The anti-referral provision in Pennsylvania’s workers’ compensation law does not prevent a provider from referring a patient to a pharmacy in which the provider has a financial interest.
The Pennsylvania Supreme Court has ruled 5-2 that the law’s prohibition on self-referrals is limited to the eight enumerated categories of services listed in the plain language of the statute — a list that does not include prescription drugs or professional pharmaceutical services.
The court rejected the argument that the phrase “goods or services” in the law acts as a catchall category to bring other unenumerated services, including prescription drugs and professional pharmaceutical services, within the ban on self-referrals.
The high court reversed orders by a Commonwealth Court and the Bureau of Workers’ Compensation that the law did apply to pharmaceuticals in cases brought by two doctors.
Drs. Miteswar Purewal and Shailen Jalali were the treating physicians for several patients who had sustained injuries arising during the course of their employment and were receiving workers’ compensation benefits pursuant to the Workers’ Compensation Act (WCA).
As part of the claimants’ treatment plans, the doctors wrote prescriptions for various medications, which were filled by 700 Pharmacy. The State Workers’ Insurance Fund, however, refused to pay for the claimants’ prescriptions. The insurer insisted it was not required to pay for the prescriptions pursuant to the anti-referral provision because the prescriptions were the result of what it believed were unlawful self-referrals.
In 1993, the General Assembly amended the WCA with a provision that states, in part, that: “Notwithstanding any other provision of law, it is unlawful for a provider to refer a person for laboratory, physical therapy, rehabilitation, chiropractic, radiation oncology, psychometric, home infusion therapy or diagnostic imaging, goods or services pursuant to this section if the provider has a financial interest with the person or in the entity that receives the referral.”
The doctors stipulated that they had a financial interest in the 700 Pharmacy. Despite that stipulation, the pharmacy contended that the treatments in question were not prohibited self-referrals because the anti-referral provision does not include a bar on self-referrals for prescription drugs and pharmaceutical services.
However, the insurer convinced the state Bureau of Workers’ Compensation and then the Commonwealth Court that the phrase “goods and services” could be interpreted to include prescription drugs and pharmaceutical services as well as other categories that are not specifically enumerated. They argued that their reading would be in keeping with the cost containment intent of the provision.
The Commonwealth Court concluded that the phrase “goods or services” indicated that the General Assembly did not intend to restrict the provision’s sweep “only to the specific items enumerated but left a broader category open” and that prescription drugs and professional pharmaceutical services fall comfortably within the “goods or services” catchall.
On appeal, the Supreme Court considered whether a pharmacy is entitled to payment for prescription drugs and pharmaceutical services provided to a claimant whose physician has a financial interest in the pharmacy. The high court said the issue presented a question of statutory interpretation.
The high court commented that the Commonwealth Court’s interpretation may appear reasonable if the phrase “goods or services” is read in isolation. However, the court added, it does not interpret statutory language in isolation, but rather “with reference to the context in which it appears.”
When read within the context of the provision as a whole, the Commonwealth Court’s reading becomes unreasonable because it ignores the enumerated services that proceed “goods or services.” The high court said thee proper reading of the plain language is that the phrase “goods or services” modifies the enumerated medical services such that it is necessary to read “goods or services” after each enumerated service, i.e. “it is unlawful for a provider to refer a person for laboratory … goods or services pursuant to this section[;]” “it is unlawful for a provider to refer a person for physical therapy … goods or services pursuant to this section[;]” “it is unlawful for a provider to refer a person for rehabilitation … goods or services pursuant to this section;” etc.
The high court said this is the only interpretation that gives effect to the entirety of the provision.
“Thus, the plain language of the statute makes clear the General Assembly did not intend for ‘goods or services’ to be a catchall category bringing non-enumerated medical services within the Anti-Referral Provision’s prohibition on self-referrals,” the majority opinion states.
The high court acknowledged arguments by the insurer and in the dissent that the intent of the provision “was to contain costs by preventing physicians from acting in their own self-interest” in the workers’ compensation arena.
According to the insurer, “banning prescription drugs and professional pharmaceutical services self-referrals fully comports with the stated legislative intent and interpreting the anti-referral provision through this type of plain language contextual analysis is consistent with the rules of statutory construction.”
But the court said that these interpretations “completely ignore the General Assembly’s inclusion of the enumerated services, rendering them absolutely meaningless.”
“[W]e are required to look to the statute’s plain language in interpreting the provision. We cannot ignore the statute’s plain language in pursuit of its spirit,” the court’s majority asserted.
The general intent may have been to contain costs by preventing physicians from acting in their own self-interest. Recognition of that general intent, however, does not alter the plain language used by the General Assembly, nor does it necessarily mean the General Assembly barred treating physicians from making self-referrals for every possible type of service, the high court added.
The majority opinion closed by noting that if the legislature, like the dissents, wishes to bring self-referrals for prescription drugs and pharmaceutical services, or any other type of service, within the self-referral prohibition, it is free to do so. “Our interpretation merely recognizes it has so far failed to bar such referrals,” the justices concluded.
Topics
Workers’ Compensation
Pennsylvania
