Friday, July 29, 2011

SB 863 Bad Idea; Lien Review Board Good Idea

California, among other unique qualities in the workers' compensation industry, allows medical providers and others to "lien" a case that is pending adjudication in the state's administrative review process - commonly referred to as the WCAB, though technically the trial level is at Division of Workers' Compensation District Offices.

The California work comp "lien" process does not operate in the technical legal sense in that a lien takes on a life of its own because most of the time a lien is paid independently of net proceeds to the injured worker. A lien in any other legal setting acts against net proceeds of an asset - such as a lien against a pending house sale.

As a consequence liens and those who file them acquire independent legal rights, and these rights entitle those asserting the lien (aka "lien claimant") to hearings separate and apart from those that determine the rights of the injured worker, albeit by law ostensibly only after the injured worker's case in chief has been resolved.

So it should come as no surprise that liens are a huge adjudicatory problem in California, taking up an enormous amount of resources, at the WCAB and within the business processes of carriers, providers, and others in the system contributing a large frictional cost component to the system.

One of the legislative answers making its way through the halls of Sacramento is Senate Bill 863 by Sen. Ted Lieu, D-Torrance. SB 863 require all liens to be in writing and filed within three years of the date of service for procedures performed before July 1, 2012, and with 18 months from the date of services rendered on or after July 1, 2012. A private health insurer, health care service plan or self-funded employee welfare benefit plan providing medical benefits on a nonindustrial basis would have five years from the date of service to file a lien under Lieu's bill.

This is a bad idea.

First, liens already have to be in writing. Second, there already is a complex (this is California after all) statute of limitations on the books for the filing of liens. Third, all SB 863 really does is shorten the statute of limitations for the filing of liens, which will only PROMOTE lien filing rather than curtail it because, if I'm a potential lien claimant facing a deadline, I'm going to file regardless of its efficacy so I don't get procedurally estopped if my lien has substantive merit.

An idea that is floating around the state, though, is to establish a separate administrative review process.

I like this idea.

According to the Commission on Health and Safety and Workers' Compensation (CHSWC) a survey of lien filers found that medical liens account for about 62% of liens filed. Disputes over the fee schedule details are present in 37% of medical liens and 17% of medical liens are solely about the proper application of the fee schedule.

Workers' Compensation Judges (WCJs) don't have the time, nor the inclination, nor the expertise, to deal with the technical application of the very complex, mind-numbing intricacies of the medical service fee schedule with all of its codes, definitions, procedural exceptions, etc.

The single biggest question to creating a separate administrative review process is who does it, and how does it get paid for.

There are two "who does it" alternatives: a new unit within the DWC, or an outside third party service.

An outside third party service is a bad idea because of the potential for abuse, or in the least, "appearance of impropriety".

A new unit within the DWC is the best alternative because of independence. But how does it get paid for, especially in these times when the allegedly independent funds of the DWC are constricted by battles over the budget and General Fund (that's another set of columns and one of my biggest pet peeves...)?

My proposal is to establish a fee to be paid by the loser in the lien dispute, payable to the DWC. The fee would be need to be incrementally based so that low end liens are shut out of the system, but big enough so that the parties are encouraged to think twice before proceeding with litigation.

I'm sure there are flaws with this idea too, especially in the implementation details. But it is surely better than imposing a more strict statute of limitations that will only increase the burden of liens on the system.

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