Stephen
L. Kline, Esq.
steve@adjustingworld.com
Since the last newsletter, the
Worker Compensation Appeals Board, sitting en banc has issued two opinions.
Both opinions are binding upon every Workers Compensation Trial Judge,
until overturned by either one of the Court of Appeals or the Supreme
Court. The importance of these decisions cannot be underestimated
as they provide meaningful guidance for several months to come.
The first opinion decided September 9, 2008, entitled
Ramirez v Drive Financial Services 73 CCC ----, involves the
issues regarding penalties (Labor Code §§5814 et seq.)
The Applicant entered into a Compromise and Release
(C & R) wherein she was to receive $57,000 new money and $3,000
from an approved RU-122. This was approved on December 7, 2004
with a Judge signing the appropriate Orders (OACR). There was
a provision that if the above amounts were paid within 30 days of the
service, then all penalties were waived. The defendants failed
to pay those amounts in a timely manner.
Applicant’s attorney (AA) notified defendant
of the late payments with four letters and requested the maximum penalty
possible. The defendant did pay the Awards as much as 17 days
late. However, they did not pay any penalties.
Later within 63 days of the OACR, the defendants paid
the 10% self-imposed penalties, but did not withhold any amounts
for attorney’s fees.
AA filed a penalty petition asserting that defendant
should have paid the maximum penalties which he claimed would be the
lesser of 25 percent or $10,000 for each of the delays. AA also asserted
that because defendant underpaid the penalties that they owed an additional
25 percent penalties, plus interest, against those amounts. Finally,
applicant requested attorney’s fees pursuant to section 5814.5.
Sorting all of this out, the Commissioners held (1)
5814(a) penalties are discretionary; (2) “that although, under
new section 5814(a), a successive penalty may still be awarded for an
unreasonable delay in making a prior penalty payment, it should not
be awarded where the defendant had genuine doubt as to its liability
or where there is no legally significant intervening event; and (3)
that, if an unreasonable delay in payment of an award of compensation
occurred after January 1, 2003, section 5814.5 entitles an applicant’s
attorney to receive fees for enforcing the award, even against a private
employer and even when the injury occurred prior to January 1, 2003,
the effective date of the amendment to section 5814.5; and (4) that
such fees are to be awarded “in addition to” applicant’s
section 5814(a) penalty - not as a percentage of the penalty - and are
to be based on the reasonable number of hours expended and a reasonable
hourly rate.”
The Commissioners set out nine factors to guide
the discretionary anlysis. One of them is very troubling for the
defense community. That factor is “evidence of whether there
was institutional neglect by the defendant, such as whether the defendant
provided a sufficient number of adjusters to handle the workload, provided
sufficient training to its staff, or otherwise configured its office
or business practices in a way that made errors unlikely or improbable.”
The Discovery possibilities around this factor are endless. Applicant
Attorneys may have been handed a new weapon in their penalty fights.
An important reminder is that when a defendant notices
its delinquency, it must act quickly and add the 10% self-imposed in
order to negate the larger penalties. The additional discovery
costs and the imposition of an applicant attorney’s hourly fee
charge increases the leverage for applicant attorneys. There are also
the excessive audit penalties and the 5814.6 threat of a substantial
fines if there is a finding of a business pattern and practice.
Be aware of the real potential danger from this opinion for the defense
community and its administrators.
The other opinion filed eight days later is less onerous
and may have some real benefit for the defense community. Tapia
v Skill Masters Staffing (SB Surgery Center) deals with lien claimants
clarifying Kunz v. Patterson Floor Coverings, Inc. (2002) 67
CCC 1588.
The issue decided at the lien trial was whether the
amount being charged by the Surgery Center ($23,529.00) for surgery
performed upon applicant’s right wrist was reasonable.
The
lien claimant presented the bill and invoice as evidence along with
the Operative Report. The defendant presented evidence that included
Medicare Billing Rules; California Outpatient Surgery Center Fee Allowances
per CCR Section 9789.33; and several California Inpatient Hospital Fee
Schedule Comparisons.
Lien
Claimant contended that under “Kunz its billing
and lien claim information constituted prima facie evidence that the
amount it claimed was a reasonable fee, and that the WCJ was obligated
under Kunz to allow the full amount of the lien claim in the
absence of evidence from defendant that outpatient surgery centers in
the geographic region accepted a lesser fee for the services provided.”
The
WCJ thought otherwise and found that the lien claimant was only entitled
to $4,700.00.
The Commissioners affirmed the Trial Judge’s
decision and held that, “consistent with Kunz: (1) an
outpatient surgery center lien claimant (or any medical lien claimant)
has the burden of proving that its charges are reasonable; (2) the outpatient
surgery center lien claimant’s billing, by itself, does not establish
that the claimed fee is “reasonable”; therefore, even in
the absence of rebuttal evidence, the lien need not be allowed in full
if it is unreasonable on its face; and (3) any evidence relevant to
reasonableness may be offered to support or rebut the lien; therefore,
evidence is not limited to the fees accepted by other outpatient surgery
centers in the same geographic area for the services provided.”
Their holding is a critical take away. Holding the
lien claimants to their burden and presenting quality evidence in opposition
to theirs is critical to the success of the defense efforts versus stale
and questionable lien claims.
Thanks for your attention.
Don't
miss Steve as the main event in the October 24th SBICA Luncheon in
"Capurro
v. Kline" a lively smackdown over issues....
See
the events calendar for more information......
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