Wednesday, October 9, 2013

Random Ridiculousness: Copy Fee Schedule

One of the most ridiculous fights the progenitors of SB 863 decided to pick was regarding copy service fees.

In California, and perhaps other states, there are businesses that cater to the claimant side of the litigation equation to procure records to use as evidence in support of some contested issue.

When former administrative director (now workers' compensation judge) Rosa Moran made her first speech as AD she said that one thing that particularly bothered her was applicant photo copy fees and that she was going to give the topic close scrutiny.

"I'm going to start with something small, because we've got to get our house in order," she said. "I randomly picked something that kind of annoys me. I picked copy services."

I couldn't help but wonder why this was so big an issue that it would raise such emotion from Moran. After all, applicant photocopy service fees amounted to about 1% of all costs, and these firms typically wait about 2 years to get paid on an invoice. Time is money so collection time is factored into the pricing. And it's not like carriers don't negotiate the final payment anyhow.

Of course, when Moran was announced as AD, SB 863 had been in the works behind closed doors for some time, likely had included the topic of copy services, and had not been publicly acknowledged by anyone outside those closed doors.

Defendant/carrier/employers use their own services which are highly competitive and driven by basic market forces (and probably some good glad handing at conferences or other social events).

Applicant copy firms are a different breed though and have several competing market forces at work.

Serving at the request of the applicant attorney, such photocopy firms have no idea what they are obtaining nor the relevancy (if any) of the records sought. And the applicant attorney doesn't much care because they are not responsible for payment of the records.

Carrier representatives have argued that there shouldn't be any difference between records, and that applicants should just accept the records that the carrier procures or obtains. That's like telling the insurance company that the only records they can have after an accident are what the applicant provides - neither side is going to trust the other to be completely forthcoming with information so there has to be independent procedures to get to the same information.

So in the dark, windowless room where SB 863 was negotiated, the authors added Labor Code Section 5307.9, requiring the administrative director to consult with the Commission on Health and Safety and Workers' Compensation and hold public hearings to adopt by Dec. 31 a schedule of reasonable maximum fees payable for copy and related services. The bill says the copy service fee schedule “shall specify the services allowed and shall require specificity in billing for these services.”

CHSWC on Friday posted on its website for public comments a report by the Berkeley Research Group recommending the flat rate of $103.55 for each copy set of up to 1,000 pages. The report, titled “Formulating a Copy Service Fee Schedule for the California Division of Workers’ Compensation,” also recommends that additional sets of copies be reimbursed at 10 cents per page if printed, or $5 if provided in an electronic format.

Researchers said they arrived at the $103.55 fee for copy service bills paid within 60 days based on an analysis of defense copy service bills that was a “useful indicator of the fair market value of copy services where payment is prompt and free of disputes.” The increased rate for bills paid late was calculated based on an analysis of applicant copy service bills that account for the “fair market value when the seller (the copy service) has to repeatedly rebill, pursue collection and risk prolonged delay or nonpayment.”

For the late payers Berkeley Research Group recommends increasing the flat rate to $251.20 for any bill that is not paid within 60 days.

Berkeley Research Group also evaluated pricing data for retrieving documents in 16 other states, including Florida, Illinois, New York and Texas and found the mean payment for reports of 1,000 pages or less was $98.13, but looking at the tables you will note that there isn't much value to the average price because of the wildly extreme differences in the study states.

Other than preparing and serving a subpoena and advancing witness fees, the report does not identify what other services would be eligible for additional payments, nor is there any recommendation as to what a reasonable rate would be for such services.

The flat fee proposed by Berkeley Research Group is even drawing criticism from defense copy firms because the rate is too low to cover the array of services necessary and provided in order to comply with California discovery laws (an interesting twist - during the entire period of "study" of the copy fee issue I'd never thought we would see the defense side with the applicant copy firms on any issue).

This whole copy fee schedule argument is ridiculous and in my opinion is just another micro-management cost control feature in the law that will result in greater expense on a different line of the balance sheet rather than save anyone any money.

I can nearly guarantee that after copy firms shutter their doors there will be a few enterprising individuals (and probably more on the criminal end of the spectrum) who will figure out how to skirt the laws and drive "annoying" profits their way.

And regardless of any "penalty" for late payments, if a defendant/employer doesn't want to pay for something, another hundred dollars isn't going to provide an incentive to drive timely payments.

This whole study is a waste of time and money and will only result in more wasted time and money.

The very simple way of dealing with the photocopy fee "crisis" (yes, I'm being sarcastic) is to make the requesting attorney responsible for the cost of the records. If an applicant attorney orders records then he or she has to pay the bill. Perhaps the attorney could recoup that cost in settlement or as part of an award, but perhaps not - let the attorney take the risk and then provide a reason why that risk should be rewarded.

Applicant attorneys will argue that doing so would stifle litigation, that they don't have the cash flow to finance a case in such manner, and that they don't have the time or resources to manage their copy requests.

Malarkey. Applicant attorneys can arrange with their copy firms better payment and finance terms so that cash flow isn't impaired. Litigation wouldn't be stifled. Instead it would get more careful management and thoughtfulness, making litigation more efficient. And applicant attorney firms already have staff that rifle through records to find the nuggets of information they seek to make their case so there's no extra expense there either.

But we're going to have a fee schedule come hell or high water. So bring it on and let's see the next micro-managed fiasco infiltrate California workers' compensation litigation bear fruit for those whose scruples aren't defined by law and regulation.

1 comment:

  1. The Applicant Attorney is to blame here. They usher a new IW through their door, and that day file a DOR and Subpoena records, without a thought to researching the claim and requesting the pertinent information from the carrier. Instead he gets a SDT for records, and leaves the copy service company out to dry. Now the copy service company has no remedy but to file a lien against the carrier. This circumnavigates the due process rights of the carrier, any decent attorney will know that, and the only ones who do it are the same old names we have all come to know and mistrust.