CERES MARINE TERMINALS v. Armstrong

COURT OF APPEALS OF VIRGINIA

Present: Judges Petty, Beales and Huff
Argued at Richmond, Virginia

CERES MARINE TERMINALS AND
ATLANTIC MUTUAL INSURANCE COMPANY
OPINION BY
v. Record No. 1603-11-2 JUDGE WILLIAM G. PETTY
MARCH 6, 2012
ELDON ARMSTRONG, JR. AND
JORDAN YOUNG INSTITUTE

FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION

Lawrence J. Postol (Seyfarth Shaw, LLP, on brief), for appellants.

Zenobia J. Peoples for appellee Jordan Young Institute.

No brief or argument for appellee Eldon Armstrong, Jr.

Ceres Marine Terminals and its insurance carrier (collectively “employer”) appeal the

Workers’ Compensation Commission’s decision awarding the payment of $25,664.22 to the

Jordan Young Institute (“medical provider”) for medical services rendered to Eldon Armstrong,

Jr., under a workers’ compensation award. The medical provider performed surgery on

Armstrong and billed the employer $30,013.75. However, the employer paid only $5,123.76 of

the bill. Thereafter, the commission entered an award for the unpaid balance of the medical bill

after the medical provider requested it to do so.

On appeal, the employer raises the following assignments of error. First, “[t]he

Commission erred in limiting its review to the issue of prevailing rates, when the Employer also

challenged what was the Medical Provider’s regular rate, and what is a reasonable rate.” Second,

“[t]he Commission erred in not considering the Longshore Fee Schedule as evidence of the

prevailing rate.” Third, “[t]he Commission erred in finding the claim was timely and not barred
by laches, when the claim for medical benefits was filed over four years after the medical

services were provided, and the physician was no longer available, and the records were no

longer available. The Commission also erred in not barring the claim for spoilage of evidence

. . . .” 1 As set forth in further detail below, we find no error in the commission’s decision.

Therefore, we affirm.

I. BACKGROUND

Armstrong suffered a compensable injury by accident on July 14, 2000. 2 To treat that

injury, a surgeon and his assistant employed by the medical provider performed surgery on

Armstrong on January 6, 2005. The medical provider submitted a bill to the employer for the

services of the surgeon and his assistant in the amount of $30,013.75. On or around May 12,

2009, the employer paid $5,123.75. In an “Explanation of Benefits” accompanying the payment,

the employer explained that it was paying an amount consistent with the Longshore and Harbor

Workers’ Compensation Medical Fee Schedule, which the employer contended is based upon the

same rate set by the federal government under Medicare. On September 22, 2009, the medical

provider sent a letter to the commission acknowledging that it had provided treatment to

Armstrong under the commission’s award and asking the commission to enter an additional

award ordering the payment of the balance of the medical bill.

A deputy commissioner considered evidence and argument from the parties on this

matter. This evidence included the depositions of Lori Delbridge and Evelyn Thomas, which the

1
In the analysis section of its brief, employer argues that the commission erred when it
held that the statute of limitations set forth in Code § 65.2-708 was inapplicable to the medical
expenses requested by the medical provider, but the employer has not actually assigned error to
this ruling in the “assignments of error” section in its brief. Under our Rules, we only address
arguments encompassed by an appellant’s express “assignment of error” in his brief. See
5A:20(c); Mecimore v. Alexandria Dep’t of Soc. Servs., 35 Va. App. 31, 39 n.4, 542 S.E.2d 785,
789 n.4 (2001). Thus, we will not address the merits of this argument.
2
The record does not establish the exact nature or severity of the injury.
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deputy commissioner received de bene esse. The employer deposed Delbridge so that it could

determine how the medical provider arrived at the billed amount of $30,013.75, and it deposed

Thomas to further explain the nature of the fee schedule.

Delbridge was as an employee of the medical provider and was knowledgeable in its

billing practices. In response to questions from the employer, she testified that about 50% of the

medical provider’s patients were on Medicare. Had Armstrong been a Medicare patient rather

than a recipient of a workers’ compensation award, she confirmed that the medical provider

would have accepted the reduced payment of $5,123.75 as “payment in full” for the charges.

Moreover, had Armstrong’s claim been submitted under the Longshore and Harbor Workers’

Compensation Act, Delbridge agreed that the medical provider would have also accepted this

amount as “payment in full.” However, Delbridge further explained that had Armstrong been

covered by Cigna, a private insurance carrier that covered some of its patients, then the medical

provider would have “asked for 100% of the charges,” or in other words, would have billed the

amount it billed the employer, $30,013.75.

Thomas was an employee of the employer working in the employer’s workers’

compensation department. The employer called Thomas in an attempt to establish the purpose of

the Longshore and Harbor Workers’ Compensation Medical Fee Schedule. Thomas first verified

an exhibit as the fee schedule as it appeared on the U.S. Department of Labor website. She also

stated that it was her understanding that the fee schedule was based upon, or the same as, the

Medicare fee schedule. The employer then asked her the following question: “So, again, just so

the Commission understands, Medicare assigns what they consider to be the relative value of a

particular procedure?” In response, Thomas replied, “Right.” She finally testified that the

payment of $5,123.75 for the surgery performed on Armstrong was the amount set forth in the

fee schedule for the geographic region where the surgery took place.

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 The deputy commissioner found that the employer “failed to rebut the medical provider’s

prima facie evidence,” i.e., the medical bill, and that the evidence presented by the employer was

insufficient to prove the prevailing rate in the community and thereby relieve itself of liability for

the unpaid balance of the bill. As the deputy explained it, the employer “presented no evidence

of the rates charged by other physicians [for Armstrong’s procedure] in the cities of Norfolk,

Virginia Beach, Chesapeake, Suffolk, Portsmouth, Hampton, Newport News, and Williamsburg

for the same or similar services.” The deputy also found that laches, spoliation of evidence, and

the time limitations set forth in Code § 65.2-708 did not apply. Accordingly, the deputy entered

an award in favor of the medical provider and against the employer for the unpaid balance of the

medical bill, $25,664.22. The full commission agreed and affirmed the deputy commissioner.

This appeal followed.

II. ANALYSIS

A. The Medical Bill and the Prevailing Rate in the Community

In its first and second assignments of error, the employer challenges the commission’s

finding that the employer failed to prove that the medical bill for the surgery performed on

Armstrong exceeded the prevailing rate in the community for that surgery. In so doing, the

employer raises several arguments. The employer first argues that the commission improperly

placed the burden of proof on the employer to prove the excessiveness of the amount charged in

the medical bill. The employer further argues that the commission should have accepted the fee

schedule as evidence of the prevailing rate in the community. Finally, the employer argues that

the medical bill was inconsistent with a “reasonable” rate or the rate ordinarily charged by the

medical provider, regardless of whether the medical bill reflected the prevailing rate in the

community, and that the commission should have denied the award on that basis.

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 As set forth in further detail below, we disagree with the employer. The commission

properly characterized the medical bill as prima facie evidence that the charged fee was

consistent with the requirements of the Workers’ Compensation Act. In the face of that

evidence, the commission properly placed the burden of proving the excessiveness of the amount

of the bill on the employer. Further, the commission correctly determined that the mere

submission of the amount payable for Armstrong’s surgery under the Longshore and Harbor

Workers’ Compensation Medical Fee Schedule, without more, was insufficient evidence of the

prevailing rate in the community. Finally, the commission appropriately limited its review of the

amount to whether the amount exceeded the prevailing rate in the community for the treatment.

1. Burden of Proof

We first address whether the employer had the burden of proving that the medical bill

was excessive. As we explain in further detail below, we hold that it did.

Whether a particular party bears the burden of proving a particular issue requires us to

“construct,” or interpret, the Workers’ Compensation Act. See Fairfax Cnty. Sch. Bd. v.

Humphrey, 41 Va. App. 147, 155, 583 S.E.2d 65, 68 (2003) (characterizing an issue relating to

the proceeding before the commission as a question of construction of the Workers’

Compensation Act). “‘The commission’s construction of the Act is entitled to great weight on

appeal.’” Id. (quoting Cross v. Newport News Shipbuilding & Dry Dock Co., 21 Va. App. 530,

533, 465 S.E.2d 598, 599 (1996)). Moreover, the commission is not bound by common law rules

of evidence, but may adopt whatever procedures it sees fit so long as they “‘protect the

substantial rights of the parties.’” Rios v. Ryan, Inc. Cent., 35 Va. App. 40, 44-45, 542 S.E.2d

790, 791-92 (2001) (quoting Sergio’s Pizza v. Soncini, 1 Va. App. 370, 376, 339 S.E.2d 204, 207

(1986)). However, “‘[w]hile we generally give great weight and deference, on appeal, to the

commission’s construction of the Workers’ Compensation Act, we are not bound by the

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commission’s legal analysis in this or prior cases.’” Humphrey, 41 Va. App. at 155, 583 S.E.2d

at 68 (quoting Peacock v. Browning Ferris, Inc., 38 Va. App. 241, 248, 563 S.E.2d 368, 372

(2002)). Ultimately, though, we must always remember the humanitarian purpose of the Act,

which seeks to provide compensation and medical treatment to employees for injuries they have

sustained in the course of and arising out of their employment. See Metro Mach. Corp. v.

Sowers, 33 Va. App. 197, 209, 532 S.E.2d 341, 347 (2000). Accordingly, “[t]he Act should be

liberally construed in harmony with [this] humane purpose.” Id.

In light of these considerations, we begin our review with the relevant portions of the

Workers’ Compensation Act. Under Code § 65.2-603, if the commission enters an award for an

injury resulting in an employee’s work incapacity, the employer must pay for all reasonable and

necessary medical treatment for the injury. However, under Code § 65.2-605, “[t]he pecuniary

liability of the employer for [such reasonably and necessary] medical, surgical, and hospital

service” is “limited to such charges as prevail in the same community for similar treatment when

such treatment is paid for by the [employee].” Moreover, under Code § 65.2-714, the

commission “may order the repayment of the amount of any [physician or hospital] fee which

has already been paid [by the employer] that it determines to be excessive.”

When we consider the text of the Act along with its well-known humanitarian purpose,

we conclude that it was reasonable for the commission to consider the medical bill as prima facie

evidence that the charges were consistent with the requirements of the Act and to place the

burden of proving that the medical fee was excessive on the employer. 3 We reach this

conclusion for two reasons.

3
As the commission acknowledged below, it has long placed “the burden of proving that
the charges do not meet the community standard of Virginia Code § 65.2-605” on the employer.
See, e.g., Rabineau v. McDonald’s/RJK Corp., No. 156-99-57 (Va. Workers’ Comp. Comm’n
Oct. 15, 1993).

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 First, a contrary rule would unfairly burden the medical provider and create a significant

obstacle to the claimant’s receipt of the reasonable and necessary treatment he is entitled to

under the Act. Where, as here, the medical provider requests payment for reasonable and

necessary medical treatment provided to the claimant, the medical provider naturally makes that

request on behalf of the claimant. The claimant should efficiently and expediently receive all

that he is entitled to under the award, which includes payment for all reasonable and necessary

medical treatment. 4 If the claimant, or, by proxy, the medical provider, had the burden to prove

that the charge for the claimant’s reasonable and necessary medical treatment was not excessive

every time payment was sought under an award, such a rule would necessarily frustrate prompt

payment for the treatment, and would therefore inhibit the claimant’s receipt of treatment that he

is entitled to under the Act. 5 See Gens v. Workmen’s Comp. Appeal Bd., 631 A.2d 804, 806

(Pa. Commw. Ct. 1993) (holding that it would be inequitable to require a workers’ compensation

claimant, “who has already proven that her back condition is causally related to her work

injuries, to subsequently prove that the medical expenses for treatment of the back condition” are

appropriate); Russell v. Genesco, Inc., 651 S.W.2d 206, 210-11 (Tenn. 1983) (placing the burden

of establishing the reasonableness of medical charges under a workers’ compensation award on

the employer because the employer is in a better position to assess the reasonableness of the

4
Of course, the claimant and the provider should have this expectation only with regard
to reasonable and necessary medical treatment. Neither the claimant nor his medical provider
should expect to be in a favored position in proving the base reasonableness and necessity of the
treatment itself. See Portsmouth (City of) Sch. Bd. v. Harris, 58 Va. App. 556, 563, 712 S.E.2d
23, 26 (2011) (“It is the claimant’s burden to demonstrate that the treatment for which he seeks
payment is causally related to the accident, is necessary for treatment of his compensable injury,
and is recommended by an authorized treating physician.”).
5
We are not suggesting that the claimant has any liability to pay for reasonable and
necessary medical treatment under an award. In fact, under Code § 65.2-714(D), a medical
provider cannot “balance bill an employee in connection with any medical treatment, services,
appliances or supplies furnished to the employee in connection with an injury for which an
award of compensation” has been made.
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charge); see also Bogle Dev. Co. v. Buie, 19 Va. App. 370, 375, 451 S.E.2d 682, 685 (1994)

(holding that a medical bill is prima facie evidence that the charges were reasonable and

necessary), rev’d on other grounds, 250 Va. 431, 463 S.E.2d 467 (1995); Arthur Larson & Lex

K. Larson, Larson’s Workers’ Compensation § 130.06[3][e] n.79 (2010) (similarly describing a

medical bill as prima facie evidence of reasonableness, which remains sufficient unless

challenged by the employer).

Second, a contrary rule would place an excessive burden on the commission. Under the

rule adopted by the commission, payment for reasonable and necessary medical treatment is

expediently processed. If the claimant had the burden of proving the reasonableness of the

charge for such medical treatment, the commission would likely find itself constantly evaluating

the propriety of the charges for particular medical treatment whenever a claim is brought for

payment, rather than simply doing it in the relatively isolated cases where the employer asserts

that the charge is excessive. Accordingly, the commission has adopted the reasonable rule that

the employer bears the burden of establishing that a billed medical expense is excessive. Indeed,

it cannot be said such a rule impairs the “substantial rights” of the employer in any way.

In light of the foregoing, we find no reason to overturn the commission’s rule that the

employer bears the burden of proving the excessiveness of the charges contained in a proffered

medical bill under a workers’ compensation award. Thus, we hold that no error occurred.

2. Evidence of the Prevailing Rate in the Community

We next address whether the commission erred when it concluded that the employer had

presented insufficient evidence of the prevailing rate in the community. 6 We conclude that it did

not.

6
In the employer’s view, the commission did “not consider” the Longshore fee schedule
as evidence of the prevailing rate in the community. We disagree. The full commission plainly
considered the evidence—it simply concluded that it was not “sufficient evidence of the
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 In addressing this issue, we must consider what the relevant community is and what the

“prevailing rate” in that community precisely means. Rule 14 of the commission defines the

relevant community for the purposes of Code § 65.2-605. 16 VAC 30-50-150. Under that rule,

the relevant community in this case, as the deputy commissioner described it, included “the cities

of Norfolk, Virginia Beach, Chesapeake, Suffolk, Portsmouth, Hampton, Newport News, and

Williamsburg.” 7 A charge which prevails in the community plainly means that which “is in

general or wide circulation or use” in the community at the time of the treatment. Webster’s

Third New International Dictionary (Unabridged) 1797 (1981) (defining the word “prevailing”).

Inferentially, then, where patients and providers of medical treatment make up a common

market, a charge that “prevail[s]” for a particular treatment may depend upon a wide variety of

characteristics of the patient and the provider, and may vary based on these characteristics, as

pricing in markets naturally does.

By relying simply on the reimbursement rate set forth in the Longshore fee schedule, the

employer misunderstands the fundamental nature of what a prevailing rate is. As the

commission correctly explained, the government-mandated reimbursement rate for injured

longshoremen or Medicare patients, standing alone, does not prove what the prevailing rate in

the community was for Armstrong’s surgery. That information establishes only what the

government would pay for treating that subset of people who are covered by those particular

programs; it does not establish what payment amount actually prevails in the entire community

for medical treatment like that received by Armstrong. Simply asking its employee whether the

Longshore fee schedule represented “what [Medicare] consider[s] to be the relative value of a

prevailing rates charged in the community.” Therefore, we will treat employer’s assignment of
error as challenging this determination by the commission.
7
The employer does not dispute this characterization of the relevant community, and
thus, for purposes of this appeal, we presume it is an appropriate definition of the community.
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particular procedure” does not achieve this end, nor does vaguely arguing (without evidentiary

support) that the community includes a large number of longshoremen, as the employer has done

in its brief. Moreover, whether the majority of patients that the medical provider treats are on

Medicare is immaterial—that statistic says nothing about the rate typically charged for

Armstrong’s particular procedure in the community. In other words, none of these suppositions

answers the ultimate question in this case, i.e., “What would a surgeon and his assistant with the

skill and experience of those that operated on Armstrong typically charge for the surgery

performed on Armstrong at the time and in the community that the surgery was performed?”

Accordingly, we agree with the commission that the employer provided insufficient evidence of

the prevailing rate in the community for Armstrong’s surgery. Therefore, the commission did

not err.

3. The Prevailing Rate in the Community As the Proper Standard

We finally address whether the commission should have considered whether the medical

bill exceeded the “regular rate charged” by the medical provider or a “reasonable rate” apart

from the prevailing rate in the community for similar medical treatment. The employer argues

that it should have. We disagree.

Relying at least partly on Code § 65.2-714, the employer asserts that the medical bill was

“excessive” as compared to these particular norms. Accordingly, it sought to establish that a

majority of the medical provider’s patients were covered by Medicare. In the employer’s view,

this would make the amount set by Medicare (and as represented in the Longshore fee schedule)

the “regular rate charged” by the medical provider, which would make that amount a

“reasonable” rate for the medical provider to receive in this case. What the employer ignores,

however, is that its liability for the payment of reasonable and necessary medical treatment is

limited only to the extent set forth in the Workers’ Compensation Act. And on this point, the Act

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is clear. Under Code § 65.2-603, “[t]he pecuniary liability of the employer for medical, surgical,

and hospital service . . . shall be limited to such charges as prevail in the same community for

similar treatment.” Although Code § 65.2-714 provides a means for the employer to recover an

“excessive” payment for medical treatment, we cannot read that section to mean “excessive” as

compared to some standard other than the prevailing rate in the same community. The Act

names an exclusive basis upon which to determine whether a charge for treatment is

excessive—whether the charge exceeds the rate that “prevail[s] in the same community for

similar treatment.” Thus, the commission did not err when it refused to consider whether the

charge in the medical bill exceeded the regular rate of the medical provider or some amorphous

“reasonable” rate.

B. Laches

As part of its third assignment of error, the employer argues that the commission erred

when it declined to apply the doctrine of laches. The employer contends that this equitable

defense ought to apply because the medical provider sought the unpaid balance of the medical

bill from the commission four years after the provider performed the surgery on Armstrong.

Because the employer has failed to provide principles of law and authorities to support this

argument, and because we find such failure significant, we hold that the employer has waived the

argument on appeal.

Under Rule 5A:20(e), an appellant must supply this Court with principles of law and

authorities in support of a particular argument. A significant omission in this regard will result

in waiver of the argument on appeal. Atkins v. Commonwealth, 57 Va. App. 2, 20, 698 S.E.2d

249, 258 (2010). As this Court has said before, “Appellate courts are not unlit rooms where

attorneys may wander blindly about, hoping to stumble upon a reversible error.” Fadness v.

Fadness, 52 Va. App. 833, 851, 667 S.E.2d 857, 866 (2008). If an appellant believes that the

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commission erred, it is incumbent upon him “to present that error to us with legal authority to

support [his] contention.” Id.

“A court of review is entitled to have the issues clearly defined and
to be cited pertinent authority. The appellate court is not a
depository in which the appellant may dump the burden of
argument and research. To ignore such a rule by addressing the
case on the merits would require this court to be an advocate for, as
well as the judge of the correctness of, [an appellant’s] position on
the issues he raises. On the other hand, strict compliance with the
rules permits a reviewing court to ascertain the integrity of the
parties’ assertions, which is essential to an accurate determination
of the issues raised on appeal.”

Id. at 850, 667 S.E.2d at 865 (quoting People v. Trimble, 537 N.E.2d 363, 364 (Ill. App. Ct.

1989)).

Here, the employer’s brief to this Court contains no legal authority in support of the

argument that the doctrine of laches ought to apply. Indeed, the entire argument is just three

sentences long. 8 The employer has not provided any legal support as to how this doctrine

applies to this case. In light of these deficiencies, we find the employer’s omission significant.

Accordingly, we hold that the employer has waived this argument on appeal.

C. Evidence Spoliation

Also as part of its third assignment of error, the employer argues that the commission

should have applied the evidence spoliation doctrine. As with its argument concerning laches,

the employer has failed to provide principles of law and authorities in support of its argument. In

8
The entire argument from the employer’s brief regarding laches is as follows:

If there is no statute of limitations, then laches must apply. For the
Commission to find there was no “neglect or omission,” when the
medical provider submitted its claim nine years after the work
injury and over four years after the medical care was rendered,
simply makes no sense. This is particularly hard to understand
when the Employer has been prejudiced—the surgeon is no longer
available to be questioned and billing records of the same
procedure for other patients were not retained.
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another short argument, the employer has simply asserted that there was evidence spoliation

without citing any legal authority in support of its proposition. 9 The employer has not provided

any legal support as to how this doctrine applies to this case. Moreover, the employer has not

explained what evidence was unavailable, nor has it explained what remedy would be

appropriate should we determine the doctrine applicable to this case. Again, we find this

omission significant. Accordingly, we hold that the employer has also waived this argument on

appeal under Rule 5A:20(e).

III. CONCLUSION

For the foregoing reasons, we conclude that the commission appropriately determined

that the employer failed to meet its burden of proving that the unpaid balance of the medical bill

exceeded the prevailing rate in the community for Armstrong’s medical treatment and that the

commission appropriately judged the propriety of the bill based only on whether the bill was

consistent with the prevailing rate in the community. We further conclude that the employer

waived its arguments regarding laches and evidence spoliation as a result of its failure to comply

with Rule 5A:20(e). Therefore, we affirm the commission’s award.

Affirmed.

9
The entire argument from the employer’s brief regarding spoliation of evidence is as
follows:

Likewise, for the Commission to find no spoliation of evidence is
error. The Commission relied upon its misunderstanding of the
Employer’s petition—that the only issue was prevailing rate, to
hold that payment records for other patients for the same surgery
were not relevant. However, what other patients pay is evidence of
what the Medical Provider’s customary rate is, as well as whether
the charge is reasonable, an issue the Employer explicitly raised.
Moreover, what the Medical Provider accepted as payment in full
from other patients for the same procedure is also evidence of the
prevailing rate. As such, the Commission’s conclusion is
unsupported and should be reversed.
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