Rawley v. J.J. White, Inc.

Appellant, Foster Rawley, is an injured worker receiving workers’ compensation benefits. His employer agreed that a surgical procedure upon Rawley’s knee was compensable. During the time his employer was seeking documentation to support the amount charged by the hospital for a private room, Rawley demanded payment of the bill and then brought a Huffman claim 1 for liquidated damages and attorneys fees pursuant to 19 Del. C. 2357. 2 The Superior Court dismissed the complaint as untimely because Rawley had not petitioned the Industrial Accident Board (“IAB”) to resolve the disagreement on the charges for medical services under 19 Del. C. § 2346. 3 Rawley argues that the Superior Court improperly dismissed his complaint. We find no error by the Superior Court and affirm.

*318 I.

Rawley sustained a compensable injury while working for Defendant-Appellee J.J. White, Inc. (“White”) on April 26, 1999. At the time, White’s workers’ compensation insurer was Liberty Mutual Insurance Company (“Liberty Mutual”). The parties reached an agreement whereby White and Liberty Mutual paid workers’ compensation benefits to Rawley, and Defendants paid various benefits, including medical expenses and compensation for lost wages and permanent disability.

In October 2003, Rawley petitioned the IAB for an order compelling the Defendants to pay for a total knee replacement surgery and lost wages that would result from the procedure. Rawley had the knee surgery on December 10, 2003, before the Industrial Accident Board considered the merits of the petition. On January 5, 2004, apparently without knowing that the surgery had already been performed, the Defendants’ counsel informed Rawley that they would pay for the surgery and for the period of disability that would follow. 4 In the same letter, White and Liberty Mutual asked Rawley to cancel the IAB hearing because the sole purpose of the hearing was to seek payment of the procedure. On January 28, 2004, Rawley informed the Defendants that his knee replacement surgery had taken place on December 10, 2003.

The Defendants received a bill from the surgeon on December 15, 2003 in the amount of $6,675.00, and paid that bill in full on January 13, 2004. They received an invoice from the hospital on April 12, 2004, which totaled $33,158.85. Liberty Mutual paid $21,008.60 on May 13, 2004 and requested additional documentation to support the remaining portion of the bill for a private room during Rawley’s four-day hospitalization. The hospital sent those documents on October 18, 2004 and Liberty Mutual paid the remainder of the bill the following day. Meanwhile, Rawley sent letters demanding payment of the medical expenses pursuant to Huffman v. C.C. Oliphant & Son, Inc. 5 on February 9, 2004 and October 7, 2004.

On March 7, 2005, Rawley filed this action against the Defendants for failing to timely pay Rawley’s medical bills as agreed in their January 5, 2004 letter. The Defendants filed an answer. They also filed a third-party complaint against the hospital, alleging that the hospital was negligent in failing to provide timely invoices to the Defendants. Rawley moved to strike the Defendants’ third-party complaint. Defendants then filed a Motion to Amend and a Response to the Motion to Strike. During oral argument on these motions, the trial judge realized that he personally knew the claimant and recused himself from the case. A new judge was assigned. That judge sent a letter to the parties instructing them to file supplemental memoranda explaining the applicability of Correa v. Pennsylvania Mfrs. Ass’n. Ins. Inc. 6

After considering the supplemental memoranda, the Superior Court dismissed Rawley’s complaint as untimely. Relying on Correa, the Superior Court held that Huffman was inapplicable to this case because the parties had not agreed that a specific bill would be paid by the Defen *319 dants, and that, therefore, the failure to pay for the private room was not a denial of Rawley’s workers’ compensation benefits. The Superior Court found that Raw-ley’s remedy was under 19 Del. C. § 2346 rather than a Huffman claim under 19 Del. C. § 2357. 7

II.

We review the Superior Court’s dismissal of Rawley’s complaint de novo 8 Dismissal of a complaint is warranted only if, accepting the plaintiffs allegations as true, the “plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof.” 9

An employer is responsible for paying compensation to an employee where the parties either enter into a voluntary agreement regarding benefits 10 or where the IAB enters an order requiring the employer to pay. 11 Under to 19 Del. C. § 2347, 12 an employer may not unilaterally terminate workers’ compensation benefits, regardless of any good faith belief that the claimant is no longer entitled to such benefits, without an order from the IAB. 13 If an employer does terminate benefits unilaterally, the employee is entitled to seek relief under 19 Del. C. § 2357, 14 *320 which includes the unpaid amount, liquidated damages and attorneys fees. 15

In Correa, the U.S. District Court for the District of Delaware considered whether an employer’s failure to pay medical bills, as opposed to fixed benefits, could give rise to a Huffman claim. 16 Applying Delaware law, the District Court found that absent an agreement to pay a specific medical bill or an IAB order to do the same, disputed medical bills must be first resolved under to 19 Bel. C. § 2846 before a Huffman claim is appropriate. 17 Thus, if an employer disputes a medical bill, the claimant should file a petition with the IAB to compel such payment. 18 The Superior Court decided that the same rationale used by the District Court in Correa was appropriate in this case and that Rawley’s complaint was untimely. We agree.

A mechanism for resolving disputes related to the reasonableness of specific medical expenses is addressed in § 2346. That section provides that any interested party may notify the , IAB if there is a dispute as to the payment of medical services. Thus, if an employer or its insurance carrier disputes a specific medical expense, the claimant’s remedy is before the IAB. The employer or insurance carrier may also petition the IAB for a resolution of the disagreement. If the IAB determines that the disputed bill is “reasonable and necessary,” then it will order that the disputed amount be paid. If an employer or insurance carrier fails to make the necessary payment after such an order to pay the bill is-, entered, the claimant may then avail himself of the remedies of § 2357 under Huffman. However, it is premature to allow the claimant to collect liquidated damages for failure to pay a disputed medical bill when that dispute is subject to resolution under § 2346. The Workers’ Compensation Act contemplates that an employer will have the opportunity to verify the reasonableness of charges related to medical services. 19 The Act further provides that the resolution of a dispute on the reasonableness of a charge for medical services shall be before the Industrial Accident Board.

Our holding that Rawley’s complaint was premature balances the employer’s right to dispute bills that are incorrect or unreasonable against the claimant’s right to seek damages under § 2357 for “any amounts due under this chapter.” 20 This rule does not prevent the claimant from seeking Huffman damages when the employer wrongfully fails to pay a specific charge for medical or other services that it has reviewed and agreed to pay or for which the IAB has ordered payment. In either circumstance, there is no further remedy before the IAB and § 2357 applies.

Rawley cites National Union Fire Ins. Co. v. McDougall, 21 for the proposition that liquidated damages under § 2357 are *321 appropriate when an employer fails to pay outstanding medical bills. He asserts that he is entitled to the same remedy afforded to the claimant in that case. The procedural posture of McDougall was factually different from the case before us, however. In McDougall, the employer failed to pay an award of actual medical expenses after the IAB had ordered such payment. Here, no specific dollar amount of payment was either ordered or agreed upon.

Rawley also argues that the facts of his case are distinguishable from those in Cor-rea. Specifically, he claims that the parties in this case had agreed to a specific medical bill, as opposed to agreeing generally that the employer will pay all' medical bills. The record does not support his argument. White and Liberty Mutual agreed that Rawleys knee surgery was compensable before receiving a bill. That is not the same as an agreement to pay a specific medical charge with knowledge of the actual charge. Nor was it an agreement to pay an unreasonable charge. The General Assembly has expressly anticipated that there may be disputes over the reasonableness of medical charges and it has created a process for the IAB to resolve such disputes in § 2346. A general agreement to pay for the expénses of a medical procedure does not preclude the employer from verifying a charge or disputing the reasonableness of the charge eventually submitted. Because the remedy available before the IAB was not exhausted in this case, we find no error by the Superior Court in dismissing Rawley’s complaint as untimely.

m.

The judgment of the Superior Court is AFFIRMED.