Commonwealth Court Rejects Insurer’s Reimbursement Claim Against Pharmacy in Billing Dispute

A workers’ compensation insurer initiated a Billing Review Petition, claiming it had overpaid a pharmacy for medication previously deemed neither reasonable nor necessary in a 2015 Utilization Review Determination. The insurer sought reimbursement through the Workers’ Compensation Judge, asserting the judge's equitable authority under the Act. However, the pharmacy contested the judge’s jurisdiction, arguing it was not a proper party to the proceedings and that the Act provided no reimbursement mechanism for overpayments. Although the judge granted the insurer’s petition and ordered reimbursement, subsequent judicial review by the Commonwealth Court overturned the decision, holding that the pharmacy could not legally be joined to the proceedings and that the Act did not authorize such reimbursement.

The workers’ compensation insurer filed a Petition to Review Medical Treatment and/or Billing (Billing Review Petition), alleging that they overpaid the pharmacy for compound pain creams that were previously found to be not reasonable or necessary for treatment of the claimant’s work injury in a March 19, 2015, Utilization Review (UR) Determination. The insurer sought reimbursement from the pharmacy in the amount of $30,767.14 and argued that the Workers’ Compensation Judge had equitable powers under the Act to order the reimbursement. They also filed a petition to join the pharmacy to the workers’ compensation proceedings. 

The pharmacy argued that the judge lacked jurisdiction to order the reimbursement as the pharmacy could not be a party to the workers’ compensation proceedings and that the Act contains no reimbursement provision for insurers who overpay providers. 

The judge granted the petition and ordered the reimbursement. The insurer then filed an enforcement action in the Court of Common Pleas (the trial court), seeking to dismiss the action. However, their petition to do so was denied. 

The pharmacy then appealed to the Commonwealth Court, which held that because the pharmacy was not, and could not, be a party to the Utilization Review and the judge’s proceedings, against whom the insurer could seek judgment in the trial court, the trial court erred as a matter of law by not striking the judgment against the pharmacy on that basis. According to the court, the reimbursement awarded by the judge was not contemplated by the Act. Also, despite the fact that the pharmacy attended and participated in the judge’s proceedings to challenge jurisdiction, there was no viable basis under the Act for the judge to join the pharmacy as a party to the Billing Review Petition, even as a matter of equity. The court stated that there was no mechanism in the Act, either expressly or by implication, for an employer/insurer to recoup monies it mistakenly paid or overpaid to a pharmacy. 

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