BY THE COURT
rule or regulation adopted by an administrative agency may
only be given binding legal effect if the agency has complied
with the requirements of the Rules and Regulations Filing Act
when it creates or amends the rule.
Filing Act requires the preparation and filing of an economic
impact statement assessing the economic effect of any
amendment to an administrative rule or regulation.
failure by an administrative agency to assess the economic
impact of an amendment of an administrative regulation
renders the amendment void and unenforceable.
Judicial Review Act permits a court to grant relief if the
agency action is unreasonable, arbitrary, or capricious.
enforcement of an accidentally amended rule, adopted in
noncompliance with the Filing Act, is an arbitrary or
from Workers Compensation Board.
D. Heath, Jr., of Law Office of Edward D. Heath, Jr., of
Wichita, for appellant.
Douglas C. Hobbs and Ryan D. Weltz, of Wallace, Saunders,
Austin, Brown & Enochs, Chartered, of Wichita, for
Hill, P.J., McAnany and Atcheson, JJ.
case illustrates why we have courts of law. There are times
when rules created haphazardly must not be enforced because
the consequences flowing from their enforcement nullify the
good policy promoted by other, properly created rules. This
is especially true here, where the rule enforced by the
Workers Compensation Hearing Officer and then the Kansas
Workers Compensation Appeals Board was unintended in its
creation-an accident at birth. Administrative agencies, for
many reasons, must follow established procedures in creating
rules, and any enforcement of a rule not so created is
arbitrary and capricious and must be struck down.
facts here are uncontested. In 2011, Darin Pinion received
horrible burns while he was working for Kan-Pak, LLC. Via
Christi Hospitals Wichita, Inc. treated Pinion for his burns.
Kan-Pak's workers compensation insurance carrier was
Travelers Indemnity Company of America. Travelers contracted
with Paradigm Management, LLC to assume the claim. In turn,
Via Christi billed Paradigm over a million dollars for
Pinion's medical treatment. Relying on the published 2011
Kansas Workers Compensation Schedule of Medical Fees,
Paradigm paid Via Christi just $136, 451.60. Via Christi
contends the payment was short by almost $600, 000.
dispute concerns a single sentence in the 2011 Kansas
Department of Labor Workers Compensation Schedule of Medical
Fees. The year before, the 2010 fee schedule introduced an
independent methodology called the "stop-loss
method" to reimburse hospitals for "unusually
costly services rendered during treatment to an injured
worker." The stop-loss method provided that if the total
charges of an inpatient hospital stay equaled or exceeded
$60, 000, the total charges were multiplied by 70 percent to
determine the allowed reimbursement. If charges did not reach