Lien Claimant Rights Are Further Clarified In 2 Cases

The Beverly Hills Multispecialtv Group. Inc. v. W.C.A.B. Case was further clarified in two cases involving liens for MRJ’s.

Two recent cases at 60 CCC 821 and 60 CCC 827 have further clarified due process requirements involving lien claimants. Both cases involved Dr. Powers, a radiologist. In both cases, Dr. Powers claimed denial of due process and the Court came up with some guidelines.

Lien claimants must be apprised of the evidence submitted, and given an opportunity to cross-examine witnesses, to inspect documents and to offer evidence in rebuttal or explanation.

The Court indicated that there is a Board rule governing the disposition of liens after the applicant has settled, whether by stipulation or Compromise and Release. Board Rule 10886 provides where there is a lien already on file you can propose a reduction or disallowance of the lien in the settlement papers. If the lien claimant does not consent then you must serve the lien claimant with settlements papers, documentary evidence and summaries of evidence. The lien claimant then only has 15 davs to protest and must submit their own copies of medical reports, documentary evidence or offers of proof.

Even if they do not comply it appears that the lien claimant must be given the opportunity to be heard pursuant to Labor Code section 10500. However, at the lien trial the defendant can also assert noncompliance with 10886 by the lien claimant in not making a timely objection or offer of proof.  The Court further clarifies that lien claims must be filed pursuant to Labor Code Section 4903.1 It further intimates that liens must be filed with the Board at the time of settlement.  Therefore, if the lien is not filed by the time of settlement it seems to intimate it should be denied in its entirety.  In the other case, Dr. Powers claimed he was not served with “defense medical reports”. The doctor did not identify any defense report critical of his work or relevant to the Board’s decision. Therefore, the Court said there was no denial of due process, which leads one to the conclusion that all medicals do not have to be served on lien claimants, but only those that are relevant to their particular lien or issue.

The doctor then argued that a QME asked for the MRI so it should be reimbursed under Labor Code section 4621 as a medical-legal expense. The Court looked at sections 4064 and 4620 and stated that this MRI was not reasonably necessary. Therefore, one must always evaluate whether there was a valid reason for ordering the tests before they become a valid medical-legal expense. Just because an orthopedist orders an MRI does not mean ip so facto it is reasonably necessary.

Applicant Can Have Multiple Change Of Treating Doctors

An Appellate Court has recently ruled that an applicant can have as many change of treating physicians as he or she chooses. The employer only has control for the first 30 days and thereafter the applicant can designate a treating doctor and change to another physician at will.

This case was appealed in order to interpret Labor Code sections 4600 and 4601. The pertinent language in 4601 is that”… the employer shall tender the employee one change of physician.” (Emphasis added) Lara (the applicant) asked for a second change of physician under Labor Code section 4600. Section 4600 requires the employer to provide medical treatment necessary to cure or relieve the effects of an injury.

The Appeals Board and Appellate Court reasoned that 4600 governs when an applicant has elected his or her own physician. 4601 governs when the employer has control and limits the applicant to one change of physician only while the employer has control.  Once the applicant assumes control, the applicant is not limited in the number of changes of doctor that may be made. If the employee /carrier believes that the applicant has had to many changes in treating doctors or is doctor shopping the employer\carriers recourse is to petition the administrative director under Labor Code section 4603 or request a hearing before a WCJ.

The appellate court relied on three writ denied cases. While most practitioners have always believed these cases were not citable the footnote indicated that even though these cases have no stare decisis effect they are citable as to the holding of the Board. The appellate court then stated that the Board’s construction of statutes is entitled to great weight. The trouble is in a writ denied case all you get is a synopsis which may or may not be accurate.

The appellate court went on to state that the legislative changes in 1990 and 1993 did not change the existing law. The court further stated that it was not reasonable to conclude that the amendments in any way changed the law. They indicated that the 1990 amendments only made it explicit that the applicant could change physician within the first 30 days while the employer had control. As to the 1993 amendments the court indicated the same thing. “If the Legislature intended to change the employee’s right of free choice it would have done so.”

The court further determined that the withholding of the change in trailing physician was unreasonable in light of section 5814. Therefore, a penalty accrued. As we know with the recent Rhiner case the penalty went to the whole class of medical treatment.

If you object to the treating physician or the change of treating physician you have two possible remedies. You can file for a hearing before the WCJ or petition the Administrative Director.

Can You Get Apportionment Under Labor Code 4750.5?

New case law indicates you cannot get apportionment under Labor Code section 4750.5 for a subsequent non-injury event such as a pregnancy.  The old saying that the law is constantly changing is never more evident than in this case. As we know apportionment can be found under Labor Code section 4663 for a preexisting disease or condition. You can also obtain apportionment under Labor Code section 4750 for a preexisting permanent disability or physical impairment. To get apportionment under either section the preexisting disability must be “labor disabling”.

Defendant’s used to be able to obtain apportionment to subsequent injuries.  Then in the Jenson case the court stated that you cannot obtain apportionment to subsequent injuries only preexisting ones. So the legislature enacted 4750.5 to overrule Jenson and let defendants get apportionment to subsequent non-compensable injuries. This Court looked at that language and analyzed definitions under the various decisions to determine the words, “non-compensable injury” and “subsequent”.

This case had to do with multiple employers, injuries, and subsequent pregnancies to industrial injuries. The applicant also alleged carpal tunnel syndrome as industrial. Some medical opinion may ascribe to the theory that carpal tunnel can be aggravated by-pregnancy. Therefore, a doctor may try to apportion to this. In this case they apportioned 50% to subsequent non-industrial injury which happened to be unemployment and pregnancy. In this case “unemployment” occurred between the first and second injury, and between the second and third injury.  The pregnancies occurred contemporaneously with the first injury and after the third injury.

No previous appellate court had discussed the meaning of Labor Code section 4750.5 in a published opinion.  So this Court determined that “Unemployment” cannot be regarded as an “injury”. The Court did not specifically say that pregnancy could not be regarded as an injury, but slated that the doctor s did not explain in what manner applicants pregnancy constituted and “injury” or caused any permanent disability. Reading between the lines it would be difficult to ever see the Court find a pregnancy an injury. They went on to state that under 4750.5 it is unlikely that the legislature ever intended that the statute would be applied to pregnancy or unemployment.

Therefore, as to the present the Court has indicated that pregnancy and unemployment will not constitute “non-compensable injuries”. The rest will have to be decided on a case by-case basis.

The case also did not discuss Labor Code section 5500.5 although it mentions in footnote three that, apportionment may arise under that statute. Whether 5500.5 was raised in the underlying case is unclear.

How Do You Rebut The Presumption After 90 Days?

A recent appellate decision has analyzed for the first time how you can rebut the presumption of compensability under Labor Code section 5402 when you miss the 90 day rejection.

State Fund did not deny liability in this case until four months after the claim was filed. At the MSC they did not list the adjuster as a witness to explain why the claim was not properly denied. Therefore, the adjuster was precluded from testifying at trial. SCIF’s medicals were also obtained after the 90 days. They were admitted into evidence. However, without explanation as to why they were not obtained during the 90-day investigation period.

The Court discussed the meaning of “rebuttable presumption” under Labor Code section 5402. There can be a presumption affecting the burden of producing evidence or a presumption affecting the burden of proof. The Court decided 5402 is a presumption affecting the burden of proof. Once the underlying facts are established the defendant employer/carrier has the burden of proving the applicant does not have a compensable injury.

The Court addressed once the presumption is applied what evidence may be admitted on behalf of the defendant to rebut the presumption. This evidence must be discovered subsequent to the 90-day period. Since there were no appellate decisions on this issue the Court looked at Board panel decisions.

A number of panel decisions would preclude evidence by the defendant to rebut the presumption that could have been obtained with reasonable diligence within the initial 90-day period. What constitutes “reasonable diligence” is to be decided on a case by case basis.

The Court also indicated that it would follow the Board’s opinion that the presumption does not operate as a bar against the admission of evidence that might rebut compensability. “An applicant’s testimony at hearing may rebut the presumption”.  The Board has reasoned that such testimony could not reasonably have been discovered in the 90-day period. (I guess they forgot about depositions of the applicant.) The Board also stated that other witnesses at trial or by deposition on behalf of the applicant may rebut the presumption. In this case SCIF never exercised reasonable diligence in investigating this claim.

The Court also discussed Rodriquez v. WCAB ( a previous issue of COMPENSATION NEWS). Remember it is the rejection of the claim that has to occur within the 90-day period. A formal denial does not have to be mailed to the applicant. You will need to prove at trial that the claim was rejected within the 90-day period. Here SCIF could not do that because the adjuster was not listed at the time of the MSC to testify.  The thing to remember from all this is all hope is not lost if a denial is not sent within the initial 90-days. A good attorney may be able to salvage what looks like a certain presumption. Make sure you have one!

Restitution of Medical-Legal Evaluations Rejected

An appellate decision has indicated that carriers or self-insured, may not obtain restitution for medical -legal expenses previously paid in cases involving American Psvchometric Apex Medical.

The Court went into a lengthy discussion in regards to medical-legal expenses under all appropriate provisions of the Labor Code. The Court also discussed the 1993 Amendments and what may be declatory of existing law or applied retroactively.

The Court referred to the Otis v. City of Los Angeles case and intimidated that the case is still good law. This means the carrier or self-insured has to make an appropriate objection within 60 days. The decision also gave credence to the previous Board decision of Del Rio v. Quality Hardware. Thus, the “contested claim” rule is given effect. The opinion also intimates that the employer/carrier does not have to protest a medical-legal expense when the medical provider does not comply with the “contested claim” rule.

The opinion discussed Labor Code section 4625 and concluded this section only dealt with excessive medical-legal fees rather than fees generated before the existence of a “contested claim”.  This section only dealt with fees in excess of the official medical fee schedule and not restitution of a fee in its entirety. It was specifically stated this section does not permit restitution where a medical-legal fee has been paid without protest in case involving uncontested claims.

In all three cases that were presented and decided in this opinion, the medicals were derived shortly after the claim form. Therefore, there was no “contested claim” at the time. In all three of the cases, the carrier negotiated the liens and paid partial amounts.  Thereafter, all three sought restitution for those amounts previously paid. The Court indicated the employer/carriers were quick to accuse the medical providers of fraud even though they paid without protest. They also indicated that violation of a statute is.  not intentional misrepresentation which is the principal element of charged and proven fraud.

The Court looked to transactional Stability for the basis of its decision.  Approving restitution in this case would have unfortunate consequences for the workers compensation system and all business in general. The Court indicated that no one can run a business on receipts only conditionally received.  Medical providers are no exception.  Thus, the Court is giving you fair warning. If you decide to pay or negotiate and pay a medical legal expense or treatment do not expect to get your money back at some later date.  Investigate before you pay and make the necessary, appropriate, timely objection.

This does make sense from a business standpoint. The carrier would not expect the employer to ask for a refund of premium for the same transactional stability reasons.

When Can You Contest a Deposition Fee Under 5710?

The question has been raised as to when it is proper to pay the applicant’s attorney’s deposition fee request under Labor Code Section 5710 (b)(4). The defense attorney is getting paid for the time to take applicants deposition, but some question whether the applicant’s attorney should likewise be paid.

The Appeals Board recently ruled in two cases about the proper payment of deposition fees under Labor Code section 5710(b)(4). It seems some defendants felt that the applicant’s attorney should not receive a deposition fee if the injury was not AOE-COE. The Board ruled in four areas in these cases and remanded back to the WCAB for further action in accordance with this decision.  First, the Board ruled that you do not have to have a finding of industrial injury in order to collect a deposition fee. The Board indicated that the taking of a deposition is to investigate workers* compensation claims. They indicated the custom and practice was to allow this cost even when injury was not found. This was compared to medical-legal costs.

Secondly, the Board indicated that where the defendant raises a good faith allegation that there is a fraudulent or deceitful claim, the judge may defer until the case-in-chief is heard the issue of the 5710 fee. At the time of the main issues the judge will then determine the merits of the 5710 fee. The parties may negotiate settlement either separately or as part of a settlement of all issues the 5710 fee dispute at any time.

Thirdly, when there is a dispute the Board indicated how the dispute should be resolved, the Board stated that this dispute is analogous to a medical-legal cost dispute and should follow the procedures set forth in Otis v. City of Los Angeles. When the Judge receives the request for the 5710 fee the Judge may issue a notice of intention to allow the requested fee, unless good cause is shown to the contrary. If no objection is received, the judge may issue the requested fee order. If an objection is received from the defendant, but there is no request for a hearing, the judge may decide fee dispute on the existing record.

If defendant makes an objection on a good faith allegation of deceit or fraud and requests a hearing, the hearing shall be deferred until the main issues are heard. If the defendant objects on ground other than deceit or fraud, the judge can set the matter for a separate proceeding or on a short cause calendar.

Lastly, the Board indicated that there may be instances where restitution of a 5710 fee would be appropriate, but not in these cases. The Board did not indicate what circumstances restitution might be available in, or what proof that an error was made would have to be shown. Do you want to spend more in defense attorney costs fighting a 5710 fee than the fee itself?

When is an Unrepresented Worker Entitled to Attorney Fees?

We were recently asked to do a special edition about when an unrepresented worker would be entitled to obtain attorney fees.

This case appeared at 22 CWCR 83 and appears to have been a WCAB panel decision after reconsideration.  The factual basis was that it was an admitted industrial claim for which temporary disability was paid. The applicant was informed of his rights under Labor Code section 4061 when the treating physician found him permanent and stationary. The applicant selected a QME from the panel of three provided to evaluate permanent disability and need for treatment. The QME determined the applicant was still TD and in need of treatment. The Code states in section 4061 (K) that the insurer has to commence payments or file an application if they are unwilling to follow the QME. Here the insurer did neither and after a month the applicant filed his own application. Thereafter, the applicant retained an attorney who requested the insurer to pay attorney’s fees under section 4064 (d).

The panel believed the insurer had the choice of either providing benefits according to the QME or filing an application for a adjudication of claim.  Since the insurer did neither the applicant was forced to file the application on his own. The applicant then needed an attorney to represent him at the hearing. Presumably if the insurer would have done what they were supposed to do the applicant would not have needed an attorney at that point.

The panel indicates that the insurer is mandated to file the application under Labor Code section 4061 and 4063.  Once the insurer does that then the insurer is required under 4064(D) to pay attorney’s fees. If the insurer fails to file the application or pay benefits then the applicant could be left without a remedy reasoned the panel The only way the applicant could ensure the payment of benefits was to file his own application. Once having done so the panel reasoned that the applicant was entitled to attorney’s fees. They considered the application “constructively” filed at this point by the defendant. This is merely a legal technicality to make sure the insurer complies with sections 4061(K) and 4063. The panel is saying that you cannot ignore the QME findings.

If the QME finds either the need for compensation or treatment you must either provide it or file an application. If you file the application you are responsible for attorney’s fees. If you do not do anything and force the applicant to file the application you will still be responsible for attorney’s fees.

Medical Lien Rights Further Explained

A good synopsis of a medical lien claimants rights was provided in a recent appellate decision.

The Hand Rehabilitation Center (HRC) provided over $50,000. in physical therapy services at the request of Dr. Hylwa. Dr. Patzakis was an AME. The liens became litigated.

The Court citing Labor Code section 4903 stated a lien claimants rights are derivative of the injured employee’s rights and the WCAB has exclusive jurisdiction over workers’ compensa-tion medical liens. The Judge must determine whether the medical lien is reasonable in relation to the medical services provided. The lien has to be litigated in order to be reduced and the lien claimant has the burden of proving by a preponderance of the evidence that the claim is industrial.

The lien claimants must be served with the AME report and afforded an opportunity’ to submit rebuttal evidence or cross-examine the AME: The lien claimant has no right to participate in the selection of the AME.

The WCAB has adopted a medical fee schedule which is prima facie evidence of the reasonableness of fees charged for medical services. Higher fees may be charged only when determined to be reasonable.

In this case Jane Clancey rendered the services for the HRC. She was an occupational therapy assistant. The official medical fee schedule does authorize and provide for physical therapy if it was performed under the continuous and direct supervision of a physician or a licensed physical therapist. The Court indicated that there is no provision in the schedule for occupational therapy. Clancey’s report did not indicate that she was a licensed physical therapist or any physician was in attendance when she performed her services. The Judge disallowed the charges because they were billed as physical therapy and Clancey was not licensed to provide physical therapy.  The appellate court indicated that the burden was on the lien claimant to prove that its lien was for properly provide services and did not do so in this case.

HRC also contended the WCAB was not a “court” and only an administrative agency. The appellate court indicated that the WCAB is a “constitutional court”. They further stated that the WCAB “exercises a portion of the judicial powers of the state and ‘in legal effect is a court.” Following this line of logic and finding by the appellate court it would question the validity of using hearing representatives before the WCAB. If the WCAB is a court of the State of California then it would seem only licensed attorneys should be practicing law before the Board. Any other conclusion would seem nonsensical.

Time of Injury and Date of Injury Control in Death

The recently decided State of California v.WCAB (Sills) is an interesting death case issue. The WCJ initially ruled that dependency could be determined by the last industrial exposure instead, of the “date of injury”. The facts are somewhat convoluted for this short of an article Suffice it to say that under these particular facts the WCJ found an adult non-dependent entitled to total dependency benefits because the adult was a minor when the decedent quit working in 1979. The death application was not filed until 1988. The initial application was filed in 1986, more than six years after retirement. The decedent was not symptomatic while working and never lost time from work.

The issue became whether Labor Code Section 3502 or Labor Code Section 5412 was controlling. The court stated that dependency for death benefits are determined “…at the time of injury, rather than death.”… The decision looked to the definition of cumulative injury. The date of the cumulative injury should be determined by Labor Code Section 5412. That section has been interpreted to mean the date the applicant first suffered disability and either knew or should have known that the disability was caused by his or her present or prior employment. It also may mean that “date of injury” is only at such time as the employee suffers an impairment of bodily functions which results in the impairment of earning capacity.

The Court further indicated that there is authority to use “date of injury” in death cases. The Court also looked at Labor Code 5406 stating that death could not occur more than 240 weeks from the date of injury. Since the death application was filed in 1988, it meant the date of injury under these facts would have been in late 1983 or 1984.  Therefore, if the date of injury was determined to be when the applicant last worked in 1979, there could be no death claim at all.

The Court resolved the “time of injury under 3502 and the “date of injury” under 5412 by holding that in cumulative injury cases both phrases have the same meaning as set forth in 5412, irrespective of where death benefit provisions are located in the labor code. The Court remanded this case back to the trial level to determine the “time of injury” using the labor Code section 5412 definition of “date of injury”. The intent is to harmonize the two statutes so that they can be read consistently.

In death cases, one must be very cognizant of the applicable dates and dependents. In this case, they are attempting to make an adult nondependent a minor dependent by using the last date worked.

Medicals Included in S & W

An appellate court has determined that when you calculate an award in favor of an employee for Serious and Willful Misconduct medical treatment will be included. Many practitioners believed this was not included in the term compensation.

Ferguson v W.C.A.B. (Raley’s) will become a significant case for the employer and the examiner under the Employer’s Bill of Rights. Serious and Willful Conduct cannot be insured against. However, what the adjuster does in handling the main issues can determine the ultimate effect of damages in the S & W litigation.  In this case, the WCJ awarded S & W benefits on total compensation including all non-indemnity payments.  This meant that the award encompassed not only temporary disability, permanent disability, and vocational rehabilitation benefits, but also medical treatment. The employer is assessed a 50% increase on the total of all those benefits.

The court analyzed Labor Code Section 4553. It determined that the broad language of the statute left no doubt that the term “compensation” in the labor code included vocational rehabilitation costs, medical treatment and medical-legal fees.  The court then analyzed whether the award as they now interpreted it, increased the award in such a manner that it necessarily exceeded the constitutional limit. They stated to determine this you would perform a test. You would need to determine “.., on the basis of all compensation received by the injured worker, including indemnity as well as non-indemnity benefits,”… whether the injured worker is receiving more than is necessary to fully compensate the worker for all damages he or she sustained as a result of the injury caused.

The court went on to state that should the employer wish to litigate this issue, the Board would have to adjudicate the question in much the way you would a third party credit or employer negligence action. Which means you would be presenting a civil type of trial before the WCJ. The Court specifically stated that “In this latter context, general tort law, not worker’s compensation law, defines the substantive law concerning recovery in a civil action.”

Therefore, the adjuster needs to take heed when providing all benefits in an S&W case because of the potential for fixing liability for the employer. It now becomes incumbent to have an attorney representing the carrier at the outset on these cases.

The Dissent raises several relevant points. It states the injured employee in a S&W now has the functional equivalent of a tort action. It also raises the issue that the same approach can be used for an S & W by the employee, thus reducing any award by 50%, including non-indemnity payments.

With significant medicals, this could result in the injured worker receiving no permanent disability. When an employee alleges a S & W one should determine as a matter of course whether the employee engaged in S & W Misconduct.

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