Supermarkets, Inc., et al.

Background:
In this case (and its companion case, Babine v. Bath Iron Works), the employers argued that in the absence of a fee schedule for facility charges pursuant to 39-A M.R.S.A. §209(1), they should have been allowed to challenge the reasonableness of Central Maine Orthopedics’ (CMO) charges. While a fee schedule has been established for professional services in Board Rule Chapter 5, the Rule does not apply to facility charges. Section 209(2) provides that a provider must be paid its usual and customary charge.

The employers argued that they should either be allowed to provide expert testimony that the facility charges were excessive or should have been granted discovery to inquire into amounts that CMO receives from private third-party insurers for the same services. Both of these requests were denied in each case. CMO argued that the charges it is required to publish pursuant to Title 22 of the Maine Revised Statutes are conclusive proof of its usual and customary charge.

The hearing officer agreed with CMO and granted the Petitions to Fix. The hearing officer then referred both decisions to the full Workers’ Compensation Board for review. After the Board failed to reach a majority vote, both employers sought appellate review.

Court ruling:
In a narrow 4 to 3 majority opinion, the Law Court upheld the hearing officer’s decisions. The Court agreed that the fact CMO negotiated lower rates with 3rd parties was not relevant in determining CMO’s usual and customary charge. The majority believed the charges published by a provider under Title 22 should be conclusive proof of their usual and customary charge. The majority was also concerned that case-by-case determinations of the usual and customary charge would lead to a flood of litigation and defeat the purpose of the Board Rules to ensure the speedy, efficient, just and inexpensive disposition of all proceedings under the Act.

The dissent agreed that in the absence of a Board promulgated fee schedule applicable to facility charges, the employer is obligated to pay the usual and customary charge. However, the dissent disagreed that the charge listed by the provider pursuant to Title 22 should be conclusive proof of a provider’s usual and customary charge. The dissent would allow employers to challenge the usual and customary charge by presenting expert testimony and evidence of what other entities are being charged for the same service. The dissent noted that in enacting the 1992 workers’ compensation reforms, the Legislature intended to limit overall costs for the workers’ compensation system, including medical costs. Requiring employers to accept a provider’s published charges would be contrary to that purpose because it allows providers to unilaterally determine what an employer is required to pay for those medical services.

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