California: Diagnostic Testing: Medical Treatment or Medical-Legal Expense? (Part 2)

In the May 4, 2015 issue of the LexisNexis Workers’ Compensation eNewsletter California Edition we reported the noteworthy panel decision of Hubbard v. United Parcel Service, 2015 Cal. Wrk. Comp. P.D. LEXIS 223 (April 21, 2015). On July 3, 2015, the WCAB panel rescinded its prior decision in which it had concluded that the lien of Southern California Psychodiagnostics was allowable as a medical-legal expense pursuant to Labor Code § 4620(a) [LC 4620].

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The WCAB panel issued a new decision disallowing Southern California Psychodiagnostics’ lien based on Labor Code § 4064(d) [LC 4064], when the WCAB found that where, as here, the medical-legal expense is a comprehensive medical-legal evaluation, Labor Code § 4064 clearly limits the liability of the employer to pay only for evaluations obtained pursuant to Labor Code §§ 4060, 4061 and 4062 [LC 4060, 4061, 4062].

Although the qualified medical evaluator in this case indicated the need for a neuropsychological evaluation, the parties never proceeded to obtain the evaluation through the qualified medical evaluator process and, instead, the neuropsychological evaluation occurred as a referral from the applicant’s primary treating physician who had expressly stated that he was acting on the applicant’s attorney’s request and performing the comprehensive medical-legal evaluation in order to prove or disprove the claim.

Furthermore, the neuropsychological evaluation was not procured under Labor Code §§ 4060, 4061 and 4062, as required, but was rather a part of a comprehensive medical-legal evaluation self-procured by the applicant, which, pursuant to statute, is done at the applicant’s own expense.

Chairwoman Caplane concurred with the majority panel’s finding that the lien was not allowable, but opined that the lien claimant’s report constituted medical treatment, not a medical-legal service, and thus she would deny the lien on that basis.

Read the Hubbard noteworthy panel decision (July 3, 2015).

COMMENTARY BY SUZANNE HONOR:

The Hubbard case raised the question of whether or not diagnostic testing is a medical-legal expense or a treatment expense. The argument rests on the purpose for which the testing is being sought. If it is to assist in specifically making a determination regarding a disputed medical issue, especially if requested by an AME or QME in the course of a medical-legal evaluation it is a medical-legal expense. The discussion in Hubbard was regarding the situation where a Primary Treating Physician requested the testing. Most frequently PTPs order testing for treatment purposes, but occasionally it can be for a medical-legal evaluation. Per statute, medical-legal evaluations are to be obtained under Labor Code 4060, 4061 and 4062, all of which refer you to the processes found under Labor Code 4062.1 or 4062.2. These two statutes require the parties to obtain an AME or a QME to resolve the issue. Labor Code 4064, however, does allow a party to obtain a comprehensive medical-legal evaluation from the PTP, an AME or a QME at that party’s own expense.

First the court needed to make a determination as to whether or not the service was a medical-legal expense. In order for the diagnostic testing to qualify as a medical-legal expense, there first has to be a medical dispute that can be resolved with a report that relies upon that testing. Secondly, one of the parties in the case needs to request that the physician generate a comprehensive, follow-up or supplemental medical-legal report to address the disputed issue. Thirdly, the report must be capable of resolving the disputed medical issue. In the Hubbard case, the diagnostic testing was obtained by the PTP for the purpose of determining the “nature and extent” of the disability, not its cause. The majority of Commissioners found this met the criteria for a medical-legal expense. The dissenting Commissioner found that it was not sufficient and that the testing was for treatment purposes. From looking at the decision, it appears that the testing obtained didn’t actually address the issue of causation, just the degree of disability. Neither party was disputing the fact that Mr. Hubbard was disabled, just whether or not the cause of the underlying condition was industrial. In fact, the court found the injury to be non-industrial and therefore the extent of disability wasn’t ever really determined. Personally I actually agree with the dissenting opinion rather than the majority for that reason, but it’s certainly an arguable point.

Everyone needs to be careful when analyzing diagnostic testing bills in disputed cases to make sure that all of the criteria for medical-legal expenses have been met.

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