The Lien Claimant's Obligation to Show Legal Status

Saturday, April 8, 2006 | 0

A case addressing the rights of defendants and lien claimants which issued on 3/20/06 as an unpublished opinion of the Court of Appeal has been ordered certified for publication.

In Zenith Insurance Co v WCAB, petitioner (Zenith) had appealed the denial of reconsideration by the WCAB from an order awarding 2 different surgery centers their full liens. In the underlying WCAB case, Zenith had settled the claim with applicant leaving several lien claimants including 2 surgery centers that Zenith alleged were not properly licensed. Zenith provided a copy of a civil complaint that had been filed alleging that the surgery centers were operating in a fraudulent manner and were not properly licensed under the Business and Professions Code and requested discovery remain open to address the issue. The WCJ refused to allow additional time for Zenith to develop the record and after trial, awarded over $40,000 to the surgery centers.

On reconsideration, Zenith argued that the surgery centers were required to provide evidence that they were properly licensed as part of their affirmative obligation to show entitlement to payment and that the WCJ erred in not allowing further discovery on the licensing status of the lien claimants. The WCAB denied reconsideration adopting an incorporating the WCJs decision.

The Court of Appeals granted Zenith's Petition for Writ of Review and reversed the WCAB decision. The Court noted:

"In workers' compensation matters, the burden of proof rests on the party or lien claimant "holding the affirmative of the issue." (Lab. Code, Section 5705, 3202.5.) Where the injured employee does not prosecute his or her claim, the lien claimant bears the burden of establishing the injury, entitlement to benefits and the reasonable value of the services. (2 Cal. Workers' Comp. Practice (Cont.Ed.Bar 4th ed. 1998) Section 15.82, p. 1108.) Although there is not a great deal of case law on this issue, a lien claimant must also prove that its services were properly provided, meaning it complied with applicable licensure or accreditation requirements. (Citations omitted)... Accordingly, in order to establish their right to reimbursement, the lien claimants bore the burden of proving they were properly licensed or accredited. Although the Board stated that Zenith was attempting to shift the burden of proof to the lien claimants, the foregoing discussion establishes that the lien claimants bore the initial burden of proof on this issue and they failed to do so. Thus, the award was not supported by substantial evidence."

This case therefore requires that a lien claimant, as an affirmative part of its burden of proof bears the responsibility of showing it is properly licensed or accredited for the bills that it is seeking presenting for payment at the WCAB. The alternative argument presented by petitioner, that the WCJ erred in not allowing additional discovery was determined by the Court to be moot given the affirmative obligation of the lien claimant to present the evidence of licensure which was not affected by the alleged failure of Zenith to preserve the issue for decision.

While this case may have significant implications specifically for some outpatient surgery centers, it can have application in other situations also. One of the current ongoing disputes is the right of chiropractors to obtain payment for MUA (manipulation under anesthesia), which is billed out often at over $10,000. There is also controversy over whether the procedure is one which can be performed under the license of a chiropractor. Until this dispute is resolved it may very well be impossible for a WCJ to determine that such a procedure is properly performed under the existing licensing statutes and therefore may not be reimbursable.

A copy of the decision can by clicking on the case title in the side bar at right.

By attorney Richard "Jake" Jacobsmeyer, managing partner of the Concorde office of Adelson, Testan, Brundo & Popolardo. Jake can be reached at richardjacobsmeyer@atblaw.net.

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