MCO Process Does Not Violate Article II, Section 35

State, ex rel. Haylett v. Ohio Bureau of Workers' Comp. (12/29/99), 87 Ohio St.3d 325:

SITUATION: In 1993, the Ohio legislature passed R.C. 4121.44 and 4121.441 establishing an MCO (Managed Medical Care) program with private companies contracting with BWC to provide medical management and cost containment for state fund employers.

Haylett had an allowed workers' compensation claim. After her injury she received chiropractic treatment.

On February 9, 1998, Anthem notified Haylett and her doctor that the treatment was not medically necessary and would no longer be paid. Haylett filed an appeal. Anthem arranged another chiropractic review and that doctor agreed the treatment was not necessary. Haylett filed a second level appeal. Anthem obtained another review by a different chiropractor who concluded Haylett was not benefitting from treatment.

Haylett appealed to the Bureau of Workers' Compensation (BWC), which issued an order March 31, 1998 disallowing the treatment. Haylett appealed to the Industrial Commission. A DHO vacated the BWC decision and approved two chiropractic treatment per month for three months.

While her appeal to the Industrial Commission was pending Haylett filed this mandamus/prohibition action seeking to prevent MCOs from terminating treatment and from following the mandatory dispute resolution process under O.A.C. 4123-6-16.

STATUS: Ohio Supreme Court denies mandamus/prohibition (6-1).

Art. II, Sec. 35: Court rejects argument that there is a violation of Article II, Section 35 of the Ohio Constitution. Court says BWC administers and monitors the MCO program. BWC determines whether a claim is compensable and what conditions are allowed. BWC authorizes release of state funds to pay medical claims.

Article II, Section 35 provides:

laws may be passed establishing a state fund to be *** administered by the state, determining the terms and conditions upon which payment shall be made therefrom. *** Laws may be passed establishing a board which may be empowered to *** collect, administer and distribute such fund, and to determine all rights of claimants thereto.

Court says this is a permissive grant of authority to the legislature and not a limitation on its authority. Court says the state supervises the MCOs and makes the final decision as to the award and payment of compensation. Court rules the MCO program is not an improper delegation of authority to a private entity.

Mandatory Dispute Resolution: Court notes the MCO dispute resolution process mandates two independent reviews by the MCOs. On an adverse decision, claimant is given an explanation for the denial and an opportunity to submit additional evidence. Mandatory deadlines ensure that the dispute resolution process move quickly.

Court says this non-binding review procedure is not quasi-judicial is nature and does not violate claimant's right to WC benefits.

Due Process: Court points to XIV Amendment, U.S. Constitution and Article I, Section 16 providing for due process. It notes Haylett has a proprietary interest in her WC medical benefits. Therefore, she is protected by due process.

Court goes on to state that the risk she would be erroneously deprived due to the MCO appeal process was not great. The primary risk is the loss of time and, in this case, "time was not critical because the deprivation of services did not endanger Haylett, whose medical situation was not life-threatening." She ultimately received a hearing after the initial termination.

Court rejects Haylett's contention that Anthem has a vested interest in terminating medical treatment and so its decision is biased. Court suggests that Anthem's decisions are not binding and are subject to review. It observes that Anthem's MCO fee is not based upon number of claims pending or closed.

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