Cal. Ins. Guarantee Assn. v. WCAB ( 2014 )

Filed 12/16/14
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
CALIFORNIA INSURANCE GUARANTEE D065072
ASSOCIATION et al.
(WCAB No. ADJ2806916)
Petitioners,
v.
WORKERS' COMPENSATION APPEALS
BOARD and ELITE SURGICAL CENTERS,
ESCONDIDO, L.P. et al.,
Respondents.
Original proceeding to review a decision of the Workers' Compensation Appeals
Board. Affirmed.
Heggeness, Sweet, Simington & Patrico and Clifford D. Sweet III for Petitioners.
Law Offices of Allweiss & McMurtry and Michael A. Marks for California
Workers' Compensation Institution as Amicus Curiae on behalf of Petitioner California
Insurance Guarantee Association.
Procopio, Cory, Hargreaves & Savitch, Anthony J. Dain and Brian J. Kennedy for
Respondents Elite Surgical Centers, Del Mar, L.P., Point Loma Surgical Center, L.P., and
Elite Surgical Centers, Escondido, L.P.
David Bryan Leonard for California Society of Industrial Medicine & Surgery,
Inc., as Amicus Curiae on behalf of Respondent Workers' Compensation Appeals Board.
I.
INTRODUCTION
We issued a writ of review on the petition filed by the petitioners in this matter to
address the two questions raised in the petition: (1) Does the Workers' Compensation
Appeals Board (the Board) retain jurisdiction over a medical billing dispute pertaining to
more than 300 consolidated claims, after the Legislature passed significant workers'
compensation reform legislation that created a new administrative independent review
process for the resolution of billing disputes?; and (2) if the Board does retain jurisdiction
over this dispute, is there substantial evidence to support the workers' compensation
judge's (WCJ) findings of fact regarding his determination of the "reasonable fee" to be
paid for arthroscopic knee procedures, arthroscopic shoulder procedures, and epidural
injection procedures performed at three commonly managed ambulatory surgical center
(ASC) facilities in San Diego County?
We conclude that although the text of the relevant legislation and resulting statutes
is ambiguous, the most reasonable interpretation of the legislation is that it does not
2
divest the Board of jurisdiction to decide the dispute at issue in this case. We further
conclude that the WCJ's findings, which the Board adopted in its decision on petitioners'
motion for reconsideration, are supported by substantial evidence. We therefore affirm
the decision of the Board.
II.
FACTUAL AND PROCEDURAL BACKGROUND
Petitioners1 were defendants in an action before the Board brought by respondents
Elite Surgical Centers, Escondido, L.P., Elite Surgical Centers, Del Mar, L.P., and Point
Loma Surgical Center, L.P. (collectively Elite), concerning billing disputes related to the
reasonable facility fees for arthroscopic knee procedures, arthroscopic shoulder
procedures, and epidural injection procedures provided by Elite to injured workers prior
to January 1, 2004.
The dispute over billing began when, in November 2000, Elite increased the
charges that it billed for certain outpatient services, including the services at issue in this
proceeding. The petitioners disputed the reasonableness of Elite's increased charges.
Rather than remitting the amounts billed, the petitioners paid only the amounts that they
believed were appropriate for the services performed. Elite filed notices of liens with the
1 The eight petitioners are the following employers and/or employers' insurance
companies: California Insurance Guarantee Association; AIU Insurance Company;
American Home Assurance Company (as insurer for Wal-Mart Associates, Inc.);
Insurance Company of the West; Explorer Insurance Company; Solar Turbines, Inc.;
BAE Systems Ship Repair, Inc.; and ACE American Insurance Company. The California
Insurance Guarantee Association took over liability for one of the original defendants in
this case after that defendant was declared insolvent and ordered into liquidation.
3
Board's San Diego office, seeking to collect the remaining balances.2 All of the facility
fee bills that are subject to consolidation in this matter are for services rendered between
November 2000 and December 31, 2003.
Division 4 of the Labor Code sets forth an extensive regulated system for the
medical treatment of employees who are injured at work. (Lab. Code, § 3200 et seq.)3
As part of this system, the administrative director of the Division of Workers'
Compensation (DWC) is responsible for adopting and periodically revising an official
medical fee schedule (OMFS) that establishes the "reasonable maximum fees" to be paid
for medical treatment provided to employees who are injured at work. (§ 5307.1.) For
the period between April 13, 2001 and December 31, 2003, the administrative director
adopted an OMFS with reasonable maximum fees for services performed by 21 San
Diego area hospitals. (8 Cal. Code Regs., § 9792.1.) This OMFS did not cover facility
fees charged by ASCs. As a result, there was no established "reasonable maximum fee"
for procedures provided at ASCs during the relevant time period.4
2 Elite originally filed thousands of liens for services rendered prior to January 1,
2004. The Board issued several orders to consolidate these liens. The most recent
consolidation order involved 436 cases, but after resolution of a number of the cases, 333
cases remained unresolved at the time of trial before the WCJ.
3 Further statutory references are to the Labor Code unless otherwise indicated.
4 The Legislature amended the Labor Code in 2003 to require the administrative
director to "adopt and revise periodically an [OMFS]" to "establish reasonable maximum
fees paid for medical services other than physician services, drugs and pharmacy
4
At the time the parties' dispute over Elite's bills arose, billing disputes were
resolved through litigation before the Board. In a billing dispute case, the parties litigate
before a WCJ, who acts for the Board in the first instance. In this case, a 17-day trial was
held before the WCJ regarding the reasonable value for certain facility services provided
by Elite in the consolidated cases. Both parties presented extensive documentary and
testimonial evidence.
At trial, Elite introduced in evidence the billing itemizations and operative reports
for the facility services, to demonstrate the range of facility services that Elite had
provided for epidural, knee and shoulder procedures during the relevant time period.
David Kupfer, M.D., who served as the medical director and the general partner of Elite,
reviewed each of the bills and operative reports and described the multiple, distinct
procedures performed by the physician, the facility services provided by Elite, and the
differences in services between and among bills and reports. For example, Dr. Kupfer
testified that as to a number of the disputed bills, although the bills identified only a
services, health care facility fees, home health care, and all other treatment, care,
services, and goods described in Section 4600 and provided pursuant to this section" for
dates of service after January 1, 2004. (Stats. 2003, ch. 639, § 35, subd. (a).) This OMFS
would include facility fees to be paid to an ASC. The Legislature also amended the
Labor Code to provide that "the maximum facility fee for services performed in an
[ASC], or in a hospital outpatient department, may not exceed 120 percent of the fee paid
by Medicare for the same services performed in a hospital outpatient department." (Stats.
2003, ch. 639, § 35, subd. (c).)
5
single "CPT code,"5 the operative reports demonstrated that in fact, multiple procedures
had been performed, thereby increasing the facility fees for the services provided by
Elite. The petitioners' expert, Theresa Cokley, confirmed that, at least as to one of the
bills, five separate procedures had actually been performed, despite the fact that only a
single CPT code appeared on the bill. This evidence demonstrated that although only a
single CPT code appeared on the bills, with respect to many of the bills, Elite had in fact
provided multiple, distinct services.
Elite also presented collection data compiled over a period of approximately seven
years to demonstrate that it generally collected 62.7 percent of the amount that it charged
for facility fees.6 In addition, Elite presented the testimony of its expert, Rocky Gentner,
a health care financial management consultant, regarding the usual and customary fees
that Elite and other ASCs accepted as full payment for facility services provided between
2000 and 2003. To compile this information, Gentner relied on a database of facility fee
charges and payment amounts for all closed cases from all payers for facility services
provided between January 1, 2000 through December 31, 2003, for all southern
5 CPT is the acronym for the American Medical Association's "Current Procedural
Terminology." "CPT codes were jointly developed by the American Medical Association
and the Health Care Financing Administration and are the standardized nomenclature for
use in insurance claims." (People ex rel. Allstate Insurance Co. v. Muhyeldin (2003) 112
Cal.App.4th 604, 607.) A CPT code is used to identify and refer to a particular medical,
surgical, and/or diagnostic procedure or service.
6 For example, between 2000 and 2003, Elite recovered $41,984,699 of the
$66,995,390 that it billed for facility fees.
6
California ASCs that were willing to participate in the database. Nineteen ASCs
participated in the database, which contained information regarding 73,319 closed cases.7
The petitioners presented a report and oral testimony from their expert, Henry
Miller, Ph.D. Dr. Miller offered his expert opinion that Elite's charges were grossly
disproportionate to those of other San Diego County providers, that Gentner's analysis
and opinion were fundamentally flawed, and that the ASC OMFS that went into effect as
of January 1, 2004 is the only objective and fair method for determining a reasonable fee
for Elite's services during the relevant time period. Dr. Miller also considered what other
ASC providers charged and accepted for similar services during the relevant period.
7 The petitioners suggest that Gentner's data should be viewed with suspicion
because he "based his opinions on his 'statistical analysis' of unauthenticated data not in
evidence" and "undertook no analysis as to whether any of the underlying services had
been correctly coded or billed." However, the WCJ admitted this evidence, over
petitioners' objections. Although petitioners state in their briefing that they "now renew
[the] evidentiary objections [that they made to the WCJ and in their petition for
reconsideration]," they do not specifically request that this court review the WCJ's rulings
with respect to this evidence. Petitioners fail to provide any legal argument in their
briefing in this proceeding as to how or why the WCJ's rulings with respect to the
evidence in question were erroneous. Rather, they simply say, for example, "Petitioners
filed pre-trial motions in limine, offered multiple evidentiary objections throughout the
trial, and filed post-trial motions to strike Gentner's objectionable evidence," and then cite
to numerous pages in the volumes of exhibits filed with the petition for review to
demonstrate where in the record they objected to this evidence. This is insufficient to
articulate any reversible error on the part of the WCJ. "Whether legal or factual, no error
warrants reversal unless the [party seeking review] can show injury from the error." (City
of Santa Maria v. Adam (2012) 211 Cal.App.4th 266, 286.) Further, " '[a]ppellate briefs
must provide argument and legal authority for the positions taken. "When an appellant
fails to raise a point, or asserts it but fails to support it with reasoned argument and
citations to authority, we treat the point as waived." ' [Citation.] 'We are not bound to
develop appellants' arguments for them.' " (Cahill v. San Diego Gas & Electric Co.
(2011) 194 Cal.App.4th 939, 956.)
7
According to Dr. Miller, Elite's charges for the procedures at issue were more than two
times the maximum amount allowed by law for full service inpatient hospitals in the
same geographic area; up to seven times more than what Elite itself had customarily
charged for the same services prior to increasing its charges in 2000; up to 10 times more
than what Elite customarily accepted as full payment prior to 2000; up to four to five
times more than the fees charged by other ASCs in the same geographic area; up to 24
times more than the amount accepted for similar services by other ASCs in the same
geographic area; and up to seven times more than the maximum facility fee under the
ASC OMFS in effect after January 1, 2004, for the same or similar services. According
to Dr. Miller, the OMFS for ASCs in effect after January 1, 2004 is easily identifiable,
objective, transparent, easy to calculate, provides fair compensation, and would provide
an expeditious and straightforward way to resolve Elite's unresolved bills.
On January 1, 2013, after the case had been submitted to the WCJ but before the
WCJ issued a decision, certain legislative changes to the workers' compensation law that
were enacted in 2012 became effective.
One month later, on February 1, 2013, the WCJ issued his decision regarding the
consolidated claims. The WCJ determined that the reasonable fee for arthroscopic knee
procedures was "$5,207.85 or the amount billed, whichever is less." This amount is
approximately 28 percent of the amount that Elite customarily billed for such procedures,
and is $5,377 less than what Elite stated that it accepted, on average, per bill. The
reasonable fee for percutaneous lysis of epidural adhesions was "$2,337.52, or the
8
amount billed, whichever is less." This amount reflects approximately 45 percent of the
amount that Elite customarily billed for these procedures, and is approximately $854 less
than what Elite stated it was able to collect per bill. Finally, the WCJ determined that the
reasonable fee for arthroscopic shoulder procedures is "$4,340.95, or the amount billed,
whichever is less." This amount is approximately 22.5 percent of what Elite customarily
billed for these procedures, and is approximately $14,926 less than what Elite stated that
it accepted, on average, per bill.
In making these findings, the WCJ stated the following:
"A broad range of evidence was presented and considered in this
case. It is noteworthy that no one proposed a formula incorporating
all of the relevant factors into a broadly applicable equation to arrive
at 'reasonable.' Maybe that is because there is none.
"The universe of 'relevant factors' is too big, subjective, random, and
dissimilar for this. But the universe of relevant factors at least
establishes that 'reasonable' facility fees will not be less than what
Medicare would allow, and not more than what Elite contends it has
collected on average over the years for the various types of facility
fees.
"Within this range of evidence, there are two other relevant factors
that significantly narrow the range of reasonable and are well
constructed for broad and objective application. One is the Official
Medical Fee Schedule for ambulatory surgical centers that went into
effect on January 1, 2004. The other is the Official Medical Fee
Schedule for hospitals in effect from April 13, 2001 through
December 31, 2003. The halfway point between these two
schedules constitutes the reasonable facility fee."
The petitioners moved for reconsideration of the WCJ's order. The WCJ issued a
Report and Recommendation on the petition for reconsideration, recommending that the
9
petition for reconsideration be denied in its entirety. In the Report and Recommendation,
the WCJ reviewed much of the evidence presented, and set forth the factual and legal
bases for his determination of the reasonable value of the services provided by Elite for
the procedures in dispute. The Board granted reconsideration. After considering the
petition for reconsideration, Elite's answer, and the WCJ's Report and Recommendation,
the full Board adopted the WCJ's Report and Recommendation, and affirmed in its
entirety the WCJ's original decision rendered on February 1, 2013.
The petitioners filed a petition for writ of review in this court. The Board filed an
informal response pursuant to this court's request. Elite filed a return in opposition to the
petition for writ of review. The California Workers' Compensation Institute filed an
amicus curiae brief in support of the petition, and the California Society of Industrial
Medicine and Surgery, Inc., filed an amicus curiae brief in support of the Board.
III.
DISCUSSION
A. Legal standards on a petition for review of a Board decision
As to findings of fact, a court defers to the Board's findings if those findings are
supported by substantial evidence. (§ 5952; Department of Rehabilitation v. Workers'
Comp. Appeals Bd. (2003) 30 Cal.4th 1281, 1290.) "The term 'substantial evidence'
means evidence 'which, if true, has probative force on the issues. It is more than a mere
scintilla, and means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion . . . . It must be reasonable in nature, credible, and of
10
solid value . . . .' " (Braewood Convalescent Hospital v. Workers' Comp. Appeals Bd.
(1983) 34 Cal.3d 159, 164.) When considering a petition for a writ of review on a
decision of the Board, " ' " '[t]his court must determine whether the evidence, when
viewed in light of the entire record, supports the award of the WCAB. This court may
not reweigh the evidence or decide disputed questions of fact.' " ' " (Tenet/Centinela
Hospital Medical Center v. Workers' Comp. Appeals Bd. (2000) 80 Cal.App.4th 1041,
1045-1046 (Tenet/Centinela).)
" ' " 'Questions of statutory interpretation are, of course, for [a] court to
decide.' " ' " (Tenet/Centinela, supra, 80 Cal.App.4th at pp. 1045-1046.) However,
although the Board's conclusions on questions of law are not binding on this court
(Kuykendall v. Workers' Comp. Appeals Bd. (2000) 79 Cal.App.4th 396, 402), and the
interpretation of a labor statute is a legal question subject to our independent review
(Boehm & Associates v. Workers' Comp. Appeals Bd. (1999) 76 Cal.App.4th 513, 515-
516), we nevertheless "generally defer to the [Board's] interpretation of labor statutes
unless clearly erroneous" (City of Long Beach v. Workers' Comp. Appeals Bd. (2005) 126
Cal.App.4th 298, 316, fn. 5).
B. The Board's jurisdiction to determine this matter
Petitioners contend that as a result of legislative action in 2012, effective as of
January 1, 2013, the Board lacked jurisdiction to resolve this medical billing dispute.
Specifically, petitioners argue that through its passage of Senate Bill No. 863 (hereafter,
11
S.B. 863) (Stats, 2012, ch. 363), the Legislature divested the Board of jurisdiction over all
pending and future medical billing disputes.8
As passed, S.B. 863 includes 86 provisions, and makes a substantial number of
changes to a variety of aspects of workers' compensation law. Among the numerous and
significant changes implemented by the Legislature in S.B. 863 is the creation of an
independent bill review (IBR) process by which billing disputes between providers and
8 In their petition for reconsideration to the Board, the petitioners did not make
precisely the same argument that they raise in this review proceeding. Although the
petitioners referenced the new independent bill review system codified by S.B. 863 in
their petition for reconsideration, they did so in furtherance of their argument that
"retrospective application of the OMFS [for outpatient surgery centers in effect as of
January 1, 2004] to resolve Elite's bills is fair, reasonable, expeditious, and consistent
with the nationally recognized industry standards," and that "Elite has presented no
plausible alternative method." In fact, the heading for the section in which the petitioners
cited S.B. 863 was, "Substantial evidence supports application of the ASC fee schedule in
effect on January 1, 2004." At one point in the petition for reconsideration, petitioners
asserted, "Finally, the WCJ no longer has jurisdiction to determine the actual amount
Defendants might owe a lien claimant ASC as those claims are now governed by the
independent bill review process." However, they made no legal argument on this point
and instead, immediately refocused on their argument that "[s]ubstantial evidence in this
case supports a finding of fact that [a] reasonable facility fee for Elite's services rendered
before January 1, 2004 is the maximum amount allowed under the Official Medical Fee
Schedule for San Diego County [ASCs] that went into effect on January 1, 2004."
Although Elite contends that the petitioners have forfeited this argument under
section 5904 and Health v. Workmen's Comp. App. Bd. (1967) 254 Cal.App.2d 235, as
petitioners point out, this is an issue regarding the Board's subject matter jurisdiction to
determine this dispute, and subject matter jurisdiction is an issue that may be raised at
any time until the finality of a decision. (See Sullivan v. Delta Air Lines, Inc. (1997) 15
Cal.4th 288, 307, fn. 9.)
12
employers are to be resolved administratively.9 In general, the new IBR process requires
an employer to respond, within certain time limits, to a bill sent by a medical provider,
and to provide an "explanation of review" detailing the reasons for the action that the
employer has decided to take with respect to the bill, i.e., to pay the bill in full, pay an
adjusted amount, or deny payment. If a provider disputes the amount that an employer
pays on the bill, the provider may request a "second review" within a certain time period.
S.B. 863 requires requests for a second review to be made in conformity with a form to
be created by the administrative director, and to include certain information listed in the
statute. If a provider is still unhappy with the amount paid by an employer after receiving
an employer's explanation of review after the second review, the provider may request to
have an independent reviewer review the bill and settle the dispute between the parties.10
S.B. 863 amends section 4603.2 by adding the following language as subdivision
(e), which sets forth the requirements for the second review that a medical provider may
request (and must request) prior to seeking independent review of a bill:
9 S.B. 863 also created a new administrative process by which disputes concerning
medical treatment may be resolved without resort to litigation before the Board. The new
"independent medical review" (IMR) process is "patterned after the long-standing and
widely applauded IMR process used to resolve medical disputes in the health insurance
system." (Sen. com. on Labor and Industrial Relations, Analysis of Sen. Bill No. 863
(2011-2012 Reg. Sess.) Aug. 21, 2012.)
10 Because the specifics of the new IBR process are important to our analysis of the
issue concerning the Board's jurisdiction over billing disputes that were pending as of the
effective date of S.B. 863, we will provide the full text of some of the relevant provisions.
13
"(e)(1) If the provider disputes the amount paid, the provider may
request a second review within 90 days of service of the explanation
of review or an order of the appeals board resolving the threshold
issue as stated in the explanation of review pursuant to paragraph (5)
of subdivision (a) of Section 4603.3. The request for a second
review shall be submitted to the employer on a form prescribed by
the administrative director and shall include all of the following:
"(A) The date of the explanation of review and the claim number or
other unique identifying number provided on the explanation of
review.
"(B) The item and amount in dispute.
"(C) The additional payment requested and the reason therefor.
"(D) The additional information provided in response to a request in
the first explanation of review or any other additional information
provided in support of the additional payment requested.
"(2) If the only dispute is the amount of payment and the provider
does not request a second review within 90 days, the bill shall be
deemed satisfied and neither the employer nor the employee shall be
liable for any further payment.
"(3) Within 14 days of a request for second review, the employer
shall respond with a final written determination on each of the items
or amounts in dispute. Payment of any balance not in dispute shall
be made within 21 days of receipt of the request for second review.
This time limit may be extended by mutual written agreement.
"(4) If the provider contests the amount paid, after receipt of the
second review, the provider shall request an independent bill review
as provided for in Section 4603.6." (S.B. 863, § 36; Lab. Code,
§ 4603.2, subd. (e).)
In turn, section 4603.6 of the Labor Code, which was added by section 39 of S.B.
863, discusses when an IBR may be requested, what will occur if an IBR is not requested
14
within the prescribed time, how such a request is to be made, and how the IBR will be
assigned to, and addressed by, an independent reviewer:
"(a) If the only dispute is the amount of payment and the provider
has received a second review that did not resolve the dispute, the
provider may request an independent bill review within 30 calendar
days of service of the second review pursuant to Section 4603.2 or
4622. If the provider fails to request an independent bill review
within 30 days, the bill shall be deemed satisfied, and neither the
employer nor the employee shall be liable for any further payment.
If the employer has contested liability for any issue other than the
reasonable amount payable for services, that issue shall be resolved
prior to filing a request for independent bill review, and the time
limit for requesting independent bill review shall not begin to run
until the resolution of that issue becomes final, except as provided
for in Section 4622.
"(b) A request for independent review shall be made on a form
prescribed by the administrative director, and shall include copies of
the original billing itemization, any supporting documents that were
furnished with the original billing, the explanation of review, the
request for second review together with any supporting
documentation submitted with that request, and the final explanation
of the second review. The administrative director may require that
requests for independent bill review be submitted electronically. A
copy of the request, together with all required documents, shall be
served on the employer. Only the request form and the proof of
payment of the fee required by subdivision (c) shall be filed with the
administrative director. Upon notice of assignment of the
independent bill reviewer, the requesting party shall submit the
documents listed in this subdivision to the independent bill reviewer
within 10 days.
"(c) The provider shall pay to the administrative director a fee
determined by the administrative director to cover no more than the
reasonable estimated cost of independent bill review and
administration of the independent bill review program. The
administrative director may prescribe different fees depending on the
number of items in the bill or other criteria determined by regulation
adopted by the administrative director. If any additional payment is
15
found owing from the employer to the medical provider, the
employer shall reimburse the provider for the fee in addition to the
amount found owing.
"(d) Upon receipt of a request for independent bill review and the
required fee, the administrative director or the administrative
director's designee shall assign the request to an independent bill
reviewer within 30 days and notify the medical provider and
employer of the independent reviewer assigned.
"(e) The independent bill reviewer shall review the materials
submitted by the parties and make a written determination of any
additional amounts to be paid to the medical provider and state the
reasons for the determination. If the independent bill reviewer
deems necessary, the independent bill reviewer may request
additional documents from the medical provider or employer. The
employer shall have no obligation to serve medical reports on the
provider unless the reports are requested by the independent bill
reviewer. If additional documents are requested, the parties shall
respond with the documents requested within 30 days and shall
provide the other party with copies of any documents submitted to
the independent reviewer, and the independent reviewer shall make a
written determination of any additional amounts to be paid to the
medical provider and state the reasons for the determination within
60 days of the receipt of the administrative director's assignment.
The written determination of the independent bill reviewer shall be
sent to the administrative director and provided to both the medical
provider and the employer.
"(f) The determination of the independent bill reviewer shall be
deemed a determination and order of the administrative director.
The determination is final and binding on all parties unless an
aggrieved party files with the appeals board a verified appeal from
the medical bill review determination of the administrative director
within 20 days of the service of the determination. The medical bill
review determination of the administrative director shall be
presumed to be correct and shall be set aside only upon clear and
convincing evidence of one or more of the following grounds for
appeal:
16
"(1) The administrative director acted without or in excess of his or
her powers.
"(2) The determination of the administrative director was procured
by fraud.
"(3) The independent bill reviewer was subject to a material conflict
of interest that is in violation of Section 139.5.
"(4) The determination was the result of bias on the basis of race,
national origin, ethnic group identification, religion, age, sex, sexual
orientation, color, or disability.
"(5) The determination was the result of a plainly erroneous express
or implied finding of fact, provided that the mistake of fact is a
matter of ordinary knowledge based on the information submitted
for review and not a matter that is subject to expert opinion.
"(g) If the determination of the administrative director is reversed,
the dispute shall be remanded to the administrative director to
submit the dispute to independent bill review by a different
independent review organization. In the event that a different
independent bill review organization is not available after remand,
the administrative director shall submit the dispute to the original
bill review organization for review by a different reviewer within the
organization. In no event shall the appeals board or any higher court
make a determination of ultimate fact contrary to the determination
of the bill review organization.
"(h) Once the independent bill reviewer has made a determination
regarding additional amounts to be paid to the medical provider, the
employer shall pay the additional amounts per the timely payment
requirements set forth in Sections 4603.2 and 4603.4." (S.B. 863,
§ 39; Lab. Code, § 4603.6.)
17
In addition to these provisions, S.B. 863 also added sections 139.5, 4603.3, and
4903.5, and amended section 4622, all of which relate to the newly created administrative
IBR.11
According to petitioners, the Legislature made this new IBR system applicable to
pending billing disputes between employers and medical providers by way of a non-
codified provision in S.B. 863. The petitioners point to section 84 of S.B. 863 which
states, "This act shall apply to all pending matters, regardless of date of injury, unless
otherwise specified in this act, but shall not be a basis to rescind, alter, amend, or reopen
any final award of workers' compensation benefits."12 The petitioners argue that since
S.B. 863 does not elsewhere specify that the IBR procedure applies only to future billing
disputes, the IBR procedure set forth in the statute must apply to "all pending matters."
Looking solely at section 84 of S.B. 863, petitioners' argument that the Legislature
intended to immediately divest the WCAB of jurisdiction over medical billing disputes
might appear to be correct. However, further review of S.B. 863, as well as a review of
the entire framework of the newly created IBR procedure, demonstrates that the
legislative picture is not nearly as straightforward as petitioners maintain.
11 To the extent that these provisions are relevant to our discussion, we will provide
the relevant language at that point in the discussion.
12 Although uncodified, this provision is nevertheless fully a part of the statutory law.
(See County of Los Angeles v. Payne (1937) 8 Cal.2d 563, 574.)
18
"Our primary task in interpreting a statute is to determine the Legislature's intent,
giving effect to the law's purpose. [Citation.] We consider first the words of a statute, as
the most reliable indicator of legislative intent. [Citation.] ' " 'Words must be construed
in context, and statutes must be harmonized, both internally and with each other, to the
extent possible.' [Citation.] Interpretations that lead to absurd results or render words
surplusage are to be avoided." ' " (Tuolumne Jobs & Small Business Alliance v. Superior
Court (2014) 59 Cal.4th 1029, 1037 (Tuolumne Jobs), italics added.)
"[W]here a statute's terms are unclear or ambiguous, we may 'look to a variety of
extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied,
the legislative history, public policy, contemporaneous administrative construction, and
the statutory scheme of which the statute is a part.' " (In re M.M. (2012) 54 Cal.4th 530,
536.) "Moreover, ' "[every] statute should be construed with reference to the whole
system of law of which it is a part so that all may be harmonized and have effect." ' "
(Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593, 610; Robert L. v.
Superior Court (2003) 30 Cal.4th 894, 903 [" 'Statutory language should not be
interpreted in isolation, but must be construed in the context of the entire statute of which
it is a part, in order to achieve harmony among the parts' "].)
After considering S.B. 863 as a whole, we conclude that this legislation is
ambiguous with respect to whether the IBR process was intended to apply to pending
billing disputes, or, rather, was intended to apply only prospectively, to new billing
disputes that arise with respect to injuries that occur after the effective date of the
19
legislation. Attempting to apply section 84 of S.B. 863 in this case would leave these
parties without a process by which to have their dispute resolved by a third party, since
the new IBR process may be utilized only if certain conditions precedent have been met,
and the deadlines for meeting those conditions have passed. Leaving these parties
without a viable process to decide their dispute cannot be what the Legislature intended.
We conclude that in creating the IBR process, the Legislature intended to establish a new
dispute resolution procedure that would apply to disputes arising on or after the effective
date of the legislation, and not to disputes like this one that were pending at the time the
legislation went into effect.
Although petitioners suggest that we look only to section 84 of S.B. 863 to
conclude that the Legislature intended that the new IBR procedure applies to pending
billing disputes, section 84 provides for application of the provisions of S.B. 863 to
"pending matters . . . unless otherwise specified in this act" (Stats, 2012, ch. 363, § 84).
S.B. 863, section 7 also added Labor Code section 139.5, a provision that authorizes the
administrative director of the DWC (administrative director) to make contracts with
organizations that can provide reviewers to implement the newly created IBR and IMR
systems. Section 139.5 provides in relevant part:
"(a) (1) The administrative director shall contract with one or more
independent medical review organizations and one or more
independent bill review organizations to conduct reviews pursuant to
Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of
Division 4. . . .
20
"(2) To enable the independent review program to go into effect for
injuries occurring on or after January 1, 2013, and until the
administrative director establishes contracts as otherwise specified
by this section, independent review organizations under contract
with the Department of Managed Health Care pursuant to Section
1374.32 of the Health and Safety Code may be designated by the
administrative director to conduct reviews pursuant to Article 2
(commencing with Section 4600) of Chapter 2 of Part 2 of Division
4. The administrative director may use an interagency agreement to
implement the independent review process beginning January 1,
2013. The administrative director may initially contract directly
with the same organizations that are under contract with the
Department of Managed Health Care on substantially the same terms
without competitive bidding until January 1, 2015." (§ 139.5, subd.
(a), italics and boldface added.)
Although this provision does not expressly state that the Legislature intended that
the IBR and IMR processes go into effect only prospectively, it provides an indication
that the Legislature viewed both the IMR and IBR processes as applying to future
employment-related injuries and to future disputes as to medical care and billing for such
care.
Petitioners and amicus curiae California Workers' Compensation Institute suggest
that the relevant language in section 139.5, subdivision (b) exists only to permit the
administrative director to contract with IMR providers in order to meet the approaching
implementation date set forth for the IMR procedure as directed in section 4610.5.
However, subdivision (a) of section 139.5 requires the administrative director to contract
with "one or more independent medical review organizations and one or more
independent bill review organizations to conduct reviews pursuant to Article 2
(commencing with Section 4600) of Chapter 2 of Part 2 of Division 4." (§ 139.5, subd.
21
(a)(1), italics added.) It is therefore clear that the "independent review program"
(§ 139.5, subd. (a)(2)) referred to in section 139.5, subdivision (b) includes both the
medical review process and the bill review process. Further, the language of subdivision
(a) suggests that the Legislature anticipated that the contracts referred to in the
subdivision would have to exist before the review procedure could go into effect. Section
139.5 thus suggests that the Legislature intended that both the IMR and IBR processes be
implemented only prospectively, and that they were not intended to apply to pending
claims.
This conflict between the language of section 84 of S.B. 863 (i.e., "This act shall
apply to all pending matters, regardless of date of injury . . . ") and the reference to
"enabl[ing] the independent review program to go into effect for injuries occurring on or
after January 1, 2013" in section 139.5, subdivision (a)(2) renders the legislation
ambiguous with respect to whether it was intended to apply to pending billing disputes
such as the one at issue here, or rather, whether it was intended to apply only to disputes
that arose with respect to injuries that occur after the effective date of the legislation, i.e.,
January 1, 2013.13
13 Section 84 of S.B. 863 appears to be a "catch-all" provision, intended to assist in
the implementation of a number of changes that were made to the workers' compensation
law in S.B. 863. Again, S.B. 863 made significant changes to a number of different areas
of workers' compensation law, and did not address solely the process by which resolution
of medical treatment disagreements and billing disagreements shall occur. Among other
things, S.B. 863 increases permanent disability values, alters/simplifies the permanent
disability rating method, simplifies the supplemental job displacement voucher system,
requires a fee for the filing of a lien, makes changes to the creation and maintenance of
22
In the face of such ambiguity, we are led to interpret the statute as operating
prospectively. (See Californians for Disability Rights v. Mervyn's, LLC (2006) 39
Cal.4th 223, 230 [statutes ordinarily are interpreted as operating prospectively in the
absence of a clear indication of a contrary legislative intent]; see also Myers v. Philip
Morris Companies, Inc. (2002) 28 Cal.4th 828, 841 [when a statute is ambiguous
regarding retroactivity, it is construed to be prospective in application].) In construing
statutes, there is a presumption against retroactive application unless the Legislature
plainly has directed otherwise by means of " 'express language of retroactivity
or . . . other sources [that] provide a clear and unavoidable implication that the
Legislature intended retroactive application.' " (McClung v. Employment Development
Dept. (2004) 34 Cal.4th 467, 475 (McClung), italics omitted.) Although, at first blush,
S.B. 863 section 84 might appear to constitute " 'express language of retroactivity' "
(McClung, supra, at p. 475), it specifically allows for other portions of the statute to
provide a different rule regarding retroactive/prospective application, and at least one
other provision of the statute, Labor Code section 139.5, suggests that the IBR process
was intended to apply only to disputes over medical treatment provided for injuries that
occur on or after January 1, 2013.
medical provider networks, updates the OMFS, establishes a fee schedule for various
other services, including interpreters, vocational experts, and in-home health care, and
provides for additional payments to be made to workers who suffer disproportionate
wage loss.
23
The new process by which billing disputes are to be resolved provides an even
more compelling basis for our conclusion that the Legislature intended the IBR process to
apply only to new disputes over billing. Specifically, S.B. 863 sets forth a number of
conditions precedent that must be met, as well as strict time limits within which those
conditions must be met, before a provider may seek access to the IBR process to resolve
a billing dispute.
For example, after a medical provider submits a bill to an employer, the employer
is to either pay the bill with an explanation of review or notify the provider of any
objection to the bill (based on a contesting of the amount, denial of the bill, or an
objection that the itemization is incomplete). (§ 4603.2, subd. (b)(1).) Specifically,
within 45 days of receiving the bill, an employer must provide any payment to the
provider, along with "an explanation of review pursuant to Section 4603.3," and if the
employer considers the bill, or any portion of it to be "contested, denied, or considered
incomplete," the employer must notify the provider in the "explanation of review" of the
"items being contested, the reasons for contesting these items, and the remedies available
to the physician or the other provider if he or she disagrees" within 30 days of receipt of
the bill. (§ 4603.2, subd. (b)(2) & (b)(2)(B).)
Section 4603.3, as newly adopted pursuant to S.B. 863, section 37, sets forth what
an employer must include in its "explanation of review" when it pays, adjusts, or denies a
"complete or incomplete itemization of medical services." (§ 4603.3.) Although the
provision sets forth certain basic information that must be provided, it also states that
24
employers must provide an explanation of review "in the manner prescribed by the
administrative director."14 (Ibid.)
If the employer fails to meet these statutory requirements regarding the
explanation of review, the employer must pay "[a]ny properly documented list of services
provided" at the "rates then in effect under Section 5307.1 . . . and increased by 15
14 Section 4603.3, which was added by S.B. 863, section 37, provides in relevant
part:
"(a) Upon payment, adjustment, or denial of a complete or
incomplete itemization of medical services, an employer shall
provide an explanation of review in the manner prescribed by the
administrative director that shall include all of the following:
"(1) A statement of the items or procedures billed and the amounts
requested by the provider to be paid.
"(2) The amount paid.
"(3) The basis for any adjustment, change, or denial of the item or
procedure billed.
"(4) The additional information required to make a decision for an
incomplete itemization.
"(5) If a denial of payment is for some reason other than a fee
dispute, the reason for the denial.
"(6) Information on whom to contact on behalf of the employer if a
dispute arises over the payment of the billing. The explanation of
review shall inform the medical provider of the time limit to raise
any objection regarding the items or procedures paid or disputed and
how to obtain an independent review of the medical bill pursuant to
Section 4603.6." (Italics added.)
25
percent, together with interest at the same rate as judgments in civil actions retroactive to
the date of receipt of the itemization . . . ." (§ 4603.2, subd. (b)(2).)
S.B. 863 also adds another level of review that a provider may request if the
provider disagrees with the amount of payment remitted by an employer after the first
review of the bill. (§ 4603.2, subd. (e).) This second review, which is required prior to
initiation of the IBR process, must be requested by the provider within 90 days after
receipt of the explanation of review from the employer as to why the full amount of the
bill was not paid. (§ 4603.2, subd. (e)(1).) If the only dispute between the provider and
the employer is the amount of the payment, and the provider fails to request a second
review within 90 days, the bill is automatically deemed satisfied, and no further payment
will be required. (§ 4603.2, subd. (e)(2).)
Within 14 days after receipt of the request for second review, the employer must
issue a final written determination on the bill, and any amount not in dispute between the
provider and the claims administrator must be paid within 21 days after receipt of the
request for a second review. (§ 4603.2, subd. (e)(3).) If, however, the provider still
disagrees with the decision of the employer after the second review, the provider may
request the IBR process. This request must be made on a form designated by the
administrative director, and must be filed with the DWC within 30 days after receipt of
the second review decision. (§ 4603.6.) Only then may the request be assigned to an
independent bill reviewer.
26
As is clear from this framework, all of the relevant deadlines for the new
requirements enacted by S.B. 863 begin to run as of the date the employer receives the
provider's initial bill. All of the relevant deadlines that the parties to a billing dispute
must meet in order to be eligible to invoke the IBR process have long since passed in this
matter, years before S.B. 863 was passed by the Legislature. As a result, neither party
has satisfied the requirements imposed on it by the new procedure. The Legislature made
all of these events conditions precedent to the availability of the IBR process, and did not
provide for an expedited or alternative procedure for disputed bills that were pending at
the time S.B. 863 was enacted.
Further, under the new system, an employer's failure to respond to a provider's bill
as required under the statute would mean that the employer would have to pay for the
services at the "rates then in effect under section 5307.1 . . . and increased by 15 percent,
together with interest at the same rate as judgments in civil actions retroactive to the date
of receipt of the itemization." However, as is made clear by this case, there were no
relevant rates "then in effect" under section 5307.1 (a section that currently consists of the
OMFS), since there was no OMFS for ASCs during the relevant time period.
The practical effect of attempting to apply the new IBR review process to pending
disputes, such as the one at issue in this case, would be that the parties would be left with
no dispute resolution process at all. These parties would not be able to access the IBR
process because they have met none of the prerequisites, and it would not be possible for
them to meet them at this point in time; there would be no resolution by default because
27
there were no rates "then in effect" under section 5307.1; and the parties would not have
available to them the option of litigation before the Board to resolve their dispute.
Considering these obstacles to applying the new billing review process to pending
claims, it is clear that the Legislature could not have intended to leave parties who had
pending billing disputes on the effective date of the new statutory scheme with no
meaningful procedure for resolving their disputes.
Petitioners maintain that application of the new IBR procedure to pending claims
would not be "impossible." According to petitioners, since its amendment in 2001,
section 4603.2 has required an "explanation of review" if an employer uses a bill review
service. Thus, petitioners argue, "[t]he only thing needed to properly implement the new
IBR procedure consistent with the Legislature's mandate is for the administrative director
to simply promulgate regulations establishing a procedure for second bill review for any
unresolved provider bill for a date of service before January 1, 2013 where the employer
had previous provided the medical provider with an objection pursuant to the previous
requirements of section 4603.2 . . . ." Petitioners claim that "[s]uch regulations,
consistent with [S.B.] 863's intent, or those that are reasonabl[y] necessary to effectuate
the purpose of the statutes, are permissible
In making this argument, petitioners essentially concede that there is currently no
viable process by which Elite may obtain an IBR for the claims that have been pending
for years, without someone else stepping up to create such a process. According to
petitioners, this person should be the administrative director. We are not convinced that
28
the administrative director's "broad discretion to adopt rules and regulations as necessary
to promote the public welfare" (Calfarm Ins. Co. v. Deukmajian (1989) 48 Cal.3d 805,
824) is so broad as to permit the administrative director to do what petitioners suggest.
Any regulation adopted by the administrative director must be " 'within the scope of the
authority conferred' [citation] and . . . reasonably necessary to effectuate the purpose of
the statute.' " (Bearden v. U.S. Borax, Inc. (2006) 138 Cal.App.4th 429, 436.) Although
S.B. 863 authorizes the administrative director to promulgate many regulations in order
to implement the new review process created by the Legislature, it does not authorize the
administrative director to develop a separate, parallel process that would apply to billing
disputes that were pending between employers and medical providers on the effective
date of the legislation.
The administrative director's adopted regulations implementing the review
processes for medical treatment and billing indicate that the administrative director has
interpreted S.B. 863's creation of the IMR and IBR processes as applying only to new
disputes (both medical and billing) over care provided to employees as a result of a
employment-related injuries, and not to disputes that were pending when S.B. 863 was
enacted.15 For example, the administrative director adopted 8 California Code of
15 As stated above, although the interpretation of a labor statute is a legal question
subject to independent review, we "generally defer to the [Board's] interpretation of labor
statutes unless clearly erroneous." (City of Long Beach v. Workers' Comp. Appeals Bd.,
supra, 126 Cal.App.4th at p. 316, fn. 5.)
29
Regulations section 9792.5.5 in order to implement the second review process created by
the Legislature in S.B. 863. That regulation provides in pertinent part:
"(a) If the provider disputes the amount of payment made by the
claims administrator on a bill for medical treatment services
rendered on or after January 1, 2013, submitted pursuant to Labor
Code section 4603.2, or Labor Code section 4603.4, or bill for
medical-legal expenses incurred on or after January 1, 2013,
submitted pursuant to Labor Code section 4622, the provider may
request the claims administrator to conduct a second review of the
bill.
"(b) The second review must be requested within 90 days of:
"(1) The date of service of the explanation of review provided by a
claims administrator in conjunction with the payment, adjustment, or
denial of the initially submitted bill, if a proof of service
accompanies the explanation of review.
"(A) The date of receipt of the explanation of review by the provider
is deemed the date of service, if a proof of service does not
accompany the explanation of review and the claims administrator
has documentation of receipt.
"(B) If the explanation of review is sent by mail and if in the absence
of a proof of service or documentation of receipt, the date of service
is deemed to be five (5) calendar days after the date of the United
States postmark stamped on the envelope in which the explanation
of review was mailed.
"(2) The date of service of an order of the Workers' Compensation
Appeal Board resolving any threshold issue that would preclude a
provider's right to receive compensation for the submitted bill."
(8 Cal. Code Regs., § 9792.5.5, italics added.)
The regulation goes on to specify the forms to be used—forms created by the
administrative director after the enactment of S.B. 863, and the information to be
30
included in the request. The next section provides a visual copy of the form. (8 Cal.
Code Regs., §§ 9792.5.5, subds. (c), (d); 9792.5.6.)
In 8 California Code of Regulations section 9792.5.7, the administrative director
sets out the process by which a provider may request the IBR process under the new law:
"If the provider further contests the amount of payment made by the
claims administrator on a bill for medical treatment services or
goods rendered on or after January 1, 2013, submitted pursuant to
Labor Code sections 4603.2 or 4603.4, or bill for medical-legal
expenses incurred on or after January 1, 2013, submitted pursuant to
Labor Code section 4622, following the second review conducted
under section 9792.5.5, the provider shall request an independent bill
review. . . ." (8 Cal. Code Regs., § 9792.5.7, subd. (a), italics
added.)
It is clear from these regulations that the administrative director has interpreted
S.B. 863, and specifically, the new IBR process, as applying only prospectively—i.e., to
disputes that arise after enactment of the new IBR process, and not to pending disputes.16
We acknowledge that the Legislature was far less ambiguous with respect to the
prospective application of the newly created IMR process created by S.B. 863.
Specifically, section 4610.5, enacted by S.B. 863, section 45, explains that the new IMR
16 The administrative director has interpreted the statute as applying to disputes over
bills for services rendered after January 1, 2013. The portion of the legislation that
suggests the relevant date for purposes of the new IBR process, i.e., section 139.5, which
authorizes the administrative director to contract with the entities that will be used to
conduct the IBR process, refers to the "program . . . go[ing] into effect for injuries
occurring on or after January 1, 2013." (§ 139.5, subd. (a)(2), italics added.) We need
not determine whether the triggering event for purposes of application of the new IBR
process to a dispute is whether the relevant employment-related injury occurred on or
after January 1, 2013, or, rather, whether the service provided to an employee for which
the bill is in dispute occurred on or after January 1, 2013, since the injuries and services
at issue in this case all occurred many years prior to January 1, 2013.
31
process applies to "[a]ny dispute over a utilization review decision regarding treatment
for an injury occurring on or after January 1, 2013" (§ 4610.5, subd. (a)(1), and/or
"[a]ny dispute over a utilization review decision if the decision is communicated to the
requesting physician on or after July 1, 2013, regardless of the date of injury." (§
4610.5, subd. (a)(2), italics added.) Although S.B. 863 includes no similar language with
respect to the IBR process, section 139.5, subdivision (a)(2), which discusses the need for
the administrative director "[t]o enable the independent review program to go into effect
for injuries occurring on or after January 1, 2013," refers to the need for both the IMR
and IBR processes to go "into effect for injuries occurring on or after January 1, 2013."
(Ibid.) Given the language of section 139.5, subdivision (b), the fact that the Legislature
was clearer regarding the prospective application of the IMR process than it was with
respect to the IBR process does not, in our view, undermine our conclusion that S.B. 863
is ambiguous as to whether it intended to treat the IBR process differently with respect to
pending claims. Rather, this fact simply further demonstrates that S.B. 863 does not
provide clear guidance as to the Legislature's intention concerning retroactive versus
prospective application.
Our examination of the objectives to be achieved by the legislation, public policy,
and the statutory scheme together17 leads us to conclude that S.B. 863 does not divest the
17 We recognize that we have made no mention of the legislative history of S.B. 863
in our discussion of this matter. Neither the parties nor amici curiae referred to the
legislative history in setting forth their arguments. Our independent review of the
legislative history has revealed nothing that would provide insight into the Legislature's
32
Board of jurisdiction over pending billing disputes, thereby requiring that ongoing
litigation involving such disputes be abandoned.18 We therefore reject petitioners'
contention that S.B. 863 divests the Board of jurisdiction over the billing disputes at issue
in this matter.
C. Substantial evidence supports the Board's conclusions as to what a reasonable
outpatient facility fee is for the relevant procedures during the relevant time
period
The petitioners contend that even if the Board retains jurisdiction to resolve Elite's
consolidated lien claims, the Board's three findings of fact (determined in the first
instance by the WCJ and subsequently adopted by the Board en banc) are not supported
by substantial evidence. Specifically, the petitioners argue that there is insufficient
evidence to support the Board's determination that the reasonable facility fees for
arthroscopic knee procedures, arthroscopic shoulder procedures, and epidural injection
procedures were $5,207.85, $4,340.95, and $2,337.52, respectively.
intention with respect to the issue raised by petitioners. Although there was much
discussion of the IMR process in various committee reports and other contemporaneous
records, there was little discussion of the IBR process, and there is nothing mentioned
regarding the Legislature's intention with respect to whether the new IBR process was to
apply to pending billing disputes or only to future billing disputes.
18 In fact, all of the deadlines for the conditions precedent to obtaining IBR have
passed, and those conditions precedent have not been met, so IBR would not be possible
under the current statutory schedule. There is nothing in the legislation that would
indicate that the conditions precedent may be dispensed with as to pending disputes, nor
is there any legislative direction as to how the IBR process could go forward without
those conditions having been met. Thus, as a practical matter, under the process created
by S.B. 863, IBR would not be available to these parties at this point in time.
33
An outpatient surgery center has the affirmative burden of proving that its lien is
reasonable, and it must carry this burden by a preponderance of the evidence. (Tapia v.
Skill Master Staffing et al. (2008) 73 Cal.Comp.Cases 1338, 1342-1343 (Tapia), quoting
§ 5705 [" '[t]he burden of proof rests upon the party or lien claimant holding the
affirmative of the issue' "] and § 3202.5 [" '[a]ll parties and lien claimants shall meet the
evidentiary burden of proof on all issues by a preponderance of the evidence' " (italics
omitted)].)
When parties fail to agree on what constitutes the reasonable outpatient facility fee
for a particular service, the Board may take into consideration a wide array of factors,
including but not limited to, the amount the provider usually charges for that service,
what the provider usually accepts as full payment for the service, the usual fee of other
providers in the geographical area in which the services were rendered, what other
providers in the same geographical area usually accept as payment for the same or similar
services, and what inpatient hospitals or surgery centers in the same geographical area
charge and ultimately accept for the same or similar services. (See Tapia, supra, 73
Cal.Comp.Cases at pp. 1343-1344.) In considering these factors, the Board will not find
a particular billing for a service by an ASC to be "reasonable" if the charge is " 'grossly
disproportionate' " to the amount accepted by other outpatient and inpatient facilities in
the same geographical area for the same or similar services. (Id. at p. 1344, italics added,
quoting Kunz v. Patterson Floor Coverings, Inc. (2002) 67 Cal.Comp.Cases 1588, 1599
(Kunz).)
34
The factors discussed in Tapia do not constitute an exhaustive list of the evidence
that the Board may consider when determining the reasonableness of a fee for a service.
Rather, "in litigating the question of a reasonable outpatient surgery center fee, a
defendant or lien claimant may present any relevant evidence concerning that issue."
(Tapia, supra, 73 Cal.Comp.Cases at p. 1344, italics added.) In fact, in Tapia, the Board
considered evidence beyond just the billing and accepted rates for services. In addition to
this evidence, the Board considered what the inpatient OMFS allowed during the relevant
time period, what the Medicare fee schedule allowed, and what the outpatient OMFS
allowed, despite the fact that the outpatient OMFS applied to dates of service that were
not applicable to the claim at issue. (Ibid.) The Board was clear in stating that "neither
section 5307.1, [subdivision] (c) nor the OMFS [for ASCs], standing alone, is dispositive
of the issue of what constitutes a reasonable fee for outpatient surgery center services
before January 1, 2004." (Tapia, supra, at p. 1346.) The Board may also consider "other
aspects of the economics of the medical provider's practice that are relevant, and any
unusual circumstances in the case." (Kunz, supra, 67 Cal.Comp.Cases at p. 1598.)
Petitioners' contention that, with respect to the liens at issue before the Board "the
relevant evidence is limited to what Elite's 'similarly situated' competitor ASCs in [the]
San Diego County 'market place' charged and accepted for the same services" is simply
incorrect. Under Tapia, on which petitioners, themselves, rely, it is clear that the
"relevant evidence" that a party may present in support of a claim for fees "is not limited
to the fees accepted by other outpatient surgery centers in the same geographic area for
35
the services provided." (Tapia, supra, 73 Cal.Comp.Cases at p. 1340, italics added.)
Rather, "any evidence relevant to reasonableness may be offered to support or rebut the
lien." (Ibid., italics added.)
In this case, the parties presented abundant evidence to the WCJ, and the record
demonstrates that the WCJ considered that evidence, weighed it, and ultimately reached a
conclusion as to the "reasonable facility fee." In reaching this conclusion, the WCJ did
not adopt, in full, the position of either side in this matter.
The WCJ noted that, at the far and disparate ends of the spectrum of fees for the
relevant procedures, a "reasonable facility fee" should not be "less than what Medicare
would allow, and not more than what Elite contends it has collected on average over the
years for the various types of facility fees." The WCJ had evidence before him as to the
fee schedule that Medicare would allow for these procedures, as well as evidence as to
the average amount that Elite collected on its bills for the same or similar procedures
between 2000 and 2003.
In narrowing the range between these disparate figures, the WCJ considered the
amounts that other ASCs billed and accepted, as well as the OMFS for hospitals that was
in effect between April 13, 2001 and December 31, 2003. Beyond this evidence, the
WCJ considered the OMFS for ASCs that went into effect as of January 1, 2004.
The WCJ also considered evidence regarding the nature of Elite's facilities. One
witness, an administrator of a San Diego outpatient surgical center not affiliated with
Elite, testified that the facility at which she worked "was not set up to do the range of
36
services available at the Elite facilities." In order to provide those services, including
epidural lysis procedures and spinal surgeries, larger operating rooms and more
expensive medical equipment would have been required. In addition, arthroscopic knee
and shoulder surgeries did not present a "significant percentage of the income" at her
facility in 2003, and unlike the facility where the witness worked, Elite was equipped to
perform spinal surgeries. Further, Elite required that all epidural procedures be done in
an operating room, using IV sedation, as well as fluoroscopies and epidurograms. The
witness's facility did not perform epidural lysis procedures, but instead allowed
physicians to perform " 'blind stick' epidural injections, i.e. without fluoroscopy or
epidurogram." Elite also utilized state-of-the-art surgical equipment and was therefore
prepared to perform procedures that other ASC's were not equipped to perform. The
witness testified that if an expensive piece of equipment was needed for a particular
procedure for a patient at the facility where she worked, she would try to convince the
treating physician to perform the procedure at a hospital, instead. These facts go to the
"economics of the medical provider's practice" and may be considered "unusual
circumstances" in the case that support the WCJ's conclusion that the "reasonable" fee for
the services at issue for the Elite facilities might be different from, and higher than, the
"reasonable" fee for those services at other local ASCs during the relevant time period.
(Kunz, supra, 67 Cal.Comp.Cases at p. 1598.)19
19 Although the creation of an OMFS for ASCs in 2004 eliminated any distinctions
37
The WCJ ultimately concluded that a "reasonable" facility fee for Elite to be paid
for the three challenged procedures would fall between the OMFS established for ASCs
as of January 1, 2004, and the OMFS established for inpatient hospital facilities during
the relevant time period. For example, the OMFS for hospital facilities during between
April 13, 2001 to December 31, 2003 (i.e., most of the relevant time period) allowed for
an average payment of $3,859.55 for percutaneous lysis of epidural adhesions, an average
payment of $8,490.18 for arthroscopic knee procedures, and an average payment of
$5,652.43 for arthroscopic shoulder procedures. On the other hand, the OMFS that went
into effect for ASCs as of January 1, 2004, allowed for an average payment of $815.50
for percutaneous lysis of epidural adhesions, an average payment of $1,952.52 for
arthroscopic knee procedures, and an average payment of $3,029.48 for arthroscopic
shoulder procedures. The WCJ concluded that the "reasonable" facility fees with respect
to Elite's liens were (1) $2,337.52 for percutaneous lysis of epidural adhesions, (2)
$5,207.85 for arthroscopic knee procedures, and (3) $4,340.95 for arthroscopic shoulder
procedures, all of which represent the average between the allowance for these
procedures under the OMFS for hospitals between April 2001 and December 2003 and
the allowance for these procedures under the OMFS for ASCs in place as of January
2004.
in payment as between local ASCs, during the relevant time period no such OMFS was in
place. Given the absence of a standardized fee schedule for these procedures, it was up to
the WCJ to determine what a "reasonable facility fee" was for these procedures. In doing
so, the WCJ was clearly not required to select any particular point of evidence as
determinative of what "reasonable" meant in the context of this dispute.
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As the WCJ noted, the formula that he used to calculate the "reasonable" facility
fees for the relevant time period for the procedures at issue took into consideration what
Medicare allowed, what Elite charged, what Elite accepted as payment, what the OMFS
for ASCs as of January 1, 2004 allowed, what the OMFS for hospitals during much of the
relevant period allowed, and the fees that other ASCs billed and accepted for the same or
similar services. The WCJ considered evidence as to all of these factors, and arrived at
results that fell somewhere in the middle of all of these figures. These conclusions are
supported by the evidence and are clearly permissible. (See San Diego Metropolitan
Transit Development Bd. v. Cushman (1997) 53 Cal.App.4th 918, 931 [ultimately, the
trier of fact " 'may accept the evidence of any one expert or choose a figure between them
based on all of the evidence' "].)
IV.
DISPOSITION
The decision of the Board after reconsideration is affirmed. The parties are to
bear their own costs in this proceeding.
AARON, J.
WE CONCUR:
HUFFMAN, Acting P. J.
IRION, J.
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