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In 1996 Kathleen Murphy, while employed as a cashier for Petsmart in 1992, sustained industrial injury to her right fool and psyche causing the need for further medical treatment. The case was resolved in 2001 by a Compromise and Release for $20.000 with the exception that the defendant remained liable for reasonable medical care related to the industrial injury.

In May and June of 2012, applicant’s treating physician, oral surgeon William W. Evans, D.M.D., M.D.,filed a request for authorization for treatment, including notice that payment was expected at the time of surgery and implant placement. He went on to explain that because of the amount of implants he will need a payment before he can proceed completely with patient’s treatment. Dr. Evans sought an advanced payment of $25,600.00. The treatment plan submitted to UR stated, “Surgical Fee and Payment: Payment is expected at the time of surgery.”

Dr. Evans’ s request for oral surgery and implant placement was forwarded to the utilization review process. On July 19, 2012, defendant issued a utilization review decision authorizing the requested care. The utilization review approval letter did not expressly approve payment of any particular sum of money to Dr. Evans, nor did it expressly mention any agreement to pay Dr. Evans in advance for his services.

Later, the defendant agreed to authorize the surgery but declined to make an advanced payment as requested stating “that advanced payment is not usual and customary for treatment provided in workers’ compensation matters.” In addition, the doctor was advised that payment would be made according to a fee schedule. The physician replied “As stated in your letter it is not usual and customary to collect up front for workers comp cases. It is however usual and customary to collect up front for Implant cases due to the overhead involved. For the extractions the payment within 60 days is acceptable. We are not agreeable to except [sic] fee schedule amounts without those amounts being disclosed. As of yet we have not received any information regarding the allowed fees. Once this information is received we will he able to inform you a to whether we are in agreement.”

Ultimately on February 4, 2013, defendant issued a check in the amount of $25,510.00 to Dr. Evans as pre-payment for the dental services originally requested in June of 2012. Despite the payment, the parties went to trial on the issue of a Labor Code section 5814 penalty. The WCJ found defendant liable for a penalty, stating that: “This Judge finds no medical or legal basis for said delay and on that basis finds that defendant did unreasonably delay payment to Dr. Evans.” The WCJ thus assessed a Labor Code section 5814 penalty in the amount of$6,377.50, which was calculated as 25% of the dental treatment unreasonably delayed by the defendant..”

The defendant Petitioned for Reconsideration which was granted, and the penalty was reversed in the split panel decision of Murphy v Petsmart.

In reversing, the majority concluded that “defendant did not act unreasonably because it had no obligation to pay for applicant’s dental treatment in advance. Labor Code section 4603.2 makes clear that a defendant has no obligation to provide payment for medical services until 45 days after medical services have been “provided.”

“Although we do not wish to belabor the point, “provided” in this context is the past participle of “provide,” and thus indicates an action which has already been completed. Despite Dr. Evans’s office insistence that defendant pay for treatment in advance, there is thus no obligation for the defendant to pay for medical or dental services before they have been provided.”

Commissioner Sweeny dissented from the Opinion noting that the defendant was “clearly notified that payment in advance was required for treatment due to the high up-front cost required for this type of treatment. Defendant approved the treatment even in the face of the requirement for pre-payment, and after authorization did nothing to retract or clarify this authorization for months, until after applicant filed a Declaration of Readiness to Proceed (DOR) seeking WCAB intervention on the issue of medical treatment.” Any “confusion in this case was engendered by defendant’s approval of the suggested treatment without communicating that it did not agree to payment in advance until almost five months later. Under the specific factual scenario of this case, I would affirm the WCJ’s decision that defendant in effect agreed to the treatment and billing terms. and that failure to promptly clarify the matter deprived the applicant of necessary medical treatment for many months.”