Med-Legal Expenses, Liability, and Penalties · PDF fileMed-Legal Expenses, Liability, and ......

8/14/2017

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Med-Legal Expenses,

Liability, and

PenaltiesPatrick C. Gorman

Managing Attorney/ Partner

Bradford Barthel, Redding

Body of Law

• Cal Labor Code 4060

• Defines what Med-Legal expenses are


• Self Procured Med-Legal expenses


• EOR, IBR, Timeframes, and Penalties

• 8 CCR 10451.1

• Required timeframes, petitions, and costs/sanctions for bad faith

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Increasing Area of Litigation

• Issue emerging at WCAB from around October 2016.

• Statutory penalties for failure to timely respond.

• No lien filing fees / standing other than as a lien claimant.

• Any Med-Legal Provider has standing to file a Petition.

• Potential for award of costs and attorneys fees pursuant to 8

CCR 10451.1(g).

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What are Med-Legal Expenses?

• “Cost or expense incurred by or on behalf of any party… which

may include X-rays, laboratory fees, other diagnostic tests,

medical reports, medical records, medical testimony, and

certified interpreter (Article 8) for the purposes of proving or

disproving a contested claim.” (Cal. Lab. Code 4060(a))

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What is a Contested Claim?

• A “contested claim” exists when the employer has actual or

constructive knowledge an employee is claiming entitlement

to any benefit arising out of a claimed industrial injury and

one of the following conditions exists

1. Benefit claimed by the employee is rejected by the

employer.

2. The employer fails to admit liability for benefits after a

reasonable period of time (essentially contesting the claim

by not admitting liability).

3. The employer fails to respond to a demand for payment of

benefits after the expiration of any time period fixed by

statute for the payment of the indemnity.

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What about “self procured” Med-

Legal expenses?• Labor Code § 4621 provides for reimbursement of medical

legal expenses to an employee, or the dependents of a

deceased employee, reasonably, actually, and necessarily

incurred [arising out of Labor Code § 4060, 4061, or 4062].

• BUT.. an employer is not liable for any med legal evaluation

performed within the first 60 days of a claim being filed,

absent an affirmative denial of that claim (See Cal. Lab. Code

4621).

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Defective Med-Legal Reports /

Studies• Costs of medical evaluations, diagnostic tests, and

interpreters’ incidental to a medical report do not constitute

medical legal expenses unless the medical report is capable

of proving or disproving a disputed medical fact essential to

an adjudication of the employees claim for benefits.

• Only Admissible Med-Legal evidence is subject to this

statutory scheme.

• Caution- beware of self procured Med-legal reports pertaining

to PTP recommendations / compensability of additional body

parts. 20 days, or 30 days if pro per, to object. (Cal. Lab. Code

4062) see Simmons v. State of California Dept of

Mental health (2005) (70 Cal. Comp. Cases 866)

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Cal. Labor Code 4622

• Covers “all medical legal expenses for which an employer is

liable.”

• Mandates response by way of Explanation of Review, even if

expenses are denied

• Mandates strict timeframes for defendant and Med-Legal

provider.

• Mandates 10% Penalty and 7% interest for untimely response.

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Mandatory Timelines

• Upon receipt by the employer of all reports and documents required by the

Administrative Director incident to the services, the employer has 60 days to

issue payment in full, partial payment accompanied by an EOR (defined by

Cal. Lab. Code 4603.3) contesting reasonableness and necessity, or by

denial. The denial must still be in the form of EOR (see Cal. Lab. Code

4622(c)).

• If the employer contests the amount paid, the provider may request a

second review within 90 days. If the provider fails to do so, their bill is

deemed satisfied. The request for second review must be submitted on

forms prescribed by the AD and contain specified information (see Cal. Lab.

Code 4622(b)(1)). Note: This only pertains to disputes of the invoice

pursuant to the fee schedule.

• If the employer denies all or a portion of the bill for reasons other than a

dispute over fee schedule, still in the form of EOR (see Labor Code §

4603.3), the provider must object to the denial within 90 days, or the

employer or employee is not liable for the amount that was denied.

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Timeline Scenarios

Scenario 1Injured Joe, one week after being terminated for failure to show up at work,

submits to his employer a DWC-1 claim form alleging a cumulative trauma

injury to his neck, back, and hips due to “repetitive work”. A delay notice is

sent, pending further investigation and confirmation of whether or not

there is evidence of injury before he was terminated.

You receive a Notice of Representation one day later, from Mr. CAAA Esq,

accompanied by a report issued by Dr. Hack (who seems to always treat the

client’s of Mr. CAAA, Esq). titled “Initial Consultation Report”. The report is

accompanied by an invoice.. For $6,500.00, lab studies, and 6 MRI reports.

You do not refer the invoice and report to Bill Review.

65 Days later you receive a Petition filed by Mr. Former DA. Esq. demanding

payment of the $6,500.00 in full, penalties and interest, and of course

attorneys fees for your bad faith actions and tactics (covered later).

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Timeline Scenarios

Scenario 1 (cont’d)Is this a Med-Legal Expense, pursuant to Cal. Lab. Code 4620 or 4621?

• No- Labor Code § 4620 defines Medical Legal expenses as “and cost or expense incurred by or on behalf of any party… which may include X-rays, laboratory fees, other diagnostic tests, medical reports, medical records, medical testimony, and certified interpreter (Article 8) for the purposes of proving or disproving a contested claim. This is not a contested claim; AND

• Labor Code § 4621 provides for reimbursement of medical legal expenses to an employee, or the dependents of a deceased employee, reasonably, actually, and necessarily incurred [arising out of Labor Code § 4060, 4061, or 4062]. An employer is not liable for any med legal evaluation performed within the first 60 days of a claim being filed, absent an affirmative denial of that claim!

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Timeline Scenario

Scenario 2Dr. Quack is a PQME in a separate denied case you have involving Sore

Jane. Sore Jane somehow requested a Chiro Panel upon receipt of the

denial letter, and selected Dr. Quack from that panel, only weeks before

retaining Mr. CAAA, Esq as her attorney.

Dr. Quack evaluated Ms. Jane on 3/1/17, and issues a report on 4/1/17

finding Ms. Jane TPD- 100%, for bilateral Carpal Tunnel Syndrome.

You receive an invoice and report from Dr. Quack on 4/5/17, with an invoice

for $13,000, accompanied by bilateral EMG Studies, and 6 MRIs.

You send a letter to Dr. Quack objecting to his reporting, and advising him

you are not paying for his garbage report, and take no further action….




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Timeline Scenario

Scenario 2 (cont’d)Question 1: Is this a Med-legal Expense Pursuant to LC 4620 and 4621?

Quite possibly.. While the report may be untimely, the admissibility of Dr.

Quacks report may depend on whether or not your objection was

communicated to AA, Applicant, and Dr. Quack before the report was

received on 4/5. While the report may not be admissible, because it does

not constitute substantial evidence may be an inquiry, that is not as clear

cut.

Question 2: If the report constitutes a med-legal expense, in that it is

capable of proving compensability did you abide by the mandatory

timelines outlined in Cal. Lab. Code 4622? Did your objection letter, issued

within 60 days, serve as a valid “objection” pursuant to LC 4622(c)?

No, if the employer denies all or a portion of the bill for reasons other than

a dispute over fee schedule, the denial must still be in the form of EOR!

We will discuss the repercussions of this scenario monetarily, but first...

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One More Scenario, Scenario 3Similar facts from scenario two:

Dr. Quack is a PQME in a separate denied case you have involving Angry Frank.

Angry Frank also requested a Chiro Panel upon receipt of the denial letter, and

selected Dr. Quack from that panel, only weeks before retaining Mr. CAAA, Esq

as his attorney.

Dr. Quack evaluated Mr. Frank on 3/15/17, and issues a report on 4/15/17

finding Mr. Frank TTD for a sprained thumb.

You receive an invoice and report from Dr. Quack on 4/25/17, with an invoice

for $12,500, accompanied by bilateral EMG Studies, and 6 MRIs.

On 6/20/17 you send an Explanation of Review to Dr. Quack objecting to his

reporting, and advising him you are not paying for his garbage report that was

late.




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One More Scenario,

Scenario 3 (cont’d)Question 1: Does Dr. Quack’s report constitute a med-legal

expense? For the reasons in the previous scenario, lets say

probably.

Question 2: Did you comply with the timelines set forth in

Cal. Lab. Code 4622? Yes, you responded within 60 days,

utilizing an EOR, denying all of Dr. Quack’s bill.

Question 3: Do you owe Dr. Quack any payment? No- The

provider must object to the denial within 90 days, or the

employer or employee is not liable for the amount that was

denied.

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Scenario 2 outcome, repercussions

for failure to abide by mandatory

timeline

“Within 60 days after receipt of each separate, written billing and

report, and if payment is not made within the period [60 days),

that portion of the billed sum then unreasonably unpaid shall be

increased by 10 percent, together with interest theron at the

rate of 7 percent annum retroactive to the date of receipt of the

bill and report by the employer.” (Labor Code § 4622(a)(1))

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Seems rather harsh...What if the report

is outrageous, like in Scenario 2?

• The first question that must be satisfied is: Does the late report of Dr. Quack constitute a Med- Legal Expense.. If the report was not timely objected to (before received), and constitutes substantial evidence with regards to the purpose of the evaluation (LC 4060) then you MUST respond by way of objection in an EOR.

• In Scenario 2, there would be a mandatory penalty of 10% AND 7% interest annum from the date the report and invoice were received until paid. The invoice would [may] be due in full (the only means to contest the reasonableness of an invoice is also by way of EOR).

• In this scenario you need to either prove that Dr. Quack’s report does not constitute substantial medical evidence and is inadmissible, or pay Dr. Quack his full invoice ($13,000.00), plus 10% ($1,300), and 7% interest, per annum, from 4/5/2017 until the invoice ($13,000.00) is paid.

• What about the attorneys fees and costs? Covered soon…

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Most Importantly

FAILURE TO COMPLY WITH ANY TIMELINES CONSTITUTES A

WAIVER OF ANY OBJECTION OTHER THAN THE AMOUNT

INVOICED PURSUANT TO THE OFFICIAL FEE SCHEDULE

See 8 CCR 10451.1(f)(1) and (f)(2)

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What if the Provider Objects to the

denial within 90 days?If the provider objects to the denial within 90 days the employer

must file a petition and DOR within 60 days of the objection.

8 CCR 10451.1 (c)(2) states:

A Defendant shall concurrently file a “Petition for Determination

of Non-IBR Medical Legal Dispute filed by a Defendant” and a

Declaration of readiness to proceed shall be concurrently filed, IF:

Defendant has denied all or a portion of a provider’s med-legal

billing for reasons other than disputes subject to IBR, and the

defendant has objected to the partial or full denial within 90

days.

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What if the Provider responds to an EOR

pertaining to Fee Schedule in 90 days?

• IBR Process is invoked.

• Payment (if additional payment ordered pursuant to Labor

Code 4603.6) shall be made within 20 days of service of the

order to pay.

• The WCAB has no jurisdiction over IBR!

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Jurisdiction of WCAB over Non-IBR

Med-Legal Expense Disputes• The WCAB has jurisdiction to resolve all non-IBR Med-legal Disputes and

mandates duties on parties pursuant to this regulation.

• Non-IBR Med-legal Disputes include, but are not limited to:

1. Any threshold issue (such as coverage, employment, affirmative defenses, or jurisdiction);

2. Whether the claimed med-legal expense was for the purpose of proving or disproving a contesting claim;

3. Whether the claimed med-legal expense was reasonable and necessary;

4. An assertion defendant has waived any objection because of failure to timely comply with Labor Code § 4622, 4603.3, and 4603.6; 5.

5. An assertion the med-legal provider waived any claim because the provider failed to timely comply with Labor Code § 4622, 4603.3, and 4603.6; 5.

6. An assertion that an interpreter does not meet the criteria set forth in the Labor Code (certification).

7. An assertion that the interpreter was not reasonably necessary.

IBR ONLY PERTAINS TO DISPUTES REGARDING THE AMOUNT PAYABLE UNDER THE OFFICIAL FEE SCHEDULE

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Earlier I mentioned a Med-Legal

provider does not have to file a lien• A provider may file a “Petition for Determination of Non-

IBR Medical Legal Dispute” if defendant breaches a duty under 8 CCR 10451.1 or Labor Code § 4622 A med-legal provider is not required to file a claim of costs in the form of a lien.

Additionally,

• The WCAB may defer hearing this issue until the issue is presented in the underlying claim , the underlying claim has been resolved by way of Compromise and Release, the underlying claim has been abandoned (keep in mind the 7% per annum interest).

However, the WCAB does not have to defer the issued set forth in the provider’s “Petition for Determination of Non-IBR Medical Legal Dispute”

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Clarification on who must file Petitions

and DORs and when the filings are due

1. Defendant shall concurrently file a “Petition for

Determination of Non-IBR Medical Legal Dispute filed by a

Defendant” and a Declaration of readiness to proceed shall

be concurrently filed, if defendant has denied all or a portion

of a provider’s med-legal billing for reasons other than

disputes subject to IBR, and the defendant has objected to

the partial or full denial within 90 days. AND; The DOR (and

petition) MUST be filed within 60 days of receiving the

objection from the med-legal provider.

2. Provider may file a “Petition for Determination of Non-IBR

Medical Legal Dispute” if defendant breaches a duty under 8

CCR 10451.1 or Labor Code § 4622

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Didn’t the QME’s attorney request

costs and attorneys fees?If the WCAB determines that, as a result of bad faith actions or

tactics, defendant failed to comply with the requirements and

timelines outlined in Labor Code § 4622, 4603.3, and 4603.6, and

the related regs, defendant shall be liable for reasonable

attorney’s fees and costs, and for sanctions and for sanctions

under Labor Code § 5813 and 8 CCR § 10561. Monetary sanctions

shall not be less than $500.00.

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What constitutes bad faith actions

or tactics by a Defendant?Bad faith actions or tactics by a defendant may include but are

not limited to:

1. Failing to pay an uncontested portion of a med-legal bill;

2. Failing to make a good faith effort to comply with the

applicable timelines;

3. Contesting liability based on a dispute over injury, or injury to

a particular body part.

4. Those actions outlined in 8 CCR 10561.

Costs, sanctions, and attorney’s fees shall be in addition to

penalties enumerated in Labor Code § 4622(a)(1).

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What constituted bad faith actions

or tactics by a Provider?If the WCAB determines as a result of bad faith actions or tactics,

a med-legal provider has improperly asserted that defendant

failed to comply with the requirements and timelines set forth in

Labor Code § 4622 and 4603.6 and the related regs, the med-

legal evaluator shall be liable for the defendant’s reasonable

attorney’s fees and costs, and sanctions under Labor Code § 5813

and 8 CCR 10561. Monetary sanctions shall not be less than

$500.00

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Ripeness for litigation

• A provider’s position is that any violation of Cal. Lab. Code

4622 is a violation of 8 CCR 10451.1(g), and is bad faith per se.

• A specific finding of bad faith is necessary for costs, attorneys

fees, and sanctions to be awarded by the WCAB, and 8 CCR

10561 is referenced

• Is there a similar standard, enumerated in 8 CCR 10561,

necessary for a finding of bad faith actions or tactics; OR

• Does any failure to pay an uncontested amount, make a good

faith effort to comply with timelines, or contesting liability due

to compensability of a specific body part constitute bad faith

actions or tactics?

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Practice TipsWhen in doubt, always respond to an invoice and report in the form of a EOR, within 60 days of receipt.

Order of handling:

1. Is this a Med Legal Expense (see LC 4620 and 4621)?

2. If so, I must respond within 60 days from date of receipt, in the form of a EOR (4622(a)).

3. Provider has 90 days to object or request a second review (for disputes regarding fee schedule).

4. If Provider fails to respond within 90 days the invoice is deemed paid, or the employer is not liable (if no amount paid(4622(c)).

5. If Provider objects to partial or total denial within 90 days, you MUST file a “Petition for Determination of Non-IBR Medical Legal Dispute filed by a Defendant” and a Declaration of readiness to proceed within 60 days of receiving the objection from the provider. The WCAB will have jurisdiction to determine reasonableness and necessity.

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Failure to abide by the previous

slide..1. Labor Code § 4622(a)(1): Imposes an increase of 10%

together with “interest thereon” (compound interest) at 7%

retroactive to the date the bill was received.

2. 8 CCR 10451.1(f)(1) and (f)(2):Failure to comply constitutes a

waiver of any objection other than the amount invoiced

pursuant to the official fee schedule.

3. The Provider may file a “Petition for Determination of Non-

IBR Medical Legal Dispute” if defendant breaches a duty

under 8 CCR 10451.1 or Labor Code § 4622.

4. Attorney for Provider will likely invoke an argument of bad

faith actions or tactics, which imposes a minimum sanction

of $500.00, costs, and reasonable attorneys fees.

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Patrick C. Gorman, Esq.

Managing Attorney/ Partner

Bradford Barthel, Redding

1805 Hilltop Drive, Suite 106

Redding, CA 96002

Phone: (530) 242-6909

Fax: (530) 242-6988

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Med-Legal Expenses, Liability, and Penalties · PDF fileMed-Legal Expenses, Liability, and ......

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