Dr. Eric Vanderwerff, D.C. v. Texas Department of Insurance-Division of Workers' Compensation and Commissioner Ryan Brannan, in His Official Capacity and the Travelers Indemnity Company of Connecticut

ACCEPTED
05-15-00195-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
11/17/2015 12:42:43 PM
LISA MATZ
CLERK

November 17, 2015
FILED IN
5th COURT OF APPEALS
The Fifth Court of Appeals Via efilingDALLAS, TEXAS
c/o The Honorable Lisa Matz, Clerk of the Court 11/17/2015 12:42:43 PM
LISA MATZ
600 Commerce Street, Suite 200 Clerk
Dallas, Texas 75220

Re: Cause No. 05-15-00195-CV; Dr. Eric Vanderwerff, D.C. v. The Travelers
Indemnity Company of Connecticut and Texas Department of Insurance - Division
of Workers' Compensation & DWC Commissioner Ryan Brannan, in his official
capacity, In the 5th Court of Appeals, Dallas County, Texas

Post-Submission Letter Brief of Appellant in Reply to Travelers’ Letter Brief

To the Honorable Justices of the 5th Court of Appeals:

This letter is in response to the letter brief of the Travelers Ins. Co.—one of
the Defendant’s below and the Insurance Carrier, regarding the substantive issue
of statutory construction and enforcement for preauthorization of medical
treatment under the Texas Workers’ Compensation Act. Travelers argues against
the clear Legislature language of 2003 that preauthorized treatment may be later
disputed—the Legislature said No emphatically. Travelers omits reference to the
clear statutory language in dispute.

May an insurance carrier preauthorize a leg amputation or a four level spinal
fusion with screws and plates and then later say “just kidding.” The Legislature
clearly determined and made clear in 2003 that the insurance carrier is liable and
may not dispute such preauthorized care at a later date. “The insurance carrier is
liable for health care treatment and treatment plans . . . voluntarily
preauthorized and may not dispute the certified or agreed-on preauthorized
health care treatment . . . at a later date. TEX. LAB. CODE §413.014(f). How could
the Legislature be any clearer? Voluntary preauthorization creates liability and
ends any dispute.

The Legislature in 2003 made clear that since 1989 that authorization or
preauthorization meant the Insurance Carrier was liable if voluntarily agreeing to
pay medical care. The Houston 14th Court made clear in directly addressing

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Section 413.041(f) in Stinson v. Ins. Co. of the Pa., 286 S.W.3d 77 (Tex. App.—
Houston [14th Dist.], pet. denied Sept. 25, 2009):

The TWCC cannot prohibit parties from voluntarily agreeing to pay for
medical services that would otherwise require preauthorization, and any
such agreements create liability for those agreed services on the part of the
insurance carrier. Tex. Lab. Code Ann. § 413.014(f) (Vernon 2006).

Long has the word “authorize” been in the English language, with the law
unquestionably enforcing “authorize” as “to empower; to give a right or authority
to act,” with “authorized” “construed as equivalent to ‘permitted.’ Black’s Law
Dictionary Revised 4th Ed. 1968, p. 169. It is likely an oxymoron, or a
reaffirmation of “authorize,” to use the prefix “pre-” to point out the
authorization before the work is performed, which is almost always obtained in
advance for services under any policy of insurance. Any health care provider in
the State of Texas will affirm that preauthorization for medical care means
approval and liability for reasonable payment (if the payment amount is not also
preauthorized), as will any patient of a health care plan.

The History of Preauthorization and Liability under the 1989 Act

ORIGINALLY, PREAUTHORIZATION PROPERLY MEANT LIABILITY TO THE
STATE AGENCY. In 1989, the Texas Legislature in adopting the Texas Workers’
Compensation Act under Texas Revised Civil Statutes 8308 Section 8.28(a) stated
as to preauthorization:

The commission by rule shall specify those health care treatments and
services requiring express preauthorization, except for medical emergency,
by the insurance carrier. The insurance carrier is not liable for those
specified treatments and services if preauthorization is not sought by the
claimant or health care provider and either obtained from the insurance
carrier or ordered by the commission.

In 1991, the then Texas Workers’ Compensation Commission, TWCC (predecessor
to the Texas Department of Insurance-Division of Workers’ Compensation, DWC)
expressly noted in adopting initial preauthorization rules that:1

1
16 Tex. Reg. 7099, 7100,

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. . . the commission believes that such procedures should be reviewed prior
to performance, to ensure that these treatments are medically necessary
and related to the specific injury. . . .

but that all such services should be subject to preauthorization to ensure
that such treatment is necessary and related to the specific injury. . . .

The commission disagrees, noting that pre-authorization of medical
services ensured providing of treatment necessary and related to the
specific injury, . . . .

In 1993, the Texas Legislature codified the Texas Workers’ Compensation Act
making clear that preauthorization was necessary to create liability and carriers
were not liable if preauthorization was not sought and obtained or ordered:

Sec. 413.014. PREAUTHORIZATION. (a) The commission by rule shall specify
which health care treatments and services require express preauthorization
by the insurance carrier. Treatments and services for a medical emergency
do not require express preauthorization.
(b) The insurance carrier is not liable for those specified treatments and
services unless preauthorization is sought by the claimant or health care
provider and either obtained from the insurance carrier or ordered by the
commission. (V.A.C.S. Art. 8308-8.28(a).)

A Decade Later State Agency Attempted to Redefine Statutory Preauthorization
Meaning to Meant something less as Travelers erroneously asserts in conflict
with the statute. In 2000, the then Texas Workers’ Compensation Commission,
the predecessor to the DWC, apparently attempted by rule to change the decade
long law and rule, and the TWCC erroneously limited workers and health care
providers justified reliance upon written preauthorization requests for medical
care. The TWCC first stated its changed position on preauthorization in the
adoption of amendments to Rule 124.3 (28 Tex. Admin Code 124.3):

Preauthorization decisions are to be made entirely based upon medical
necessity of the treatment of the condition proposed to be treated. Issues
associated with extent of injury, compensability of the injury, or liability for
the claim are separate from the issue of whether a given treatment or
service is medically necessary. That is why approval of a preauthorization

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request does not make a carrier liable for payment if the carrier
successfully challenges the extent of injury/compensability/liability issue.
25 TEXREG 2101 (March 10, 2010)

In 2002, the TWCC amended Rule 134.600 to follow this newly adopted
interpretation of preauthorization, effective January 1, 2002, to include the
language:

(f) The carrier shall:
(1) approve or deny requests for preauthorization or concurrent review
based solely upon the reasonable and necessary medical health care
required to treat the injury, regardless of:
(A) unresolved issues of compensability, extent of or relatedness to the
compensable injury;
(B) the carrier's liability for the injury; or
(C) the fact that the employee has reached maximum medical
improvement;

28 TexReg 9908 (November 30, 2001). After the problems caused by the TWCC’s
unsupportable reinterpretation of “preauthorization” in 2000 through 2002, the
Legislature passed express language in the Act to state that “preauthorization”
means what it means—liability.

2003-- LEGISLATURE SAID PREAUTHORIZED CARE MAY NOT BE DISPUTED.

The Legislature in 2003 clearly reemphasized that preauthorization creates
liability and insurance carriers “MAY NOT DISPUTE” such treatments “AT A
LATER DATE.” See TEX. LAB. CODE §413.014(f). In 2003, Senate Bill 1804 was
passed creating express liability of carriers under 413.014 for preauthorized
treatment and prohibited an insurance carrier from later disputing the
preauthorized treatment, pharmaceuticals, and treatment plans. The Legislative
analysis of the 2003 Legislation could not have been clearer:2

Currently, a health care provider may contact an insurance carrier to get
precertification or preauthorization for certain care. After receiving the
preauthorization or precertification from the carrier, the services will be

2
http://www.capitol.state.tx.us/tlodocs/78R/analysis/pdf/SB01804S.pdf ; see also
http://www.capitol.state.tx.us/tlodocs/78R/analysis/pdf/SB01804F.pdf

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provided and billed to the insurance carrier. Later, however, the insurance
carrier may dispute the treatment and services provided or refuse to pay
them. This bill would clarify this section of the law.
* * * * *
Provides that the insurance carrier is liable for health care treatment and
treatment plans and pharmaceutical services that are voluntarily
preauthorized and prohibits the insurance carrier from disputing the certified
or agreed-upon preauthorized health care treatment and treatment plans and
pharmaceutical services at a later date.

This bill took effect in September of 2003. Our injured employees and especially
our health care providers, our doctors and clinics count on voluntary
authorization or payment--“preauthorization”-- to mean exactly what the
Legislature clarified to the then TWCC and now the DWC, that the DWC “may not
prohibit” and the Legislature clearly used the word “liable” under subsection
413.014(d) and (f) and prohibited disputes of such preauthorized care a later
date. This enforces the law as written in 1989, and properly applied through
2000, and the Legislature put the TWCC/DWC on notice that it meant what it said
in 2003. Texas Labor Code Section 413.014 currently provides under (d) and (f):

(d) The insurance carrier is not liable for those specified treatments and
services requiring preauthorization unless preauthorization is sought by the
claimant or health care provider and either obtained from the insurance
carrier or ordered by the commissioner.
(f) The division may not prohibit an insurance carrier and a health care
provider from voluntarily discussing health care treatment and treatment
plans and pharmaceutical services, either prospectively or concurrently,
and may not prohibit an insurance carrier from certifying or agreeing to pay
for health care consistent with those agreements. The insurance carrier is
liable for health care treatment and treatment plans and pharmaceutical
services that are voluntarily preauthorized and may not dispute the
certified or agreed-on preauthorized health care treatment and treatment
plans and pharmaceutical services at a later date.

While it is not yet before this Court what preauthorized treatment creates as to
liability and no longer being subject to any dispute, the erroneous position of
Travelers cannot be supported. The Court should consider the full history and
the clear language of the statute that preauthorization ends any dispute and
creates liability.

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Respectfully,
/s/ Brad McClellan
Bradley Dean McClellan
State Bar No. 13395980
Of Counsel, Law Offices of Richard Pena, P.C.
2211 South IH 35 Suite 300
Austin, Texas 78741
Brad.McClellan@yahoo.com
(512) 327-6884 telephone
(512) 327-8354 facsimile

CERTIFICATE OF SERVICE

I certify that a copy of the foregoing Appellant’s Letter Brief in Reply to Travelers’
Letter Brief was served on the through counsel of record by the method indicated
below on November 17, 2015.

DOUGLAS D. GEYSER, Assistant Solicitor General Via efiling/eservice
ADRIENNE BUTCHER, Assistant Attorney General
OFFICE OF THE ATTORNEY GENERAL
P.O. Box 12548 (MC 059), Austin, TX 78711-2548
Tel.: (512) 936-2540
Fax: (512) 474-2697
douglas.geyser@texasattorneygeneral.gov
Attorneys for DWC and Commissioner

James M. Loughlin
Stone Loughlin & Swanson, LLP Via efiling/eservice
P.O. Box 3011
Austin, Texas 78755
Facsimile: (512) 343-1385
jloughlin@slsaustin.com
Counsel for Defendant Travelers
/s/ Brad McClellan
Bradley Dean McClellan

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