RE: GEORGE THE BARTENDER AND THE NEVER-ENDING BATTLE OF OBJECTING TO MEDICAL-LEGAL EXPENSE LIENS OR WHY LABOR CODE §4622 IS YOUR NEW BEST FRIEND1
FROM THE LOBBY BAR AT THE HYATT:
It was a chilly winter evening, damp and windy, as I walked into the Lobby Bar after a long day of keeping benefits to those which were reasonably owed. Punxsutawney Phil had predicted an early Spring, but it didn’t feel like it to me this night.
I noted the addition of a piano to the bar, which caught my eye, and emanating from this piano was a beautiful medley of rather sad songs. As I approached it I was surprised to find that the player of these sad songs to be none other than your friend and mine, Joe Truce.
I asked Joe what was the matter and he said he was still lamenting the loss of his beloved 49ers in the Super Bowl.2 Hoping a round of fresh drinks would brighten his mood, I caught the attention of Kim, the breathtakingly beautiful cocktail waitress, and indicated we wanted a round of drinks. Not a moment later she appeared with a Patrón Añejo tequila on the rocks with a lime for me and a Beefeater’s martini, straight up with two olives, for Joe.3
I took a moment to survey the rest of the bar, and spotted Larry and Lenny Lien, owners of the lien company California Settlement Holdings, LLC (aka CASH), cackling gleefully to their client, Zee Wroucks, the CFO of Fin-Sawbuck Photocopy Inc. Across from them defense attorney Frank Falls and his client, Pat Pennipincher, claims manager of Integrity Insurance Company, listened glumly.
I realized that this might be the perfect opportunity to lift Joe’s spirits as an en banc decision regarding liens was recently published. I asked Joe to grab his drink and follow me and we ambled over to the other side of the bar, bidding greetings to all.
I asked the Lien brothers what they were discussing. Lenny said he was explaining how he was going to win his case to collect for records copied at the request of the applicant attorney. A series of unfortunate events caused what he believed to be a maelstrom for the defense: Several dates of service had no objections on them. The Explanations of Review (EOR) which did issue failed to list as defenses entitlement to reimbursement under California Labor Code §4620 and §4621.4 The assigned Trial Judge, whom we all had appeared before on numerous occasions, was of the opinion if it was not listed in the EOR the objection was waived.
I listened politely as Lenny went through the litany of reasons he felt he had a winner, sighed contentedly, smiled and told him, “Not so fast.”
I asked Joe to reach into his trusty briefcase, and pull out copies of Ashley Colamonico v Secure Transportation (2019) 84 Cal. Comp. Cases 1059, 2019 Cal. Wrk. Comp. Lexis 111 issued en banc on November 14, 2019.5 He handed one to each of our fellow compatriots and I then proceeded to tell Lenny everything that was wrong with his analysis.
In Colamonico the defendant’s Petition for Reconsideration was granted by the Workers’ Compensation Appeals Board after a WCJ issued a Finding and Award that found that the defendant had waived all objections to an unpaid medical-legal expense. They also found that the lien claimant in this case was entitled to full reimbursement, penalties and interest for one set of billing, in addition to penalties and interest on another set of billing that the defendant had already paid in full, just not within 60 days of receipt of them.
The Appeals Board, however, found that in order to collect on a medical-legal expense, the lien claimant has the initial burden of proof of the following three elements:
- There must be a contested claim at the time the services were rendered;
- The expenses were incurred for the purpose of proving or disproving the contested claim;
- The expenses were reasonable and necessary at the time they were incurred.
They further held that the defendant didn’t waive their objection based on Labor Code §4620 or §4621 simply because they failed to raise the objections in an EOR pursuant to Labor Code §4622.
I told Lenny that until these three elements laid out by the Appeals Board are demonstrated, one does not address the value of the services at all. Labor Code §4622(f) makes it clear that one does not consider Labor Code §4622 unless there has been compliance with sections §4620 and §4621, as it states:6
(f) 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.
Additionally, I pointed out to them that the Appeals Board found that Title 8, California Code of Regulations, Chapter 4.5, Subchapter 2, Workers’ Compensation Appeals Board–Rules of Practice and Procedure, Article 5, §10451.1(f)(1)(A), specifically exempts Labor Code §4620 and §4621 objections from being waived in a late denial.
Lastly, in what must be considered at that time an early Christmas present for the defense, the Appeals Board specifically disapproved of reliance on its prior en banc decision of Otis v City of Los Angeles (1980) 45 Cal. Comp. Cases 1132, at least as far as it applies to Labor Code §4620 – §4622, noting that it was based on a former law which put the burden on the defendant to timely object, whereas the current law places the burden on lien claimant to demonstrate that its services were rendered for the purpose of proving or disproving a contested claim.
My little rant complete, Larry, Lenny and their client were crestfallen. Frank and Pat were cheerful, and Joe returned to the piano with a twinkle in his eyes. We were ready for another round.
All characters at the Lobby Bar aside from Joe, George, Kim and I are fictional and the storyline is simply a product of my vibrant imagination.
While Colamonico is definitely a gift to the defense, it is worth mentioning a word of caution that the Appeals Board laid out toward the end of their decision:
A defendant may challenge the reasonableness and/or necessity of a medical-legal expense for the first time at a lien conference without first objecting in an EOR. Should a defendant pursue this type of litigation strategy, a defendant potentially exposes itself to penalties and interest “retroactive to the date of receipt of the bill … .” (§ 4622(a).) Furthermore, if a defendant failed to communicate these objections to a lien claimant before the lien conference, the WCJ has the discretion to consider whether it is engaging in bad-faith tactics to delay the resolution of the lien. Any bad-faith action or tactic may be the basis for potential sanctions pursuant to section 5813. (§ 5813; Cal. Code Regs., tit. 8, § 10561.)
Make mine a double, George.
1 For those new patrons to the Lobby Bar, George the Bartender’s workers’ compensation case involves an injury to his elbow, epicondylitis (tennis elbow), sustained from the repetitive serving of martinis to Joe Truce. If there ever was an admitted industrial injury, this is it!
2 Joe Truce is a lifelong 49er fan and rarely misses a game.
3 A Beefeater’s martini, straight up, is best served at 38˚ Fahrenheit.
4 Labor Code §4620 and §4621 are a little long to quote in full here but suffice to say they define what constitutes medical-legal services.
5 Retirement can’t stop a dedicated practitioner like Mr. Truce. Much like Mary Poppins’s seemingly bottomless carpetbag (of Disney fame) and Hermione Granger’s bottomless handbag (of Harry Potter fame), Joe’s briefcase possesses magical powers, granting him the ability to pull out any decision at a moment’s notice. A copy Colamonico can be obtained via email request.
6 Labor Code §4622(f) was previously subsection (d) when initially enacted 1993 and renumbered in 2012. Also a bit too long to quote in full here, §4622 is related to the reasonable value of medical-legal services.