My Name is York and I'm a Business Owner

Saturday, March 25, 2006 | 0

by York McGavin

Initially, I am not an attorney, nor do I have any formal legal training. Accordingly, my posts here are to be construed as nothing more than my personal lay opinions, not legal advice.

I own a company that provides durable medical equipment as well as supplies and materials. These items require a prescription from a physician. In the past, my company furnished these items to physicians and their patients in about 38 States. In the past, my company accepted the referral of a patient regardless of whether the patient was injured industrially or non-industrially.

As a business owner, my primary concern is the financial health of my company. As a result of major changes of workers' compensation law in the recent past, in particular SB 228, and more specifically SB 899, I made a decision to cease accepting the referral of any industrially injured patients here in California as of 1/1/2005.

This was not an easy decision made lightly. However, the outcome of continuing to accept referrals of California's injured workers was as plain as the light of day: it was driving my company into bankruptcy.

Previously, my company could carry the financial float of denied reimbursement for our services on claims that were denied AOE/COE because my company was getting paid on accepted injury claims. Now, that has all changed.

Beginning in 2004, with the adoption of ACOEM as the mandated treatment guideline considered to be presumptively correct, the workers' compensation payor community (insurers or permissibly self-insured employers) simply chose to stop reimbursing for our services on the basis that they were not supported by ACOEM --- across-the-board.

In short, regardless of whether the claim was denied AOE/COE, or the claim was determined to have been caused on an industrial basis, the payor community refused to reimburse my company anything. This resulted in a tremendous increase in the filing of liens at the WCAB, and a corresponding increase in making numerous appearances before the WCAB in various venues.

Beginning in 2004, the law required my company, as a lien claimant, to pay $100.00 just to file a lien with the WCAB. In addition, I had to increase the number of employees (in-house counsel and in-house non-attorney hearing representatives) in my company just to make appearances before the WCAB every time there was a noticed hearing. Failure to make an appearance at each noticed hearing oftentimes resulted in the payors DA seeking to have our lien disallowed.

The charged costs for one full year of services from my company is less than $2,000.00. My company is considered a 'low-dollar lien claimant.' The combination of having to pay $100.00 just to file a lien, plus the costs of having a proficient legal representative appear at an MSC, then oftentimes at a second MSC, sometimes a case-in-chief trial, a lien conference, then oftentimes a second lien conference, an initially scheduled lien trial that is usually rescheduled several times due to preference being given to a case-in-chief trial for an IW (as is should be), it became quite expensive for this 'low-dollar lien claimant' and all but eliminated any profit margin my company enjoyed. Unlike the 'prevailing party' in a civil proceeding, even if my company was awarded the full amount of my lien before the WCAB, there is no provision for a lien claimant to obtain "attorney fees" as the prevailing party.

Accordingly, as a business decision, I decided it was in the best financial interests of my company to just stop accepting new IW referrals, collect on my existing accounts receivable, and market our products and services to physicians in California whose practice profile was mainly not workers' compensation patients. I also directed my sales representatives to increase marketing in the other 37 States in which we already have a presence.

I opened up shop in California in the early 1990s and accepted referrals for any type of patient. I did not seek out workers' compensation patients - but inevitably, IW referrals began to trickle in along with individual and group health insurance patients, PI patients, and cash patients.

Like many of you, I had absolutely no clue about the workers' compensation system when I first became involved. I have had to learn about comp from experience in the trenches at the WCAB - as there is no school or class to teach lien claimants how to collect on their liens.

In the beginning, I learned that the California workers' compensation system has its own unique laws and rules. I purchased the 'Blue Book' properly titled, Workers' Compensation Laws of California, published by LexisNexis - Matthew Bender. However, the 'Blue Book' just provided me with the labor codes and regulations. It did not furnish me with any information on how the courts interpreted and applied these labor codes and regulations.

In order to learn about how the labor codes and regulations were interpreted by the courts, I spent considerable time in the 'stacks' (library bookshelves) at UCLA and Pepperdine. Eventually, I was able to afford to purchase the specific collections of law books that addressed the interpretation of the labor codes and the regulations. The collections I purchased were the California Compensation Cases (the CCCs) published by LexisNexis - Matthew Bender, the California Workers' Compensation Reporter (CWCR), and now the index to these cases published by Stew, a regular poster in the professional forum. Stew's index, which is really excellent, is truly of use only if one has access to the CCCs and the CWCR.

Through extensive reading, cogitating, and analyzing the opinions of the various courts outlined in the CCCs and the CWCR, I have gained a limited understanding of our workers' compensation system. However, remember, as a lien claimant, my primary interest was in learning how to collect on my company's liens. Notwithstanding my primary focus of successfully collecting my company's liens, being as I am a curious person, I began to also learn about the cases that interpreted the labor codes and regulations as they applied to the IW. This was only because I was inquisitive - I never have had any interest in attending law school, obtaining a degree, and becoming a lawyer.

I have never represented an IW, nor do I have any intention of doing so in the future. I have not, nor will I provide legal advice - for to do so may be considered to be practicing law without a license. However, the First Amendment of our Constitution ensures citizens have freedom of speech. As such, my interpretation is that it guarantees citizens the right to voice our opinions.

It is in that spirit that I will offer to share my opinions on these threads here at WCC as to how various labor codes and regulations have been interpreted by various courts in regards to the myriad variations of unique factual scenarios that have been presented to the courts for resolution of a dispute.

I was not familiar with the old rating system for PD, and I know nothing about the new AMA Guide for rating PD under the new PD system. If any of you ask me a question about rating PD under the old or the new system, I will be unable to provide you with an opinion - other than the crystal-clear general fact that the new system severely reduces the degree of PD, which simply translates into less dollars for the truly injured worker, as well as less reimbursement for an attorney who is representing an IW.

An AA who is representing an IW is generally only allowed to be awarded up to 15% of the PD dollars awarded an IW - and this is usually in urban areas, rather than rural areas where 12% is the norm. This is far less than the 33% - 40% often allowed per the contractual relationship between a plaintiff and an attorney for a PI claim in the civil arena.

Obviously, in order for an AA to obtain a comparable living in the comp arena, the AA has to represent at least three times the number of clients as the usual PI attorney. Naturally, with there only being so many hours in the day, the AA can only devote so much time to each case. It is just as natural to understand that the wise AA will usually devote more time and attention to a case where there is clearly more PD, than a case where there is less PD - particularly now with the issue of 'apportionment' being on the front burner, and with 'apportionment' reducing the amount of industrial PD allowed to be awarded - thus reducing the financial outcome for both the IW and the AA.

I mention this because over the years I have been in the trenches getting my knuckles as well as my nose bloodied (metaphorically speaking), I have come to know quite a few AAs. As is true in any profession, some AA practitioners are proficient, some are competent, some are incompetent, and some are so darn stupid that one has to wonder how they ever passed the bar and became licensed. Regardless of the level of competency, a constant complaint I have heard repeated over-and-over, ad nauseum, is the complaint that "my attorney does not take my calls and does not call me back." I can sympathize with those that have this complaint - as I have suffered the same problem with lawyers I have retained in the past. It is annoying and can cause tremendous friction between an attorney and his/her client.

Frankly, there is no excuse for an attorney not to return phone calls from his/her clients - or at the very least, have a paralegal return the phone call. However, on the other hand, there are some clients that want the attorney to consider them their only client, which is equally as improper.

In regards to those attorneys that choose to respond to questions posed on these threads, it would behoove the IW community here on WCC to not slam them, or to paint those proficient and competent few with the same broad brush that is used to refer to an incompetent AA. Like me, they are giving up valuable time that could be spent with family, in order to answer questions and offer referrals to you, the IW. In our world, as I have learned, nothing is more valuable than time. Money may come and go - but time just goes.

Another issue that I see on a daily basis is the uncertainty and lack of understanding of the laws, implemented by SB 228 and SB 899, which amended and/or repealed a number of labor codes and regulations. This has caused much confusion for the AA, as well as for treating physicians. Now, lawyers must know much more about medicine, and physicians must know more about the law. Lawyers are not doctors, and doctors are not lawyers - but in order to survive, for those that have chosen to remain in the workers' compensation arena, both have had to increase their base of knowledge - and for both professions, each are being paid less than before SB 228 and SB 899 were enacted.

I have noticed many long-time familiar faces at the WCAB are now gone, gone, gone. I have also noticed that many physicians, previously proficient in workers' compensation, have simply chosen to opt out of the system. Many lawyers have switched their practice profile and ramped up on their percentage of PI clients, or have entered the still red-hot real estate market. Many physicians I know on a personal basis have changed their practice profile to individual/group health patients; they have chosen to switch to a 'cash' practice, refusing to contract with any insurers, or even submit billing to any insurer; or, they have simply retired from practice.

As of 1/1/06, physicians are now reimbursed at Medicare, plus 20%. To the layperson unfamiliar with allowed reimbursement amounts, this may seem to be no big deal. However, to give you, the IW, an idea of the depth of this draconian change, a simple example should suffice: On average, surgeons are now getting paid about 40% - 45% less for the same treatment provided in 2005, and the reimbursement for treatment in 2005 was cut 5% from reimbursement issued in 2003, which was the exact same amount as physicians were getting paid in 1985 - despite inflation and the increased cost of doing business. In short, a dollar in 1985 was worth about fifty cents in 2003.

We will be seeing more and more physicians leaving the workers' compensation arena for greener pastures - and understandably so. In comp, the treating physician has to seek authorization for each and every procedure. A request is submitted to the payor, who in turn often submits it to Utilization Review (UR). The UR physician will oftentimes respond to the request for authorization with a request for further information from the treating physician in the form of provision of scientifically based evidence-based medicine (EBM) guidelines that support a variance from ACOEM. The treating physician then has to stop treating, do research, submit the research, and wait for authorization. If the treatment is provided without authorization, the physician is taking the chance that he will not get paid. On the other hand, the treating physician does not get reimbursed for researching or submitting the research to the UR physician.

If authorization is given by UR, the treating physician has to wait 45 working days, from the submission of each bill, to get paid. When the treating physician has determined that the industrially injured worker is permanent and stationary (P&S), the treating physician has to address PD according to the AMA Guides, and address any apportionable pathology. This requires extensive work in order to generate a substantive report that can be considered to be legally correct.

On the other hand, if the treating physician had a straight Medicare practice; there is no need to seek authorization for each and every procedure - nor are there the hassles associated with UR; there is no requirement to submit periodic progress reports, or to write a P&S report that complies with the AMA Guides and addresses apportionment; and lastly, the physician treating a Medicare patient gets paid much faster by billing electronically.

These are rough times for injured workers. Proficient lawyers are hard to find. Proficient treating physicians are also becoming an endangered species in the comp arena. The Information & Assistance Officers (I&A) are not advocates, but instead can only offer "information and assistance." It is up to the unrepresented IW, who either cannot find legal counsel of chooses not to retain legal counsel, to be his or her own advocate. The unrepresented IW will have to duke it out with a DA who is highly trained, and who gets paid the same regardless of whether his client (the payor) wins or loses.

I have reviewed some of these threads and reviewed numerous comments about conspiracies by either the employer community or the payor community. I will not indulge in these discussions - for I find it to be a waste of time.

As an IW, you can expect that it will get worse before it gets better. One thing is for certain, as long as we have Schwarzenegger as our Governor, it will not get better. November is just around the corner. Get out the vote for whichever Democrat who ends up running against him.

From time to time, I will be posting my thoughts and opinions on these threads. I will answer questions to the best of my ability, and offer my lay opinions. However, I do have a life that I do, and will continue to, enjoy as best I can. As a businessman, I do have a business to run. I may post numerous times on a daily basis, or I may not post anything for days or weeks.

Accordingly, do not expect me to answer each and every question posed. Additionally, do not expect me to stay tuned to WCC 24/7. I am a firm believer that I have an obligation, as a human being, to assist those less fortunate than me - but I will not allow this obligatory belief to overwhelm, and thus erode, my personal or business life.

By York McGavin. York can be contacted at ymcgavin@socal.rr.com

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The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.

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