Capitalism Is Not Dead; Profiteering at Whose Cost?

Saturday, July 15, 2006 | 0

The following was adapted from a post in the California Work Comp Professional Forums and provides an opinion on the regulation of medical costs in workers' compensation.

Capitalism is not dead, nor is making a healthy profit unreasonable or unconscionable. As an example, being as the OMFS for DME has been pegged to Medicare plus a 20% mark-up since 1/1/04, the reasonable charge for a TENS unit, per OMFS, is over $377.00.

In just doing a google search for the term "tens unit," the first hit took me to a site that sells TENS units for as low as $48.95. See for yourself by clicking here.

"It's not capitalism to use the cost of litigation to inflate the value of a $20 neck pillow." That coin has two sides. As a DME and Supplies and Materials provider myself, I have received thousands of EORs that object on the basis "Your charges exceed the OMFS" accompanied by zero reimbursement. When contacting the employer/insurer to attempt informal non-litigation resolution of our outstanding bill, the adjuster routinely tells me or my staff to file a lien and pay the $100.00 filing fee.

In a situation such as this, the employer/insurer has an obligation to pay the reasonable amount allowed per OMFS --- but uses the requirement to pay the $100.00 lien filing fee as leverage to discourage my company from seeking the reasonable amount allowed per OMFS.

I'm not one to be easily discouraged --- and I constantly use the defendant's cost of litigation for a frivolous objection, like the example given above, as a way of discouraging future disingenious frivolous objections from being repeatedly issued by the employer/insurer. Natch, counsel for the defendant is tickled pink. The DA reaps billable increments/events each and every time they have to appear at a hearing. I have even had one DA tell me that he is glad there are obdurate lien claimants such as myself, as he needed to fund his children's collage tuition. At each hearing, we would take turns buying each other a cup of coffee. (In that particular example, after the third aborted trial date, the DA agreed to reimburse at close to OMFS because he could no longer justify his charges to his client.)

As another example, I am often present when a case-in-chief resolves at the MSC. Rather then negotiate in good-faith then and there, the DA will just ask the WCJ for a lien conference, thus increasing my out-of-pocket costs to appear once again. The DA again reaps the benefit of additional billable increments/events, but my facility incurs additional costs that are not reimbursable. Who wins and who loses in this type of situation. The answer is obvious --- it is the DA who has incurred additional billable increments/events to the detriment of his client, the employer/insurer --- but the blame is heaped on the shoulders of the lien claimant.

Still another example I encounter on a daily basis is when the employer/insurer objects and denies reimbursement on the basis the services provided were not reasonable based on the report of Dr. Washout --- but the adjuster fails/refuses to attach a copy of Dr. Washout's report upon which the denial was based. When I appear at the lien conference, the DA wants to set the matter for trial, but I object, seek an Order from the WCJ for the DA to serve all medical reports, and seek to have the lien conference continued.

Due process mandates the lien claimant be served with the medical reports relating to the claim upon demand, but these demands fall on deaf ears. This failure/refusal to timely serve lien clamant with the requested medical reports relating to the claim during the course of treatment prevents the lien claimant from being able to make a fully informed decision as to whether to continue treating on a lien basis, or cease treatment. I have addressed this issue numerous times here on WCC, and at numerous WCABs, ad nauseum but the defendant employers/insurers still continue to refuse to timely serve the requested medical reports. This results in increased costs to the defendant employer/insurer --- but again results in addditional billable increments/events that benefits the DA.

This is the other side of the coin we lien claimants see on a daily basis. Speaking for my company, and being as I appear before various WCABs on a daily basis, I can assure you this is true.

I am of the mindset that if the employer/insurer simply paid the amount due, per OMFS, and disallowed the remainder as being excessive, many lien claimants would accept the amount reimbursed and not file a lien. If the employer timely served the lien claimant, upon demand, with all medical reports during the course of treatment, this would obviate the need for a continuance of the lien conference, thus saving the employer/insurer the cost of appearing at an additional hearing --- but that would deprive the DA of obtaining payment for additional billable increments/events.

One last thought on capitalism: I'm an employer here in California. My comp insurer has financially benefited tremendously from the recent reforms. Yes, my premium has been reduced, but only slightly --- particularly in comparison to the windfall savings my comp insurer has reaped. Capitalism in this form is not dead, nor is making a healthy profit unreasonable or unconscionable for my comp insurer --- particularly in light of the fact my company has only had one employee file a DWC-1 (an unavoidable DWC-1 that was a subrogation claim where my employee was driving a company car and was rear-ended) in more than 15 years in business. How was I rewarded by my insurer? I got an increase in premium as a result of this subrogation claim.

Apparently, in some people's view, it is appropriate for an insurer to enjoy capitalism, but it is inappropriate for a lien claimant to be a capitalist. Respectfully, I disagree.

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