California W.C.A.B. Affirms Prior Valdez Decision

When it rains it pours...

Having just issued an en banc decision yesterday on QME panel issues, the W.C.A.B. has just issued its 3rd Reconsideration decision in Valdez v Warehouse Demo Services.  The original decision issued in April 2011 holding reports obtained by an applicant outside of a validly established Medical Provider Network (MPN) were not admissible for any purpose.  The Board granted Reconsideration for further study in July and now has issued its Opinion after Reconsideration which solidly affirms its original decision.  As in the original decision there were 2 separate concurring and dissenting opinions from Commissioners Brass and Caplane.

The W.C.A.B.'s decision does not break any new ground.  It simply rejects the applicant attorney' arguments that the W.C.A.B. misinterpreted the provisions of the Labor Code referring to MPN.s and also argued the board had ignored longstanding established case law.  The problem for applicant attorney was the W.C.A.B. did not rely solely on the MPN statutes, even agreeing partially with applicant attorney on some of the provisions, but also relied on Labor Code § 4061 and 4062 as providing applicant the ability to challenge PD and TD issues within the MPN.  Within the MPN, the W.C.A.B. noted applicant had multiple opportunities to challenge an adverse opinion of the PTP on medical treatment issues, none of which were utilized.

The board was also unimpressed with applicant attorney arguments regarding the "long standing established" case law, pointing out that none of the cited authorities dealt with MPN issues.

"...Apparently because the provisions cited do not qualify the term "treating physician" in any way, i.e., do not specifically mention MPN physicians, or distinguish them from non-MPN physicians, applicant claims that they, without exception, compel admissibility of all treating physician reports, regardless of the existence of a validly established and properly noticed MPN.  However, because many cases do not involve an MPN, and because MPN physicians are included in the definition of a treating physician or a PTP under AD Rule 9785(a)(1) (Cal. Code Regs., tit. 8, § 9785(a)(1)),  there is no reason for these provisions to specifically refer to MPN or non-MPN physicians, or to differentiate between them."

The Board also dealt with applicant's argument that limiting admissibility of non MPN physicians would prohibit defendants from proving apportionment:

"This also belies the applicant's contention that "[r]uling that [section] 4616.6 is a broad rule of inadmissibility to all proceedings causes mischief, exorbitant costs, and an absurd result."  Much of applicant's argument with respect to this contention is based on false assumptions, speculation and unsupported allegations.  For example, applicant states that "[b]y the WCAB's ruling, apportionment would not be provable if it is based on any medical record from a healthcare provide[r] outside of the MPN."  Applicant then states that "[m]any of the medical reports and records finding apportionment predate the inception of the MPN system on January 1, 2005."  However, our decision is applicable only where unauthorized industrial injury treatment reports are obtained outside a validly established and properly noticed MPN, and does not preclude admissibility of any other medical reports and records.  Furthermore, as stated previously, disputes concerning permanent disability, including apportionment, are to be determined under the procedures set forth in sections 4061 and 4062 with medical-legal reports outside the MPN.  Therefore, based on her false assumption regarding admissibility of medical evidence on apportionment, applicant has wrongly speculated that "[i]n all such instances, injured workers will move to strike these reports... and the employer will be unable to prove apportionment under [sections] 4663 and 4664 leading to unintended and exorbitant costs, surely a mischief and absurdity caused by this ruling."

The W.C.A.B. also specifically noted reports from non MPN physicians who were authorized to treat outside the MPN, as allowed in Labor Code § 4616.3 would be admissible.  It was only reports from unauthorized non MPN physicians whose reports are excluded by statute.

The good news is for employers, as long as there is a validly established MPN, this case will be applicable and will prevent both the expense of treatment and the exposure from such reports which are almost invariably medical legal evaluators hand selected the applicant attorney as a means of evading the AME/QME process.  I am repeating my commentary from the prior Eblast message regarding the importance of establishing the MPN and the proof issues that seem to swirl around that effort.

COMMENTS AND STRATEGIES (from 4/21/11 message):

This issue is one which has been commented on by several W.C.A.B. panel decisions with mixed results.  Initial decisions commented such reports would be "unquestionably admissible".  Later decisions have seemed to back off that language (including a case commented on by the undersigned a few weeks ago - see my 3/30/11 "Power Press Exception & LC 4064 Nugget" for a discussion of the Scudder panel decision).  In this decision, the W.C.A.B. has issued a definitive opinion which is now binding on all trial judge and W.C.A.B. panels.  The W.C.A.B. appears to have recognized the inherent unfairness of allowing an employee to effectively buy his/her own report outside the medical legal process that is meant to apply to both sides.

An additional issue that will come up in cases where the employee has obtained treatment outside the MPN pursuant to Labor Code § 4605 is the potential lien claim of the physician for such treatment.  I have been taking the position such treatment, which is clearly the responsibility of the employee, is still a lien on the employee's benefits if the physician has filed a lien claims.  I put the employee/applicant attorney on notice that my client will withhold sufficient sums from PD to cover the lien claim.  Failure to do so, in the face of a lien may expose the employer to the treatment expenses.  Where such a lien has been filed, it is imperative the claim not be resolved with the employer agreeing to hold the employee harmless on the lien claims.  Such an agreement ultimately makes the employer responsible for the bill as it puts the employer in the employee's position relative to the treatment bills.  I have required the employee and his counsel to address the bills directly either by agreeing to pay from the settlement or else arrive at an agreement with the doctor for a disposition.  However where there is no such agreement, distribution of the proceeds of settlement, in the face of a lien, can result in the employer being responsible for the treatment costs.

Needless to say, a critical part of this decision is the ability of the employer to prove a properly implemented MPN.  Such proof requires the employer provide affirmative evidence regarding sending of MPN notices and posting of notices under Labor Code § 3550.  Unfortunately providing such proof frequently requires the employer provide direct evidence of how the MPN was implemented, how notices were distributed and evidence of the proper postings (it is interesting that when employees testify they almost always claim the employer has never posted the Labor Code § 3550 notices and yet I have almost never walked into an employee break room without seeing them prominently posed on the wall).

Claims administrators should make an effort to get ahead of the curve on this issue and maintain an MPN Evidence file.  That file should contain copies of all of the MPN notices, the procedures used to communicate the initial notices and a picture of the employer's posting notices.  It should also contain declarations under penalty of perjury by the person responsible for the MPN implementation describing the process followed to communicate the notices (whether by mail or provided in the employees' paycheck as an example).  A declaration under penalty of perjury regarding the employer posting notices can also be made by the employer's safety officer or other party responsible for posting such notices. (Administrative Director Regulation §10114.2 allows such declarations to be admitted into evidence where properly served before trial.)  In any case where the employee has challenged the employer/carrier's MPN, this file, along with the actual notices sent to the employee at the time of injury, should suffice to document a properly implemented MPN and may avoid the need to provide live testimony especially if the issue arises at an expedited hearing.  I have recently also taken the position the validity of an MPN is not an issue for an Expedited Hearing as it is not one of the enumerated issues for expedited hearing and decision.  This can avoid the applicant testifying that notices were not received and postings not made without the employer having an opportunity to present its side of the case.  However with a properly developed MPN Evidence file, even an Expedited hearing might result in a finding the MPN was properly noticed.

The deposition of an employee is also an opportunity to document the MPN implementation.  It would be a good idea to confront the employee with a picture of the employer's notices, which he might well remember once shown, as well as any copies of notices.  One technique that can be used to confirm receipt of such notices is to include any medical releases the employee is asked to complete with the MPN notices.  If the employee has returned the medical releases and history forms, it is difficult for him/her to claim they did not receive the other material in the same package.

© Copyright 2011 Richard M. Jacobsmeyer. All rights reserved. Reprinted with permission.

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