Do Workers' Compensation Insurers Have to Pay Disputed Medical Bills Before Determination That Treatment Was Necessary ?
In American Manufactures Mutual Insurance Company v. Sullivan, 526 U.S. 40, 119 S. Ct. 977, 143 L. Ed. 2d 130 (1999), the question before the Supreme Court was whether the Due Process Clause required workers' compensation insurers to pay disputed medical bills prior to a determination that the medical treatment was reasonable and necessary. Id. at 59.
The employees asserted that under Pennsylvania's workers' compensation law they had a protected property interest in the payment of workers' compensation medical benefits.
They argued that once the employer's liability was established for the work injury the employer was obligated to pay the medical benefits because the benefits constituted a property interest that could not be withheld without providing due process.
The Supreme Court rejected the employees' argument, noting that the employees' property interest was fundamentally different because Pennsylvania law did not entitle employees to payment for all medical treatment once liability attached, but only "necessary" and "reasonable" medical treatment. Id. at 60 (citing 77 P.S. 531).
Employing a two-part test, the Supreme Court held the employees did not have a protected property interest because, although the employees cleared the first hurdle and established employer liability for the injury, they had not yet cleared the second hurdle and established that the particular medical treatment was reasonable and necessary. Id. at 61.