Smith Is Here

Wednesday, May 13, 2009 | 0

By Julius Young


Long awaited, the California Supreme Court decision in Smith v. WCAB and Amar v. WCAB has been rendered.

Though not a surprise to most observers, the decision will have negative ramifications for many workers. More on that in a minute. First, a recap of the facts of the cases.

Both Mr. Smith and Mr. Amar had "future medical" awards.

To enforce his medical treatment award, Smith went back for re-exam to the AME who had previously been used to resolve the case. The AME indicated that the medical treatment (epidural injections) sought was related to the injury on which treatment had been awarded. Smith's attorney claimed an attorney fee against the insurer, arguing that the denial of treatment was a constructive termination of treatment. Labor Code 4607 provides for attorney fees against defendants if "reasonably incurred by the applicant in resisting the proceeding to terminate the medical treatment." Overturning trial-level and WCAB panel decisions that refused to award attorney fees, the 2nd District Court of Appeal agreed to allow fees.

In Amar's case, Mr. Amar had been awarded medical treatment for a foot injury. There was a later dispute whether as a result the defendant was required to cover treatment for weight loss and diabetes as a consequence of the foot injury. Amar's attorney prevailed at the board over utilization review on the weight loss issue and sought attorney fees under Labor Code 4607. Rejecting trial-level and WCAB panel rulings denying the fees, the 2nd District Court of Appeal ruled that fees could be awarded under 4607.

According to the Court of Appeal, Labor Code 4607 authorizes an award of attorney fees to an employee who successfully challenges an employer or insurer's denial of a specific request for medical treatment.

The California Supreme Court disagreed, finding that in neither case was there a petition to terminate treatment. The Court was unwilling to extend 4607 attorney fees to medical treatment denials where the defendant wasn't trying to extinguish the award altogether. The Supreme Court saw the insurers as denying specific treatment requests rather than attacking the treatment award altogether.

In the Supreme Court's view, a worker could pursue a penalty in the event of unreasonable delay and seek attorney fees under Labor Code 5814.5.

Moreover, the Supreme Court had concerns that awarding attorney fees under 4607 would undermine the utilization review process.

The employer and insurance community is undoubtedly breathing a sigh of relief. That's particularly so at a time when there are widespread concerns that medical cost inflation and increased treatment usage is driving higher costs. Insurance Commissioner Poizner has scheduled an early June hearing on this issue.

But in the real world, the decision will negatively impact the disabled.

It's true that there are some situations where carriers simply ignore treatment requests, refusing to authorize the treatment or failing put the requests into the time-sensitive utilization review process. Attorneys will still pursue those situations, and fees will be awarded.

But penalties were eviscerated by the 2004 reforms. Formerly based on 10% of the entire medical treatment in the case, penalties can now be awarded only up to 25% of the cost of the item delayed. A penalty on delay of (or non-UR based denial of) a $1,000 MRI would be $250.

This has discouraged use of penalties as an enforcement tool where the underlying treatment is inexpensive. In many situations the attorney fees under Labor Code 5814.5 might far exceed the amount of the penalty or the cost of the disputed item.

The reality is that most treatment denials these days are utilization review based. UR has become a potent tool for carriers can use to manage medical treatment.

The big question: Who is going to help workers with further medical awards navigate the UR process?

Clearly, the California Supreme Court assumes a UR process which is "expeditious, inexpensive, and driven by uniform standards and the recommendations of treating physicians."

Tell that to many a disabled worker who was awarded medical treatment years ago, but who now has trouble getting medication refills each month at the pharmacy or an epidural when his pain flares beyond its baseline.

Many of these workers - and their doctors - are having great difficulty navigating the UR process.

Often there's much to be done... legal counsel makes calls, coordinates with the treating doctor, solicits reports appealing the UR, agreed with the carrier on a suitable QME or panel QME.

Who's to pay the attorney for these services?

I'll be offering more reflections in my next post.


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Julius Young is an applicants' attorney with Boxer & Gerson LLP in Oakland. This column was reprinted with his permission from his blog, http://www.workerscompzone.com
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