8/14/2017
1
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
• Cal Labor Code 4061
• Self Procured Med-Legal expenses
• Cal Labor Code 4622
• EOR, IBR, Timeframes, and Penalties
• 8 CCR 10451.1
• Required timeframes, petitions, and costs/sanctions for bad faith
actions or tactics ww
w.b
rad
ford
ba
rth
el.
com
2
8/14/2017
2
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).
ww
w.b
rad
ford
ba
rth
el.
com
3
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))
ww
w.b
rad
ford
ba
rth
el.
com
4
8/14/2017
3
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.
ww
w.b
rad
ford
ba
rth
el.
com
5
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).
ww
w.b
rad
ford
ba
rth
el.
com
6
8/14/2017
4
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)
ww
w.b
rad
ford
ba
rth
el.
com
7
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.
ww
w.b
rad
ford
ba
rth
el.
com
8
8/14/2017
5
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.
ww
w.b
rad
ford
ba
rth
el.
com
9
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).
ww
w.b
rad
ford
ba
rth
el.
com
10
8/14/2017
6
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!
ww
w.b
rad
ford
ba
rth
el.
com
11
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….
65 Days later you receive a Petition filed by Mr. Former DA. Esq. demanding
payment of the $13,00.00 in full, penalties and interest, and of course
attorneys fees for your bad faith actions and tactics (covered later).
ww
w.b
rad
ford
ba
rth
el.
com
12
8/14/2017
7
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...
ww
w.b
rad
ford
ba
rth
el.
com
13
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.
65 Days later you receive a Petition filed by Mr. Former DA. Esq. demanding
payment of the $12,500.00 in full, penalties and interest, and of course
attorneys fees for your bad faith actions and tactics (covered later).
ww
w.b
rad
ford
ba
rth
el.
com
14
8/14/2017
8
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.
ww
w.b
rad
ford
ba
rth
el.
com
15
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))
ww
w.b
rad
ford
ba
rth
el.
com
16
8/14/2017
9
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…
ww
w.b
rad
ford
ba
rth
el.
com
17
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)
ww
w.b
rad
ford
ba
rth
el.
com
18
8/14/2017
10
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.
ww
w.b
rad
ford
ba
rth
el.
com
19
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!
ww
w.b
rad
ford
ba
rth
el.
com
20
8/14/2017
11
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
ww
w.b
rad
ford
ba
rth
el.
com
21
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”
ww
w.b
rad
ford
ba
rth
el.
com
22
8/14/2017
12
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
ww
w.b
rad
ford
ba
rth
el.
com
23
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.
ww
w.b
rad
ford
ba
rth
el.
com
24
8/14/2017
13
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).
ww
w.b
rad
ford
ba
rth
el.
com
25
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
ww
w.b
rad
ford
ba
rth
el.
com
26
8/14/2017
14
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?
ww
w.b
rad
ford
ba
rth
el.
com
27
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.
ww
w.b
rad
ford
ba
rth
el.
com
28
8/14/2017
15
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.
ww
w.b
rad
ford
ba
rth
el.
com
29
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
ww
w.b
rad
ford
ba
rth
el.
com
30