DWC Publication on UR and ACOEM

DWC's PUBLISHED OPINION ON PERTANENT LABOR CODE, REGULATION, and WCAB DECISIONS: This publication may be downloaded from "here" in .pdf format or "here" in .doc format.

FAVORABLE AND EXCITING WCAB DECISIONS:

Knight v. Liberty Mutual -- WCAB En Bance Decision. (2006) 71 Cal. Comp. Cases 1423

On 10/10/06, in an En Banc decision (this type of decision is the “law of the land” until the District Court of Appeals or Supreme Court of California change it), the seven commissioners of the WCAB handed down a unanimous ruling that allowed an injured worker to receive medical treatment outside of the employers Medical Provider Network (“MPN”). In Knight v. Liberty Mutual [(2006) WCAB En Banc; 71 Cal. Comp. Cases 1423] an injured worker, who was not satisfied with treatment from the company clinic, opted to change primary treating physicians to a doctor who was not a member of the employers MPN. Needless to say, the insurer refused to authorized any treatment outside of their MPN and left the patient without any treating doctor. The case went to trial and the administrative Law Judge ordered the insurer to pay for the treatment procured outside of the MPN. Aggrieved by the decision, the Insurer appealed and, in a surprise decision, the entire 7-member WCAB voted to take on this case. In their ruling—which has sent a sobering shockwave throughout the insurance industry—the WCAB agreed with the initial ruling and ordered that all medical treatment be paid. More explicitly, the commissioners stated:

“In sum, the record in this case compels the conclusion that defendant neglected and refused to provide reasonable medical treatment by failing to provide applicant with required notice of his rights under the MPN. Because reasonable medical treatment was neglected or refused, applicant is entitled to self-procure reasonable treatment and defendant is liable under section 4600(a) for that treatment.” (Emphasis added.)

Since (in my experience) 95% of all injured workers are not informed of their MPN rights, it would seem that most can treat outside of the dreaded MPNs without worry.

Empirically, however, much like 3rd Party Personally Injury Cases, you’re going to have to wait to get paid on such cases and will need a decent Hearing Rep (or you can do it yourself if you’ve got the time), as the insurer will most likely fight tooth and nail.

Hamilton Vs. State Compensation Insurance Fund (2004) 32 CWCR 249 WCAB Panel Decision: [ACOEM not for Chronic Conditions]

Hamilton was the first citable WCAB opinion that stated the insurer’s UR department had erred by using the ACOEM guidelines to deny recommended treatment for a patient who was suffering chronic pain. Workers’ Compensation Administrative Law Judge (“WCJ”) Webber relied on (and quoted) the forthcoming ACOEM verbiage to support his opinion:

“ Recommendations on assessing and treating adults with potentially work-related low back problems (i.e., activity limitations due to symptoms in the low back of less than three months duration) are presented in this clinical practice guideline…. this chapters master algorithm schematizes how primary care and occupational medicine practitioners generally can manage acute or subacute low back complaints.”

Based upon this verbiage, WCJ Webber opined:

“The ACOEM guidelines themselves, in the opinion of this WCJ, clearly provide for applicability only during the first 90 days following the industrial injury."

His decision was appealed to the WCAB by the insurer; however, the assigned three commissioner panel agreed with WCJ Webber’s opinion on ACOEM and denied the insurers request for reconsideration (appeal).

Los Angeles Times V. WCAB ( Herbinger) (2005) 70 CCC 504 [Writ denied] [ACOEM not for Chronic Conditions]

“The Court’s review of the specific pages [of the ACOEM guidelines] referenced by defendant reveals that the treatment guidelines discuss treatment recommendations within the first few days to the first 4 to 6 weeks following the injury, the injury’s acute phase. Mr. Herbinger’s injury occurred in September, 1990, fourteen years ago. The Court believes that Mr. Herbinger’s injury is long past the acute phase. Thus, the Court believes the ACOEM guidelines referenced by the defendant are inappropriate at this point.”

In Herbinger, WCJ Delaterre ruled against the insurer’s attempt to use the ACOEM guidelines (among other things) to deny requested medical care for a chronically injured worker. In relevant part, the WCJ opined:

“[The ACOEM Guidelines are] related to acute medical treatment within the first few days to the first four to six weeks following the injury and that the ACOEM Guidelines were accordingly inapplicable.”

To no avail, the insurer appealed upward and was denied by both a panel of commissioners at the WCAB (request for reconsideration denied), and the Second District Court of Appeals (writ denied).

Regents of the University of California, Lawrence Livermore National Laboratory, PSI v. WCAB ( Macari) (2005) 70 CCC 1733 Writ Denied [Maintenance Chiro Care allowed – Mercy, Ch 6, Glenerin,]

In Macari, a Californian WCJ allowed thirty (30) Chiropractic visits per year for treatment of an injured worker’s chronic back pain in order to maintain function and keep pain under control. She used ACOEM Chapter 6, the Mercy Guidelines, and the Glenerin (Canadian) Guidelines as the foundation for this decision. Insurer objections to this decision were denied by the Workers’ Compensation Appeals Board (“WCAB”), and the First District Court of Appeals (Writ Denied).

More explicitly, on 02-20-04, an injured worker was granted an award for future medical care from the WCAB. Subsequent to the award additional chiropractic care was procured, which effectively diminished his chronic back pain and increased his function with respect to work and the activities of daily living. Despite the award, the insurer’s UR department (two separate UR doctors’ opinions) denied such care on the basis of Chapter 12 of the ACOEM Guidelines. At trail, the WCJ ordered the insurer to pay for and continue paying for the chiropractic care at a frequency of no more than 30 visits per year. The WCJ based her decision (which was upheld by the Appeals Board and the District Court of Appeals) on (1) the patient’s credible testimony that his function deteriorated and his need for medication increased without the chiropractic care, (2) Chapter 6 of the ACOEM guidelines, (3) the Mercy Guidelines, and (4) the Glenerin (Canadian) Guidelines. Upon reconsideration, the WCAB agreed that said evidence effectively rebutted the ACOEM Guidelines in accordance with labor Code § 4604.5 and upheld the WCJ’s decision. The matter was further appealed to the First District Court of Appeals; however, the appeal was rejected (Writ Denied).

In relevant part, the WCJ stated:

“Dr. Loero [PTP], and the panel QME in this case, Dr. Aubin, both point out that Chapter 12 deals with acute injury and that the only chapter in the ACOEM Guidelines that deals with chronic pain is Chapter 6. Both Dr. Aubin and Dr. Loero point to Chapter 6 for authority that ongoing treatment to increase function in chronic pain patients is appropriate. I have reviewed Chapter 6, and I agree that that is what Chapter 6 says.”

Casillas vs. the County of San Luis Obispo (2005) 33 CWCR 217 (Opinion and Order Granting Reconsideration and Decision after Reconsideration)

In Casillas, the patient (who suffered an industrial injury in 2000) received a stipulated award for future medical care from the WCAB in 2002 and used this award to procure chiropractic treatment for flare-ups (exacerbations) of her chronic pain. It was noted that over the years the patient had procured over 100 chiropractic treatments, which the insurer paid for. In 2004 (after ACOEM was presumed correct on the scope of medical treatment), the insurer cut-off the patient’s chiropractic care after a UR doctor opined that said care was not ACOEM compliant.

Despite a favorable QME report that used the Mercy Guidelines and ACOEM itself to support chiropractic care for acute exacerbations of a chronic condition, the insurer won the first battle as the WCJ sided with the insurer and denied chiropractic care based on ACOEM.

The decision was appealed upward to the WCAB where a panel of three commissioners was appointed to reconsider the decision. Commissioners Brass, Caplane, and O’Brien unanimously agreed to over-turn the WCJ opinion and ordered the insurer to pay for the chiropractic care. In relevant part, the commissioners stated:

“In short, we do not find the ACOEM Guidelines to specifically preclude continuing chiropractic carefor acute exacerbations of the applicant’s [the injured worker] symptoms. As such, no presumption is clearly established pursuant to [labor code] section 4604.5(c). But even if a presumption is said to exist, arguendo [argumentatively], we find in this case that the presumption would be rebutted by the reasoned opinion of the examining QME, the Mercy Guidelines, and the applicants experience in obtaining pain relief from acute exacerbations of her symptoms through the use of chiropractic care,” and “we will specify that future chiropractic care is to be provided when reasonably necessary to treat acute exacerbations of the applicant’s [the injured worker] symptoms.”

This was a wonderful decision, for it found that chiropractic care for acute exacerbations of a chronic condition can be treated with chiropractic manipulation and physiotherapy even if said care was not specifically mentioned in the award. The simple fact that the insurer had paid for it for years was enough to prove it was an insurance-accepted treatment intervention and using ACOEM to cut it off was wrong.

*********************************** SPIEL *****************************************

Chiropractic treatment is supported by Chapter 6 of ACOEM and in the opinion of Casillas [33 CWCR 217].

In Casillas, the commissioners stated in relevant part:

“In short, we do not find the ACOEM Guidelines to specifically preclude continuing chiropractic care for acute exacerbations of the applicant’s [the injured worker] symptoms…. Arguendo, we find in this case that the presumption would be rebutted by the reasoned opinion of the examining QME, the Mercy Guidelines, and the applicants experience in obtaining pain relief from acute exacerbations of her symptoms through the use of chiropractic care,” and “ we will specify that future chiropractic care is to be provided when reasonably necessary to treat acute exacerbations of the applicant’s [the injured worker] symptoms.”

I can’t explain why the SCIF UR team has such difficulty understanding that the California Constitution and Labor Code allows for an injured worker to receive any form of medical care (including chiropractic) the cures or relieves him/her from the effects of the industrial related pain syndrome.

Metoyer v. Wilshire West Dental; Zenith Ins. Co. (2005) 34 CWCR 14 [Violation of 3550 allowed Tx outside an MPN.]

In Metoyer a panel of three commissioners upheld a WCJ’s opinion that an injured worker could treat outside an insurer’s MPN because the employer failed to comply with the work-place notification requirements of Labor Code section 3550; furthermore, they opined that if the employer would have violated Title 8 CCR section 9767.12, the injured worker may also be allowed to treat outside an insurer’s MPN. In relevant part, commissioner Rabine stated the forthcoming in the Opinion and Order Denying Petition for Reconsideration:

"Absent proof that defendant complied with this notice requirement [section 3550], it would appear that the applicant would be entitled to be treated by his/her personal physician with respect to an injury occurring during the time that there was a failure to post the required notice. We see no ambiguity in application of this provision."

And:

"Additionally we [the WCAB commissioners] note that AD rule 9767.12 provides for required notices to be given prior to an injury, specifically written notice of a medical provider network under Labor Code section 4616.3 prior to the implementation of an approved MPN, at the time of higher, or when an existing employee transfers into the MPN. While specific consequences for a failure to provide required notice are not described in AD Rule 9767.12, when coupled with the aforementioned Labor Code section [section 3550(e)], the consequences herein may be justified."

The bottom line of this WCAB opinion would seem to indicate that if the employer failed to post the Employee Notification as required by Labor Code section 3550 or the MPN Initial Notification as required by Title 8 CCR 9767.12, then the injured worker is free to treat out side an MPN.

The WCAB in an en banc decision held as follows in Willette v. AU Electrical
Corporation and SCIF , 69 CCC 1298 (WCAB en banc)

(1) If an employer’s utilization review physician does not approve an employee’s treating physician’s treatment authorization request in full, then an unrepresented employee (if he or she desires to dispute the utilization review physician’s determination) must timely object, and then a panel qualified medical examiner (“QME”) must be obtained to resolve the disputed treatment issue(s);

(2) Once the panel QME’s evaluation has been obtained, neither the treating physician nor the utilization review physician may issue any further reports addressing the post-utilization review treatment dispute;

(3) The panel QME should ordinarily be provided with and consider both the reports of the treating physician and the utilization review physician regarding the disputed issues;

(4) If a post-utilization review medical treatment dispute goes to trial after the panel QME issues his or her report, both the treating physician’s and the utilization review physician’s reports are admissible in evidence; and

(5) When a WCJ or the Appeals Board issues a decision on a post-utilization review medical treatment dispute, the reports of the panel QME, the treating physician, and the utilization review physician will all be considered, but none of them is necessarily determinative.

Shearson v. St. Paul Ins. Co. (32 CWCR 318) (October 2004)

1. Applicant suffered an industrial injury and a treatment dispute arose under the utilization review system. Applicant was represented. At trial the opinions of the UR doctor were excluded on the grounds that that physician had not examined or interviewed the injured worker. The WCAB granted reconsideration and directed the trial judge to apply Willette for an unrepresented applicant. The board pointed out the parties failed to follow the procedure set forth in Willette to resolve disputes over treatment recommend by the PTP. The Board went on to state that in Willette the board set forth the procedure to be followed if the employee is not represented by an attorney. The board ruled that if the employee is represented the procedure is basically the same except the process provided in 4062.2 rather than 4062.1 is followed. The board also indicated as outlined in Willette, the report of the UR physician is admissible.

2. The appeals board in this case applied the old QME procedure even though for this date of injury (2003) the QME sections were repealed as of 4-19-05 and the new procedure did not go into effect until to 1-1-05.

3. In Godinez v. Buffer Inc. and Specialty Risk: (69 CCC 1311) (Significant Panel Decision). In this case the board concluded that the timeliness of an appeal from any determination or recommendation of the Administrative Director’s vocational rehabilitation unit with reference to an injury occurring before January 1, 2004, is controlled by former Labor Code section 4645(d), and that defendant’s appeal in this case was filed timely. The date of injury in this case is June 18, 2000. The board stated that the issue in the case was what “timely” means when the statutory definition of “timely” has been repealed. The board indicated that timeliness of an appeal from the decision of the Rehabilitation Bureau in Cabrera v. Intercell Industries (1980) 45 Cal.Comp.Cases 3 [Appeals Board en banc], timeliness was governed by Administrative Director Rule 10014. (See 45 Cal.Comp.Cases at 7). That Rule was codified by Labor Code section 4645(d), first enacted in 1989 (1989 ch. 892, §33) and amended in 1993 (1993 ch. 121 [AB 110], §52). Administrative Director Rule 10014 was repealed in 1996 as superfluous. Before 2003, section 4645(d) provided:

“Any determination or recommendation of the administrative director’s vocational rehabilitation unit or by the arbitrator shall be binding unless a petition is filed with the appeals board within 20 days after service of the determination or recommendation. Nothing in this section shall affect an employee’s rights pursuant to Sections 5405.5, 5410, and 5803.” However, section 4645 was itself repealed in 2003 (2003 ch. 635 [AB 227]), together with the rest of Division 4, Chapter 2, Article 2.6. Section 139.5 was also repealed and replaced by a new section that applies to injuries occurring on or after January 1, 2004.

In 2004, former section 139.5 was re-enacted, with modifications, to apply to injuries occurring before January 1, 2004 (2004 ch. 34 [SB 899], §5). But the vocational rehabilitation sections of Article 2.6 were not re-enacted.

The Board noted that the version of section 139.5(c) now operative refers to “former Section 4642” and “subdivision (d) or (e) of former Section 4644.” Thus, even though these sections were repealed in 2003 and not reenacted in 2004, they still have a shadowy existence for injuries prior to January 1, 2004. 7 Like ghosts “doomed for a certain term to walk the night” (Hamlet I, v), these statutes have no material existence but linger until their work is done. Because there is no other operative law, we hold that former section

4645 is a similar “ghost statute” that continues to govern the timeliness of appeals from decisions of the Rehabilitation unit

4. The Board's in an en banc decision in Marilyn Simi v. Sav-Max Foods, Inc., SAC 323226, filed and served on February 1, 2005 held that for injuries occurring prior to January 1, 2005, section 4062, as it existed before its amendment by SB 899, continues to provide the procedure by which Agreed Medical Evaluation (AME) and QME medicallegal reports are obtained in cases involving represented employees. The board cited the Godinez (above) for its rationale.

C. Sandhagen v. Cox & Cox and SCIF: (69 CCC 1452 WCAB en banc) The UR Process

1. The Utilization Review Time Deadlines Of Section 4610(g)(1) Are Mandatory And, Therefore, A Defendant That Fails To Meet The Mandatory Deadlines Is Precluded From Using The Utilization Review Procedure.

A. The utilization review provisions of section 4610 establish a process by which a defendant may prospectively, retrospectively, or concurrently review the treatment recommendation of a treating physician and then decide whether to approve, modify, delay, or deny authorization for the treatment, based in whole or in part on its medical necessity to cure and relieve the effects of the injury in accordance with section 4600. (Lab. Code, §4610(a)-(f).) Section 4610, however, sets forth specific time frames that govern the utilization review process. As relevant here, section 4610(g)(1) provides:

7 As a former U.S. President stated in a different context, “that depends on what the meaning of is is.”

“(g) In determining whether to approve, modify, delay, or deny requests by physicians prior to, retrospectively, or concurrent with the provisions of medical treatment services to employees all of the following requirements must be met:

(1) Prospective or concurrent decisions shall be made in a timely fashion that is appropriate for the nature of the employee’s condition, not to exceed five working days from the receipt of theinformation reasonably necessary to make the determination, butin no event more than 14 days from the date of the medicaltreatment recommendation by the physician. In cases where the review is retrospective, the decision shall be communicated to the individual who received services, or to the individual’s designee, within 30 days of receipt of information that is reasonably necessary to make this determination. … (Lab. Code, §4610(g)(1) (emphasis added).)

b. It is a principle of statutory construction that the word “shall,” as used in the Labor

Code, ordinarily connotes a mandatory duty. (Lab. Code, §15 [“ ‘[s]hall’ is mandatory and ‘may’ is permissive”]; see also, Smith v. Rae-Venter Law Group (2003) 29 Cal.4 th 345, 357; Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, 109; Morris v. County of

Marin (1977) 18 Cal.3d 901, 907.) The word “must” is also normally mandatory. ( Long Beach Police Officers Assn. v. City of Long Beach (1988) 46 Cal.3d 736, 743; In re Angela M. (2003) 111 Cal.App.4th 1392, 1398, fn. 4; Larson v. State Personnel Bd. (1994) 28 Cal.App.4th 265, 276; see also, Cal. Rules of Court, Rule 200.2(4) [“The words ‘must’ and ‘shall’ are mandatory and the word ‘may’ is permissive.”]; Rule 1401(b)(1) [“ ‘Shall’ and ‘must’ are mandatory and ‘may’ is permissive.”].) Similarly, the word “require” means “to direct, order, demand, instruct, command, ... [and] compel.” (In re Barfoot (1998) 61 Cal.App.4th 923, 931 [quoting from Black’s Law Dict. (6th ed. 1990), at p. 1304.)

c. Here, we construe the deadlines for commencing utilization review established by section 4610(g)(1) to be mandatory.

Section 4610(g)(1) unequivocally speaks of “requirements” that “must” be met. (Lab.

Code, §4610(g)(1) (emphasis added).) It also commands that prospective or concurrent utilization review decisions “shall be made” in a timely fashion, “not to exceed” five working days from the receipt of the necessary information, but “in no event” more than 14 days from the date of the medical treatment recommendation. (Lab. Code, §4610(g)(1) (emphasis added).) Thus, section 4610(g)(1) frames a defendant’s duty to comply with the statutory deadlines in mandatory terms. The words of section 4610(g)(1) in no way imply a legislative intent that the declared deadlines are merely permissive. Moreover, the implicit legislative purpose in establishing these deadlines is to ensure that, where a defendant decides to undertake the utilization review process, it must do so expeditiously (see Cal. Const., art. XIV, §4), so that any utilization review decisions regarding what medical treatment is “reasonably required” for the injured worker is not unduly delayed. In this regard, it has long been recognized: that the workers’ compensation statutory scheme “is designed to help an employee obtain promptly the cure or relief he is entitled to under the law” and to “encourage [e] the employer and carrier to provide prompt medical treatment” ( Avalon Bay Foods v. Workers’ Comp. Appeals Bd.

( Moore) (1998) 18 Cal.4th 1165, 1173, fn. 3, & 1178 [63 Cal.Comp.Cases 902]; Adams v. Workers’ Comp. Appeals Bd. (1976) 18 Cal.3d 226, 229 & 230 [41 Cal.Comp.Cases

680]); that a delay in the provision of medical treatment “may impose a great hardship upon an employee, who due to the injury frequently is without funds to properly support himself and his family or is without funds to obtain the necessary care” (Zeeb v.Workmen’s Comp. Appeals Bd. (1967) 67 Cal.2d 496, 501 [32 Cal.Comp.Cases 441]); and that “[t]he broad purpose of workmen’s compensation is to secure an injured worker seasonable cure or relief from industrially caused injuries in order to return him to the work force at the earliest possible time.” (Carver v. Workers’ Comp. Appeals Bd. (1990) 217 Cal.App.3d 1539, 1547 [55 Cal.Comp.Cases 36]; Davison v. Industrial Acc. Com. (1966) 241 Cal.App.2d 15, 18 [31 Cal.Comp.Cases 77].) Accordingly, in addition to the express language of section 4610(g)(1), the basic and essential purposes of the workers’ compensation statutory scheme support a construction that the time deadlines of section 4610(g)(1) are mandatory.

B. If A Defendant Undertakes An Untimely Utilization Review Procedure, Any Utilization Review Report It Obtains Is Not Admissible In Evidence With Respect To The Particular Medical Treatment Dispute In Question, And Any Utilization Review Report It Obtains Cannot Be Forwarded To An AME Or QME If Section 4062(a) Procedures Are Timely Pursued.

a. Having concluded that the deadlines of section 4610(g)(1) are mandatory, we now consider what consequences flow from a defendant’s failure to comply with them.

We hold that if a defendant fails to comply with the mandatory deadlines of section

4610(g)(1), then any utilization review report obtained by a defendant that has not complied with the deadlines is inadmissible with respect to the particular medical treatment issue in question. 8

b. Given that section 4610(g)(1) imposes a mandatory duty on a defendant to comply with its deadlines, it would be incongruous to permit a defendant that fails to comply with the deadlines to nevertheless obtain a utilization review report and to then enter it into evidence. The intent of section 4610(g)(1)’s deadlines is to ensure that a defendant makes its utilization review determination quickly. The natural consequence of a defendant’s noncompliance with the mandatory deadlines is that it is precluded from instituting the utilization review procedure. If it attempts to use that procedure, any utilization review report it obtains in the attempt is inadmissible. Indeed, medical reports not timely obtained in accordance with statutory requirements are generally inadmissible in workers’ compensation proceedings. (Strawn v. Golden Eagle Insurance Co. (2000) 28

Cal. Workers’ Comp. Rptr. 105 (Appeals Board panel) [under former section 4061, the 8 Of course, if a defendant does comply with the statutory deadlines, then any utilization review report is ordinarily admissible. (Willette v. Au Electric Corporation (2004) 69 Cal.Comp.Cases __, 2004 Cal. Wrk. Comp. LEXIS 308 (Appeals Board en banc).) report of a QME obtained by the defendant was excluded where the defendant did not timely object to the opinion of the treating physician]; County of Santa Barbara v.

Workers’ Comp. Appeals Bd . (Finch) (1999) 64 Cal.Comp.Cases 907 (writ den.)

[similar]; San Diego Gas & Electric v. Workers’ Comp. Appeals Bd. (Morgan) (1997) 62 Cal.Comp.Cases 384 (writ den.) [if a party failed to timely object to the treating physician’s opinion under former section 4062, it could not obtain a QME report under that section].)

c. Moreover, because the natural consequence of a defendant’s noncompliance with the mandatory deadlines of section 4610(g)(1) is that it is precluded from employing the utilization review procedure, then any report generated by an untimely utilization review process cannot be used for any purpose. Thus, if a defendant has not complied with the deadlines of section 4610(g)(1), but it timely pursues the AME/QME procedure under section 4062(a) (see Section C, infra), then any utilization review report the defendant obtains may not be forwarded to the AME or QME. To conclude otherwise would mean that, if an AME or a QME considers or relies upon an untimely utilization review report, and then the AME or the QME’s report is admitted in evidence, the untimely utilization review report effectively would be admitted through the back door when the front door is closed. Attempts at “back door” admissions of inadmissible evidence have long been denounced in California. (E.g., Alling v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1438; People v. Casas (1986) 181 Cal.App.3d 889, 896; People v.Rioz (1984) 161 Cal.App.3d 905, 918-919; City of Monterey v. Hansen (1963) 214 Cal.App.2d 794, 797.) Further, although a utilization review report is generally a “medical record” within the meaning of section 4062.3(a)(2) (Willette v. Au Electric

Corporation , supra, 69 Cal.Comp.Cases __, 2004 Cal. Wrk. Comp. LEXIS 308 (Appeals Board en banc)), section 4062.3(a)(2) expressly limits the “medical records” that a party may submit to a panel QME solely to those that are “ relevant to [the] determination of the medical issue.” (Lab. Code, § 4062.3(a)(2) (emphasis added).) Of course, any decision by a WCJ or the Appeals Board “must be based [only] on admitted evidence in the record[,] … including admitted medical records.” ( Hamilton v. Lockheed Corp. (2001) 66 Cal.Comp.Cases 473, 476 (Appeals Board en banc) (emphasis added).) Accordingly, an untimely obtained and, therefore, inadmissible utilization review report does not constitute a medical record that is “ relevant ” to the determination of the disputed medical issue . Similarly, although section 4062.3(c) allows the parties to agree on what information is to be provided to an AME, we hold that the parties may not agree to provide an AME with an inadmissible and, therefore, irrelevant utilization review report that cannot be relied upon by either a WCJ or the Appeals Board. SCIF suggests that the only consequences of a failure to comply with the mandatory timeframes of section 4610(g)(1) are: (1) the defendant may be assessed administrative penalties by the Administrative Director of the Division of Workers’ Compensation (“DWC”) (see, Lab. Code, §4610(i)); and/or (2) the defendant may be liable for section

5814 penalties if its delay in the completion of the utilization process is unreasonable. (Lab. Code, §4610.1.) We find no merit in this suggestion.

d. First, it is true that section 4610(i) allows the Administrative Director to assess administrative penalties if a defendant fails to meet any of the timeframes of section

4610. Yet, as pointed out by the WCJ’s Report, section 4610(i) states, “The administrative penalties shall not be deemed an exclusive remedy for the administrative director.” If the imposition of administrative penalties is not even the sole remedy available to the Administrative Director, who does not even have jurisdiction over workers’ compensation proceedings (see, Lab. Code, §§111(a), 5300, 5301), then the availability of administrative penalties certainly does not limit the remedies of the WCAB. (See, Lab. Code, §133 [the WCAB “shall have power and jurisdiction to do all things necessary or convenient in the exercise of any power or jurisdiction conferred upon it”].)

e. Second, the possibility that the WCAB may impose section 5814 penalties against a defendant if it unreasonably delays completion of the utilization review process (see, Lab. Code, §4610.1) does not mean that the WCAB cannot also exclude from evidence a utilization review report that the defendant obtained without complying with the mandatory deadlines of section 4610(g)(1). Section 5814 is not the exclusive remedy against a defendant, even when its actions have been unreasonable. (See, e.g., Rhiner v.Workers’ Comp. Appeals Bd. (1993) 4 Cal.4th 1213, 1227 [58 Cal.Comp.Cases 172]). In this case, the May 14, 2004 joint report Drs. Goldthwaite and Josey that recommended a cervical and upper thoracic spine MRI, as well as a request for authorization of the

MRI, were received by SCIF on May 24, 2004. The utilization review report of Dr. Krohn, however, did not issue until June 21, 2004, which was both well over five days after SCIF’s receipt of the May 14, 2004 report (SCIF did not request any further “necessary information”) and well over 14 days after Drs. Goldthwaite and Josey’s treatment recommendation. Therefore, the WCJ properly excluded Dr. Krohn’s June 21, 2004 utilization review report from evidence.

C. When A Defendant Does Not Meet The Section 4610(g)(1) Deadlines, It May Use The QME/AME Procedure Established By Section 4062(a) To Dispute The Treating Physician’s Treatment Recommendation; However, The Defendant (Not The Applicant) Is Then The “Objecting Party” And The Defendant Must Meet The Section 4062(a) Deadlines, Unless Those Deadlines Are Extended For Good Cause Or By Mutual Agreement.

a. When a defendant fails to comply with the deadlines established by section 4610(g)(1), however, it may still be able to use the procedure established by section 4062(a) to dispute the treating physician’s treatment recommendation. Section 4062(a) states, in relevant part: “If either the employee or employer objects to a medical determination made by the treating physician concerning any medical issues not covered by Section 4060 or 4061 and not subject to Section 4610, the objecting party shall notify the other party in writing of the objection within 20 days of receipt of the report if the employee is represented by an attorney or within 30 days of receipt of the report if the employee is not represented by an attorney. … These time limits may be extended for good cause or by mutual agreement. If the employee is represented by an attorney, a medical evaluation to determine the disputed medical issue shall be obtained as provided in Section 4062.2 …. If the employee is not represented by an attorney, … the evaluation shall be obtained as provided in Section 4062.1 … .” (Lab. Code, §4062(a).)

b. Thus, section 4062(a) applies to any objection to a treating physician’s medical

determination not subject to section 4610, which would include a defendant’s objection where it has failed to meet the mandatory time deadlines of section 4610(g)(1).) Accordingly, in situations where a defendant does not timely initiate or complete the utilization review process, or where a defendant chooses not to participate in the utilization review process, the defendant is essentially in the same position it would have been prior to the Legislature’s enactment of utilization review, i.e., it is within the AME/QME procedure.

c. Section 4062(a), however, requires that the objecting party “shall” notify the other

party in writing of the objection within 20 days of receipt of the physician’s report if the

injured employee is represented, or within 30 days if he or she is not represented, and then utilize the appropriate procedure for obtaining a QME or AME. Thus, the section 4062(a) procedure cannot be used if the party’s objection to the treating physician’s opinion is untimely. (Cf., Strawn v. Golden Eagle Insurance Co., supra, 28 Cal. Workers’ Comp. Rptr. 105; County of Santa Barbara v. Workers’ Comp. Appeals Bd. (Finch), supra, 64 Cal.Comp.Cases 907; San Diego Gas & Electric v. Workers’ Comp. AppealsBd. (Morgan), supra, 62 Cal.Comp.Cases 384 (writ den.).)

d. Here, SCIF received the May 14, 2004 report of Drs. Goldthwaite and Josey no later than May 24, 2004, but it did not notify applicant (who is represented) of any objection to

their medical determination within 20 days thereafter. Therefore, under the procedures announced here, SCIF would be precluded from obtaining a QME report in rebuttal to Drs. Goldthwaite and Josey’s determination. Nevertheless, we recognize that the statutory procedures established by section 4610(g)(1) and 4062(a) are relatively new and that no binding Appeals Board or Court of Appeal decision has previously interpreted the interplay between them. Therefore, we will rescind the WCJ's July 21, 2004 decision and remand the matter to the WCJ to give SCIF a reasonable opportunity to obtain a section 4062(a) evaluation.

e. Within 20 days of the date of this decision, SCIF may initiate the QME/AME process.

(Lab. Code, §4062(a).) If SCIF elects to initiate this process, however, then neither it nor applicant shall submit the untimely-obtained utilization review report to any QME orAME.

f. Once the QME/AME process is completed (or if SCIF fails to initiate this process within 20 days of the date of this decision), applicant or SCIF may bring the matter on calendar before the WCJ by filing either a declaration of readiness to proceed (Cal. Code Regs., tit. 8, §10410) or a declaration of readiness to proceed to an expedited hearing. (Cal. Code Regs., tit. 8, §10415.)

g. Because we are rescinding the WCJ’s decision and are remanding the matter to him so that SCIF may obtain a section 4062(a) report, if it so elects, we will not now address any ACOEM issues. Any QME or AME, if obtained, should address the ACOEM issues in the first instance, and then the WCJ may re-address the ACOEM issues at any new trial.

Lamin v. City of Los Angeles, 89 CCC 1002 ( Board Panel Decision)

1. Under the present law, reasonably required medical treatment means treatment based upon the ACOEM Guidelines and they are presumed correct on the issue of extent and scope of treatment. The presumption of correctness is rebuttable and may be controverted by a preponderance of evidence establishing that a variance from the guidelines is reasonably required to cure and relieve the employee form the effects of the injury. It is a presumption effecting burden of proof. ( Lamin v. City of LA, VNO 0337532).

2. If the ACOEM Guidelines cover the type of injury, the applicant must show that the

ACOEM Guidelines call for the treatment or prove by a preponderance of the evidence the treatment is reasonably required notwithstanding ACOEM Guidelines.

3. A medical opinion with a statement that has a mere conclusion that disagrees with the ACOEM Guidelines will not be sufficient to rebut the presumption of correctness; rather, the medical opinion must provide specific facts and specific reasons establishing the treatment other than set forth in the ACOEM Guidelines is reasonably required. The chief value of an expert’s testimony rests upon the material from which the opinion is fashioned and the reasoning by which the expert progresses from his material to his conclusion. (People v. Bassett 69 Cal 2d 122) It does not lie in the mere expression of conclusion and the opinion of an expert is no better than the reasons upon which it is based. (Hegglin v. WCAB 36 CCC 93). Not all expert medical opinions are substantial evidence. Medical reports and opinions are not substantial evidence if they are known to be erroneous, or if they are based on facts no longer germane, or an inadequate medical history and examinations or incorrect legal theories. Medical opinion also fails if it is based on surmise, speculation, conjecture, or guess. (Owings v IAC 13 CCC 80). The value of an expert’s opinion is dependent upon its factual basis.

4. If the ACOEM Guidelines do not cover the type of injury, applicant may go forward with evidence-based medical treatment guidelines generally recognized by the national medical community that are scientifically based. (LC 4604.5) Defendant may present contrary evidence. The appeals Board in the Lamin case indicated the following, “Nevertheless, we observe (without deciding the issue) that other evidence in lieu of, in addition to evidence-based medical treatment guidelines might also be admissible.”

D. Smith vs. Churn Creek Construction Company and State Compensation Insurance Fund (June 2004) 69 CCC 1012 (Board Panel Decision)

A judge ordered treatment in accordance with the recommendations of the PTP and the WCAB reversed. The PTP physician recommended epidural injections because the PTP did not know what else to do. The Utilization Review doctor determined that pursuant to the ACOEM Guidelines such treatment was not appropriate unless applicant had been determined to be a surgical candidate and that two doctors had already indicated he was not such a candidate and thus the treatment should be denied. At the time of the recommendation the ACOEM Guidelines were in effect (1-1-04), but not yet presumed correct (3-22-04). The WCAB concluded the ACOEM Guidelines were in effect, but were not presumed correct, at the time of the of the utilization review physician’s opinion. The board concluded that even though the presumption did not apply, because the guidelines were in effect the burden of proof shifted to the treating physician to justify the request for treatment. The Board went on to find that the treating physician’s opinion was inadequate because the doctor never provided reasons for the basis of his opinion and failed to respond to the opinion of the utilization review doctor. Because the employer had correctly applied the utilization review process and applicant had not provided adequate rebuttal evidence and the defendant was not liable to provide the care.

Kunz vs. Golden Eagle Insurance (2002) 67 CCC 1588

"Where a lien claimant (rather than the injured employee) is litigating the issue of entitlement to payment for industrially-related medical treatment, the lien claimant stands in the shoes of the injured employee and the lien claimant must prove by preponderance of the evidence all of the elements necessary to the establishment of its lien."

"We conclude that a defendant’s failure to specifically object to a lien on the basis of reasonable medical necessity (or on any other basis) does not result in a waiver of that objection under section 4603.2."

"Yet, nothing in section 4603.2 states or implies that the consequence of a defendant’s failure to make any particular specific objection is that the defendant is thereafter precluded from raising that objection, or that the lien claimant is relieved of any portion of its obligation to prove by preponderance of the evidence all of the elements necessary to the establishment of its lien."

In reaching this conclusion, we are mindful of our decision in Otis v. City of Los Angeles (1980) 45 Cal.Comp.Cases 1132 (Board en banc). In Otis, we interpreted former section 4601.5, which had some similarities to section 4603.2. We held, in substance, that former section 4601.5 required a defendant to make a specific and non-conclusionary written objection to the reasonableness of any medical-legal bill within 60 days of its receipt and, if the defendant failed to do so, it was precluded from raising (and the Board was precluded from considering) the reasonableness of the medical-legal cost.

************************************************************************************************************************

Kunz vs. Patterson Floor Coverings (67 Cal.Comp.Cases 1588) - 12/05/02

Note: Failure to make specific objection does not waive it; OFMS applies to services prescibed by DR at outpatient center; Outpatient fees must be reasonble.

WORKERS' COMPENSATION APPEALS BOARD

STATE OF CALIFORNIA

Case No. SJO 0224503

SCOTT KUNZ,

Applicant,

vs.

PATTERSON FLOOR COVERINGS, INC.; and GOLDEN EAGLE INSURANCE CO.

Defendants.

OPINION AND DECISION AFTER RECONSIDERATION (EN BANC)

On October 22, 2002, the Board granted reconsideration of the Findings and Order issued on August 9, 2002, in order to further study the factual and legal issues raised in the petition filed by lien claimant, Alpine Surgery Centers, LP, dba Silicon Valley Surgery Center ("Alpine"), an outpatient surgical facility.

In the August 9, 2002 decision, the workers' compensation administrative law judge ("WCJ") found that applicant, Scott Kunz, sustained industrial injury to his left knee on February 3, 2000, while employed as a carpet installer by Patterson Floor Coverings, Inc., the insured of Golden Eagle Insurance Company ("Golden Eagle"). The WCJ, however, disallowed Alpine's lien claim in the amount of $7,902.00, which represented the balance of Alpine's "facility fee" bill relating to applicant's April 4, 2001 left knee surgery, after Golden Eagle had paid $1,810.00 on the bill, as recommended by a bill review service. In disallowing the lien, the WCJ stated, among other things, "there has been absolutely no medical evidence offered, and no testimony presented, to establish that the knee surgery was reasonably required to cure or relieve from the effects of the industrial injury."

In its petition for reconsideration, Alpine contended in substance: (1) under Labor Code section 4603.2, if a defendant objects to any portion of a medical treatment bill, it must advise the medical provider of the items being contested and the reasons for contesting these items, and, if a bill reviewer does not recommend payment as billed, the bill reviewer must provide "a specific explanation as to why the reviewer altered the procedure code or amount billed and the specific deficiency in the billing or documentation that caused the reviewer to conclude that the altered procedure code or amount recommended for payment more accurately represents the service performed;" (2) in determining a medical treatment lien claim, the Board is limited to resolving the specific objections made to the billing by the defendant and, here, Golden Eagle did not object to Alpine's charges on the basis that the April 4, 2001 left knee surgery was not medically required; (3) at trial, Golden Eagle failed to rebut the testimony Alpine offered regarding the appropriateness of the billing in this case; and (4) outpatient surgery centers are not subject to the Official Medical Fee Schedule, and facility fees for such centers are reasonable if they do not exceed the center's usual and customary charges and are consistent with the charges of similarly situated providers in the same geographic area.

Golden Eagle filed an answer to Alpine's petition for reconsideration.

Because of the important legal issues presented, and in order to secure uniformity of decision in the future, the Chairman of the Board, upon a majority vote of its members, has reassigned this case to the Board as a whole for an en banc decision. (Lab. Code, section115.) Based on our review of the relevant statutes, regulations, and case law, we conclude:

(1) under section 4603.2, a defendant's failure to specifically object to a medical treatment lien claim on the basis of reasonable medical necessity (or on any other basis) does not effect a waiver of that objection;

(2) the provisions of section 4603.2 do not apply unless the prerequisites to the section's application have been met, i.e., the medical treatment in question must have been "provided or authorized by the treating physician selected by the employee or designated by the employer [pursuant to section 4600]" and the medical provider's billing to the defendant must have been "properly documented" with an "itemized billing, together with any required reports and any written authorization for services that may have been received;"

(3) the Official Medical Fee Schedule applies to medical services provided, referred or prescribed by "physicians" at an outpatient surgical facility;

(4) the Official Medical Fee Schedule generally does not apply to outpatient surgery facility fees, however, such fees nevertheless must be "reasonable;" and

(5) in determining the reasonableness of an outpatient surgery facility fee, the Board may take into consideration a number of factors, including but not limited to the following: the medical provider's usual fee and the usual fee of other medical providers in the same geographical area, which means the fee usually accepted, not the fee usually charged; the fee the outpatient surgery center usually accepts for the same or similar services (both in a workers' compensation context and in a non-workers' compensation context, including contractually negotiated fees); and the fee usually accepted by other providers in the same geographical area (including in-patient providers).

BACKGROUND

Applicant sustained an admitted left knee injury on February 3, 2000.

On April 4, 2001, applicant had left knee surgery, performed by Michael Butcher, M.D., at Alpine's outpatient surgery center. Alpine billed for a total of $9,712.00 for three procedures, i.e., (1) $4,856.00 for a knee arthroscopy - lateral and medial menisectomies (CPT Code 29880), (2) $2,428.00 for a chondroplasty (debridement) knee arthroscopy (CPT Code 29877), and (3) $2,428.00 for a knee synovectomy (CPT Code 29876).

At some time not established by the present record, Alpine submitted its billing to Golden Eagle.

Thereafter, Golden Eagle sent Alpine's billing to a bill review service. In a written "explanation of review" statement served on Alpine, the bill review service allowed a payment of $1,810.00 for the first procedure, which, it asserted, was the usual, customary and reasonable rate in Alpine's geographic area. The bill review service did not allow any payment for the other two procedures, stating that they were being "denied according to the surgical record." The bill review service then issued a check to Alpine in the amount of $1,810.00.

On January 17, 2002, Alpine filed a lien for the $7,902.00 balance of its billing and, on February 13, 2002, it filed a declaration of readiness to proceed to trial on the generic issue of its "lien."

A mandatory settlement conference ("MSC") took place on April 25, 2002. At the MSC, Alpine and defendant generically placed the "lien" in issue.

At the June 25, 2002 trial, the issues framed were, in essence: (1) liability for the lien of $7,902.00, representing the difference between the amount billed by Alpine and the amount allowed by the bill review service; (2) section 4603.2 penalties and interest to Alpine; and (3) a section 5814 penalty to applicant. The parties placed in evidence Alpine's $9,712.00 billing, Dr. Butcher's operative report (but no other medical reports), the bill review explanation, a copy of the $1,810.00 check paid, a U.S. Department of Labor report (apparently, to show that labor costs in Alpine's geographic area are high), and some pages of CPT codes. Also, Alpine presented the testimony of Steven F. Kanter, M.D., a "managing principal" at Alpine.
Dr. Kanter testified, in substance, that Alpine prepares a bill based on the procedures specified in the operative report, that the three billing codes used here involve different parts of the anatomy of the knee, that the fees charged here were those usually charged by Alpine, and that the fees charged were less than those generally charged by other providers in the same geographic area. He also stated that it was customary for providers to charge for secondary surgical procedures, but to reduce the charges for the secondary procedures by 50-percent.

On August 9, 2002, the WCJ issued his decision finding that Alpine had failed to establish a prima facie case of entitlement to reimbursement and disallowing the lien. As noted above, the WCJ's Opinion recited, among other things, that "there has been absolutely no medical evidence offered, and no testimony presented, to establish that the knee surgery was reasonably required to cure or relieve from the effects of the industrial injury."

DISCUSSION

I. Where Section 4603.2 Applies, A Defendant's Failure To Timely Make Specific Objections To A Medical Treatment Billing Does Not Result In The Waiver Of The Objections.

We will first consider whether the WCJ properly disallowed Alpine's lien on the basis that it failed to present medical evidence to establish that the knee surgery was reasonably required.

Where a lien claimant (rather than the injured employee) is litigating the issue of entitlement to payment for industrially-related medical treatment, the lien claimant stands in the shoes of the injured employee and the lien claimant must prove by preponderance of the evidence all of the elements necessary to the establishment of its lien. (Lab. Code, sectionsection3202.5, 5705; Kaiser Foundation Hospitals v. Workers' Comp. Appeals Bd. (Martin) (1985) 39 Cal.3d 57, 67 [50 Cal.Comp.Cases 411, 418]; Industrial Indemnity Co. v. Industrial Acc. Com. (Lohnes) (1935) 2 Cal.2d 397, 404-409 [20 IAC 311, 313-317]; Hand Rehabilitation Center v. Workers' Comp. Appeals Bd. (Obernier) (1995) 34 Cal.App.4th 1204, 1210 [60 Cal.Comp.Cases 289, 291-292]; Beverly Hills Multispecialty Group v. Workers' Comp. Appeals Bd. (Pinkney) (1994) 26 Cal.App.4th 789, 801 [59 Cal.Comp.Cases 461, 469-470].)

Alpine essentially contends, however: (1) Golden Eagle had an obligation under section 4603.2 to timely and specifically state all of its objections to Alpine's lien, including any objection that applicant's knee surgery was not reasonably required; and (2) because Golden Eagle allegedly failed to object on the basis of reasonable medical necessity, it waived this objection and, therefore, Alpine had no burden to come forward with any proof regarding this issue.

We conclude that a defendant's failure to specifically object to a lien on the basis of reasonable medical necessity (or on any other basis) does not result in a waiver of that objection under section 4603.2. It is true that section 4603.2(b)(2) requires a defendant to advise the medical provider "of the items being contested [and] the reasons for contesting these items." (Lab. Code, section 4603.2(b)(2) (emphasis added).) Yet, nothing in section 4603.2 states or implies that the consequence of a defendant's failure to make any particular specific objection is that the defendant is thereafter precluded from raising that objection, or that the lien claimant is relieved of any portion of its obligation to prove by preponderance of the evidence all of the elements necessary to the establishment of its lien. To the contrary, the only potential consequences of a defendant's failure to timely state any given specific objection under section 4603.2 are: (1) the defendant may become liable for a ten-percent penalty and/or interest, accrued from the date the defendant received the lien claimant's bill, on the unpaid balance of the lien allowed by the Board (Lab. Code, section4603.2(b); Boehm & Associates v. Workers' Comp. Appeals Bd. (Lopez) (1999) 76 Cal.App.4th 513 [64 Cal.Comp.Cases 1350]); and (2) the defendant may become liable for a section 5814 penalty to the applicant, if the defendant's failure to object and pay is unreasonable. (Lab. Code, section4603.2(b).) Because these potential consequences can be serious, a prudent defendant will timely raise all specific objections, including (where appropriate) an objection that the treatment rendered was not reasonably required to cure relieve the effects of an industrial injury. (See, Lab. Code, section4600.) However, a defendant does not forever waive any specific objection(s) it does not make.

However, Otis does not compel a conclusion that, under section 4603.2, a defendant should be deemed to waive any objection to a medical treatment billing that was not specifically made, including (but not limited to) an objection that the treatment rendered was not reasonably required to cure relieve the effects of an industrial injury.

First, there are significant differences between medical-legal billings and medical treatment billings. A defendant may be liable for a medical-legal billing even where it is ultimately determined that there is no industrial injury or that the employee's claim is barred by the statute of limitations. (Subsequent Injuries Fund v. Industrial Acc. Com. (Roberson) (1963) 59 Cal.2d 842, 843 [28 Cal.Comp.Cases 139, 139-140]; Beverly Hills Multispecialty Group, Inc. v. Workers' Comp. Appeals Bd. (Pinkney) (1994) 26 Cal.App.4th 789, 802 [59 Cal.Comp.Cases 461, 471]; Turudich v. Industrial Acc. Com. (1965) 237 Cal.App.2d 455, 457-459 [30 Cal.Comp.Cases 316, 318-319].) A defendant, however, will not be liable for a medical treatment billing if there was no industrial injury (Lab. Code, section4600) or if the injury claim is time-barred. (Lab. Code, section5404.) Also, because medical-legal cost claims generally are relatively simple, the policy adopted in Otis to largely remove such claims from the litigation process was appropriate. Claims for medical treatment costs, however, are not nearly so simple and straightforward. Finally, the amounts in issue in medical treatment lien litigation are often significantly greater than the amounts involved in medical-legal lien litigation.

Second, the medical-legal cost provisions of section 4601.5 were repealed by the Legislature in 1984 (Stats. 1984, ch. 596, section3) and were replaced by sections 4620 et seq. Although, notwithstanding the repeal of section 4601.5, "[t]he reasoning of the Otis decision continues to be sound" in some respects (American Psychometric Consultants, Inc. v. Workers' Comp. Appeals Bd. (Hurtado) (1995) 36 Cal.App.4th 1626, 1640 [60 Cal.Comp.Cases 559, 569]), the fact remains that, since Otis, there have been "major revisions" and a "massive [legislative] effort to strengthen and clarify the perceived weaknesses" in the procedures pertaining to medical-legal billings. (American Psychometric Consultants, Inc. v. Workers' Comp. Appeals Bd. (Hurtado), supra, 36 Cal.App.4th at pp. 1641, 1643 [60 Cal.Comp.Cases at pp. 570, 571].) In particular, under sections 4620 et seq., a defendant now can raise (and the Board can consider) certain objections to a medical-legal billing, even if those objections were not specifically raised within 60 days of the receipt of the billing. (Lab. Code, section4622(d) ["Nothing contained in this section shall be construed to create a rebuttable presumption of entitlement to payment of an expense upon receipt by the employer of the required reports and documents. This section is not applicable unless there has been compliance with Sections 4620 and 4621."]; see also, American Psychometric Consultants, Inc. v. Workers' Comp. Appeals Bd. (Hurtado), supra, 36 Cal.App.4th at pp. 1641-1645 [60 Cal.Comp.Cases at pp. 569-573] [holding that a defendant is not liable for medical-legal costs under section 4622 unless there has been compliance with sections 4620 (contested claim) and 4621 (medical-legal expenses reasonably, actually, and necessarily incurred)]; Del Rio v. Quality Hardware (1993) 58 Cal.Comp.Cases 147 (Board en banc); Apex Medical Group v. Workers' Comp. Appeals Bd. (Real) (1994) 59 Cal.Comp.Cases 743 (writ den).)

Nevertheless, although there has been no waiver of the issue of whether applicant's knee surgery was reasonably required, we will remand to allow the parties to present evidence (or reach a stipulation) regarding that issue. This is because, based on the generic "lien" issues framed by the parties at the MSC and trial (and based on the absence of any evidence in the record that Golden Eagle objected to the surgery on the ground it was not reasonably required), we conclude the parties (or, at least, Alpine) understandably did not anticipate that this question might be in issue.

II. The Provisions Of Section 4603.2 Apply Only Where Its Prerequisites Have Been Met.

In any event, it is not clear that section 4603.2 even applies to Alpine's lien claim. Before a lien claimant can invoke the provisions of section 4603.2, it must establish that the prerequisites to that section's application have been met.

First, section 4603.2 does not apply unless the medical treatment in question was "provided or authorized by the treating physician selected by the employee or designated by the employer [pursuant to section 4600]." (Lab. Code, section4603.2(a) & (b).) Thus, the statute provides that defendants are potentially subject to penalties and interest only if they do not promptly pay (or contest) billings for medical treatment provided or authorized by the primary treating physician. However, there appears to be no similar legislative concern about other medical treatment.

Second, section 4603.2 applies only where the medical provider's billing to the defendant is "properly documented," i.e., the section does not apply unless the medical provider has provided the defendant with an "itemized billing, together with any required reports and any written authorization for services that may have been received." (Lab. Code, section 4603.2(b).)

Here, Alpine did not present any evidence regarding who, if anyone, was applicant's properly designated primary treating physician. Further, assuming there was a properly designated primary treating physician, Alpine did not present any evidence regarding whether that physician performed or authorized the surgery. Moreover, the parties made no stipulations regarding these issues.

Also, there are serious questions regarding whether Alpine submitted a "properly documented" and "itemized" billing to Golden Eagle. As discussed above, Alpine's billing merely consisted of three CPT codes, with three corresponding brief descriptions of three surgical procedures. From the CPT pages that Alpine offered in evidence, however, it appears the CPT codes utilized by Alpine relate only to the surgical procedures themselves (i.e., the services performed by the physician). Thus, it appears that Alpine's billing merely establishes why applicant was at the outpatient surgery center (and, very generally, what happened while he was there). In any event, Alpine's billing does not set forth what specific services it actually provided in connection with applicant's surgical procedures. For example, although Dr. Butcher's operative report reflects that applicant was given general anesthesia, Alpine's billing does not reflect whether it provided the anesthetic. Similarly, although Dr. Butcher's operative report reflects that various instruments and supplies were used (e.g., a Stryker arthroscope, a Mitek thermal radio frequency probe, a shaver, mechanical instruments, a pain pump catheter, Steri-Strips, sterile dressing, a 6-inch Ace bandage, and crutches), Alpine's billing does not reflect whether it provided these instruments and supplies. Also, although it might be inferred that Alpine provided the operating room and recovery room, the time period that these rooms were in use for applicant, and the rates at which these rooms were charged, are not specified. Further, Alpine's billing does not specify what medical support staff (other than physicians) Alpine provided during the course of the pre-operative preparations, the operation itself, or the post-operative recovery (and it does not specify the time expended and the rate(s) charged for any medical support staff).

Of course, where the Board's record is not adequately developed to permit the reasoned resolution of the issues before it, it may direct the further development of the record. (See, Lab. Code, sectionsection133, 5701, 5906, 5908; Kuykendall v. Workers' Comp. Appeals Bd. (2000) 79 Cal.App.4th 396, 403-406 [65 Cal.Comp.Cases 264, 268-269]; Tyler v. Workers' Comp. Appeals Bd. (1997) 56 Cal.App.4th 389, 392-395 [62 Cal.Comp.Cases 924, 926-928]; Raymond Plastering v. Workmen's Compensation Appeals Bd. (King) (1967) 252 Cal.App.2d 748, 753 [32 Cal.Comp.Cases 287, 291]; West v. Industrial Acc. Com. (Best) (1947) 79 Cal.App.2d 711, 719 [12 Cal.Comp.Cases 86, 89].) Here, for the reasons outlined above, the record is not adequately developed for us to conclude whether section 4603.2 applies to Alpine's lien, so we will remand the matter for development of the record.

III. The Official Medical Fee Schedule Applies To Medical Services Provided, Referred Or Prescribed By "Physicians" At An Outpatient Surgical Facility.

Alpine asserts that outpatient surgery centers are not subject to the Official Medical Fee Schedule under any circumstances. It also asserts that fees for such centers are reasonable if they do not exceed the center's usual and customary charges and are consistent with the charges of similarly situated providers in the same geographic area.

We do not agree (if Alpine is so asserting) that the Official Medical Fee Schedule is entirely inapplicable to all services performed at an outpatient surgery center.

Administrative Director Rule 9791 (Cal. Code Regs., tit. 8, section9791 states, in relevant part:

"Except as provided in this article, the Official Medical Fee Schedule applies to all covered medical services provided, referred or prescribed by physicians (as defined in Section 3209.3 of the Labor Code), regardless of the type of facility in which the medical services are performed, including clinic and hospital-based physicians working on a contract basis." (Cal. Code Regs., tit. 8, section9791 (emphasis added).)

Moreover, page 1 of the General Instructions of the Official Medical Fee Schedule states:

"Outpatient procedures and services which are included in this fee schedule and which are provided in the emergency room or operating room of a hospital or in a freestanding outpatient surgery facility shall be reimbursed in accordance with this fee schedule." (Emphasis added.)

Thus, medical services provided, referred or prescribed by physicians at an outpatient facility are covered by the Official Medical Fee Schedule and, in general, the reasonable value of such medical services will be established by the relevant unit values and conversion factors. (See Cal. Code Regs., tit. 8, sections 9791, 9791.1, 9792, 9792.1.) That is, to obtain a fee in excess of the reasonable maximum, the "medical service" provider must submit an itemization and (1) show that the requested fee is reasonable and is not in excess of the provider's usual fee; and (2) explain the extraordinary circumstances, related to the unusual nature of the services rendered. (Lab. Code, sections 5307.1(b), 5307.6(b); Cal. Code Regs., tit. 8, sections 9792(c), 9792.5(c).)

Here, it is not clear whether Alpine's billing included the services of Dr. Butcher or any other physician. Accordingly, we will remand on that question.

IV. The Official Medical Fee Schedule Generally Does Not Apply To Outpatient Surgery Facility Fees, However, Such Fees Nevertheless Must Be "Reasonable."

We do agree with Alpine, however, that outpatient surgery facility fees generally are not subject to the Official Medical Fee Schedule. Administrative Director Rule 9791 (Cal. Code Regs., tit. 8, section 9791) provides, in relevant part:

"Nothing contained in this schedule shall preclude any hospital as defined in subdivisions (a), (b), or (f) of Section 1250 of the Health and Safety Code, or any surgical facility which is licensed under subdivision (b) of Section 1204 of the Health and Safety Code, or any ambulatory surgical center that is certified to participate in the Medicare program under Title XVIII (42 U.S.C. Sec. 1395 et seq.) of the federal Social Security Act, or any surgical clinic accredited by the Accreditation Association for Ambulatory Health Care (AAAHC), from charging and collecting a facility fee for the use of the emergency room or operating room of the facility." (Cal. Code Regs., tit. 8, section9791 (emphasis added).)

Although Rule 9791 refers to a facility fee "for the use of the emergency room or operating room of the facility," this language does not appear to specifically limit "facility fees" to emergency room or operating room fees. Rather, the term "facility fee" appears to include all services provided at an outpatient surgery center, except for the professional medical services provided, referred or prescribed by a surgeon, assistant surgeon, anesthesiologist, or other "physicians" within the meaning of section 3209.3 et seq. (Cal. Code Regs., tit. 8, section9791; see also, Lab. Code, sectionsection5307.1(a)(2); 5307.21(a)(1) [effective January 1, 2003.].) Thus, without now deciding the question, a "facility fee" might include charges for the operating room, the recovery room, nursing services, medicines, medical and surgical supplies, and medical apparatus. (See, Lab. Code, sectionsection3209.5, 4600.)

V. Factors To Be Considered In Determining Reasonableness Of A Facility Fee.

Although facility fees are not subject to the Official Medical Fee Schedule, any facility fee still must be "reasonable." (Lab. Code, section4600.) In determining the reasonableness of a facility fee (as with any medical treatment charge that is not subject to the Official Medical Fee Schedule), the Board may take into consideration a number of factors, including but not limited to the medical provider's usual fee, the usual fee of other medical providers in the geographical area in which the services were rendered, other aspects of the economics of the medical provider's practice that are relevant, and any unusual circumstances in the case. (See Gould v. Workers' Comp. Appeals Bd. (1992) 4 Cal.App.4th 1059, 1071 [57 Cal.Comp.Cases 157, 165].)

We emphasize that the "usual fee" to which we refer is the fee usually accepted, not the fee usually charged, because that is an aspect of the economics of a medical provider's practice in the current market. In the absence of persuasive rebuttal evidence from the defendant, the outpatient surgery center's billing, by itself, will normally constitute adequate proof that the fee being billed is what the outpatient surgery center usually accepts for the services rendered (and that the fee being billed is also consistent with what other medical providers in the same geographical area accept). The defendant, however, may present evidence that the facility fee billed by the outpatient surgery center is greater than the fee the outpatient surgery center usually accepts for the same or similar services, both in a workers' compensation context and a non-workers' compensation context, including contractually negotiated fees. Similarly, the defendant may present evidence that the facility fee billed by the outpatient surgery center is greater than the fee usually accepted by other providers in the same geographical area, including in-patient providers. Although neither the contractually negotiated amount that an outpatient surgery center usually accepts nor the amount that in-patient providers usually accept will necessarily be determinative of what constitutes a "reasonable" facility fee, these factors nevertheless will be relevant to what constitutes a "reasonable" fee (particularly if the fee being billed is grossly disproportionate either to the contractually negotiated amount that the outpatient surgery center usually accepts or to the amount that in-patient providers usually accept for the same or similar services). Of course, if a defendant offers such rebuttal evidence, the outpatient surgery center is free to offer contrary evidence, and the Board will resolve the issue of the lien based on the most persuasive evidence in the record as a whole.
Accordingly, for all the reasons above, we will rescind the August 9, 2002 Findings and Order, and we will return this matter to the WCJ for further proceedings and a new decision consistent with our opinion.

For the foregoing reasons,

IT IS ORDERED, as the Decision After Reconsideration of the Board (En Banc), that the Findings and Order issued by the workers' compensation administrative law judge on August 9, 2002 be, and it hereby is, RESCINDED and that this matter is REMANDED to the workers' compensation administrative law judge for further proceedings and a new decision consistent with this opinion.

WORKERS' COMPENSATION APPEALS BOARD (EN BANC)

MERLE C. RABINE, Chairman

WILLIAM K. O'BRIEN, Commissioner

JAMES C. CUNEO, Commissioner

JANICE J. MURRAY, Commissioner

FRANK M. BRASS, Commissioner

------------------------

FOOTNOTES

1. Restitution of the previously paid $1,810.00 was neither requested nor ordered.

2. All further statutory references are to the Labor Code, unless otherwise noted.

3. The Board's en banc decisions are binding precedent on all Board panels and WCJs. (Gee v. Workers' Compensation Appeals Bd. (2002) 96 Cal.App.4th 1418, 1425, fn. 6 [67 Cal.Comp.Cases 236, 239, fn. 6]; WCAB/DWC Policy & Procedure Manual, Index No. 6.16.1.)

4. The "CPT" codes are the Current Procedural Terminology codes of the American Medical Association.

5. A defendant's failure to properly object under section 4603.2 may also subject it to audit penalties. (Cal. Code Regs., tit. 8, sections 10108(e), 10111(a)(9).)

6. Former section 4601.5 had provided, in relevant part, that unless payment of a medical-legal billing was made within 60 days of receipt, "that portion of the billed sum then unpaid shall be increased by 10 percent, together with interest thereon at the rate of 7 percent per annum." It further provided, among other things: "Where the employer within the 60-day period, contests the reasonableness and necessity for incurring such fees, services, and expenses, payment shall be made within 20 days of the filing of an order of the appeals board directing payment."

7. For example, a defendant can be liable for the cost of treatment for a non-industrial condition, if the evidence establishes that such treatment is reasonably required to cure or relieve the effects of an industrial injury. (Lab. Code, section4600; Braewood Convalescent Hospital v. Workers' Comp. Appeals Bd. (Bolton) (1983) 34 Cal.3d 159,165-166 [48 Cal.Comp.Cases 566, 570]; Granado v. Workmen's Comp. Appeals Bd. (1968) 69 Cal.2d 399, 405-406 [33 Cal.Comp.Cases 647, 652]; Abdala v. Aziz (1992) 3 Cal.App.4th 369, 376 [57 Cal.Comp.Cases 94, 97]; Dorman v. Workers' Comp. Appeals Bd. (1978) 78 Cal.App.3d 1009, 1020 [43 Cal.Comp.Cases 302, 309]; Vela v. Workmen's Comp. Appeals Bd. (1971) 22 Cal.App.3d 513, 520-521 [36 Cal.Comp.Cases 807, 812-813].)

8. See also, Cal. Code Regs., tit. 8, section 9792.5(a)(5) & (b) [providing that, within 60 days, the defendant must pay or contest the billings of the "treating physician," with that term defined to mean "the one physician managing the care of the injured employee who has been selected by the employee pursuant to Labor Code section 4603.2"]; cf., Cal. Code Regs., tit. 8, section9784 [the employer shall promptly authorize the primary treating physician to provide all reasonably required medical treatment].)

9. We note that the primary treating physician must periodically report to the defendant, including providing treatment plans (Lab. Code, sections 4061.5, 4603.2(a); Cal. Code Regs., tit. 8, section 9785(d), (e), (f), & (g)) and, if a dispute arises over the treatment prescribed by a primary treating physician, the employee and the defendant must follow specific dispute resolution procedures. (Lab. Code, section4061, 4062.) There are no comparable provisions with respect to treatment rendered by or obtained from other physicians.

10. This does not mean that a defendant is not liable for, and a lien claimant cannot seek payment for, any reasonably required medical treatment that is not "provided or authorized" by the primary treating physician. It merely means that the procedures and remedies of section 4603.2 are not applicable to such treatment.

11. Although the medical reports filed with the recently submitted stipulations with request for award suggest that Dr. Butcher (who performed the April 4, 2002 left knee surgery) was applicant's primary treating physician, these reports are not presently in evidence. (Cal. Code Regs., tit. 8, section 10600 ["The filing of a document does not signify its receipt in evidence."].)

12. Although section 5307.1(a)(1) specifically refers to medical facilities licensed under Health and Safety Code section 1250 (i.e., medical facilities to which patients are admitted for a 24-hour stay or longer), this language constitutes language of inclusion, not of exclusion and limitation.

13. On remand, the WCJ should also act on the recently filed stipulations with request for award (which do not relate to Alpine's lien).