Roger v. CorVel Healthcare
Filed 6/13/13 Roger v. CorVel Healthcare CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE
DISTRICT
DIVISION THREE
DOUGLAS J. ROGER,
Plaintiff and
Appellant,
v.
CORVEL HEALTHCARE CORPORATION,
Defendant and
Respondent.
G045935
(Super. Ct.
No. 07CC11570)
ORDER MODIFYING OPINION AND DENYING REHEARING; NO
CHANGE IN
JUDGMENT
The opinion filed May 16, 2013 is hereby
(1) On page 4, of the opinion remove the “A.†of
subheading and replace with “1.†so it now reads “1. The
main agreement.â€
(2) On page 5, of the opinion remove the “B.†of
subheading and replace with “2.†so it now reads “2. The
provider agreement.â€
(3) On page 6, of the opinion remove the “C.†of
subheading and replace with “3.†so it now reads “3. The
utilization review agreement.â€
(4) On page 7, of the opinion remove the “D.†of
subheading and replace with “4.†so it now reads “4. The
appeal agreement.â€
(5) On page 21, of the opinion, at the end of the
first full paragraph, (currently ending with the words “precise procedure
specified in CorVel’s contractâ€) insert this citation: (El-Attar
v. Hollywood Presbyterian Medical Center (June 6, 2013, S196830) ___
Cal.4th ___, ___ [2013 Cal. Lexis 4697, at p. *19][“In applying the common law
doctrine of fair procedure, we have long recognized that departures from an
organization’s procedural rules will be disregarded unless they have produced
some injustice.â€].)
These modifications do
not effect the judgment.
The petition for rehearing
is DENIED.
BEDSWORTH,
J.
WE CONCUR:
RYLAARSDAM,
ACTING P. J.
THOMPSON, J.
Filed 5/16/13 (unmodified version)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE
DISTRICT
DIVISION THREE
DOUGLAS J. ROGER,
Plaintiff and
Appellant,
v.
CORVEL HEALTHCARE CORPORATION,
Defendant and
Respondent.
G045935
(Super. Ct.
No. 07CC11570)
O P I N I O
N
Appeal from a judgment
of the Superior Court
of Orange County,
Ronald L. Bauer, Judge. Affirmed.
Law Office of Don C.
Burns and Don C. Burns for Plaintiff and Appellant.
Sedgwick LLP, Gary S.
Pancer, Robert C. Bohner and Douglas J. Collodel for Defendant and Respondent.
* * *
I.
INTRODUCTION
A workers’ compensation
system medical provider network terminated the contract of an orthopedic
surgeon for two separate, albeit interrelated, reasons: First, he was unreachable by independent
reviewing physicians hired by the network to evaluate four nonstandard
treatments he was regularly prescribing for his workers’ compensation
patients. Second, he was prescribing
those nonstandard treatments on a wholesale basis, and not taking the time to
justify their application to particular
patients. As we show below, the medical
provider network was well within its rights in terminating his contract.
The case becomes more
complicated, though, when one realizes that the medical provider network did
not comply with the letter of the contract as regards the process of termination. The
contract clearly provided for a graduated, three-step disciplinary process
based on first, second, and third offenses:
first a warning letter, second a set of counseling “sessions,†and only
then, third, actual termination. And
that didn’t happen. The network
terminated the physician after one lengthy telephone discussion with one
independent reviewing physician about one patient.
Despite this, we affirm
the judgment the orthopedic surgeon take nothing by this breach of contract
action. The physician sustained no
damage as a result of the network’s
failure to follow the three-step procedure.
The record is clear the physician was not about to change his practice
to conform to the network’s utilization review procedure, either by making
himself readily accessible for peer review consultations, or by taking the time
and effort to justify his nonstandard treatments on a patient-specific
basis. Under those circumstances, there
was no causal connection between the absence of the three-step process and the
physician’s ultimate termination from the network. Like one of T.S. Eliot’s famous cats, the
physician was going to do “as he do do, and there’s no doing anything about
it.†(T.S. Eliot, Old Possum’s Book of
Practical Cats (1982) pp. 13-14.)
II. FACTS
The
appellant physician did not request a formal statement of decision, so
reasonable inferences to be drawn from any substantial evidence must be drawn
in the network’s favor.
name="_ftnref1" title="">[1] The point is important because, as much as we
might agree with the appellant physician in this opinion on various individual
arguments made in this appeal, the evidence is susceptible of the reasonable
inference that the physician would never
modify his practice to conform to the contract.
And it is that inference which ultimately sinks his case and requires
affirmance of the judgment.
A.
Plaintiff, Dr. Douglas
J. Roger, is a board certified orthopedic surgeon who has published
peer-reviewed articles in a variety of orthopedic journals. He has presented
research before a variety of orthopedic physician groups, and has taught
orthopedic surgery at Stanford. There is
not a hint of a whisper in this record that he is anything less than an
extremely competent orthopedic physician, and we stress at the outset that his
termination had nothing to do with any adverse patient “outcomes.â€
The defendant, CorVel
Healthcare, is a little harder to describe.
In a word, it is a “medical provider network†(often acronymized to MPN
in the briefing) which provides medical treatment for injuries covered by the
workers’ compensation laws.
Under the 2004 reforms
to California’s workers’
compensation laws, all employers must institute a “utilization review†process
for their workers’ compensation program.
(See Lab. Code, § 4610, subd. (b).
workers’ compensation insurers can contract with a medical provider network,
like CorVel, for medical services and concomitant utilization review. (See § 4616.)
B.
In 2006, one of CorVel’s
clients, Ralph’s supermarkets, requested Dr. Roger be added to CorVel’s network
of workers’ compensation physicians.
Deanna Kaufman, a CorVel contract specialist, signed Dr. Roger up.
In broad terms, CorVel
agreed to market Dr. Roger’s services as a participating provider by listing
him in its network, and it promised to expedite payments to him. In return, Dr. Roger agreed to accept a
reduction in his fees of about 20 percent and otherwise abide by CorVel’s
rules.
The contract itself was
organized into two basic parts. First
was the main agreement, called “CorCare Preferred Provider Organization
Agreement.â€
The
second part, attached to the main agreement as Exhibit A, consisted of three
documents which bear on this appeal: (1)
the “CorVel HealthCare Organization (HCO) Provider Agreement,†(the “provider
agreementâ€); (2) a document entitled “CorVel Healthcare Organization Quality
and Utilization Management Programs†(the “utilization review agreementâ€); and
(3) the “CorVel HealthCare Organization Peer Review, Grievance and Appeal
Procedures†(the “appeal agreementâ€).
A. The
main agreement
Several provisions of
the main agreement are important to the resolution of this case. Early on in the main agreement, in section
2.2, is a very clear statement that the physician retains the right to exercise
his or her independent judgment in treating patients.
Then comes utilization
review. In section 3.8, the physician
agrees to “participate in, cooperate with, and abide by all policies,
procedures, and directives of Payors’ [employers who are clients of CorVel’s],
CorVel’s or CorVel’s designee’s utilization management and quality assurance
programs and to cooperate with Payors’, CorVel’s or CorVel’s designee’s
requests for information, records, reports, files, data, or documentation of
services provided in performing such functions.â€
Termination is the
subject of section 6 in the main agreement.
Three kinds of termination are specified in three separate
sections: Section 6.2, for termination
without cause, upon 90 days written notice by either party;
section 6.3, for termination with cause, based on some failing of the physician
that jeopardizes actual patient care (e.g., loss of hospital staff privileges,
felony conviction, conduct endangering the “health welfare or safety†of a
beneficiary); and section 6.4, for termination based on material breaches of
the agreement itself. An important
aspect of section 6.4 is that, while it contemplates an opportunity to cure the
breach before termination, any cure must be to the satisfaction of the nonbreaching party.
B. The
provider agreement
The provider agreement,
which is specifically tailored to workers’ compensation, has a number of
noteworthy provisions as well. As with
the main agreement, there is a provision, section 2.1, which leaves the
independent judgment of the physician inviolate.
of the physician’s practice are to be the same for the physician’s workers’
compensation patients as they are for the physician’s other patients. The provision thus implies the physician –
regardless of whatever constraints on treatment the workers’ compensation
system might impose – should treat patients the same, regardless of whether
they incurred a weekend warrior sports injury, or a full-blown occupational
injury covered by workers’ compensation.
Article 5 of the exhibit
A provider agreement addressed the need to comply with CorVel’s utilization
management system. Physicians must
“cooperate fully†with CorVel’s management and utilization program, including
its peer review and appeal processes.
stated that upon written request of either party, the two parties would “meet
and confer in good faith to resolve any disputes or problems that may arise
under this agreement.â€
name="_ftnref7" title="">[7]
C. The
utilization review agreement
There are two relevant
sections of the utilization review agreement:
Under the heading of elements of utilization management there is a
section C4, for denials, which expressly contemplates the possibility of
documentation of denials of service
physician to appeal any denial through CorVel’s formal appeal procedures
“described in this agreement,†i.e., presumably meaning the specific appeal
agreement.
There is also a section
D, which spells out the three-step discipline procedure to which we have already
referred. We quote the entire section in
the margin, but for the moment we should note there is no way to read the
section fairly without coming to the conclusion that a putatively errant
physician first receives a formal letter stating a “problem,â€
in “education and counseling†sessions conducted by CorVel administrative
staff, and only then is subject to
suspension or termination.
name="_ftnref8" title="">[8]
D. The
appeal agreement
The appeal agreement
provides that if a physician disputes a denial of service based on “medical
necessity/appropriateness,†the physician can file a grievance in writing or
call a toll-free phone number, and the information will be forwarded to
CorVel’s own “Customer Service Advocate,†who is to investigate and try to
achieve an “informal resolution of the grievance.†If no informal resolution is achieved, the
physician can initiate a “Level Two appeal†that goes to CorVel’s department
manager and then to CorVel’s utilization management committee, who decides
whether to “uphold†the customer service advocate’s “original proposed
resolution†of the dispute.
C.
Dr. Roger regularly
prescribed four nonstandard treatments for his workers’ compensation
patients. The first is known as a
“surface EMG†– the EMG standing for electromyography. Electromyography is a process of trying to
record muscle activity. It can be done
by needle, which is considered a separate procedure from surface EMGs, or it
can be done by surface electrodes—hence the term “surface EMGs.†Thus it is technically classified as a
diagnostic “test†as distinct from a “treatment.†Even so, for the sake of readability, we will
classify it as a “treatment†for purposes of this opinion.
Surface EMG’s are controversial. Insurers, generally speaking, don’t like
them. (E.g., State Farm Mutual Auto. Ins. Co. v. Pain & Injury Rehabilitation
Clinic (June 8, 2009, E.D. Mich.) 2009 WL 1587371 [noting it was “unclearâ€
whether surface EMG device met nationally recognized standards and there was
“serious doubt†on its clinical value].)
But it has not been without success in the courts. The Florida Court of Appeal upheld an
administrative law judge’s finding “that surface EMG testing has significant
medical value as a diagnostic tool with respect to the treatment of a patient
suffering from injuries like those arising out of a motor vehicle accident,â€
noting the finding was “supported by competent substantial evidence.†(Department
of Health v. Merritt (Fla. App. 2006) 919 So.2d 561, 564.)
The other nonstandard
treatments were two ointments and one “medical food.†The two ointments were a capsaicin compound
referred to by the parties as wasabi-rub, the other a compound of various
ingredients called Gaba-2K rub. The
“medical food†was theramine tablets. A
“medical food†is a specially made food for seriously ill patients which must
be used under a physician’s supervision.
Dr. Roger does not
dispute that none of these four
treatments are recommended for use in the medical treatment utilization
schedule (MTUS) adopted by California Division of Workers’ Compensation.
that any of them cause actual harm to patients.
D. Dr.
Rogers’ Treatment Pattern
Dr. Roger is professionally
convinced of the general efficacy, safety and advisability of each of the four
nonstandard treatments. He prescribed
them over 90 times, either individually or in some combination, over the course
of the year following his sign-up with CorVel.
Under CorVel’s
procedures – indeed, under the Labor Code itself – non-doctors do not have the
unilateral authority to do anything other than approve a requested
treatment. (See § 4610, subd. (e).) Thus each time Dr. Roger prescribed one of
the nonstandard treatments, section C4 of the utilization review agreement
required the request to be forwarded by CorVel to an independent reviewing
physician. And in each of those more
than 90 cases, the proposed treatment was not “certified†for payment, as stated
in a memo. Dr. Roger now denigrates the
non-certification memos as “cut and paste jobs†performed by nurses rather than
actual doctors (even though they were signed
by doctors), but cites no evidence to that effect. On appeal, of course, we must assume
otherwise. There are exhibits and
testimony to the effect that a number of the independent reviewing physicians
discuss his prescription of the one or more of the nonstandard treatments.
But Dr. Roger made
himself practically unreachable during his tenure with CorVel. He testified he operated four offices during
this period, and he had a personal
policy of never returning any phone call from an independent reviewing
physician unless he was at the office where the patient’s file was kept. Moreover, he was not available after hours
for discussion, because of the same need for the patient’s file. And beyond that, he believed he had no obligation
to return any call from an independent reviewing physician unless that
physician explicitly requested a call
back.
Not surprisingly then, the record contains ample evidence from
independent reviewing physicians that Dr. Roger failed to return (by our count)
no less than 10 calls from independent reviewing physicians. Moreover, Dr. Roger had no office email,
record contains no email correspondence between Dr. Roger and a reviewing
physician about any given patient.
Even
the trial judge used for it – Dr. Roger resorted to the unethical practice of
upcoding in order to be paid for the surface EMGs he prescribed.
that Dr. Roger’s office submitted bills using the standard medical billing code
for needle EMGs (which
the actual procedures he performed were surface
EMGs.
E.
Since Dr. Roger’s
appeal, at its most basic, centers on the adequacy of the process he received
from CorVel leading to his termination, we recount the events of the
Roger-CorVel relationship in the period June 2007 through October 2007 in some
detail.
CorVel
perceived a problem in Dr. Roger’s habit of prescribing treatments not approved
by MTUS and then simply ignoring the attempts of independent reviewing
physicians to discuss the prescription with him. And so, on June 7, 2007, CorVel’s Deanna
Kaufman sent him a termination letter.
Kaufman requested a
“formal response†to certain “grievances,†but preceded their enumeration by asserting
Dr. Roger’s “practice is repeatedly failing to adhere to the UR guidelines set
by the CorVel Corporation.†The letter
then stated that “individual responses†were required for four particular
patients, and pointed out that Dr. Roger had made “no response†to peer review
requests concerning those patients. The
letter then stated that due to these “multiple instances notated above,†CorVel
had decided to exercise its right to terminate the contract “pursuant to
Section 6.3,†but Dr. Roger had 30 days to “respond and resolve the above
disputes.†If not, his contract would be
terminated effective July 6, 2007. The
letter made no reference to termination based on any section other than 6.3,
which, as we noted above, only applies to some event evidencing jeopardization
of actual patient health. In its
briefing on appeal, CorVel candidly concedes it forgot to include section 6.4 –
termination for breach of the contract as distinct from jeopardization of
patient care. Nor does the letter make
any explicit reference to terminating Dr. Roger because of some propensity to
prescribe nonstandard treatments; the only specific derelictions mentioned are
failure to respond to peer review requests.
The
letter was faxed, so it generated an almost immediate phone call from Douglas
Marx, Dr. Roger’s main office manager.
Kaufman would later testify that she told Marx Dr. Roger needed to “be
available for a peer-to-peer.†Marx told
her in that conversation he was “well aware of the issues,†which included the
fact there had been “an excessive number of non-certifications.â€
The letter also finally
prompted Dr. Roger to talk to an independent reviewing physician, Dr. Robert
Holladay, on July 6, 2007, by phone. The conference with Dr. Holladay was not,
however, about Dr. Roger’s practice generally, but about a specific patient,
whom we simply identify as Marcela. Dr.
Roger had prescribed for Marcela all four nonstandard treatments, so the
conference afforded Dr. Roger the opportunity to cite to Dr. Holladay much of
the professional literature supporting the four nonstandard treatments.
Neither physician
budged. Dr. Holladay was unimpressed
with Dr. Roger’s arguments for the nonstandard treatments. For his part, Dr. Roger simply said the two
had a “difference of opinion.â€
Kaufman was quite hopeful the Holladay conference would correct (from CorVel’s
point of view) Dr. Roger’s noncompliance with the contract. On the day of the conference she wrote to
Douglas Marx to extend the July 7 deadline for termination as indicated in the
June 6 letter to July 20. But Kaufman’s
hopes were dashed when CorVel received Dr. Holladay’s written report of the
conference. Dr. Holladay’s report said
Dr. Roger had not agreed to any change in his prescriptions for Marcela.
Somehow, the July 20
deadline came and went without formal notice of termination to Dr. Roger; the
actual communication of termination came in an email four days later from
Kaufman to Marx. The email was general,
mentioning only “grievances†that “still have not been resolved to
satisfaction,†but not spelling them out.
It did say, though, “we will be terminating Dr. Roger from the Corvel
MPN network effective July 20th, 2007†and a “formal letter for your file will be
going out in the mail today.â€
formal letter of termination, however – at least none dated July 24 – appears
in our record. In fact, the final
termination letter would not be sent for about two months. For her part, Kaufman appears to have been
thinking at that point Dr. Roger would appeal the termination.
didn’t. He did, however, write a formal
protest letter to Kaufman
August 30, 2007. Among other things, he asserted he’d been
removed “without any explanation for said removal,†had not “received formal
notification†of his termination, argued he had treated “in strict compliance
with the ACOEM guidelines and the California labor code,â€
and generally asserted a violation of due process.
wrote back on September 17, to reiterate that “the issues
that
surrounded the initial submission of a grievance originally filed on June 7,
2007, have not been successfully resolved†– again she did not specify
precisely what those “issues†were – “so CorVel has decided to terminate your
participation within our MPN network effective July 20th, 2007.â€
The September 17 letter
appears to have generated a final attempt to achieve some informal resolution
of CorVel’s dispute with Dr. Roger in the form of a four-way telephone
conference held October 12. Kaufman was
not hopeful going into that conference.
She had had “pushback†from Marx to the effect Dr. Roger really
“believed in the certifications [that is, treatments] that he was requesting.â€
Garcia, at least, emerged from the conference optimistic. She was “quite pleased†with the outcome; she
felt “there was a better understanding of what the obligations that were needed
– that [Dr. Roger] would need to follow in order to reinstatement him.â€
she thought, was now “on the same page.â€
According to Garcia, Roger had said “he would be willing to adhere to
the guidelines†and provide “a telephone number in order to successfully be
able to schedule peer-to-peer discussionsâ€
Indeed, she thought that Dr. Roger’s nonstandard treatment requests
“would discontinue.†CorVel’s optimistic understanding was
memorialized in a letter sent to Dr. Roger on October 12.
CorVel’s hopes of a
reconciliation died when it received a letter from Dr. Roger dated October
15. To be sure, Dr. Roger stated his
“absolute intention to comply with the UR and QA processes which are outlined
in the CorVel Provider Agreement.†But he stepped back from the purported
understanding of a direct phone number, basically saying he was too busy to
take calls during normal office hours. More ominously (from CorVel’s point of
view), Dr. Roger remained adamant about his intent to continue with the four
nonstandard treatments. (“Any action by
a physician to put cost containing measures above the best interests of the
patient constitutes an ethical violation of the highest level.â€)
And with that, all hope
of reconciliation was abandoned. Dr.
Roger filed this litigation the next month, alleging, among other things,
breach of contract. While many of his
other causes of action fell to the wayside in pretrial challenges, his breach
of contract cause of action survived to trial, where it was heard by a
judge. By the time of trial, the
percentage of his practice devoted to workers’ compensation, which had been at
about 90 percent, had dropped to some 30 to 40 percent.
As we have noted, there
was no statement of decision, only a minute order. While the judge sympathized with Dr. Roger
about the constraints imposed on him by CorVel’s utilization review process, as
noted, the judge was explicitly unimpressed by Dr. Roger’s practice of
upcoding. The bottom line was that Dr.
Roger “had little interest in compliance with the guidelines that followed the
2004 reforms.â€
III. DISCUSSION
A. Grounds
for Termination
Dr. Roger does not
really contest the proposition he violated his contract with CorVel requiring
him to “fully†comply with its utilization management program by his habit of
making himself incommunicado with independent reviewing physicians. He argues, rather, that CorVel’s grievances
regarding communication were only pretexts for its real reason for wanting him terminated, which was that his
prescription of nonstandard treatments made extra work for CorVel, discrepant
with its own preoccupation with reducing costs.
It is a sufficient
answer to this point that substantial evidence shows CorVel’s concern over
communication was not pretextual, but went to the essence of its utilization
review system. The 2004 workers’
compensation reforms are not as inflexible as Dr. Roger would have us believe,
but part of that flexibility requires physicians to be in relatively prompt and
constant communication when they prescribe nonstandard treatments. Kaufman’s letter of June 6, her conversation
with Marx in its immediate wake, and the October 12 four-way conference all
furnish substantial evidence that CorVel’s concern with communication per se
was not pretextual, but bona fide.
That brings us to Dr.
Roger’s main theme, which is that a network like CorVel has no business telling
fully qualified physicians – under the guise of utilization review – that they
can’t prescribe what they think is best for their patients if it is
otherwise perfectly legal. On this point Dr. Roger stresses those
provisions of his contract (like section 2.2 of the main agreement and section
2.1 of the provider agreement) which make clear the contracting physician is
not required to do anything inconsistent with his or her best independent
professional judgment.
On that precise point,
and as framed, we actually agree with Dr. Roger. The contract plainly does not require the
physician to compromise his or her independent professional judgment.
prescribe surface EMGs, wasabi rub, Gaba 2k rub, or theramine tablets – all otherwise perfectly lawful treatments –
if Dr. Roger’s independent professional judgment was that those treatments were
indicated.
The contract, however,
must be analyzed as a whole, and any otherwise apparently repugnant parts
reconciled, if possible. (Civ. Code, §§ 1652 [need to reconcile apparent
repugnancies]; 1641 [contract construed as a whole, with each part helping to
interpret the other].) The provisions
respecting independent physician judgment and the provisions requiring full
cooperation with CorVel’s utilization review system are readily
reconciled. CorVel’s utilization review
system is based on the 2004 reforms, and those reforms expressly contemplate
the possibility that treatments beyond the MTUS might be appropriate. But only after appropriate unitization
review.
Section 4604.5, subdivision (a) provides: “The recommended guidelines set forth in the
medical treatment utilization schedule adopted by the administrative director
pursuant to Section 5307.27 shall be presumptively correct on the issue of extent
and scope of medical treatment.
controverted by a preponderance of the scientific medical evidence establishing
that a variance from the guidelines reasonably is required to cure or relieve
the injured worker from the effects of his or her injury. The presumption created is one affecting the
burden of proof.†(Italics added.)
A concomitant regulation
fleshes out the theme of rebuttability.
Section 9792.25(a) of the California Code of Regulations provides: “The MTUS is presumptively correct on the
issue of extent and scope of medical treatment and diagnostic services
addressed in the MTUS for the duration of the medical condition. The
presumption is rebuttable and may be controverted by a preponderance of
scientific medical evidence establishing that a variance from the schedule is
reasonably required to cure or relieve the injured worker from the effects of
his or her injury. The presumption
created is one affecting the burden of proof.â€
Consistent with that
scheme, CorVel’s contract provides for a process of appeal focused on denials
of treatments, including the opportunity to file a grievance in writing or talk
to a customer service advocate. The
advocate is tasked with investigating any denial and trying to achieve an
informal resolution of the grievance. If
anything, CorVel’s contract appears to be more liberal than the Labor Code and
regulations, because it is at least theoretically open to the possibility that
a CorVel customer service advocate might construct a compromise in which
nonstandard treatments were allowed in a given instance, even if the physician
could not show that the nonstandard treatment was favored by a “
evidence.†(Italics added.)
But Dr. Roger did not
appreciate the implications of the flexibility afforded by the 2004 reforms or
the appeals process built into CorVel’s contract. Reconciling physician professional autonomy
with the contract meant that physicians retained every right to prescribe
nonstandard treatments for given patients, but if they did so, they would have to comply with both CorVel’s
appeals process and California’s workers’ compensation scheme, and go to the
trouble of articulating why the nonstandard treatment was “reasonably requiredâ€
to relieve a given worker of the effects of the worker’s injury.
And that, as this record shows all too clearly, was more investment in
time and energy than Dr. Roger was prepared to make. In his briefing, Dr. Roger characterizes CorVel’s
appeals process as a “virtual sham†such that if a provider abandoned it, it
“hardly mattered†to CorVel. The only
evidence he points to, however, to support that characterization is the fact
the non-certification memos he received did not mention any of the literature
supporting the nonstandard treatments.
That absence, however, hardly proves the possibility of appeal was a
sham – it merely shows that the independent reviewing physicians did not cite
contrary authority. Dr. Roger ignores
the terms of the contract and section 4604.5 which required
particular nonstandard treatment for a particular patient. There was no reason for the independent
reviewing physicians to cite authority if Dr. Roger presented none.
Finally, a major theme
running through Dr. Roger’s briefing is that CorVel had no real cause for
complaint, because the only significant detriment it was incurring was the need
to document denials of prescribed treatments, and Dr. Roger himself was perfectly
willing to accept denial of a prescribed treatment and simply assert a workers’
compensation lien later. That argument,
however, represents a jujitsu reversal on the topic of administrative costs
which inverts the proper relationship between the contracting parties. Under the contract and section 4604.5, it is
Dr. Roger who bears the administrative burden of justifying a nonstandard
treatment, not CorVel to justify its denial.
In refusing to communicate with peer reviews, and in refusing to pursue
appeals while continuing to write disproportionate numbers of prescriptions for
nonstandard treatments, Dr. Roger was unilaterally inflicting administrative
costs on CorVel – costs which it did not have to bear under its contract. We therefore conclude CorVel had ample
grounds on which to conclude Dr. Roger was in breach of the contract.
B.
There is no avoiding the
fact CorVel did not terminate Dr. Roger according to the three-step process
outlined in section D of the utilization review agreement. To be sure, Kaufman’s letter dated June 7
supporting termination for breach of contract (failure to communicate), and
indicated some corrective action needed for that problem. But Kaufman’s letter clearly invoked the
wrong provision in the main contract, namely section 6.3 relating to the
jeopardization of patient care rather than section 6.4 relating to breach of
the contract itself. The letter also
failed to explicitly complain about Dr. Roger’s habitual prescription of
nonstandard treatments. And there was no
mention at all of any “first offense†handling.
Moreover, there is
nothing in this record to indicate compliance with the second, “second offenseâ€
step of the termination process, namely “education and counseling sessionsâ€
conducted by CorVel. There is nothing
from CorVel on the order of: “You’ve had
a first offense letter, now you’re on your second offense, we are therefore
requiring you to show up at X o’clock on Y date for a counseling session to be
conducted by our medical director on the importance of adhering to the MTUS.†CorVel suggests that the numerous
non-certification memos received by Dr. Roger constituted a sort of de facto
series of education and counseling sessions, but that argument fails because of
the actual content of those memos. All
of them were focused on particular patients and merely conveyed the conclusion
one or more of the nonstandard treatments was not accepted. At most, those memos constituted the outcome
of the utilization review procedure.
Naught was mentioned about breach of contract.
That said, we still
affirm the judgment Dr. Roger take nothing by his breach of contract
action. Among the elements of a cause of
action for breach of contract are damages that result from the breach. (See
Patent Scaffolding Co. v. William Simpson
Constr. Co. (1967) 256 Cal.App.2d 506, 511 [“Patent suffered no
uncompensated detriment caused by Simpson’s breach of contract. It was fully paid for its fire loss. It could not recover the cost of the premiums
it had paid to the insurers because it did not incur that expense as a
consequence of its contract with Simpson or as a result of Simpson’s breach of
contract. A breach of contract without
damage is not actionable.â€].) While Dr.
Roger’s workers’ compensation business may have declined considerably as a
result of his termination, we cannot say that his termination was as a
three-step termination process.
Termination was inevitable, independent of that process.
Substantial evidence for
our conclusion is found in no less than:
(a) Dr. Holladay’s report, which inferentially shows that Dr. Roger made
no patient-specific arguments in favor of any of the nonstandard treatments,
only generalized ones; (b) Dr. Roger’s own October 15 letter, inferentially
showing there was no way he would stop prescribing any of the four nonstandard
treatments; (c) the same letter’s begrudging attitude toward physician review,
basically restating Dr. Roger’s position he did not have the time to be
available if a reviewing physician called to talk about a nonstandard
treatment; (d) the complete absence of any willingness on Dr. Roger’s part to
take the necessary time and trouble to articulate patient specific reasons for
the use of any of the four nonstandard treatments as part of CorVel’s appeals
process; (e) the absence of any initiation of any appeal or dispute resolution
process, as was his right under the contract, on Dr. Roger’s part; and (f) Dr.
Roger’s willingness to engage in the deceptive practice of upcoding rather than
author the necessary memoranda to justify a given treatment to a given
patient. In sum, the trial court could
reasonably conclude Dr. Rogers was going to continue to refuse to do the work
inherently necessary to justify his prescriptions if he was going to continue
to prescribe the four nonstandard treatments.
C.
Lastly, Dr. Roger
presents a claim which is, strictly speaking, extrinsic to his contract with
CorVel, namely a denial of the common law right of fair procedure to his
membership in the network. (See
generally, Potvin, supra, 22 Cal.4th
1060.) The answer to this claim,
however, is that substantial evidence shows Dr. Roger received a fair
procedure, even if it wasn’t the precise
procedure specified in CorVel’s contract.
Procedure is fair if the
relevant decision is both “substantively rational†and “reached in a manner
that is procedurally fair.†(
Fund (2008) 161 Cal.App.4th 206, 222.)
Here, the decision to
terminate was certainly rational. In
order to give the MTUS system some flexibility, section 4604.5 and CorVel’s
contract work imposed on physicians who
prescribe outside of the MTUS the burden of taking the laboring oar of
justifying their prescriptions. But Dr.
Roger made it abundantly clear to CorVel that he did not feel it a worthwhile
use of his time to undertake such justifications. His disobliging ways were a matter on which
he was unwilling to compromise. At most
he thought it sufficient merely to cite to any reviewing physician who managed
to reach him by phone the literature supporting his nonstandard treatments.
And the termination was
procedurally fair. Kaufman and CorVel
gave Dr. Roger every chance to work out a resolution short of termination. That eventuality was never concealed or
downplayed and CorVel gave Dr. Roger plenty of notice and abundant opportunity
to be heard.
DISPOSITION
The judgment is
affirmed. Respondent to recover costs.
BEDSWORTH,
J.
WE CONCUR:
RYLAARSDAM,
ACTING P. J.
THOMPSON, J.
name="_ftn1" title=""> [1] The reply brief asserts that at an
unrecorded meeting in chambers with the judge on the third day of trial, the
physician’s trial counsel said, “This might be a good time to ask that we get a
written decision, per 632.†Even if
made, that observation by counsel was inadequate to trigger any obligation on
the trial court’s part to prepare a formal statement of decision. It was not a request, and it didn’t comply
with section 632 of the Code of Civil Procedure. (“The request must be made within 10 days
decision unless the trial is concluded within one calendar day or in less than
eight hours over more than one day in which event the request must be made
prior to the submission of the matter for decision. The request for a statement of decision
as to which the party is requesting a statement of decision.†(Italics added.))
name="_ftn2" title=""> [2] All further statutory references
are to the Labor Code unless otherwise indicated.
