Medical Treatment Billing Analyzed In Writ Denied Case

This newsletter has not addressed Writ Denied cases in the past.  However, there was a recent case that may be beneficial in correctly evaluating the validity of a treatment lien.

Dr. Roback became the Applicant’s treating physician. “He referred Applicant to Lien Claimant Bio-Thermology for a thermogram, and t o Lien Claimant Center for Occupational and Sports Testing (Cost) for Arcon testing.” Defendants filed objections, including an objection for the reasonableness and necessity of the treatment performed.

The main issues were settled by C&R. At a lien hearing the WCJ ruled that Dr. Roback inappropriately billed as a medical-legal evaluator.  The WCJ made other rulings with which Lien Claimant took issue. In Lien Claimant’s Petition for Reconsideration, one of the issues presented was that the WCJ indicated mat no penalties were due under Labor Code section 4622 since Dr. Roback was a treating physician, rather man a medical-legal evaluator. This is an important issue to analyze when the Lien Claimant is requesting penalty and interest.

The WCJ also did not allow penalties and interest under Labor Code section 4603.2, stating Dr. Roback mislabeled his billings as medical-legal instead of as treatment bills. The WCJ also considered the billings excessive. The WCJ indicated mat the doctor could be paid for his reasonable treatment for the back injury, but mere would be no imposition of penalties and interest.  The WCJ disallowed the charge for the thermogram. Lien Claimant argued mat a Medical Advisory Opinion would allow the charges for the thermogram.  The Industrial Medical Council adopted its own opinion in 1994, “which stated that thermography ‘is an adjunctive diagnostic tool for nerve root injuries with radicular presentation where the patient is unable to undergo an EMG.” In this case, the Applicant had an EMG, making the need for the thermogram unreasonable. This Applicant also had an MRI. The WCJ concluded that the close proximity in time between the MRI and the thermogram made the thermogram unnecessary. Thus, when evaluating the payment for a thermogram, see if an EMG or MRI was previously performed.

The WCJ then evaluated the costs for Arcon testing. The WCJ used the Official Medical Fee Schedule to determine the proper code under which to bill. The WCJ used the schedule as a “guide”. Therefore, the Official Medical Fee Schedule should be used as a “guide” to determine payment.

The last issue the WCJ dealt with was the billing for medical-legal evaluator.  The WCJ determined this billing was unreasonable since the doctor was designated a treating physician.  Defendant’s failure to object to the charges did not convert Dr. Roback’s status to medical-legal evaluator.


Duties To The Employer Under The Policy Clarified

A continuing line of case law is being developed relating to the carriers or third party administrators duties to the employer. These cases deal with when there may be a breach of contract.

This case revolved around whether an employer had to exhaust their administrative remedies and procedures prior to instituting a civil action. The court ruled there was no such administrative review necessary.  However, the Court did review previous cases about what is in the express and implied contract terms of a workers compensation policy. This court reiterated that the insurer’s alleged “pattern of failing to pay claims promptly, defend them diligently, or assign them reasonable reserves…” could amount to a breach of contract. They added that “allegations of undue delay in resolving claims may signify a violation of the ‘prompt payment obligation specified in the insurance contract.”

The court then went on to discuss the hiring of experts, specifically inadequate legal and medical advisors.  The court indicated that the hiring of inadequate and incompetent legal and medical counsel could be a breach of the implied covenant of good faith and fair dealing in all workers’ compensation policies. The court intimated that it will specifically look to see if this is being done by the insurer with the intent to charge higher premiums and deprive the insured of a dividend.

The court has yet to address the issue of what is the hiring of inadequate an incompetent legal and medical counsel. This will probably be determined in future cases. However, one should be cognizant if the issue before it becomes the subject of a lawsuit for the breach of the policy’s terms.

The court has implied in previous cases that the setting of reserves will be evaluated also in this regard. Thus, if the insurer is setting reserves and billing the employer for legal counsel in the policy at a given rate and then hiring hearing representatives at a significantly lower rate this may be a factor. The quality of the counsel may also be a factor. For example, the applicant may be represented by an attorney who is recognized as a specialist by the State Bar of California. The question then becomes what is adequate representation for the employer.  Surely, a workers’ compensation defense attorney who is also a specialist certified by the State Bar would be sufficient. Probably, all attorneys who regularly practice workers’ compensation defense would also be sufficient. The grey area may be when the insurer uses hearing representatives. This will ultimately be decided by appellate courts in a breach of good faith and fair dealing claim.


The Scope Of Discovery Of Med/Legal Charges Decided

In a time when the Board has established lien units, specifically to deal with liens, an appellate court has given some guidelines as to interpretation of Labor Code section 4628 in dealing with those liens.

The Court first indicated that 4628 was really an anti-ghostwriting statute. The statute was for the purpose of controlling the quality of the report. The statute enumerates the responsibilities of the signing doctor.  Subdivision (d) the Court indicated does not limit or regulate the amount of legitimate fees a doctor or clinic can charge.

When disputing these costs this opinion gave some guidelines as to what is discoverable from the entity involved. Defendants do not have an unfettered access to business records.

“ Defendant’s may only seek discovery of relevant and unprivileged information mat will assist them in determining the medical services performed by the physician, the amount of direct charges for me physician’s professional services, and the amount of costs related for related medical tests, clerical expenses and overhead.”

In interpreting this statute the opinion indicated that “…the statute merely limits the types of charges that can be reimbursed; it does not limit the amount of the charges that can be billed.” Nothing in 4628 (d) limits what can be charged and does not restrict a clinics ability to make a profit. It is up to the Board to determine what constitutes reasonable charges by factors such as those enumerated in Gould v. WCAB.

The Court indicated that Labor Code sections 4621,4622, 5307.1, and 5307.6 are the appropriate sections for the defendant to raise to challenge the reasonableness of the medical-legal charges. Once challenged, the clinic or doctor must provide sufficient justification by way of itemization under sections 5307.1 and 5307.6.  In determining what a defendant may be entitled to, the Court indicated that defendants do not have an unfettered right to books and records regarding the clinics overall business operation. The clinic does have a privacy right in financial and employment information unrelated to the preparation of the report. Tax returns are not discoverable.

“Defendants are entitled to relevant and unprivileged information that will assist them in determining (1) the medical services performed by the physician signing the report, (2) the amount of direct charges for mat physician’s professional services, and (3) the amount of the reasonable costs for lab exams, diagnostic studies, medical tests, and clerical expense related to producing the report.” It is then up to the Board to determine what is discoverable in order for defendants to determine the reasonableness of the charges.


After You Receive Aa RU-107 You Should File Your RU-105

An appellate court has recently held that where an-applicant has not timely objected to the request for termination, the-applicant will be held to the requirements of Labor Code section 5410 (five year rule).

This case dealt with an applicant who was unable to read English, although he could understand English. The applicant entered into a Compromise and Release which did not include a Thomas waiver. The applicant signed a Declination (RU-107). The defendants, thereafter, filed a Request for Termination (RU-105). The applicant filed an RU-103. The Rehab Bureau decision was that the Objection to Termination was not timely since the RU-103 was more than 30 days after the request for termination. The Rehab Unit indicated that the applicant must now file A Petition to Reopen showing good cause pursuant to section 5410.  Applicant did not appeal. Thereafter, applicant filed a petition to reopen Rehab. The Rehab unit found that applicant’s reasons for reopening were not sufficient under 5410. The applicant filed an appeal alleging a “change of mind” was sufficient under Section 10017.

The WCJ on appeal stated “(w)here there is a declination under the rules, Section 10017 allows a reopening where there has been a change of circumstances. In the undersigned’s opinion, a change of circumstance is something more than an injured worker simply changing his or her mind and saying that he or she now wishes this benefit. A change of circumstance must be something where the applicant was, for example, unable to participate because of the need to take care of a family member…  A change of mind is simply not… a change of circumstance.”

The appellate court indicated that once the applicant declines rehabilitation benefits, it is appropriate for the employer to request termination of rehabilitation services and they cited Labor Code section 4644 for authority.  Therefore, once the defendant receives the RU-107 it behooves them to file the RU-105 as quickly as possible. The appellate court further indicated that if the applicant does not timely object to the request for termination the applicant could then only apply for Rehab under Labor Code 5410. The appellate court agreed with the WCJ and indicated that to come within the meaning of 5410, the section requires more than a mere change of mind. The defendant should make sure that the reason to reopen is specifically pleaded in the Petition To Reopen so that an adequate investigation and defense can be maintained.

This case also involved the side issue that the applicant claimed he did not understand the paper work since he did not read English. One way to alleviate this problem is to have an interpreter present and have the interpreter sign both the C& R and the RU-107 staling that a proper translation was made and that the applicant understood it.


A Telephone Call Is a Request For VOC.

A recent case has dealt with die formalities of a request for vocational rehabilitation services.  The appellate court found a mere telephone call was sufficient to start services and beat the time deadline.

Labor Code section 5405.5 states mat your request for vocational rehabilitation benefits pursuant to Section 139.5 must be made by request within one year of the last finding of P.D. or the approval of a C & R In this case the last finding of P.D. was March 1, 1993. The applicant made a telephone call on February 22, 1994 requesting vocational rehabilitation Defendant’s argued a telephone call was not a request. The Court analyzed Rule 9813 (b) which states that the claims administrator must provide the applicant with a notice that informs the applicant how to apply for vocational rehabilitation.  It states this can be by telephone.

The Court further analyzed Section 5410 which deals with instituting proceedings within 5 years from the collection of compensation because this injury was from September 1983 to September 1984.

The Court analyzed several prior cases in making its determination mat “..we see nothing in section 5405.5 which would require a filing with the rehabilitation unit (or “bureau”), or a filing with the appeals board, in order for there to be a “request” for vocational rehabilitation benefits.” The court specifically stated that you do not need to make a written request since the rules do not state that the request must be in writing.

The court citing three previous cases stated mat a request for vocational rehabilitation more than five years from the date of injury but less than one year from the last finding of permanent disability was satisfactory.  The court decided ft did not have to reach the issue of whether marking “Rehabilitation” on the Application for Adjudication of Claims constituted a timely request for vocational rehabilitation benefits. The court in a footnote cited Vasquez v.  W.C.A.B which held mat checking the box for rehabilitation on the application for adjudication of claim was sufficient to constitute a request and toll the statute of limitations. Do not forget that on the new post 1993 Applications for Adjudication in paragraph 9 there is a box to check for Rehabilitation.

The major thing to remember from this is mat a simple telephone call by the applicant or the applicant’s attorney is sufficient for a “request” to constitute vocational rehabilitation benefits. The question is will this be a Pandoras Box in making other determinations mat can become sufficient merely by making a telephone call without written documentation.


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.


Negligent Claims Handling Can Be Evidence Of Bad Faith

These days one must be careful in how you adjust a workers’ compensation file.  The appellate court in a number of recent rulings has determined the carrier or third party administrator adjusting the file can be liable for a ton of bad faith in poor claims handling, as well as, possible breach of contract.

This case involved an employer that was not satisfied with the claims handling they were receiving. They alleged that the carrier engaged in bad faith claims handling resulting in paying higher premiums and not receiving proper dividends.

The Court indicated that the employer might have a cause of action for negligent claims handling as evidence of bad faith and breach of contract actions.

The Court looked to their previous case Security Officers Service Inc VSCIF to conclude that you can breach the implied covenant of good faith and fair dealing You must conduct your claim resolution with good faith.

The case and its predecessors bring to the forefront that one has a responsibility and a duty to properly adjust and handle claims. This commences from the initial claim of injury all the way to case closure.  Employers are looking at how effectively the injury claim is handled and disposed of. Issues will not only be whether the disposition was fair to the applicant, but also whether the claim was handled properly.

The Court is indicating that in the future causes of action the) may take into consideration the evidence of negligent claims handling This will be pertinent when it effects the employers premium in the future and any dividend policy.  Competent performance by the adjuster at a reasonable cost is to be expected of the adjuster. The Court, therefore concluded, that a workers* compensation policy of insurance requires that the conduct of defending, investigating, reserving and settling claims be done in good faith.

The previous decisions have also indicated that these type of actions may be entitled to punitive damages if the employer is meritorious.

With the advent of the employers bill of rights, the employer is going to have greater access to material in the claims file. Although the concepts in the employers bill of rights have not been the subject of judicial review, they become extremely important: If the employer wished to vehemently fight a specific claim one must take great credence in the employers wishes. The employer not only has the legislative bill of rights, but may also have both contract and tort causes of action. In doing discovery in those causes of action they can second guess your claims handling.

Proper claims handling should be a plan. Systematic review on a timely basis is a necessity for every file.  Proper investigation, denial if needed, and prompt payment will be closely scrutinized in the future.


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