United Fire and Casualty v. Cedars Sinai Medical Center, No. 15-1769 (Iowa App. Dec. 21, 2016) address an issue not commonly before the courts - the reasonable costs of medical care. The hospital in this case charged more than $3 million in medical fees for treatment of an injured construction worker. The insurer filed an action under section 85.27(3) arguing that the commissioner erred in selecting the medical-fee reviewer, refusing to allow United Fire to submit certain evidence and accepting certain filings from Cedars Sinai. United Fire also alleges that Cedars Sinai did not have standing and that there was a accord and satisfaction. Because United Fire failed to preserve error and cannot show the medical fee dispute process should be repeated, the commissioner's action and action of the district court is affirmed.
Following claimant's over 100 day stay in the hospital, the hospital, through a third party notified the agency of its intent to use the agency review process, as United Fire had only paid approximately $1 million of a bill that was over $5 million. They named Dave Stamp as the person to perform the review. United Fire responded by letter, indicated that the dispute was complicated and nominated Paul Thune as the reviewer, essentially arguing that Stamp couldn't be the reviewer because he was a claimant's attorney.
Penny Maxwell rejected Thune and informed the parties Stamp would perform the review. Stamp indicated that the review might not resolve the dispute, but the commissioner directed him to move forward, before either party had filed a motion. The commissioner indicated that if the process did not resolve the dispute, a contested case process could be used.
Stamp withdrew as reviewer and two more reviewers failed to complete the process. A reviewer hired by Sequetor, who primarily did collection work, was hired. United objected. Deputy Christenson affirmed the reviewer and the reviewer indicated that an additional $2 million plus was owed.
The court agrees that United Fire did not preserve error that Penny Maxwell should not have been involved, because this had not been raised before the agency. The court finds that the reviewer did not have a conflict of interest. The court also finds that United Fire did not preserve error on the claim of procedural due process. United Fire had argued that they should have been given the opportunity to provide legal arguments to the reviewer, but the court rejected this argument. The court finds that this was not required since the review process is to address the necessity of services provided and the reasonableness of charges. The court also finds that Sequetor had standing to use the administrative procedure under 876 IAC 10.3. They finally concluded that accord and satisfaction did not prevent the hospital from seeking additional payment, in large part because there was no indication in the records that the hospital knew that the original $1 million check demonstrated an accord and satisfaction.
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