Pennsylvania's highest court has barred workers' comp insurers from using the state's anti-referral law to refuse paying pharmacy bills.
In a June 16, 2026 ruling, the Supreme Court of Pennsylvania sided with 700 Pharmacy over the State Workers' Insurance Fund, resolving five consolidated cases over who pays for injured workers' prescriptions. Justice Mundy wrote the majority opinion.
The setup was simple. Injured workers receiving comp benefits got prescriptions from their treating physicians. 700 Pharmacy filled them. The insurer, the carrier for the workers' employers, refused to pay. Its argument: the bills came from unlawful self-referrals, because the prescribing physicians had a financial interest in the pharmacy. Those physicians stipulated that they had a financial interest in the pharmacy, the opinion says. They were not parties to the appeal, and the court did not find that either had broken the law.
When the insurer refused payment, the pharmacy filed fee review applications with the Bureau of Workers' Compensation. A hearing officer denied them, ruling the prescriptions stemmed from prohibited self-referrals. The Commonwealth Court agreed and affirmed. The pharmacy then took the question to the state Supreme Court, which granted review.
Everything hinged on the Workers' Compensation Act's Anti-Referral Provision. It bars a provider with a financial interest from referring patients for eight named services: "laboratory, physical therapy, rehabilitation, chiropractic, radiation oncology, psychometric, home infusion therapy or diagnostic imaging, goods or services."
The insurer read "goods or services" as a catchall wide enough to capture prescription drugs and pharmacy services, even though neither is on the list. The hearing officer and the Commonwealth Court accepted that reading. The Supreme Court did not. It held the ban covers only the eight listed services, and that "goods or services" describes those services rather than opening a separate, open-ended category. The word "or" before "diagnostic imaging," the court said, marks the end of a closed list of eight.
The justices found more support elsewhere in the statute. A separate provision, two paragraphs later, deals specifically with paying for prescription drugs and pharmacy services. To the court, that showed lawmakers knew how to name those services when they wanted to, and chose not to put them in the referral ban. Reading the phrase as broadly as the insurer urged, the court added, would make the eight listed services pointless.
The stakes drew industry attention. The Insurance Federation of Pennsylvania, the American Property Casualty Insurance Association and the Pennsylvania Defense Institute filed a joint brief backing the insurer.
For claims teams, the takeaway is direct. In Pennsylvania, the Anti-Referral Provision can no longer justify denying a worker's prescription bills just because the prescribing doctor has a financial interest in the pharmacy. The court was clear that any change is for lawmakers, not judges: if the legislature wants to bar these self-referrals, it remains "free to do so."
The court reversed the Commonwealth Court and sent the cases back for further proceedings. Justices Wecht and McCaffery each dissented.
