Silent PPO Claims Another State

Silent PPO Claims Another State

It appears that the State of Oregon is dealing with the nationwide problem of the Silent PPO. The Oregonian recently reported that, under pressure from Liberty Northwest insurance company, the second largest insurer in the state of Oregon, John Shilts, the Administrator of the Oregon Workers’ Compensation Department, enacted an emergency regulation without the authority of the Workers’ Compensation Board, stating that fees based on PPO rates are legal. The purpose of the emergency ruling was to stop the barrage of lawsuits relating to fee disputes with workers’ compensation providers. Coventry, a large brokerage firm that leases their network, threatened to withdraw from the state of Oregon, thus potentially putting the state’s workers’ comp system in crisis because there would be less payers in the state.

 It’s my opinion that this is the exact opposite of how the state should be looking at the problem. It’s expensive for providers to treat workers’ comp patients, and they should be paid fairly and actually more money than what they receive from regular patients. After all, it’s the job of the provider of service to treat patients so they can return to work quickly.

The real crisis would occur if the providers joined together and refused to treat injured workers. This is what I believe the Administrator should be worried about. It seems that fairness and reasonableness are not issues that most insurance companies are concerned about.

It further appears that Oregon is several years behind California in terms of dealing with the silent PPO issue in that the Administrator is arguing contract when one does not exist. If the provider had entered into a contract with a workers’ comp payor, billed the payor, and was paid by the payor, there would not be this crisis. Most providers are not in the business of attempting to interpret a contract that really does not affect them.

The Administrator is telling the providers to review their contract. In a silent PPO setting there is nothing to review. The purpose of entering into a PPO arrangement is to receive more business for a discount. But there is no evidence that the providers are receiving referrals such that they are getting what they had bargained for.

The state of Oregon should put their citizens first, and not some out-of-state company that threatens the state, just like a child telling their friend that if they don’t get their way, they’re going to take their ball and go home.

Oregon should look to other states that are dealing with this problem. I believe there are at least 28 other states that have some sort of statute or regulations to address a Silent PPO.

In fact, the state of North Carolina has a statute that calls it an unfair trade practice (NCGS-58-50-56(h). The state of Texas is in the process of enacting new legislation on the issue. Oregon should not allow insurance companies and/or brokers dictate what is best for its citizens.

There have been several articles written throughout the country on this problem, and I would encourage anyone who is interested to look at LexisNexis and research the issue. (See resources provided at the end of this blog.)

I recently spoke with Diana Godwin, an attorney in the state of Oregon that is leading the fight against silent PPO's. Ms. Godwin has filed a suit in the Oregon Court of Appeals to challenge the validity of the emergency rule, arguing that it was enacted outside the authority of the Workers’ Compensation Board.

Ms. Godwin has extensive experience in administrative law and the workers’ comp arena. She has practiced law for more than 30 years. She said to me that providers are not going to give up their fight on this issue.

In the meantime, let's hope that the state of Oregon doesn’t wilt under the pressure.

Resources

Reid Steinfeld podcast on Silent PPOs and California workers' compensation (see Workers' Comp Law Podcasts on the Workers' Comp Law Center)

David Leonard's expert commentary on Silent PPOs and California Workers' Compensation (free download)

Denis Paul Juge's expert commentaries on Silent PPOs and Louisiana Workers' Compensation (excerpt) (full article available for purchase) (excerpt #2) (full article #2 available for purchase)