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First State Orthopaedics, P. A. v. Liberty Mutual Insurance Co.

Superior Court of Delaware

August 6, 2019

FIRST STATE ORTHOPAEDICS, P. A., on behalf of itself and all others similarly situated, Plaintiff,
v.
LIBERTY MUTUAL INSURANCE COMPANY, ET AL, Defendants.

          Submitted: April 3, 2019

         Plaintiffs Motion for Partial Summary Judgment on the Meaning of Sections 2362(b) and 2322F(h) - GRANTED IN PART - DENIED IN PART

         Defendants' Cross-Motion for Partial Summary Judgment on the Meaning of Sections 2362(b) and 2322F(h) - GRANTED IN PART - DENIED IN PART

          John S. Spadaro, Esquire (Argued); John Sheehan Spadaro LLC, Attorney for Plaintiff.

          Kevin J. Connors, Esquire; Marshall Dennehey Warner Coleman & Goggin, Attorney for Defendants.

          Tiffany Powers, Esquire (Argued); Andrew Hatchett, Esquire; Alston & Bird LLP, Attorneys for Defendants.

          MEMORANDUM OPINION

          CARPENTER, J.

         Before the Court is Plaintiff First State Orthopaedics, P.A.'s ("First State" or "Plaintiff) Motion for Partial Summary Judgment on the meaning of 19 Del. C. §§ 2362(b) and 2322F(h), as well as the Defendant Insurers' ("Insurers" or "Defendants") Cross-Motion for Partial Summary Judgment on the same statutory provisions. For the reasons set forth in this Opinion, Plaintiffs Motion for Partial Summary Judgment is GRANTED IN PART AND DENIED IN PART and Defendants' Cross-Motion is GRANTED IN PART AND DENIED IN PART.

         I. FACTUAL & PROCEDURAL BACKGROUND

         On April 3, 2017, First State filed an amended proposed class action Complaint against insurer-members of the Liberty Mutual Group of insurance companies, seeking recovery of statutory interest allegedly owed under 19 Del. C. § 2322F(h) of the Delaware Workers' Compensation Act.[1] Plaintiff brought suit on behalf of all Delaware health care providers who, at any time since December 4, 2012, submitted health care invoices to one or more Defendants for care provided to Delaware workers' compensation claimants where: (i) the invoiced Defendant failed to contest the sufficiency of the invoice's "data elements" within 30 days of receipt, (ii) though ultimately paid by the invoiced Defendant, the invoice was paid only after the expiration of the 30-day period under section 2322F(h), and (iii) the invoiced Defendant's payment of the invoice was unaccompanied by the statutory interest provided under 2322F(h).[2] Essentially, First State is attacking the Insurers' alleged practice of generally refusing to pay the 1% interest on unpaid invoices as mandated by § 2322F(h), a claim denied by the Defendants.

         A. 19 Del. C. Sections 2362(b) and 2322F(h)

         Section 2362(b) states that "[a] 11 medical expenses shall be paid within 30 days after bills and documentation for said expenses are received by the employer or its insurance carrier for payment, unless the carrier or self-insured employer notifies claimant or the claimant's attorney in writing that said expenses are contested or that further verification is required."[3] Meanwhile, Section 2322F(h) provides:

An employer or insurance carrier shall be required to pay a health care invoice within 30 days of receipt of the invoice as long as the claim contains substantially all the required data elements necessary to adjudicate the invoice, unless the invoice is contested in good faith. If the contested invoice pertains to an acknowledged compensable claim and the denial is based upon compliance with the health care payment system and/or health care practice guidelines, it shall be referred to utilization review. Any such referral to utilization review shall be made within 15 days of denial. Unpaid invoices shall incur interest at a rate of 1% per month payable to the provider. A provider shall not hold an employee liable for costs related to nondisputed services for a compensable injury and shall not bill or attempt to recover from the employee the difference between the provider's charge and the amount paid by the employer or insurance carrier on a compensable injury.[4]

         B. The Instant Motion

         On June 18, 2018, Plaintiff filed the instant Motion for Partial Summary Judgment regarding the meaning and effect of the two statutory provisions at issue. First State argues that, under §§ 2362(b) and 2322F(h), "if a covered invoice -meaning, for the purposes here, an invoice that is ultimately paid (or covered) in whole or in part - is not paid within the 30-day window, it is an "unpaid" invoice for which statutory interest accrues."[5] Plaintiff further contends that there is no "good faith" exception to the statutory interest provision set out in § 2322F(h).[6]Thus, according to First State, even if a workers' compensation claim is timely denied in "good faith" but eventually gets paid outside the 30-day window, statutory interest for that invoice began to accumulate on the thirty-first day after the Insurers initially received it.[7]

         In response, Defendants filed a Cross-Motion for Partial Summary Judgment regarding its interpretation of the two statutes. The Insurers contend that §§ 2362(b) and 2322F(h) "by their plain terms, confirm that interest is not owed under circumstances where an insurer, within 30 days of receiving the invoice, either (i) contests the invoice in good faith, or (ii) requests further verification to support the charge."[8] According to Defendants, "if an insurance carrier has a good-faith basis to deny coverage for the invoice or request additional documentary support, no statutory interest is owed until 30 days after the ...


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