WCDefenseCA

A recent writ-denied case (Interwoven, Inc. v. Workers’ Compensation Appeals Board (2011) 13 WCAB Rptr. 13,252) explored, or rather declined to further explore, the extent to which a lien claimant must prove industrial causation in California’s Workers’ Compensation system.

The skinny:  A lien claimant has the burden of proving industrial causation by a reasonable probability standard, and not to a medical certainty standard.

Applicant traveled to China on business, and worked there for his employer, starting in April of 2000.  He fell ill in May of 2000, and his health quickly deteriorated until he expired in September 2001.

Prior to his death, he had been treated at Beijing Union Hospital, Stanford University Hospital, and UC Davis Hospital.  After the case in chief was settled by compromise and release in 2010, a lien-claimant, Healthcare Recoveries, Inc., came forward with a lien in excess of $2,000,000.

The facts present a murky issue at best – 29-year-old applicant is in China for a few months and some unknown event or substance causes him to fall ill and tragically die.

Though expert testimony entered into the record during the case in chief, the lien claimant met a standard of reasonable probability, but not medical certainty.

The standard, as articulated by the Workers’ Compensation Appeals Board panel (and which the Court of Appeals declined to review) was “more convincing force and greater probability of truth.  Thus, the preponderance of the evidence establishes that the decedent’s illness and death arose out of and occurred in the course of employment.”

The San Francisco Chronicle has an interesting article on the state of medical records in California.  Apparently, “medical files belonging to nearly 300,000 Californians sat unsecured on the Internet for the entire world to see.”

It appears that a consulting firm working to collect unpaid workers’ compensation bills for doctors and hospitals, mercifully to remain nameless, put the files online.  The firm mistakenly believed that only its own employees could see the files.

I’m a big fan of modern technology in general and the paper-less world especially.  That being said, even though fire was a wonderful invention, it came with its own dangers and to this day it must be handled with care.

Defendants and defense attorneys can benefit greatly from paperless environments – no more coffee-stained original documents; access for the entire office at the same time to any file; service of all medical records by CD or e-mail.

At the same time, records get accidentally attached and sent; e-mails are dispatched that should have been filtered (read: censored) by cooler heads; and, as here, the medical records of unsuspecting individuals are made available for the world to see.

Given the facts of this story, the defendants in the victims’ respective workers’ compensation cases are blameless (and probably safe from liability).  However, such a slip-up could have easily happened to a private investigator firm hired by a third-party administrator or a careless Agreed Medical Evaluator’s office.

In other words, the modern professional need not fear technology or the paperless environment any more than he or she fears a camp fire; but the same attention and care that goes into keeping a camp fire safe and contained should go into keeping that precious information neatly under a tight lid.

As your caveman author chisels this blog post into a stone tablet, he wishes you the safe and successful use of modern technology to increase your efficiency and reduce your costs, hopefully without the price of a privacy and security breach.

In an earlier post, I mentioned the Valdez v. Warehouse Demo Services (en banc) case, in which the Workers’ Compensation Appeals Board first ruled that defendants are not responsible for treatment bills originating outside of a validly established Medical Provider Network, before deciding to take more time to consider the issue.

While we are in limbo, waiting to see who foots the bill for extra-MPN charges, a thought comes to mind about the companion arena to the MPN: what about the Pharmacy Benefit Networks established pursuant to Labor Code § 4600.2?

In the case of Brambila v. Vons, Inc. (2010), the WCAB denied a lien-claimants petition for reconsideration of the Workers’ Compensation Judge’s ruling that liens asserted by extra-PBN suppliers of drugs are not valid or enforceable.  The WCAB denied reconsideration, relying on § 4600.2.

(As an aside, I have had lien-claimant argue that because the injured worker didn’t understand the PBN network notices, the PBN does not apply to the worker and he or she can obtain drugs wherever he or she wants.  But even if the worker doesn’t understand the plain meaning of the notice, the pharmacist does, and the meaning of the objection letters that followed the first filled prescription as well.)

Since the WCAB now needs more time to consider whether or not insurance companies and self-insured employers are liable for extra-MPN treatment, is it possible that the same reasoning applies to extra-PBN dosages.  The Valdez case is newer and en banc, giving it controlling power over Brambila.

Until the Valdez decision comes out, Brambila is still good law.  If lien-claimants demand payment of extra-PBN liens, settle for token amounts or rush to trial before the WCAB changes its mind in Valdez!

The Department of Workers Compensation has announced that it is proposing new regulations, mostly having to do with lien claimants.  You can see the notice and read the new regulations here.

The proposed changes include a process for dismissing liens that have been inactive for the last year, similar to the dismissal of cases for lack of prosecution.

The new proposed regulations also limit the filing of liens to new or opening liens, and lifts the requirement to file (but not to serve) the itemized list that make up the basis for the lien.

Also, it appears that defendants will have grounds to argue that an improperly filed lien is not filed and not binding, even if it is served.   The new proposed regulations even seem to allow for sanctions and attorney’s fees for violations of the new procedures.  (The threat of sanctions is a useful tool in curbing the advances of lien claimants.)

I, for one, am eager to see how much of this survives and becomes the law of the land.  It looks like, before too long, defendants might have a new set of maneuvers to ward off the Lien Pirates!  Even for a cynical workers’ compensation defense attorney, hope springs eternal.

On a regular basis, liens I encounter are filed by lien representatives.  Rather than prosecuting the lien itself, the lien claimant assigns the task to one office or another, generally for a percentage of the recovery.  In fact, a regular part of practicing California Workers’ Compensation defense is fighting off unwarranted and baseless liens.

Some cases go on for years, however, and a lien-claimant’s representative might change with the seasons – different person, different office or even a different firm/company.  How do you know if the “new” lien representative actually has the power to negotiate and settle a lien, and the old one no longer does?

For swapping attorneys in the case-in-chief, there is a process to substitute attorneys, as per the Code of Civil Procedure § 284. It appears that no such procedure is followed for lien representatives.

With that in mind, I have a suggestion:  When a lien representative sends that initial demand letter, a proper response includes some demand for documentation that the lien representative actually represents the lien claimant.  That includes authority to negotiate and settle the lien.

In a recent case, Green v. State Roofing systems, Inc., the Workers’ Compensation Appeals Board reviewed a Workers’ Compensation Judge’s granting of a Petition to Quash a Subpoena Duces Tecum, which, among other items, demanded documentation of the agreement and arrangement between the lien claimant and the lien representative.

The case was remanded to work out a discovery plan, but the point is a valid one – defendants must be able to know who the lien claimant is and who its representative is before the lien can be paid, adjusted or litigated.

Who could have thought that a medical office could possibly defraud insurers in a California Workers’ Compensation scam?  Fortunately, the insurance company and the Orange County District Attorney did.  Recently, several sources confirmed that Dr. Sim Carlisle Hoffman of Newport Beach, and three others from his office, were engaged in a $17 million Workers’ Compensation insurance fraud scheme.

Ibtimes.com, Patch.com and Adjuster.com confirm that Hoffman has been accused of over-billing, hoping that insurance companies, or self-insured entities, would let the unnecessary charges go unnoticed.  These involved both unnecessary procedures and procedures never performed.

The facilities involved?  Advanced Professional Imaging, Advanced Management Services and Better Sleeping Medical Center (all in Buena Park).  Amongst those indicted is a neurologist, a radiologist and a hearing representative who would press for these bills to be paid in lien trials.

I, for one, extend a heartfelt thanks to Orange County District Attorney Tony Rackauckas and the deputy district attorneys that, under his leadership, are seeing this matter through.  Although I practice in San Francisco, I salute these efforts to curb the fraud that, sooner or later, unnecessarily brings up costs for consumers.  Far too often self-insured employers and insurance companies are defrauded by false billing practices and over-treating physicians.

In such cases, it seems unlikely that prosecutors or the insurance company will find $17 million worth of goods to recover for their loss, although I would check under the mattresses just to be safe.  Nor will the D.A.’s office or the insurance company recover the costs of investigation, reporting and prosecution, which in such cases is a lengthy, difficult and therefore expensive process.

The only hope insurers and self-insurers have of curbing their losses is through vigilance, bill review, and cooperation with law enforcement to catch the frauds and (hopefully) put them out of business.

Other ways to defend against this are the use of Utilization Review procedures and a Medical Provider Network.  But these have their own limitations.

If a fraudster becomes familiar with the allowable treatments under UR, he need only bill for procedures that would be allowed, even without performing them.  Similarly, an MPN can eliminate a doctor who commits fraud, but only after the fraud has been committed.  The very nature of fraud is that, for the longest time, it is not detected.

In the meantime, we can all enjoy the bite of increased premiums and costs due to fraud.  Cheers!

A recent writ denied opinion highlights an important tool that is often neglected in curbing the costs of lien negotiation and settlement.  In Escamilla v. WCAB (2011 Cal. Wrk. Comp. Lexis 67; behind a Lexis pay wall), the Workers Compensation Judge’s award of sanctions and costs against a lien claimant and its hearing representative was upheld.

The essential facts are that the lien claimant was forced to wait for the lien hearing to begin, roughly 90 minutes, because the defense attorney was in a trial.  Ultimately the parties settled, including in the settlement all claims to penalties and interest.   A year later, the lien claimant filed a petition for cost and sanctions for that 90 minute wait.  After arriving late for a trial date, requesting and receiving a continuance, and arriving late for the second trial date, the WCJ denied the lien claimant’s petition, while also awarding almost $2,500 in costs to the defense attorney (pursuant to the defense attorney’s Labor Code § 5813 petition, among other penalties.

In this case, the attorney pursued a § 5813 petition and recouped the costs of his billed hours for his client.  But too often the remedy of § 5813 is not invoked.  Lien claimants have a very low operating cost, while defendants have to pay their adjusters and their attorneys.  This is effectively leveraged by lien claimants threatening “scorched earth” against defendants – pay us our Danegeld, even on an unreasonable claim, or we’ll cripple you with attorney fees.

§ 5813 gives defendants a chance to fight back, and to raise the cost of doing business on the lien claimants.  Without § 5813, the operating costs are limited to small amounts of time and boiler plate pleadings used repeatedly.  With § 5813, the lien claimant and its hearing representative suddenly find themselves paying the defendant’s attorney fees.  If used judiciously, § 5813 can stem the flow of unreasonable lien claims and provide some real leverage in negotiating a token settlement.

But, just like peeking inside a van parked by the river to claim the “free candy” promised in spray-paint on the van’s side, § 5813 comes with its own dangers.  A careless and knee-jerk habit of sanction filing will eventually get an attorney or even a defendant on the “ignore” list of the WCJ.