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First State Orthopaedics v. Sedgwick, IAB Hearing No. 1362536 (June 9, 2011) (Order)

First State Orthopaedics filed a motion to compel against Sedgwick seeking full payment of various medical bills that had been partially paid by Sedgwick. First State argued that because the bills were partially paid, there could be no legal defense to its claim that the remainder must be paid in accordance with Delaware's Health Care Payment System, 19 Del. C. §§ 2322B and 2322F. Sedgwick argued that it may have a good faith defense based on a preferred provider agreement that allowed it to pay less than the full charges. Further, Sedgwick asserted that First State needed to proceed by filing a formal petition for compensation rather than requesting a legal hearing before the Board. The Board initially postponed the matter for two weeks to allow Sedgwick additional time to investigate the claims. However, when the Board reconvened, Sedgwick was unable to produce a copy of the alleged preferred provider agreement.

The Board held that First State Orthopaedics did not need to file a formal petition for payment of the medical expenses because having made partial payments, Sedgwick accepted the reasonableness, necessity and causal relationship of the treatment. It noted that there was no dispute as to the amount of the charges as that is controlled by the fee schedule established by the Health Care Payment System. Further, Sedgwick had not produced a copy of the alleged preferred provider agreement or otherwise alleged a claim of improper billing, which could have given rise to an actual factual dispute. Accordingly, the Board ordered Sedgwick to pay the remainder of the partially paid medical bills in accordance with the fee schedule; interest on the unpaid invoices at the rate of 1% per month; a fine in the amount of $1,000 for each of the four partially paid bills; and an attorney's fee in the amount of $2,000.

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