Thursday, February 28, 2013

The Mandate - My How We Have Strayed

In January I posted about Despicable Behavior, Audits & Penalties, commenting on the rumored practice of some carriers, third party administrators, and defense attorney firms (collectively "defendants"), that were taking the stance that a vendor who provided services must first file a lien (along with the filing fee) or pay an activation fee for a previously filed lien even before any negotiations could begin on bills - even if there really isn't any justifiable dispute on the amounts billed.

I had heard of anecdotes where this behavior was going on even to bills presented for payment by Medical Provider Network (MPN) physicians - in other words to defendant's own doctors!

Apparently the rumors had some validity.

Late yesterday the California Division of Workers' Compensation issued a "DWCNewsline" release titled, "Payors must negotiate in good faith with potential lien claimants - filing a lien is not a prerequisite." It states:

The Audit Unit of the Division of Workers’ Compensation has received an increasing number of complaints from individuals and entities providing services on a lien basis in workers’ compensation claims. The complainants report that some payors have adopted a policy of refusing to discuss negotiating the provider’s liens until the provider of the services demonstrates it has filed a lien with the WCAB and paid the applicable lien filing or activation fee required by the enactment of SB 863. Such a policy is both unsupported by the plain language of Labor Code sections 4903.05 or 4903.06, and directly contrary to the legislative intent of those sections and existing law.

If a claims administrator has reasonable grounds to contend that nothing is owed, then good faith negotiation does not necessarily require an offer of compromise. In the absence of a good faith contention that nothing is owed, however, a refusal to negotiate prior to payment of the filing fee would not be in good faith.

Additionally, Title 8, California Code of Regulations, section 10109(e) mandates that “[a]ll Insurers, self-insured employers and third-party administrators shall deal fairly and in good faith with all claimants, including lien claimants”.

Title 8 California Code of Regulations, section 10250(b) requires a moving party state under penalty of perjury that the moving party has made a genuine good faith effort to resolve the dispute before filing the Declaration of Readiness (DOR). Forcing a provider to file a lien and pay the filing or activation fee before the payor will discuss informal resolution of their billing amount prevents the provider from complying with this mandate. Such conduct could expose the payor to the imposition of sanctions, attorney’s fees and costs under Labor Code section 5813. This practice also exposes the payor to audit penalties for violation of Title 8, California Code of Regulations, section 10109(e). As is the Audit Unit’s existing practice, the Audit Unit will review all complaints received about this practice during the next random or targeted audit of any payor about whom such a complaint has been received.

I had said in my earlier post about this rumored (and apparently now substantiated) practice, "The carrier/administrator that is engaging in this behavior does so at its own peril, and I'm quite certain we will see an enforcement action publicized and reported in the news when one of these entities is hit with an audit and penalties..."

That DWC has issued a public warning about this practice, in my mind, validates the rumors but I'm disappointed that the Division hasn't taken a more aggressive stance.

I understand that the Division is under huge pressures to get all of the regulatory machinations in place for SB 863 implementation, in addition to the annual educational conferences (starting today in Los Angeles and Monday in Oakland), but the interests of the system need to be taken into account because the behavior described creates a "lien problem" well in excess of that previously identified by SB 863 proponents and which has not been addressed at all by the administration or legislators.

Getting the numbers on defendant's vendor denial practices would difficult, but I'd be interested to see just how much of the "lien problem" is due, and has been due, to the failure of defendants to deal with vendors in good faith, as noted by DWC's release.

In any event, if you're a vendor that has been the subject of this practice, then DWC has given you apt instruction - collect the evidence, give it to the Audit Unit.

And as I also said previously, if you're a defendant, or an individual working for a defendant, that is engaged in this practice, freshen up your contact list for a new job because you're going to cost your employer some extra money.

In the meantime defendants' collective balance sheets will clean up quite a bit come 1/01/2014 when lien genocide hits and any lien that was filed for which no Declaration of Readiness has been also filed will automatically be dismissed without recourse. I have doubts about the constitutionality of this action and think that it amounts to a "taking" without due process, but I'll let the lawyers argue that.

In the meantime, as we all knew would happen, attempts in Sacramento are already seeking to reverse SB 863 provisions, notably to allow the Workers’ Compensation Appeals Board to overturn independent medical review decisions, allow psychological conditions to be used in calculating benefits and eliminate the ban on chiropractors serving as the primary treating physician for more than 24 visits.

Filed by Sen. Jim Beall, D-Campbell, SB 626 was co-sponsored by Dolores Huerta, who co-founded the National Farmworkers Association with Cesar Chavez in 1962, was awarded the Presidential Medal of Freedom in 2012 and will be inducted into the California Hall of Fame in March.

Huerta said in a statement, "“I asked Jim Beall to introduce SB 626 on my behalf to correct several injustices and drafting errors in last year’s reform bill, SB 863. The changes I am proposing will restore a small amount of due process of law to injured workers while saving employers money.”

The opposition to SB 626 was vitriolic, as reported by WorkCompCentral's Greg Jones this morning.

Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network, is quoted as saying that SB 626 is "nothing short of a total annihilation of many of the SB 863 reforms, particularly those dealing with timely, high quality medical treatment and a less litigious and more predictable (permanent disability) system.”

Mark Sektnan, president of the Association of California Insurance Companies, said SB 626 is “clearly not what SB 863 intended.”

I don't think that the tension in the California work comp system has been higher. The dysfunction has grown to an entirely new level and in my opinion the system has strayed far from the Article XIV, section 4 mandate: 

A complete system of workers' compensation includes adequate provisions for the comfort, health and safety and general welfare of any and all workers and those dependent upon them for support to the extent of relieving from the consequences of any injury or death incurred or sustained by workers in the course of their employment, irrespective of the fault of any party; also full provision for securing safety in places of employment; full provision for such medical, surgical, hospital and other remedial treat ent as is requisite to cure and relieve from the effects of such injury; full provision for adequate insurance coverage against liability to pay or furnish compensation; full provision for regulating such insurance coverage in all its aspects, including the establishment and management of a state compensation insurance fund; full provision for otherwise securing the payment of compensation; and full provision for vesting power, authority and jurisdiction in an administrative body with all the requisite governmental functions to determine any dispute or matter arising under such legislation, to the end that the administration of such legislation shall accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character; all of which matters are expressly declared to be the social public policy of this State, binding upon all departments of the state government.

It's a mouthful, but is still the guiding principle of the system. We have moved far from those principles.

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