WCAB Holds Limitation on Defendant's Obtaining QME Report Invalid

Monday, June 7, 2010 | 0

By Richard M. "Jake" Jacobsmeyer
Shaw, Jacobsmeyer, Crain, Claffey & Nix

The WCAB, in surprising and welcome en banc decision, has held the recently adopted administrative director regulation commonly known as Rule 30 [Administrative Director Rule § 30(d)(3)] is invalid in that it conflicts the provisions of Labor Code § 4060(c) and § 4062.2. The WCAB found numerous reasons to disagree with the) regulation, however the substance of the WCAB’s ruling is stated as follows:

 “We hold that AD Rule 30(d)(3) is invalid because it conflicts with sections 4060(c) and 4062.2 and exceeds the scope of section 5402(b).  Neither section 4060 nor section 4062.2 provides that 'only the employee may request' a QME panel after an employer has denied the compensability of a claimed injury. To the contrary, those sections when read together specifically provide that 'either party' may make a QME panel request “at any time” after the filing of a claim form.  Furthermore, nothing in section 5402(b) provides that a defendant must request a QME panel before it denies liability for an injury, even if that denial is based on medical causation grounds.

"We also hold that: (1) the time limits of section 4062(a) for objecting to a treating physician’s medical determination do not apply when the injury has been entirely denied by the defendant; and (2) section 4062.2 does not establish timelines for initiating or completing the process for obtaining a medical-legal report on compensability."

The board's decision in this case is one which will certainly be lauded by defense attorneys, employers, third-party claims administrators, insurance companies as a welcome relief from what was viewed by many as an exceptionally rigid regulatory approach to implementing Labor Code § 4060 and one which ran roughshod over defendants right to develop the record as well as the obligation to investigate the validity of claims.

ADR § 30(d)(3) provides a defendant may not obtain a QME evaluation once a claim has been denied.  The rational expressed by the AD in adopting the rule was the defendant, once liability has been denied, did not need a medical legal evaluation to determine compensability because the case had been denied.  Rule 30 allowed only a QME evaluation by applicant once a claim had been denied.

In the case of Mendoza v Huntington Hospital, the applicant sustained what appeared to be minor injuries.  However shortly after the incident she developed a life threatening illness which left her severely disabled and essentially comatose.  Defendant’s claim administrator denied the case based on a lack of evidence of any occupational relationship to her illness.  After denial of the claim, applicant obtained a report from her selected treating physician indicating compensability. Several months later at the deposition of the applicant’s spouse, defendant initiated the AME/QME dance by offer to use an AME. Applicant declined and a short time later a priority conference was held. At the conference applicant argued since the claim had been denied, Rule 30 prohibited a QME evaluation by defendant. (Other arguments were also raised having to do with the timing to object under Labor Code § 4062 which the WCAB ultimately was inapplicable to QME evals under Labor Code § 4060).

The WCJ, Ralph Zamudio, ruled defendant had timely denied the injury and was entitled to a obtain a QME evaluation under Labor Code § 4060. He granted defendant’s request the matter be continued over the objection of applicant attorney who insisted the matter should be set for trial and discovery closed. Applicant filed a Petition for Removal which was granted by the WCAB and the matter assigned to the WCAB en banc for decision.

The WCAB invited and received briefing from the Division of Workers’ Compensation supporting the validity of Rule 30(d)(3).  However in its en banc decision the WCAB agreed with Judge Zamudio Rule 30 was inconsistent with provisions of the labor code authorizing medical legal evaluation.  In particular, there is no provision putting time limits on obtaining and exam under Labor Code § 4060 nor are there any provisions limiting its application to only the employee’s ability to obtain such an exam.

The WCAB also determined Rule 30 exceeded the scope of Labor Code § 5402:

“Contrary to applicant’s assertion, the plain terms of section 5402(b) do not compel the defendant to commence the panel QME process within the 90 days, let alone complete that process.

Accordingly, by providing that that “only the employee may request” a QME panel on the issue of the compensability once injury has been denied, Rule 30(d)(3) exceeds the scope of section 5402(b).  It is only where a defendant fails to timely reject liability that the presumption of compensability is triggered.  Thus, it is only where there has been an untimely denial that a defendant is precluded from rebutting the presumption by evidence that could have been obtained had it exercised reasonable diligence in investigating the claim within the 90 days.”

The WCAB further commented that all of the provisions authorizing medical legal evaluations provide for bilateral use of the sections and nothing in any of those provisions suggested only applicant could avail themselves of the provisions.

Relying on Government Code 11342.2, the Board noted:

“No regulation adopted is valid or effective unless consistent and not in conflict with the statute.”  Therefore, it has been said that “[w]hen a statute confers upon a state agency the authority to adopt regulations …, the agency’s regulations must be consistent, not in conflict with the statute” and that “[a] regulation that is inconsistent with the statute it seeks to implement is invalid.”  No matter how altruistic its motives, an administrative agency has no discretion to promulgate a regulation that is inconsistent with the governing statutes.” (Citations omitted)

 The case was remanded to the trial judge to allow defendants to obtain a QME evaluation.

 Commentary

To say this decision will be welcomed by the employer community is a gross understatement. Applicant attorneys have seized on the requirement to obtain a QME evaluation within the first 90 days to assert a virtual presumption of injury.  If there was not QME eval obtained, Applicant Attorney  would hand pick a “treating physician” who was in reality a medical legal evaluation obtained outside the QME process. Applicants would therefore obtain a hand selected medical legal eval and defendants would then be prohibited from obtaining any evaluation.  Defendants would be caught between a rock and a hard place without any ability to develop the record other than possibly depose the “treating doctor” selected by applicant.

The regulation was particularly hampering to defendants because of the requirement pursuant to Labor Code § 5402 to accept or reject a claim within 90 days.  As a practical matter, given the timed needed to initiate the medical legal evaluation process in unrepresented cases or AME/QME made it virtually impossible to obtain a QME evaluation within the 90 days. The regulation therefore effectively required defendants to accept or reject a claim without the ability to obtain a QME evaluation.  It was quite common even if an employer started the QME panel process immediately upon receipt of a DWC-1 claiming injury, it was not possible to obtain a medical-legal evaluation within the 90 days to accept or reject a claim. Defendants were frequently therefore required to either reject the claim for lack of medical evidence and then be precluded from obtaining such medical evidence or accept such claims and rely upon Labor Code § 4061 and § 4062 to limit the consequences of the claims. Defendants were frequently therefore faced with the unenviable choice of being unable to complete their discovery and then having discovery cut off even when they acted in a prompt and expeditious fashion.

The Appeals Board's ruling in this case appears to be well supported by their rational.  There is certainly nothing in Labor Code § 4060 which limits the ability to obtain a medical-legal examination to the first 90 days. Furthermore the court's ruling is in keeping with the obligation of a carrier to make a determination to accept a claim based upon new evidence if received. When a carrier is unable to complete their investigation within the first 90 days it may little sense to prohibit them from obtaining a medical-legal evaluation which might help them to decide to accept the case or to determine it was compensable.  As a result many cases were very likely denied without any further action being taken to develop the record as defendants were barred from obtaining a QME evaluation pursuant to Rule 30.

It seems likely this case will be appealed further.  The first appeal may very well be an additional petition for reconsideration to the WCAB  I would not be surprising to see the administrator director's office joining in to defend its rule.  However until further successful challenge to this holding, the decision in binding on all WCJs and WCAB panels. I know in my own practice this decision will have an immediate impact in at least a dozen case and I am sure most defense attorneys will have a similar experience.

Subscribers may download the WCAB's en banc decision by clicking on the case title in the sidebar.

Richard M. "Jake" Jacobsmeyer is a partner with the workers' compensation defense firm of Shaw, Jacobsmeyer, Crain, Claffey & Nix in Oakland.