Summer Reflections

Monday, July 9, 2012 | 0

Now that it is officially summer, we take this opportunity to reflect on what has been happening lately in workers’ compensation, and what we have to look forward to in the months ahead.

Valdez and the Future of the MPN.  In May, the 2nd District Court of Appeal overturned the Workers' Compensation Appeals Board's en banc decision in Valdez v. Warehouse Services, and held that, even where there is a valid medical provider network, reports from doctors who provided medical treatment outside the MPN are admissible in evidence. The court found, in essence, that since the MPN statutes do not explicitly state that reports of treatment obtained outside an MPN are not admissible, these reports are relevant evidence which can be considered.

The Court of Appeal decision was initially unpublished, but was ordered published on June 18, 2012.  

In our opinion, this is an unfortunate decision because it effectively condones the practice of ignoring the employer’s MPN when seeking treatment for an industrial injury. The only positive thing we can say about this opinion is that the Court of Appeal did not overturn the WCAB’s holding that a defendant is not required to pay for unauthorized treatment obtained outside an MPN. We believe that rule still stands, and should provide some deterrent to applicants and doctors to help keep treatment in the MPN.  

New Lien Regulations. Resolving liens has always been a somewhat annoying part of litigating workers’ compensation claims.  The applicant’s case is resolved, but you still have to deal with all the medical treatment providers and vendors who are unhappy that they have not been paid what they think they deserve. Even more frustrating, some lien claimants wait years before asserting their claims, making it difficult to defend and resolve them because of loss of memory and records due to the passage of time.

The WCAB recently adopted new regulations which are intended to get liens resolved more quickly. Among other things, the rules require a lien claimant to actually file a lien claim for it to be valid; sending a letter to a defendant objecting to a partial payment of a bill is not enough. The lien must be filed using an approved Electronic Adjudication Management System (EAMS) printed form or e-filed, and must list the ADJ number of the case, unless the lien is the initial filing in the case. A rule which goes into effect on Aug. 1, 2012 provides that a lien may be dismissed for lack of prosecution if the lien claimant does not file a declaration of readiness within 180 days of the applicant’s case being resolved. When a lien conference is set, the lien conference must address all unresolved liens, and all defendants and all lien claimants must appear at the conference.  If the lien is not resolved at the conference, discovery “shall” close and the claim “shall” be set for trial. The regulation does allow for one opportunity to take the matter off calendar or continue it if good cause is shown. If it is taken off calendar, the parties have to wait 90 days before filing a new DOR.

The regulations do not apply to certain liens filed by government agencies, including EDD and government agencies filing for child or spousal support, and also do not apply to liens from individuals for living expenses, burial expenses, and child or spousal support.  We learned on June 27, 2012 that the WCAB has created a new Pretrial Conference Statement form specifically for lien conferences, although the form has not yet been formally adopted.

We believe this effort to get liens under control is a positive development. We expect there will be a lot of lien conferences in the next few months while all the old liens get resolved. On July 2, 2012, WorkCompCentral reported that a backlog of unprocessed liens, estimated to number 800,000, had now been entered into the system, and in Southern California, where most lien claims are filed, the Board was considering setting aside two weeks in October just to hear lien claims. However, we are hopeful that by the end of the year these new regulations will result in a much more timely process for resolving liens. If you have any questions about the new regulations, or about resolving liens in general, we invite you to contact your favorite Mullen & Filippi attorney.

Laches Is Still A Good Defense To A Lien Claim.  Before there was a statute of limitations setting a time limit for lien claimants to assert their liens, the standard defense to a stale lien claim was laches. Laches is a legal doctrine that provides that if you wait too long to assert a claim, and the other party is harmed because of your delay, you lose the right to pursue your claim. Karen Dutton in Mullen & Filippi’s San Francisco office recently successfully defeated a lien claim based on laches.

The lien claim was for hospital services in 2003. Defendant had paid the bill, but did not pay the full amount requested. Applicant’s case settled in 2005. When applicant’s case settled, the same lien claimant settled a claim for a different date of service in 2004, but did not assert any claim for the services in 2003. In December, 2011, lien claimant filed a Declaration of Readiness requesting a lien conference on the 2003 lien. By that time, defense counsel’s litigation file had been destroyed, and the bill review company which had calculated the amount due on the bill no longer had any records. Lien claimant asserted that the lien had been filed and served in December, 2006, but neither the WCAB nor the claims examiner nor defense counsel had any record that it was ever received.  Because of the passage of time, and the fact that necessary records no longer existed, Karen argued that defendant was harmed by the delay in pursuing the lien.  The judge agreed and found that the claim was barred by laches and the statute of limitations (finding there to be no reliable evidence that the lien claim was actually filed).

Lien claimant did not seek reconsideration of the dismissal of the lien, but did seek reconsideration of an order to reimburse the travel expenses of a claims supervisor who appeared at trial at the request of lien claimant but was not called to testify. On reconsideration, lien claimant argued that it should not be required to reimburse the cost because there was no evidence in the record that the witness had actually appeared. The WCAB denied reconsideration and issued a notice to show cause why lien claimant should not be sanctioned for misrepresenting the record. Final decision on the sanction issue is pending.

Temporary Disability Rates Going Up. On June 16, 2012, the Division of Workers' Compensation announced that the minimum and maximum rates for temporary total disability will go up on January 1, 2013. The minimum rate is increasing to $160 per week, and the maximum rate is increasing to $1,066.72.

The temporary disability rates are increasing because the state average weekly wage for 2012 increased from the average for 2011.  The new rates also apply to awards of life pension and permanent total disability. As always, the maximum rate is only available to those individuals whose income supports that rate. An injured worker who earns more than the minimum is still only entitled to temporary disability benefits calculated as two-thirds of average weekly wage.

Mullen & Filippi is a workers' compensation defense firm with 12 offices in California. This column was reprinted with the firm's permission from its quarterly newsletter.