Author: WorkCompAcademy

The Department of Industrial Relations and its Division of Workers Compensation (DIR/DWC) announced new regulations implementing provisions of Senate Bill 863, California’s landmark workers’ compensation reform signed last year by Governor Edmund G. Brown Jr. to save businesses millions of dollars in unnecessary costs while boosting worker protections. “We are on track to implement the wide-ranging reform which was the result of extensive input by workers and employers,” said DIR Director Christine Baker. “These reforms are engineered to reduce unnecessary costs while redirecting some of the savings to increase benefits for disabled workers.”

Key components of Senate Bill 863, which became law on January 1, 2013, include a 30 percent increase in permanent disability indemnity rates for workers phased in over two years. Other aspects of the bill, including those designed to cut costs for businesses, will now be implemented through regulatory action. Today’s new regulations launch that full rulemaking process with public hearings scheduled to take place by March.

The new regulations, approved on an interim basis by the Office of Administrative Law, improve workers’ compensation by creating an independent medical panel to review injuries, streamlining billing disputes and curbing unnecessary liens. Details of these new regulations include:

Utilization Review, Independent Medical Review – For injuries on or after Jan. 1, 2013, and effective July 1, 2013 for all dates of injury, medical treatment disputes will be resolved by physicians through an efficient process known as independent medical review (IMR), rather than through the often cumbersome and costly adjudication system. If utilization review denies, delays or modifies a treating physician’s request for a specific course of medical treatment for the reason that the treatment is not medically necessary, the injured employee will have the right to request a review of that decision by IMR conducted by a physician. The physician review will be expeditious and based upon evidence-based standards to ensure that injured employees receive timely and appropriate medical treatment.

Qualified Medical Evaluator Regulations and PDRS – The new regulations amend existing rules to clarify that independent medical review is the sole process for resolving disputes regarding ongoing medical treatment issues; limits the number of offices from which a Qualified Medical Evaluator (QME) may conduct evaluations; streamlines the application process for chiropractors; allows for factual corrections of a comprehensive medical-legal report from a QME panel; and amends a number of forms.

Independent Bill Review– Medical service billing disputes for dates of service on or after Jan. 1, 2013, will be resolved through a non-judicial process of independent bill review (IBR). The IBR applies to any medical service bill where the fee is determined by a fee schedule adopted by the DWC. If the medical provider disagrees with the amount paid by a claims administrator on a properly documented bill following a second review, he or she can request an IBR. This regulation will eliminate unnecessary, costly litigation.

Electronic document filing and lien filing fee – Any lien for reasonable medical expenses incurred by or on behalf of the injured employee (except disputes subject to independent medical review or independent bill review) and filed on or after Jan. 1, 2013, is subject to a lien filing fee of $150. For those liens filed before Jan. 1, 2013, there will be a $100 activation fee which must be paid prior to Jan. 1, 2014, or the lien will be subject to dismissal by operation of law.

Self-Insurance and Annual Actuarial Reports – These new regulations will implement SB 863’s requirement for all private self-insured employers and groups to obtain an actuarial report to more accurately establish the organization’s California workers’ compensation liability exposure. The regulations will further define new methods in how the OSIP establishes security deposit collateral requirements based on this additional information.

Interpreter Services – SB 863 amended Labor Code section 4600(g) to state that an injured worker is entitled to the services of a “qualified interpreter” at medical appointments if the injured worker is not proficient in English. These regulations define the “qualified interpreter for purposes of medical treatment appointments” as “an interpreter who has a documented and demonstrated proficiency in both English and the other language; a fundamental knowledge in both languages of health care terminology and concepts relevant to health care delivery systems; and education and training in interpreting ethics, conduct and confidentiality” so that employers can furnish, and non-English-speaking injured employees can receive, interpreter services at medical treatment in accordance with the statute.

Supplemental Job Displacement Benefits – Makes modifications reflecting regulatory changes regarding offers of work, notifications and vouchers for retraining workers injured on the job.

Hospital outpatient departments and ambulatory surgical centers fee schedule – The statute also amended the official medical fee schedule for hospital outpatient departments and ambulatory surgical centers, reducing the facility fee for ambulatory surgical center services to 80 percent of what Medicare bills for the same services in a hospital outpatient. This change will save an estimated $62 million plus additional savings in system costs. The regulation is effective Jan. 1, 2013.

Extensive information on workers’ rights and employers’ responsibilities as well as information for small business owners can be found on DIR’s website. DIR’s rulemaking web page includes a quick overview of regulations and is updated regularly.

Florida-based American Sleep Medicine LLC has agreed to pay $15,301,341 to resolve allegations that it billed Medicare, TRICARE – the health care program for Uniformed Service members, retirees and their families worldwide – and the Railroad Retirement Medicare Program for sleep diagnostic services that were not eligible for payment, the Justice Department announced today.

American Sleep, headquartered in Jacksonville, Fla., owns and operates 19 diagnostic sleep testing centers throughout the United States, including in Alabama, California, Delaware, Florida, Illinois, Indiana, Kansas, Kentucky, Maryland, Missouri, New Jersey, Tennessee, Texas and Virginia. The company’s primary business is to provide testing for patients suffering from sleep disorders such as obstructive sleep apnea. The test results are used by doctors to determine the most appropriate course of treatment for patients. The most common tool used to diagnose sleep disorders, particularly sleep apnea, is a procedure called polysomnographic diagnostic sleep testing. Under federal program requirements for the reimbursement of claims submitted for sleep disorder testing, initial sleep studies must be conducted by technicians who are licensed or certified by a state or national credentialing body as sleep test technicians.

The United States contend that Medicare and TRICARE claims submitted by American Sleep during this period were false because the diagnostic testing services were performed by technicians who lacked the required credentials or certifications, when it knew this violated the law. American Sleep submitted false claims to Medicare and TRICARE between Jan. 1, 2004, and Dec. 31, 2011, according to the United States’ allegations.

The allegations covered by today’s settlement were raised in a lawsuit filed against American Sleep under the qui tam, or whistleblower, provisions of the False Claims Act. United States ex rel. Daniel Purnell v. American Sleep Medicine LLC, no. 3:07-cv-12-S (W.D. Ky.). The act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. Relator Daniel Purnell will receive $2,601,228 as part of today’s settlement.

In addition to the $15.3 million payment, American Sleep entered into a five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The agreement requires enhanced accountability and wide-ranging monitoring activities conducted by both internal and independent external reviewers.

Principal Deputy Assistant Attorney General Delery thanked the Office of the Inspector General for the Department of Health and Human Services, the Medicare Railroad Retirement Program, the Defense Criminal Investigative Service, the FBI, the U.S. Attorney’s Office for the Western District of Kentucky and the Commercial Litigation Branch for the collaboration that resulted in today’s settlement. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Martina A. Silas represented Ross Gunnell in a personal injury action filed in 1995 resulting in a jury award that was later overturned on the grounds that worker’s compensation was the exclusive remedy. Gunnell and others were unskilled laborers who worked for four and one-half months on a cleaning project at Metrocolor Laboratories, Inc. (Metrocolor), which owned a facility to develop and process movie and television film.Metrocolor provided no protective clothing other than rubber gloves, which rapidly disintegrated. Gunnell was never told what the solution was, but later learned it was Absorb, a solvent/degreaser, that contained a hazardous substance known to cause brain and nervous system damage and that was readily absorbed through the skin. Gunnell suffered from anxiety and panic attacks, loss of cognitive function, and respiratory problems, and was disabled from work as a laborer.

The jury returned a verdict of $1,650,000 in compensatory damages and $5 million in punitive damages. Pursuant to Metrocolor’s motion for judgment notwithstanding the verdict based on the holding of Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465, the court found that pursuant to Labor Code section 3602, subdivision (a), worker’s compensation provided Gunnell’s exclusive remedy. The Court of Appeal in Gunnell v. Metrocolor Labs, Inc., 92 Cal.App.4th at page 714 affirmed the trial court

Gunnell then filed a malpractice action against Silas, asserting she failed to assert a meritorious defense to worker’s compensation exclusivity, and had misappropriated funds. Gunnell was represented by James Ellis Arden in that action. Silas’s motion for summary judgment was granted in Gunnell’s malpractice action.

In 2008, Silas filed her complaint for malicious prosecution and abuse of process against Arden, his law firm (Scott, Arden and Salter), and several other attorneys involved in the malpractice action. Silas asserted that (1) Arden continued to prosecute the claim for misappropriation of settlement funds throughout three versions of the complaint, even when confronted with checks Gunnell endorsed and a notarized settlement agreement; and (2) argued that she should have asserted the section 3602 subdivision (b)(2) exception although Gunnell’s own testimony about his chapped hands undermined a key component of the theory, namely that he was unaware of the cause of his physical ailments.The jury found for Silas and awarded $145,756 in legal fees and costs, $30,000 in noneconomic damages, and $125,000 in punitive damages. Arden appealed.

The Court of Appeal in the unpublished opinion of Martina A. Silas v James Ellis Ardien affirmed the trial court. Arden argued, among other issues that the record was devoid of evidence that he lacked probable cause or harbored malice towards Silas in bringing the malpractice action against her. To establish a cause of action for malicious prosecution, a plaintiff must prove that the underlying action was (1) terminated in the plaintiff’s favor, (2) prosecuted without probable cause, and (3) initiated with malice. A claim for malicious prosecution need not be addressed to an entire lawsuit; it may, as in this case, be based upon only some of the causes of action alleged in the underlying lawsuit. A litigant will lack probable cause for his action if he relies upon facts which he has no reasonable cause to believe to be true, or seeks recovery upon a legal theory which is untenable under the facts known to him. Arden continued to prosecute the misappropriation claim by including it in Gunnell’s amended complaints, which were filed even after confronted with Gunnell’s signatures on all relevant documents.

Soobok L. Hong hired Creed Consulting Inc. (Creed) to remodel her house. She then sued Creed seeking to recover the $85,000 she paid it under the statute that allows a party to recover “all compensation paid to [an] unlicensed contractor” (Bus. & Prof. Code, § 7031, subd. (b)), on the theory Creed failed to carry workers’ compensation insurance, which resulted in automatic suspension of its contractor’s license during the time it worked on her house. The trial court entered judgment in Hong’s favor for $85,000.

Hong’s complaint alleged that on August 24, 2010, she entered into a written contract with Creed for home remodeling work. The written contract, attached to the complaint as an exhibit, was for work totaling $92,000. Hong alleged she paid Creed $85,000 in progress payments.

Printouts from the Contractors State Licence Board showed that from June 2, 2010, to June 14, 2011, Creed did not have workers’ compensation insurance and was exempted from having workers’ compensation insurance because it certified it had no employees. Creed had employees including Hyunsung Park and Dukyong Lee. The court found on summary judgment that Hong had established Creed had employees during the time it worked on Hong’s house. During that time, Creed did not carry workers’ compensation insurance, and therefore, its contractor’s license was automatically suspended. Moreover, because Creed certified it had no employees, it did not act reasonably or in good faith to maintain its license and could not avail itself of the substantial compliance/good faith exception to section 7031, subdivision (e).

On appeal, Creed contends the trial court erred in taking judicial notice of the printouts from the California Contractors State License Board website (Exhibits 2 and 3) to establish as an undisputed fact that Creed did not carry workers’ compensation insurance during the time it performed work on Hong’s house. Moreover, as that was the only evidence Hong submitted to establish that Hong lacked workers’ compensation insurance, she failed to carry her burden and was not entitled to summary adjudication on her third cause of action..

Hong contends the two website printouts were proper subjects for judicial notice under Evidence Code section 452, subdivision (c) [official acts of legislative, executive, or judicial departments], and subdivision (h) [facts and propositions not reasonably subject to dispute and capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy], because they were from a government website and as such were “self-authenticating.”

The Court of Appeal reversed the summary judgment in favor of Hong in the unpublished opinion of Soobok Hong v Creed Consulting Inc. The Court noted that Hong relied solely on the printouts from a government website reciting that Creed was exempt from carrying workers’ compensation insurance and had certified it had no employees, to prove the essential fact that it did not have workers’ compensation insurance. But the truthfulness of the contents of the printout was subject to dispute and the court could not take judicial notice of the contents of the website printout. Accordingly, Hong failed to establish all the essential elements of her cause of action. Summary adjudication was improper and the judgment must be reversed. We recognize this may well be a hollow victory for Creed. It either had workers’ compensation insurance during the relevant time period or it did not, and that seems an easy enough fact for Hong to prove through properly obtained discovery.