by Patrick C. Gorman –
Over the past two-and-a-half years the industry has been regressively bogged down in litigation over Non-IBR Medical Legal Disputes.
Despite the codification of a Non-IBR Medical Legal Dispute Process in SB 863, the industry saw little friction under the statutes and rules until 2017 (which was observed by the Hon. Judge Myrle Petty in her summary of the statutes in 2017).
What followed has been a massive influx of litigation over Non-IBR Medical Legal Disputes, fueled in part by a 2016 Panel Decision (see Ozuna v. Kern County Superintendent of Schools, 2016 Cal. Wrk.Comp. P.D. LEXIS 401) which states that a claim is essentially “contested” until the case-in-chief has resolved.
Another cause of the new litigation resulted from the misinterpretation of the DWC rules. For instance, attorneys for med-legal providers frequently argued that the regulations (8 CCR § 10451.1) provided a lower standard for an award of costs and attorney fees. These attorneys contended that ANY failure to comply with statutory timelines was “bad faith” under the regs, which we at Bradford & Barthel have disagreed with in blog articles such as this one.
Remarkably, codification of a process intended to reduce the WCAB’s burden of litigating these disputes resulted in a major increase in adjudication by the WCAB. Bill review vendors and carriers, initially caught off guard, reacted promptly to put in place processes to combat the “gottcha” impact of non-IBR Medical Legal disputes. This author wrote articles, first about steps to comply with the statutes and rules, and then about strategic litigation to combat the predictably parasitic claims infused into the system.
At last, the WCAB and Administrative Director (AD) both have responded to the emergence of this area of litigation by way of an En Banc decision, and complete rewording of the AD’s rules governing Non-IBR Medical Legal Disputes. It is important to note that these actions by the DIR are NOT a change in the law, but rather in response to the misrepresentation of the law (and rules).
Colamonico v. Secure Transportation (En Banc), 2019 (ADJ9542328))
Colamonico states a Medical Legal Service Provider has the initial burden to prove that:
- There was a contested claim at the time the expenses were incurred, and that the expenses were incurred for the purpose of proving or disproving the contested claim, and
- That the services were reasonably, actually, and necessarily incurred.
Pursuant to B&B’s training, a defendant does not waive an objection that the services do not qualify under Cal. Lab. Code § 4620-4621 by failing to issue a timely EOR.
This is consistent with the analysis B&B has been providing across the industry. How could a party qualify for a statutory remedy if they are not the class covered by the statute? Somehow this was lost upon litigants. Abject, but predictable, litigation left the WCAB with little choice but to define this obvious legal principal in issuing the Colamonico opinion En Banc. Disparate impacts of Non-IBR Med Legal adjudication is best illustrated by the fact that Colamonico was one of only two En Banc opinions issued by the WCAB in 2019.
8 CCR § 10451.1 replaced with 8 CCR § 10786
Some of the most frivolous positions taken by provider litigants have been that
- Any failure to respond to an invoice in the form of an EOR waives all objections (including that the claimant does not qualify under the statute),
- Any breach of a statutory timeframe entitled a provider’s attorney to attorney’s fees (regardless if those fees were actually incurred, and at the rate of $400.00 / hour), and
- Hearings set in response to a Petition for Determination were some form of “expedited trial” on the issues.
While the threshold issue was addressed in Colamonico, the AD redrafted Non-IBR Medical Legal Dispute rules. The material changes to the Non-IBR Dispute rules include:
- “Bad Faith” must be those actions enumerated in 8 CCR 10421 (formerly 10561).
- Only a defendant has standing to file a DOR (a provider can only file a petition). The WCAB can use their own discretion to set for a MSC or Status Conference (not expedited trial entitlement).
- The language seems to urge judges to defer disputes until after case-in-chief resolved.
- While the waiver provisions are different, they do not seem to materially impact the prior waiver provisions. An untimely EOR= waiver, untimely Petition and DOR= Waiver. Provider does not request SBR, or Object in 90 days= invoice deemed paid (see LC 4622(b)((2) and (c)).
Anticipated Response from Providers
While Colamonico and the rule changes appear to be in response to parasitic litigation, and drafted with the intention of removing frivolous code and rule interpretation from adjudication, this is merely the beginning of removing fraud, waste, and abuse from the Non-IBR process. I anticipate that many provider attorneys will argue that the rule change does not impact their claims for attorney’s fees, when there is a Non-IBR Medical Legal Dispute.
Looking at the language of “bad faith” provisions within 8 CCR 10786, the rule states:
“If the Workers’ Compensation Appeals Board determines that, as a result of bad faith actions or tactics, a defendant failed to comply with the requirements, timelines and procedures set forth in Labor Code sections 4622, 4603.3 and 4603.6 and the related Rules of the Administrative Director, the defendant shall be liable for the medical-legal provider’s reasonable attorney’s fees and costs and for sanctions under Labor Code section 5813 and rule 10421”
We are faced with a predictable course of advocacy on the part of providers. Providers’ representatives will argue that the language “[IF] a defendant failed to comply with the requirements, timelines and procedures… the defendant shall be liable for the medical-legal provider’s reasonable attorney’s fees and costs and for sanctions” continues to mandate imposition of attorney’s fees on a defendant if there is any timeline variance (60 day EOR, 60 day Petition for Determination and DOR).
This position is flawed because the statute also says that “If the Workers’ Compensation Appeals Board determines that, as a result of bad faith actions or tactics… under Labor Code section 5813 and rule 10421”, which would require the court to look at the longstanding general statutes and regulations regarding bad faith. In light of that, adjudication of this precise issue is imminent.
While we will continue to see litigation in this respect, the rule change is an extraordinarily helpful affirmation that costs and sanctions can only be awarded upon a specific finding of bad faith under the standard set ford in Cal. Lab. Code § 5813 (and further illustrated under 8 CCR § 10421). The rules (8 CCR § 10786 and 8 CCR § 10421) provide that the defendant’s failure to comply with the timelines set forth in the statutes and rules must derive from those actions outlines under 8 CCR 10421 (harassment, intimidation, frivolity, or fraud) before any award of costs, attorney’s fees, or sanctions can issue.
These changes have been necessary for years, and are welcome, but do not foreclose litigation on the Non-IBR Dispute front. I would categorize the industry impact of these WCAB and AD actions as the beginning of the end for frivolous Non-IBR Medical Legal litigation.
Please do not forget that for actual Medical Legal Services, failure to respond in the form of an EOR within 60 days mandates a 10% penalty, 7% interest thereon, and waiver of contesting the amount invoiced other than those in excess of OMFS. So continue to respond to ALL invoices in the form of an EOR, within 60 days of receipt. Failure to do so may create penalty situations, and audit issues, if those services do qualify under Cal. Lab. Codes § 4620-4621.
Viewing this website does not form an attorney/client relationship between you and Bradford & Barthel, LLP or any of its attorneys. This website is for informational purposes only and does not contain legal advice. Please do not act or refrain from acting based on anything you read on this site. This document is not a substitute for legal advice and may not address every factual scenario. If you have a legal question, we encourage you to contact your favorite Bradford & Barthel, LLP attorney to discuss the legal issues applicable to your unique case. No website is entirely secure, so please be cautious with information provided through the contact form or email. Do not assume confidentiality exists in anything you send through this website or email, until an attorney/client relationship is formed.