Attorney for Appellant Attorney for Appellee
Michael Rader Kathryn A. Moll
Terre Haute, Indiana Nation Schoening Moll
Fortville, Indiana
Attorneys For Amicus Curiae
Indiana State AFL-CIO
William R. Groth
Fillenwarth Dennerline Groth & Towe
Indianapolis, Indiana
Mark T. Robbins
Indianapolis, Indiana
Attorneys For Amicus Curiae
Indiana Trial Lawyers Association
Craig R. Van Schouwen
Randall J. Zromkoski
Thomas F. Macke
David L. Hollenbeck
Bradley L. Banks
Valparaiso, Indiana
____________________________________________________________________________
__
In the
Indiana Supreme Court
_________________________________
No. 93S02-0209-EX-501
Barry Daugherty,
APPELLANT (PLAINTIFF BELOW),
v.
Industrial Contracting & Erecting,
Appellee (Defendant below).
_________________________________
Appeal from the Indiana Worker’s Compensation Board, No. C-147608
The Honorable G. Terrence Coriden, Judge
_________________________________
On Petition To Transfer from the Indiana Court of Appeals, No. 93A02-0110-
EX-671
_________________________________
February 5, 2004
Rucker, Justice.
Case Summary
An employee injured on the job underwent knee replacement surgery
without prior approval from his employer. Although the Worker’s
Compensation Board found the surgery reasonable and appropriate it declined
to award the employee the cost of the surgery or any sum for prospective
care and treatment because the surgery was not authorized either by the
employer or the Board. We conclude however that the employee demonstrated
“other good reason[s]” for the unauthorized medical care and therefore is
entitled to relief.
Facts and Procedural History
The undisputed facts in this case are as follows. Barry Daugherty
was an employee of Industrial Contracting & Erecting (“IC&E”). On May 8,
1997 Daugherty sustained injuries to his right knee after a fall at work.
Under applicable provisions of Indiana’s Worker’s Compensation Act (“Act”),
IC&E provided Daugherty with compensation for temporary total disability,
along with an extensive course of medical care and treatment from six
different doctors. However, the care and treatment did not relieve the
pain in Daugherty’s knee. One doctor, Dr. Robert C. Gregori, determined
that Daugherty’s injury was permanent and quiescent. As a result, on March
11, 1998 Dr. Gregori assigned Daugherty a permanent partial impairment
rating of ten percent (10%) of the right lower extremity and released him
from further care.
Because he was still experiencing pain, Daugherty requested the
Worker’s Compensation Board to appoint an Independent Medical Examiner.
The Board granted the request and appointed Dr. Frank Throop. After
conducting a physical examination, Dr. Throop determined that Daugherty
suffered lingering pain in his right knee, but concluded that Daugherty’s
injury had achieved its “maximum medical improvement.” R. at 215.
Dissatisfied with the result, and still suffering pain, Daugherty on his
own contacted Dr. Peter J. Brooks, an orthopedic surgeon at the Cleveland
Clinic. Dr. Brooks recommended that Daugherty undergo a total knee
replacement. Daugherty contacted IC&E’s worker’s compensation insurance
carrier and relayed Dr. Brooks’ recommendation. The insurance carrier
responded that the procedure was not authorized at that time. Nonetheless,
Daugherty followed Dr. Brooks’ recommendation. He underwent knee
replacement surgery, which proved to be a success, and returned to work
four months later eventually resuming his normal duties.
Daugherty filed an application for adjustment of claim with the
Worker’s Compensation Board seeking, among other things, payment of the
charges and expenses incurred for his knee replacement surgery. After
conducting a hearing, a single hearing member found in relevant part:
“Based largely upon [Daugherty’s] return to work and his credible testimony
as to his improvement following the surgery by Dr. Brooks, it is found,
with the benefits of hindsight, that Dr. Brooks’ recommended care and
treatment was reasonable and appropriate.” Order at 3. The single hearing
member went on to find, “[A]s appropriate as the care was, it was clearly
and definitively unauthorized by [IC&E] and its workers [sic] compensation
carrier at the time [Daugherty] chose to go forward with it.” Id.
Finally, the single hearing member concluded, “[B]ecause the care was
specifically indicated by [IC&E] to be unauthorized, [Daugherty] is not
entitled to payment of the charges and expenses incurred for the right knee
replacement at the Cleveland Clinic.” Id. at 4.
Daugherty appealed to the full Board, which adopted the single
hearing member’s decision by a vote of 4-3. Raising several issues,
Daugherty then sought review before the Court of Appeals. A divided panel
of the court affirmed concluding among other things “the Board did not err
when it declined to cover the cost of the surgery itself because Daugherty
proceeded without authorization from [IC&E’s] insurance carrier or the
Board . . . .” Daugherty v. Indus. Contracting & Erecting, 765 N.E.2d
1280, 1284 (Ind. Ct. App. 2002). Having previously granted transfer, we
now reverse the decision of the Worker’s Compensation Board on this issue
and remand this cause for further proceedings. On all other issues we
summarily affirm the opinion of the Court of Appeals.
Discussion
Indiana Code section 22-3-3-4 provides in relevant part:
(a) After an injury and prior to an adjudication of permanent
impairment, the employer shall furnish or cause to be furnished,
free of charge to the employee, an attending physician for the
treatment of his injuries, and in addition thereto such
surgical, hospital and nursing services and supplies as the
attending physician or the worker’s compensation board may deem
necessary. . . .
(b) During the period of temporary total disability resulting
from the injury, the employer shall furnish the physician
services, and supplies, and the worker’s compensation board may,
on proper application of either party, require that treatment by
the physician and services and supplies be furnished by or on
behalf of the employer as the worker’s compensation board may
deem reasonably necessary . . . .
(d) If, because of an emergency, or because of the employer’s
failure to provide an attending physician or surgical, hospital,
or nursing services and supplies, or treatment by spiritual
means or prayer, as required by this section, or because of any
other good reason, a physician other than that provided by the
employer treats the injured employee during the period of the
employee’s temporary total disability, or necessary and proper
surgical, hospital, or nurses’ services and supplies are
procured within the period, the reasonable cost of those
services and supplies shall, subject to the approval of the
worker’s compensation board, be paid by the employer.
Our courts have long held that under the foregoing statute an employee
generally is not free to elect at the employer’s expense additional
treatment or other physicians than those tendered by the employer. K-Mart
v. Morrison, 609 N.E.2d 17, 33 (Ind. Ct. App. 1993); Richmond State Hosp.
v. Waldren, 446 N.E.2d 1333, 1336 (Ind. Ct. App. 1983); Perez v. United
States Steel Corp., 359 N.E.2d 925, 927 (Ind. Ct. App. 1977). This view is
consistent with the majority rule, which provides:
[I]t is generally held that the employee should ordinarily not
incur medical expense without first giving the employer a
reasonable opportunity to furnish such services, and an employee
who does so will be liable for that expense. The mere fact that
claimant has more faith in the family doctor, or lacks
confidence in the employer’s doctor, is not enough to change the
rule.
5 Arthur Larson & Lex K. Larson, Workers’ Compensation Law § 94.02[3]
(2002). Nonetheless, the statute allows the employee to select medical
treatment under three circumstances: (1) in an emergency; (2) if the
employer fails to provide needed medical care; or (3) for other good
reason. Ind. Code § 22-3-3-4(d); Richmond, 446 N.E.2d at 1336.
In its brief in opposition to transfer, IC&E does not address Indiana
Code section 22-3-3-4 and its application to the facts of this case.
Rather, directing this court’s attention to Indiana Code section 22-3-3-
7(c) IC&E contends Daugherty’s failure to request a hearing before the
Board, prior to obtaining knee replacement surgery, is fatal to his claim.
See Br. in Resp. to Pet. for Trans. at 6-12. IC&E points specifically to
that portion of Indiana Code section 22-3-3-7(c) which provides, “[i]f
either party disagrees with the opinion of the independent medical
examiner, the party shall apply to the board for a hearing under IC 22-3-4-
5.” According to IC&E, once Doctor Throop determined that Daugherty’s
injury had achieved its maximum medical improvement, Daugherty was required
to seek a hearing before the Board if he did not agree with the doctor’s
opinion. We disagree.
Indiana Code section 22-3-3-7(c) begins, “[o]nce begun, temporary
total disability benefits may not be terminated by the employer unless
[certain events not at issue here occur].” I.C. § 22-3-3-7(c) (emphasis
added). The statute goes on to say, “the employer must notify the employee
in writing of the employer’s intent to terminate the payment of temporary
total disability benefits” and sets forth a procedure for the employee to
contest the employer’s decision if the employee disagrees. Id. (emphasis
added). The statute continues “[i]f the board is unable to resolve the
disagreement within ten (10) days . . . the board shall immediately arrange
for an evaluation of the employee by an independent medical examiner.” Id.
Significantly, the statute instructs:
If the independent medical examiner determines that the employee
is no longer temporarily disabled or is still temporarily
disabled but can return to employment that the employer has made
available to the employee, or if the employee fails or refuses
to appear for examination by the independent medical examiner,
temporary total disability benefits may be terminated. If
either party disagrees with the opinion of the medical examiner,
the party shall apply to the board for a hearing under IC 22-3-4-
5.
Id. (emphasis added).
At issue here are payments for “physician services and supplies,” I.C.
§ 22-3-3-4(b), and not payments for temporary total disability. The record
shows that an independent medical examiner indeed determined that Daugherty
no longer was temporarily disabled and assigned him an impairment rating.
Thus, Daugherty’s temporary total disability benefits were terminated.
However, nothing in the record shows that Daugherty disagreed with the
medical examiner’s opinion that he was no longer temporarily disabled.
Although as a part of his claim, Daugherty sought payment of TTD benefits
from the date he was assigned an impairment rating until the date he went
back to work, the record shows that the termination of TTD benefits were
not Daugherty’s primary concern. Rather, Daugherty testified, “I wanted my
knee fixed and wanted back to the line of work I did prior.” R. at 14.
Because the issue in this case has nothing to do with the independent
medical examiner’s opinion concerning Daugherty’s temporary disability,
Daugherty was not required to seek a hearing before the Board to contest
the issue. In essence, Indiana Code section 22-3-3-7(c) has no
applicability here.
The question remains whether Daugherty was required to seek Board
approval or approval from IC&E before undergoing knee replacement surgery.
As we mentioned above, the answer is generally yes. However there are
exceptions. No prior approval is necessary: (1) in an emergency; (2) if
the employer fails to provide needed medical care; or (3) for other good
reason. There is no claim here that the surgery was required because of an
emergency. Nor does Daugherty claim that IC&E failed to provide him needed
medical care.[1] In fact, at IC&E’s expense, Daugherty received the
services of over six treating physicians. Each physician essentially
determined that there was little else medical science could to do to
alleviate the pain in Daugherty’s knee. This case is not one of failure to
provide needed medical care, but rather a disagreement over the appropriate
care. Here, Daugherty argues that IC&E should bear the cost of his knee
surgery under the “other good reason” exception to the general rule.
When an employee seeks treatment other than that provided by the
employer or the Board, he or she does so at his or her own peril and risks
not being reimbursed. The mere fact that the unauthorized medical
treatment is an acceptable method of treating the condition does not mean
that the employer should pay for the treatment. However as Professor
Larson observes:
[D]ifficult questions can arise when there is a difference of
opinion on diagnosis or appropriate treatment, as when the
employer’s doctor recommends conservative measures while the
claimant thinks he or she should have surgery.
5 Larson, Larson’s Workers’ Compensation Law § 94-02[5], at 94-19 (2002).
“One way to settle this kind of controversy is to let the result turn on
whose diagnosis proved to be right.” Id. Several jurisdictions have
embraced this approach. See, e.g., Caldwell v. Vestal, 371 S.W.2d 836, 838
(Ark. 1963) (noting that claimant “acted at his peril in overriding the
insurer’s warning that the proposed operation would be at the claimant’s
own expense,” but on the strength of hindsight knowledge that the operation
was in fact necessary, the court held employer responsible for paying the
incurred medical expenses); McCoy v. Indus. Accident Comm’n, 410 P.2d 362,
365 (Cal. 1966) (declaring employee entitled to reimbursement for self-
procured treatment from her doctor because the care was “reasonably
required to cure or relieve” the effects of the injury); Mattingly v. Okla.
Indus. Court, 382 P.2d 125, 128 (Okla. 1963) (describing as “mere idle
gesture” the medical care provided by employer and holding employer liable
for employee’s successful but self-procured, unauthorized medical
expenses); cf. Halbert v. U.S. Fid. & Guar. Co, 178 N.W.2d 781, 783 (Neb.
1970) (awarding employee the costs of an unsuccessful self-procured surgery
because “it was grounded upon a reasonable belief that improvement would
result”), modified, 180 N.W.2d 879 (Neb. 1970).
We find particularly persuasive the Virginia case of Shenandoah
Prods., Inc. v. Whitlock, 421 S.E.2d 483 (Va. Ct. App. 1992). In that
case, the employee suffered a work-related lower back injury, and was
treated by several doctors, one of whom was designated as the authorized
treating physician. After reviewing tests from a physical therapist and
neurologist, the treating physician issued an evaluation that concluded the
employee could return to work without restrictions. Apparently still in
pain and dissatisfied with the evaluation, the employee sought the advice
of a specialist for a neurosurgical evaluation. At the specialist’s
suggestion, the employee underwent surgery. Prior to doing so, both the
employer and treating physician refused authorization for treatment. The
State of Virginia’s Worker’s Compensation Commission awarded medical
expenses to the employee on grounds that she “benefited from the surgery.”
Id. at 485. The employer appealed contending the surgery was not
authorized and therefore the employer was not liable for payment.
Construing a Worker’s Compensation Statute that is similar to our
own,[2] the Virginia Court of Appeals noted that without a referral from an
authorized treating physician, treatment by an unauthorized physician is
allowed in an “emergency” or “for other good reason.” Id. In that case
there was no question the treatment the employee received was not required
due to an emergency. However, acknowledging this was a case of first
impression in Virginia, and citing supporting authority from other
jurisdictions, the Court fashioned the following test:
[I]f the employee, without authorization but in good faith,
obtains medical treatment different from that provided by the
employer, and it is determined that the treatment provided by
the employer was inadequate treatment for the employee’s
condition and the unauthorized treatment received by the
claimant was medically reasonable and necessary treatment, the
employer should be responsible, notwithstanding the lack of
prior approval by the employer. These legal principles which
provide a basis for the payment of unauthorized medical
treatment are part of the “other good reasons test.”
Id. at 486 (citations omitted); accord H.J. Holtz & Son, Inc., v. Dumas-
Thayer, 561 S.E.2d. 6 (Va. Ct. App. 2002). We agree with Virginia’s
approach, and adopt the foregoing test as appropriate for evaluating the
existence of good reason under Indiana Code section 22-3-3-4. The test is
also consistent with the longstanding rule of this State, namely:
[T]erms contained in our Work[er]’s Compensation Act are to be
liberally construed so as to effectuate the humane purposes of
the Act; doubts in the application of terms are to be resolved
in favor of the employee, for the passage of the Act was
designed to shift the economic burden of a work-related injury
from the injured employee to the industry and, ultimately, to
the consuming public.
Talas v. Correct Piping Co., Inc., 435 N.E.2d 22, 28 (Ind. 1982); see also
Stump v. Commercial Union, 601 N.E.2d 327, 331-32 (Ind. 1992). We hasten
to add that reimbursement for medical treatment not authorized by the
employer, or the Board, should be the rare exception. Indeed the employee
runs a high risk that he or she will not be reimbursed for such treatment.
And the employee can avoid that risk simply by obtaining prior approval.
Nonetheless, if an employee can demonstrate good reason for the
unauthorized care, then subject to the approval of the Board, the employer
will be responsible for paying the cost of certain medical care. Applying
the foregoing test, we determine that Daugherty has made such a showing.
The record shows that Daugherty submitted to the treatment of Dr. Brooks
without obtaining approval of the employer or the Board. However, he did
first seek prior approval from the employer’s insurance carrier. This fact
suggests he acted in good faith. The record also shows that the course of
treatment being offered by IC&E was inadequate. Despite the efforts of
numerous physicians and other health care professionals Daugherty still
suffered pain and was unable to return to work performing his regular
duties. Finally, the Board specifically found that Dr. Brooks’ recommended
care and treatment was “reasonable and appropriate.” We think this is the
functional equivalent of “reasonable and necessary.” In sum, the record
before us is sufficient to demonstrate that Daugherty’s decision to obtain
unauthorized medical care fell under the “other good reason” exception to
the general rule that an employee is not free to elect, at the employer’s
expense, additional treatment or other physicians than those tendered by
the employer.
Conclusion
We reverse that portion of the Full Worker’s Compensation Board’s
decision denying Daugherty relief on grounds that his medical care was
unauthorized. This cause is remanded for further proceedings.
Shepard, C.J., and Dickson, Sullivan and Boehm, JJ., concur.
-----------------------
[1] Amicus Indiana Trial Lawyers Association argues that when IC&E’s
worker’s compensation insurance carrier informed Daugherty that it would
not “authorize” his knee replacement surgery, the carrier effectively
denied additional treatment. According to Amicus “[t]his denial
constitutes a refusal to provide care as required in I.C. 22-3-3-4(d).”
Br. of Amicus at 5. Because we resolve this issue on other grounds we
decline to address Amicus’ general proposition that a failure to authorize
care is synonymous with a failure to provide care. We do note however the
record in this case shows the insurance carrier actually informed Daugherty
that his surgery was not authorized “at that time.” R. at 229. Rather,
Daugherty was told that “once he got the [medical records concerning the
surgery recommendation] to the worker’s comp board we would just kind of go
with their decision from there.” Id. The clear indication here is that
the carrier was not failing to provide care, but rather was awaiting
further developments before making a decision one way or the other.
[2] The statute provides in relevant part:
If in an emergency or on account of the employer’s failure to provide
the medical care during the period herein specified, or for other good
reasons, a physician other than provided by the employer is called to
treat the injured employee, during such period, the reasonable cost of
such service shall be paid by the employer if ordered so to do by the
Commission.
Va. Code § 65.2-603(C).