June 3, 2020
by Elyse Waters

In the midst of COVID-19 pandemic, Oregon Court of Appeals issues troubling ruling for processing new/omitted condition claims

The Oregon Court of Appeals issued its decision in Coleman v. SAIF, 304 Or App 122 (2020) on May 13, 2020. Claimant filed a claim for a left knee injury on June 12, 2015. On June 29, 2015, claimant and his attending physician submitted an 827 form for a new/omitted condition claim for medial femoral chondral defect in the left knee. The carrier issued an initial notice of acceptance on August 11, 2015, accepting a left knee strain and contusion; there was no reference to the June 29, 2015 827 form. In a chart note dated October 15, 2015, claimant’s attending physician referenced the June 2015 827 form and indicated it needed to be addressed by the carrier. The carrier did not respond to this chart note. Based on the alleged failure of the carrier to respond to the chondral defect request, claimant filed a request for hearing.

On January 29, 2016, claimant wrote the ALJ a letter, asserting the carrier’s failure to address the June 2015 827 form constituted a de facto denial because the carrier had knowledge of the condition at the time it accepted the claim for left knee strain and contusion. The ALJ rejected this argument but determined the carrier’s failure to timely respond to claimant’s January 29, 2016 letter was a de facto denial. On April 6, 2016, while litigation was still pending, claimant filed an expansion request for chondromalacia and left knee medial compartment full thickness chondral cartilage defect. The carrier issued a modified notice of acceptance, accepting both conditions, on June 7, 2016. The ALJ determined the modified notice of acceptance was untimely and regarded the carrier’s late acceptance was a rescission of its earlier de facto denial. The ALJ awarded penalties and attorney fees for unreasonable claim processing and claimant’s success in overcoming the de facto denial. The carried appealed to the Board.

The Board reversed the ALJ’s order, concluding the carrier satisfied its initial claim processing obligations with its initial notice of acceptance on August 11, 2015. The Board considered the June 2015 827 form a “pre-acceptance” request and did not constitute a new/omitted medical condition claim for the condition of medial femoral chondral defect. As a result, there was nothing for the carrier to accept or deny. The Board determined the carrier timely accepted the chondral defect with its modified notice of acceptance dated June 7, 2016, after a proper expansion request was initiated by claimant on April 6, 2016. The Board concluded the October 15, 2015 chart note from claimant’s attending physician was not sufficient to assert a claim because ORS 656.262(d) and ORS 656.267(1) do not provide for a physician to file a new/omitted medical condition claim on behalf of the worker. The Board also rejected claimant’s January 2016 letter as an assertion of a new/omitted condition claim because it failed to comply with ORS 656.267(1) as it was addressed to the ALJ, not the carrier, and it did not request the carrier’s formal written acceptance of the chondral defect condition. The Board reversed the ALJ’s award of penalties and attorney fees.

On appeal, there were three issues raised by claimant: (1) whether a new/omitted condition claim could preclude initial claim acceptance; (2) whether the June 2016 letter to the ALJ constituted the filing of a new/omitted condition claim; and (3) whether a physician can file a new/omitted condition claim on behalf of an injured worker. As to the first issue, the Court of Appeals provided an expansive discussion of statutory interpretation of ORS 656.267(1) – the statute concerning new/omitted medical condition claims. The court determined that an omitted condition claim challenges a carrier’s notice of acceptance and “necessarily, therefore, such a claim can be filed only after the acceptance of an initial claim.” The court held that a new/omitted condition claim under ORS 656.267(1) cannot preclude initial claim acceptance. Therefore, the carrier was not required to respond to claimant’s “pre-acceptance” submission of the June 2015 827 form.

The court also addressed claimant’s argument that his January 2016 letter to the ALJ satisfied the communication requirements of ORS 656.267(1) by referencing the June 2015 827 form and therefore constituted a “clear” request for formal written acceptance. The court dismissed this argument fairly quickly, explaining that ORS 656.262(6)(d) requires an “injured worker who believes that a condition has been incorrectly omitted from a notice of acceptance” to communicate his/her objections to the insurer in writing and ORS 656.267(1) requires a clear, formal written request for acceptance for the new/omitted condition claim. Despite raising the issue of the chondral defect and referencing the June 2015 827 form, the court determined the January 2016 letter did not request that the carrier accept the condition. The court rejected claimant’s argument that “challenges [carrier’s] failure” to accept the condition was the “functional equivalent” of request[ing] formal written acceptance.”

The final issue addressed by the court was whether a physician could initiate a new/omitted condition claim on behalf of an injured worker. Claimant argued that ORS 656.005(6) defines “claim” as a “written request for compensation” from an injured worker or “someone on the worker’s behalf.” Additionally, the Court of Appeals has previously held that “a physician’s report requesting medical treatment for a specified condition constitutes a claim” and a physician’s “submission of medical records and his billing constituted” a claim pursuant to the definition of claim in ORS 656.005(6). See Safeway Stores, Inc. v. Smith, 117 Or App 224, 227, 843 P2d 1000 (1992); Reynolds Metals v. Rogers, 157 Or App 147, 151, 967 P2d 1251 (1998). The carrier relied on the language of ORS 656.267(1) which states that a new/omitted condition claim “is not made by the receipt of medical billings, nor by requests for authorization to provide medical services for the new/omitted condition, nor by actually providing such medical services.” The court indicated the carrier’s reliance on this language was “misplaced” with regard to the initiation of a claim. The court determined the provisions of ORS 656.267(1) do not make it clear that physicians cannot initiate a claim for an injured worker – only that some things are “not themselves clear requests for acceptance” within the meaning of the statute.

Relying on its prior decision in Safeway Stores, Inc., the court stated that if the legislature had intended to preclude physicians from initiating claims on behalf of injured workers, it would have explicitly done so in the language of the statute. The court concluded that the Board was mistaken in its belief that an injured worker’s physician could not initiate a new/omitted medical condition claim on his or her behalf. Despite this holding, the court did hold the October 15, 2015 chart note at issue in the case was insufficient to satisfy the requirements of initiating a new/omitted condition claim under ORS 656.267(1). The court explained that it was not a “clear request” for “formal written acceptance” – at most, it was an “oblique reminder” that claimant’s purported new medical condition claim remained outstanding.

The court ultimately affirmed the Board’s order. However, its discussion regarding whether a physician can file a new/omitted condition claim is troubling as it is at odds with prior case law on the issue. In Andria D. Costello, the Board held that a worker must clearly request formal written acceptance of a new/omitted medical condition claim from the insurer. See Andria D. Costello, 55 Van Natta 498, 504 (2003), aff’d without opinion, 193 Or App 484 (2004). This case also stands for the proposition that there is no legislative intent which allows physicians to file new/omitted condition claims on behalf of workers. In analyzing ORS 656.267(1), the Board determined that the express language of the statute indicated the legislature’s intent to restrict individuals “entitled to request formal acceptance” of new/omitted condition claims to the worker. It is not clear why the Court of Appeals rejected the Board’s reliance on Costello in favor of its older cases, Safeway Stores, Inc. and Reynolds Metal. This is particularly confusing as the court ultimately determined the October 15, 2015 chart note was insufficient to constitute a request for a new/omitted condition. Given the prior case law that contradicts the court’s holding in Coleman, it is likely the case will be appealed to the Oregon Supreme Court.

In the meantime, what does this mean for claims processors and insurers? While the court determined “formal written acceptance” by a physician was required to initiate a new/omitted medical condition claim, it was not entirely clear on what language would be sufficient to do so. Each chart note received from a physician should be carefully analyzed to determine if the insurer has an obligation to process the claim. In addition, those physicians who frequently respond to concurrence requests with a separate opinion letter should be reviewed for any potential acceptance language. If you have any questions about a particular chart note used by a physician and whether there is an obligation to process it as a new/omitted condition claim request, please feel free to contact me at 503-412-3111 or .