On June 16, 2026, the Pennsylvania Supreme Court decided 700 Pharmacy v. Bureau of Workers’ Compensation Fee Review Hearing Office (State Workers’ Insurance Fund), Nos. 97-101 MAP 2024. A five to two majority held that the Anti-Referral Provision of the Workers’ Compensation Act, bars physician self-referrals only for the eight categories of services the statute names. Prescription drugs and professional pharmaceutical services are not among them, so an employer/carrier cannot rely on the Anti-Referral Provision to deny payment for medications a claimant fills at a pharmacy in which the prescribing physician holds a financial interest.
Background
The Anti-Referral Provision makes it unlawful for a provider to refer a person for “laboratory, physical therapy, rehabilitation, chiropractic, radiation oncology, psychometric, home infusion therapy or diagnostic imaging, goods or services” if the provider has a financial interest in the entity that receives the referral. In the consolidated cases, treating physicians who held a stipulated financial interest in a pharmacy wrote prescriptions for their workers’ compensation claimants, and the pharmacy filled them. The carrier refused payment, arguing that the prescriptions arose from prohibited self-referrals. The fee review hearing officer agreed and denied the pharmacy’s fee review applications, and the Commonwealth Court also agreed, affirming, treating the phrase “goods or services” as a catchall broad enough to capture prescription drugs.
The Holding
The Supreme Court reversed. The majority read the statute’s plain language to limit the prohibition to the eight enumerated services. In its view, the phrase “goods or services” modifies the enumerated list rather than standing on its own, so the provision reaches, for example, laboratory goods or services and diagnostic imaging goods or services, but does not open a separate catchall category. The Court pointed to the word “or” between “home infusion therapy” and “diagnostic imaging” as marking a closed list of eight alternatives, and it reasoned that reading “goods or services” as an independent catchall would render the eight enumerated services to be surplus.
The Court acknowledged its earlier description of the provision as a cost containment measure meant to keep physicians from acting in their own self-interest, but it held that this general purpose could not displace the words the Legislature chose. If the General Assembly wishes to reach self-referrals for medications, the Court said, it must amend the statute.
What This Means for Carriers and Self-Insured Employers
The decision removes a primary defense that has been used to challenge pharmacy charges. The Anti-Referral Provision may no longer be invoked to deny payment for prescription drugs or pharmaceutical services on the ground that the prescribing physician owns or holds an interest in the dispensing pharmacy. The defense remains intact for the other eight enumerated services, and other tools for contesting treatment that is not reasonable or necessary, including utilization review, are unaffected by this ruling.
Practical Considerations
Some considerations to consider are to reassess pending fee review and denial files that rest on a self-referral theory tied to prescription drugs and modify any denial onto a defensible basis. A denial grounded solely on the Anti-Referral Provision now carries penalty and unreasonable contest fee exposure under Sections 435 and 440 of the Act.
Further, employers and carriers should preserve any Anti-Referral Provision as a defense for the eight enumerated services and for cross-referral arrangements, both of which the decision leaves intact.
Related to the use of prescription medication, carriers should return to the use of utilization review to test the reasonableness and necessity of the medications themselves, which this decision does not touch.
Finally, if appropriate, employers and carriers should confirm the license held by the billing entity. If it is primarily a goods supplier, repackager, or distributor rather than a licensed pharmacy, consider a provider-status challenge to its fee review standing as a “medical provider” under the recent Commonwealth Court Decision in Scomed.
For questions about how this decision affects your claims handling or pending fee disputes, please contact Christopher Scott at cscott@tthlaw.com or 717.237.7111