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Villanueva v. Federal Express


January 4, 2008


On appeal from the Division of Workers' Compensation, Docket No. 2005-13121.

Per curiam.


Submitted December 10, 2007

Before Judges S.L. Reisner and Baxter.

Federal Express (Fed Ex) appeals from a March 22, 2007 order entered by the Division of Workers' Compensation, ordering Fed Ex to pay the $61,428 bill of Dr. Donald H. Frank for treatment rendered to Fed Ex's employee Sammy D. Villanueva (petitioner or Villanueva), plus $5400 in counsel fees and costs. We affirm.


Villanueva, a long-time employee of Fed Ex, was referred to Dr. Frank, a neuro-surgeon, by his treating neurologist, J. Erinna Monck. On April 21, 2003, Dr. Frank sent Dr. Monck a report opining that Villanueva had a large herniation at C4-5 and bulging at C3-4 "with apparent cord compression." The patient was complaining of numbness in his fingers and right leg. Dr. Frank indicated "the possibility of progressive irreversible neurological deficit" and the necessity of surgery. On May 17, 2005, Dr. Frank performed extensive spinal surgery on Villanueva.

Villanueva filed a claim petition on May 6, 2005, alleging that he had sustained injury to his cervical spine, neck nerves, nervous system "and complications arising therefrom," as a result of occupational exposure at work between January 1993 and April 2006. Fed Ex filed its answer to the petition on August 29, 2005, denying that the condition was work-related and putting Villanueva "to his proofs regarding all aspects of a compensable claim." Dr. Frank intervened in the matter to assert a claim for payment of his bill for the surgery, for which he asserted a charge of $61,428, only $7,409.94 of which had been covered by Villanueva's health insurer CIGNA. See N.J.S.A. 34:15-15; N.J.A.C. 12:235-3.10(a)3 (permitting a health care provider to intervene in a pending workers' compensation action to seek payment for medical services provided to the injured worker); Univ. of Mass. Mem'l Med. Ctr., Inc. v. Christodoulou, 180 N.J. 334, 345-46 (2004).

A hearing was held on March 1, 2007, on the issue of Dr. Frank's medical treatment of petitioner.*fn1 Dr. Frank testified that when he examined Villanueva in April 2005, he found severe compression of the spinal cord. He testified that there was an "urgent" need for surgery because otherwise Villanueva "could become paralyzed from the neck down." Therefore, he proceeded with the surgery on May 17, 2005. The surgery consisted of "[a]nterior cervical diskectomy and arthroedesis fusion and plating at C3-4, C4-5 and C5-6." Dr. Frank also testified that he performs this type of surgery frequently and that the amounts he charged for the surgery on petitioner were necessary and reasonable. He also testified that the charges were consistent with amounts he had billed and been paid in connection with other workers' compensation cases.

On cross-examination, Dr. Frank testified that he was "sure" that his office contacted "Mr. Villanueva's Workers' Compensation carrier" to request authorization for the treatment he performed. It was something his secretary would have done, however, and he did not have personal knowledge of its having been done. He testified that he did not agree to accept petitioner's health insurance as full payment for the operation. He expected to be paid by the workers' compensation carrier, based on his conclusion that petitioner's medical condition was related "within a reasonable degree of probability to his employment activity at Fed Ex." He also testified that he billed CIGNA because CIGNA imposed time limits on submission of claims, and it was in his patient's interest to obtain some insurance payment of the bill in case workers' compensation would not pay. Unless insurance paid the bill, Dr. Frank would charge Villanueva.

At the hearing, however, the employer's counsel argued that Dr. Frank had implicitly agreed to accept whatever CIGNA would pay, and that he was limited to that sum and could not attempt to collect the balance of his bill from the petitioner or the workers' compensation carrier. She also argued that Dr. Frank did not "know" whether his office contacted the workers' compensation carrier to request authorization for the treatment. At this hearing, however, the employer did not produce any evidence that Dr. Frank had not requested prior authorization.

On March 22, 2007, the judge approved a settlement of Villanueva's underlying permanent disability claim. She then addressed Dr. Frank's claim. Prior to the hearing, Dr. Frank's counsel had filed a brief with several attachments intended to show that Dr. Frank's office had in fact notified the workers' compensation carrier before performing the surgery. At the hearing, the employer's counsel objected to those attachments. In response, Dr. Franks' counsel sought permission to present further witness testimony to authenticate the documents. The judge denied the request as untimely, and struck the exhibits attached to the brief. The judge then placed an opinion on the record in which she determined that the employer should pay Dr. Frank's bill.

Relying on Benson v. Coca-Cola, Co., 120 N.J. Super. 60 (App. Div. 1972), she reasoned that no demand for treatment is necessary if it would be futile, that is, if . . . the employer has denied the claim. For if the respondent has denied the claim, it is obvious it would not authorize medical treatment. In that situation, an injured employee may obtain necessary medical treatment on his own and the respondent will be liable for the reasonable charges for that treatment if the employee's claim is later found to be compensable.

The judge noted that not only did the employer deny that the condition was work-related, it also did not file its answer until August 24, 2005, although the petition was filed on May 6, 2005. She concluded

I believe it is reasonable to conclude that the denial of claim in August would also have been a denial in July or June or May. And as such, respondent was refusing liability for workers' compensation benefits, including medical treatment. Under these circumstances, it would have been futile for petitioner to request authorization for treatment in May.

The judge also rejected the employer's argument that Dr. Frank should be limited to what CIGNA paid him. She concluded that Dr. Frank was in a catch 22 situation. If he did not file with CIGNA within a specified time, CIGNA would pay nothing, and he could not count on being paid by workers' compensation since the respondent had denied petitioner's claim. In order to protect himself somewhat, Dr. Frank had no choice but to file with CIGNA. But the amount paid by CIGNA pursuant to its contract with Dr. Frank does not bind Dr. Frank if another entity is liable. That is, the contract with CIGNA agreed to by Dr. Frank does not inure to the benefit of another not a party to the CIGNA contract.

Based on Dr. Franks' unrebutted testimony, the judge also concluded that the surgery was necessary and that the charges were reasonable and customary. The judge therefore ordered the employer to pay Dr. Frank's bill, his $5,400 counsel fee and $200 stenographer's fee.


Our review of the Workers' Compensation judge's decision is limited to determining whether it is supported by substantial credible evidence in the record and whether it is consistent with applicable law. Close v. Kordulak Bros. 44 N.J. 589, 599 (1965); Rova Farms Resort v. Investor's Ins. Co., 65 N.J. 474, 483-84 (1974).

In light of that standard, we find no basis to disturb the judge's decision that Dr. Frank's treatment was necessary, that the charges were reasonable, and that it would have been futile for the employee or Dr. Frank to seek the employer's advance approval for the surgery. See Benson v. Coca-Cola, supra, 120 N.J. Super. at 64-65; D'Amico v. General Electric Supply Co., 16 N.J. Super. 472, 483 (Law Div. 1951), aff'd, 22 N.J. Super. 199 (App. Div. 1952), aff'd, 12 N.J. 607 (1953); N.J.S.A. 34:15-15. Clearly where the employer denied that the employee's medical condition was work-related, it would not have authorized $61,000 worth of surgical treatment to be paid by workers' compensation. Further, according to Dr. Frank, there was an urgent need to perform the surgery in order to avoid possible paralysis. If the employer did not even answer the petition for three and one half months, and then denied any liability, there is no reason to believe it would have promptly approved the surgery.

Having reviewed the record, however, we are constrained to add that we find no legally competent evidence that Dr. Frank did not give the employer or its insurer prior notice of the need for the surgery. He testified at the hearing that he was sure that his office gave notice, because that was his customary practice. Not only did the employer's counsel fail to make an issue of the lack of prior notice at the March 1, 2007 hearing, she also did not present any testimony or other evidence at the hearing that the workers' compensation carrier or the employer did not receive notice.*fn2 Apparently, the employer raised the issue in its post-hearing brief. Dr. Frank's counsel proffered documents, attached to her brief, which indicated that Dr. Frank's office did send advance notice to the workers' compensation carrier. Under the circumstances, we believe it would have been the better practice for the judge to have permitted Dr. Frank to supplement the record with brief testimony authenticating those documents.

The employer's argument that Dr. Frank should be limited to reimbursement by CIGNA for a fraction of the reasonable cost of the surgery is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We reject these arguments substantially for the reasons stated in the opinion of the trial judge. By its terms, N.J.S.A. 34:15-15.1 does not limit Dr. Frank to what CIGNA paid him. It only requires that to the extent a health insurer has paid some of the cost, the employer or its carrier must reimburse the health insurer.

Finally, we reject the employer's challenge to the award of counsel fees. We find no indication in the record that Fed Ex raised this issue before the Workers' Compensation judge, and the issue cannot be raised for the first time on this appeal. See Neider v. Royal Indemnity Ins. Co., 62 N.J. 229, 234 (1973). However, we also conclude the argument is without merit.

The Workers' Compensation statute, N.J.S.A. 34:15-15, and regulations, N.J.A.C. 12:235-3.10(a)3, permit a medical provider to either intervene in the employee's compensation action or file a separate petition to obtain payment for services provided to the employee. Once having intervened, as Dr. Frank did here, the medical provider is a party to the action and can be awarded counsel fees if he prevails. See N.J.S.A. 34:15-64a (The compensation judge "may allow to the party in whose favor judgment is entered, costs of witness fees and a reasonable attorney fee, not exceeding 20% of the judgment.").

Moreover, in Christodoulou, supra, 180 N.J. at 345-46, the Supreme Court acknowledged the medical provider's right to intervene in a pending workers' compensation action, but also emphasized that it was primarily the employee's obligation to seek payment of the doctor's bill. Otherwise the doctor can file suit in the Law Division to collect the bill from the employee. Id. at 350-52. If the employee pursues payment of medical bills in the compensation action, the employee may recover a counsel fee. See N.J.S.A. 34:15-64a. We perceive no sensible reason why the employer should avoid paying a counsel fee if the doctor's attorney rather than the employee's attorney takes the laboring oar in the workers' compensation hearing.


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