BY THE COURT
Parties cannot confer subject matter jurisdiction by consent,
waiver, or estoppel, and parties cannot convey subject matter
jurisdiction on a court by failing to object to the
court's lack of jurisdiction.
Whether subject matter jurisdiction exists is a question of
law over which this court's scope of review is unlimited.
reviewing an agency action under the Kansas Judicial Review
Act, a court shall grant relief only when it determines that
the agency violated one or more of the provisions listed in
K.S.A. 2018 Supp. 77-621(c)(1)-(8).
Under the facts of this case, the Workers Compensation
Appeals Board's enforcement of the plain language of the
fee schedule created under the director of workers
compensation's statutory authority was not unreasonable,
arbitrary, or capricious under K.S.A. 2018 Supp.
of the judgment of the Court of Appeals in 54 Kan.App.2d 624,
402 P.3d 602 (2017). Appeal from Workers Compensation Board.
of the Court of Appeals reversing the Workers Compensation
Board is reversed. Judgment of the Workers Compensation Board
D. Heath, Jr., of Law Office of Edward D. Heath, Jr., of
Wichita, argued the cause and was on the briefs for
D. Weltz, of Wallace, Saunders, Austin, Brown & Enochs,
Chartered, of Overland Park, argued the cause, and Douglas C.
Hobbs, of the same firm, of Wichita, was with him on the
briefs for appellee Paradigm Management Services, LLC.
case concerns a fee dispute between a hospital that provided
extensive medical services to a severely burned worker and a
workers compensation insurance carrier that paid the hospital
considerably less than the billed amount for those services.
A hearing officer ruled in favor of the carrier, Paradigm
Management Services, LLC (Paradigm), essentially holding it
had appropriately paid the amount required by the schedule
for maximum medical fees established by the director of the
Division of Workers Compensation. His decision was upheld by
the Workers Compensation Appeals Board (Board).
the hospital, Via Christi Hospitals Wichita, Inc. (Via
Christi), appealed to the Court of Appeals under the Kansas
Judicial Review Act (KJRA), K.S.A. 77-601 et seq., the court
reversed. It essentially held the Board's enforcement of
the maximum medical fee schedule was unreasonable, arbitrary,
and capricious because the applicable fee limiting provision
had been accidentally created. So Paradigm owed Via Christi
considerably more money. Via Christi Hospitals Wichita,
Inc. v. Kan-Pak LLC, 54 Kan.App.2d 624, 630, 402 P.3d
602 (2017). Now Paradigm has appealed via K.S.A. 20-3018(b).
conclude we have subject matter jurisdiction of this appeal
under K.S.A. 2018 Supp. 77-614 of the KJRA. But as a matter
of law, the relief sought by Via Christi-and ordered by the
Court of Appeals-cannot be granted in this proceeding under
K.S.A. 2018 Supp. 77-621(c). So we reverse the Court of
Appeals panel and affirm the hearing officer and the Board.
AND PROCEDURAL BACKGROUND
Pinion suffered severe burns while working at Kan-Pak, LLC
(Kan-Pak) in 2011 and was treated that same year. Via Christi
provided medical treatment in the total billed amount of $1,
048, 569. Kan-Pak's workers compensation insurance
carrier was Travelers Indemnity Company of America
(Travelers). Travelers contracted with Paradigm, an
out-of-state corporation which specializes in medical
management of complex workers compensation cases, to assume
Travelers' obligations for Pinion's past and future
medical needs. Of Via Christi's bill, Paradigm only paid
$136, 451.60 in purported full payment under the 2011
Schedule of Medical Fees. ("2011 maximum fee
schedule"). See, e.g., K.S.A. 2011 Supp. 44-510i; K.A.R.
year earlier, in 2010, the Division of Workers Compensation
(Division) had created a "stop-loss" provision in
its fee schedule. The Division's stated reason for the
stop-loss methodology was to compensate hospitals for
"unusually costly services rendered during treatment to
an injured worker." This provision essentially stated
that if the total charges of an inpatient hospital stay
equaled or exceeded $60, 000, those charges were multiplied
by 70 percent to determine the allowed reimbursement. But if
the total charges did not reach the $60, 000 stop-loss
threshold, then hospitals were reimbursed using the Medicare
Severity-Diagnosis Related Group (MS-DRG) method which had
previously been used.
stop-loss methodology was repeated in the 2011 maximum fee
schedule. But without the knowledge of the Division's
manager of medical services or the appointed medical
administrator (see K.S.A. 2011 Supp. 44-510i), the 2011
version also included the sentence: "If the MS-DRG level
of reimbursement exceeds the $60, 000 stop-loss threshold,
the facility shall be paid billed charges multiplied by 70%
or the MS-DRG level whichever is least; all other
rules apply to making this determination." (Emphasis
origin of the "whichever is least" language-upon
which Paradigm relies for its lowered payment to Via
Christi-is unclear. Meeting minutes contain no indication
that anyone within the Division, or advising the Division,
had noticed the insertion of this language. The manager of
medical services, Anne Haught, was responsible for guiding
the 2011 maximum fee schedule through the process of
adoption. See K.S.A. 77-602(j) ("'Rulemaking'
means the process for formulation and adoption of a rule and
regulation."). As Haught testified during a hearing, the
Division's adding of the phrase "whichever is
least" would have been a significant enough change to
come up as part of the process of adopting the 2011 maximum
fee schedule. But it was not discussed which, according to
her testimony, indicated it was not intended to be there. In
fact, no one in the record available to this court explained
how this particular language was inserted. The 2011 maximum
fee schedule was adopted and incorporated by reference into
K.A.R. 51-9-7. See K.S.A. 2011 Supp. 44-510i(c) (The workers
compensation "director shall prepare and adopt rules and
regulations which establish a schedule of maximum fees for .
. . hospital . . . services.").
Paradigm relies on the "whichever is least"
language in the 2011 maximum fee schedule to justify its
lowered payment, Via Christi responds that Paradigm should
have paid $732, 426.97-70% of the billed charges-or an
additional $595, 975.37, because the "whichever is
least" amending language was accidentally included. This
language was not in the 2010 or 2012 versions, or any
Christi proceeded with the steps set forth in K.S.A. 2015
Supp. 44-510j to try to resolve the fee dispute with
Paradigm, which had begun with Paradigm's notification to
Via Christi under the statute's subsection (a)(1)
regarding the existence of a dispute. When resolution between
the parties was unsuccessful, it was followed by Via
Christi's request for an informal hearing before the
director. K.S.A. 2015 Supp. 44-510j(a)(1). The informal
hearing was unsuccessful and the director scheduled a formal
hearing. K.S.A. 2015 Supp. 44-510j(d). After the formal
hearing, a hearing officer in the Division agreed with Via
Christi that the "whichever is least" language was
erroneously included. But he held that a hearing officer did
not have authority to strike the language and thus could not
rule in favor of Via Christi.
Christi then appealed this decision to the Board under K.S.A.
2015 Supp. 44-510j(d)(2). The Board is within the Division.
See K.S.A. 2015 Supp. 44-555c(a). Like the hearing officer,
the Board found the addition of the "whichever is
least" language was accidental. But it too ruled it had
no authority to void the 2011 maximum fee schedule's
amending language to hold in Via Christi's favor.
Christi then appealed the Board's decision directly to
the Court of Appeals under K.S.A. 2016 Supp. 44-556(a). The
panel observed that the director of workers compensation was
statutorily tasked with adopting rules and regulations
"which establish a schedule of maximum fees for medical,
surgical, hospital, dental, nursing, vocational
rehabilitation or any other treatment or services provided to
employees under the Workers Compensation Act." Via
Christi, 54 Kan.App.2d at 627 (citing K.S.A. 2016 Supp.
panel then ruled the amendment in the 2011 fee schedule was
not correctly promulgated under the Rules and Regulations
Filing Act-which made the amendment void. 54 Kan.App.2d at
629-30 (citing K.S.A. 2016 Supp. 77-415). Specifically, the
Act's required "determination of costs by the agency
was not done here for the inserted 'whatever is
least' language amending the 2011 fee schedule." 54
Kan.App.2d at 629.
panel effectively held it did have authority, under K.S.A.
2016 Supp. 77-621(c) of the KJRA, to declare the Board's
enforcement of the improperly promulgated amendment to the
2011 maximum fee schedule to be unreasonable, arbitrary, or
capricious. It reversed the Board and held in Via
Christi's favor, no longer limiting the hospital to the
payment of approximately 15% of its bill.
"If we were to approve the Board's ruling and
enforce this rule, our holding would be as arbitrary as the
Board's. Essentially, we would be saying that it is a
rule; therefore, it must be enforced even though it was
created accidentally. Once created, rules are not
indestructible. The Judicial Review Act permits this court to
grant relief if the agency action is unreasonable, arbitrary,
or capricious. See K.S.A. 2016 Supp. 77-621(c). The
enforcement of an accidentally created rule is the
very picture of an arbitrary or ...