August 15, 2011

1.1              MEDICAL REPORTS IN WCAB PROCEEDINGS

• The WCAB expressly favors the production of medical evidence in the form of written medical reports

• Live medical testimony at trial is strongly disfavored and is therefore rare.  It can be brought but only upon a party first making an application and then showing good cause^[i] 

• The filing of a medical report with the WCAB does not make it admissible.  The medical report is not received in evidence simply because it is filed^[ii]

• As a result of the SB 899 reforms, for injuries on or after 1/1/05, the parties are no longer permitted to simply go out and obtain a medical-legal opinion from a physician under Labor Code Sections 4060, 4061 or 4062.  Instead, the parties are expressly limited to obtaining medical-legal opinion and evidence either from a PQME (APQME) or AME.  All other medical opinions are specifically limited either to a Primary Treating Physician or Treating Physician^[iii]

• Most reports from treating physicians are going to get into evidence

• The WCAB will generally permit medical reports to come in to evidence but may accord them less weight or even no weight

• The reforms have restricted introduction of medical-legal evidence.

• Failure to make proper disclosures under Lab C 4628 may render the entire report inadmissible

• A medical report must be substantial evidence

• Substantial evidence is based upon reasonable medical probability^[iv]

• A medical opinion is not substantial evidence if it is based upon facts no longer germane, on inadequate medical histories or examinations, on incorrect legal theories, or on surmise, speculation, conjecture or guess^[v]

• A medical report is not substantial medical evidence unless it sets forth the reasoning behind the physician’s opinion, not merely his or her conclusions^[vi]

• The chief value of an expert’s testimony rests upon the material from which his or her opinion is fashioned and the reasoning by which he or she progresses from the material from which his or her opinion is fashioned and the reasoning  by which he or she progresses from the material to the conclusion, and does not lie in the mere expression of the conclusion; thus the opinion of an expert is no better than the reasons upon which it is based^[vii]

1.2          ELEMENTS OF A MEDICICAL REPORT

Please let us know whether you require any further records or other information other than what has been transmitted herein.  Please provide your written report, together with your billing item to the undersigned, in order to assure your prompt payment.  Thank you for your courtesy and cooperation herein.

Psychiatric Claims

Corey A. Ingber

SO WHAT DOES THIS MEAN?

• The DWC Medical Unit has not defined what they mean by “validity of panels.” Seemingly, this is limited to issues of selecting the correct medical specialty, the availability of the QME, problems with the ‘strike’ process, whether one party did or did not make a timely strike, multiple panel requests, replacement panels and the like, but we don’t know.  Would this also include issues of non-medical records, including depositions and sub-rosa DVD’s being sent to the QME?  I think not, but it is not entirely clear.

• For my part, I simply don’t want the DWC Medical Unit resolving these disputes, since they really can’t and they aren’t in that business anyway.  The issuance of timely panels is what we want.  In the past, we were seeing a significant number of QME Form 106 rejections simply because someone at the Medical Unit thought that a form was not properly completed or there did not exist the attached objection to the PTP or if there was one, it didn’t contain the magic words of the specific medical issues to which we were objecting.  This only promoted the institutional delays.  We also saw a lot of requests being rejected for the wrong reasons, but rejected nonetheless.

• I don’t see a flood-gate of problems here.  If we weigh the overall advantages to obtaining a timely QME panel vs. the time delays, which may result on a narrow, case-by-case basis, because of disputes and the WCAB calendar, I still like this policy more than I oppose it.  In other words, I want panels issued more than I want to wait 90-100 days before getting a panel issued. [and then after the panel is issued, 18 more days for the “strike” process to run its course, another 60 days for the PQME examination to occur and then another 30 days to get the report]  Also, on a practical level, it doesn’t do the applicant attorneys any good to have PQME examinations canceled “on demand.”  So, there is an incentive on both sides to try and resolve disputes or to prevent them from occurring.
  

• WILL THIS LEAD TO SOME MISCHIEF?  Maybe some.  A few attorneys may go ahead and request multiple QME panel specialties on every case, even when unwarranted and the DWC Medical Unit will simply issue the requested panels.  Or, in an orthopedic case, a few attorneys may be more emboldened to request a chiropractic panel as a matter of strategy.  It is here where you will need to develop a protocol for response.  But for the most part, I don’t see wide-spread problems, since the lawyers who don’t go out of their way to create them, won’t likely be tempted.   Of course the CAAA convention is this Thursday, and you know this will be a hot topic so stay tuned!

SO WHAT’S THE ADVICE HERE?

Start with prevention.  Try and establish communication with applicant’s attorney over the potential use of an AME/QME for a disputed medical issue, whether under Lab C 4060/4061 or 4062.  Try and agree on some things, like the specialty of the PQME in the event you can’t agree on an AME, whether an advocacy letter is agreed upon or a joint letter is preferred and what records, medical and non-medical, will be sent to the QME.  By getting those things out of the way early, you simply avoid the problems associated with the panel process.  But should these efforts fail…

• LOOKS LIKE A 3 -STEP PROCESS;

• STEP ONE:   Use the calendar as a tool with which to resolve the dispute with applicant’s counsel.  If we know that an objection will suspend the QME examination, then try and resolve the dispute before making the objection, since one you do so, the QME has no discretion not to cancel. And, benefit entitlement may depend upon the QME findings.  On a practical level, waiting a 100 or more days for a WCAB hearing and then not being assured we will even go to trial, is daunting reason enough to use the new policy as a leverage point and try and resolve the dispute with applicant’s attorney.  They are rarely inclined to want to delay their own cases.  And, even if you prevail on the dispute, you then have to re-set the PQME examination and therefore you may not have your medial report in hand for yet another 90 days, at a very minimum!

• STEP TWO:  If Step 1 fails, don’t wait until the QME panel issues and the appointment is made before raising your objection.  Go ahead and object BEFORE the panel issues.  Make an effort to try and get your objection and dispute to the WCAB before the panel issues, SO YOU AT LEAST GET ON CALENDAR BEFORE THE EXAMINATION. IF YOU GET A PANEL REQUEST FROM APPLICANT’S ATTORNEY AND THERE ARE FLAWS OR NON-COMPLIANCE PROBLEMS, INCLUDING SPECIALITY SELECTION, ISSUE AN OBJECTION AND FILE IT WITH THE WCAB.  THEN SEND A LETTER TO APPLICANT ATTORNEY ATTEMPTING TO RESOLVE THE DISPUTE.  IF YOU CAN’T OR THERE IS NO REPLY, FILE A DOR (EXPEDITED HEARING)

• STEP THREE:   IF THE PANEL ISSUES AND/OR THE APPOINTMENT IS MADE BEFORE YOU GET A WCAB CONFERENCE/HEARING DATE OR THE PROBLEMS ARISE AFTER THE APPONITMENT IS SCHEDULED, THEN SEND A WRITTEN OBJECTION TO THE PQME, THE PARTIES AND THE WCAB.  IF YOU CAN’T RESOLVE THE DISPUTED ISSUES WITH APPLICANT’S ATTORNEY, THEN YOU ALREADY HAVE THE WCAB DISPUTE PENDING; OR IF NO DOR HAS BEEN FILED, THEN FILE ONE AT THIS POINT. I believe the Labor Code permits an Expedited Hearing under Labor Code 5502(b) relating to “any other issues requiring an expedited hearing…”

One unintended consequence here is that the parties may be more inclined to avoid the PQME process and use AME’s. For many reasons beyond the scope of this memo, I would still contend that in most cases, the better strategy is to put up with the QME process issues rather than risk the case outcome in the hands of AME’s.

WCAB AFFIRMS DECISION OF 4/21/11 HOLDING THAT IF UNAUTHORIZED

TREATMENT IS OBTAINED OUTSIDE OF A VALIDLY ESTABLISHED AND PROPERLY NOTICED MPN, THEN THE RESULTING  TREATMENT REPORTS FROM THE NON-MPN PHYSICIANS ARE INADMISSBLE AND CANNOT BE RELIED UPON FOR AN AWARD OF BENEFITS

As we reported earlier, this WCAB En Banc decision had not yet been “cast in stone” as applicant’s attorney had, on 5/16/11, filed a petition for reconsideration and in response, on 7/14/11, the WCAB granted the petition.  Now, having reconsidered the arguments brought forth from the applicant, the WCAB has affirmed its earlier decision.

In further decision following reconsideration, the WCAB reflects that the impermissible securing of treatment outside of a validly established and properly noticed MPN, must by definition, involve a non-MPN physician, who cannot be deemed to be the PTP.  Therefore, the PTP in the MPN remains the PTP, even if the applicant otherwise decides          to treat outside of the MPN.  Also, the WCAB returns to the Tenet case, as supportive rationale for this decision.^[ii]   

Medical treatment reports from unauthorized, out-of-network physicians are deemed inadmissible, provided the conditions of valid MPN establishment and proper notices have been met by the defendant.  This is because the out-of-network doctor is not the PTP,^[iii] as defined under the statutes.

Remember, the limitation on admissibility here is to medical treatment reports made by a non-MPN physician in order to make findings for the intended purpose of determining the employee’s eligibility to receive compensation.  But, other reports from non-MPN physicians may remain admissible, including reports from UR physicians, subpoenaed treatment records, PQME’s and possibly others.

Comment:

The limits of this decision still pose some remaining concerns.  For one thing, the WCAB has been clear to maintain that it is only the treatment reports and diagnosis reports from non-MPN physicians, which are rendered inadmissible.  So, does this present a potential “door ajar” for further mischief?  Seemingly, the answer should be “no,” since it is quite evident that if the applicant goes out of network, the actual treating reports from the non-MPN doctors are inadmissible and that would include diagnosis, need for care, modalities, nature and scope of treatment, etc.  But…the WCAB states on page 5, “However, while medical treatment and diagnosis issues must be resolved within the MPN, disputes concerning temporary disability or permanent disability are to be resolved outside of the MPN using the medical-legal procedures of sections 4061 and 4062. Therefore, section 4616.6 does not prevent an applicant from disputing the determination of the MPN PTP on the issues of temporary and permanent disability under sections 4061 and 4062.”

It seems as if the door is still potentially open because this decision leaves some doubt about what kind of non-MPN reports could come in, if not for treatment and diagnosis.  Therefore is it implied that the applicant can go out of network and obtain a consult from a non-treating MPN physician on issues other than treatment and diagnosis. The response should be “no” if we follow the Labor Code, since those issues must go down the   4061/4062 track, requiring a timely objection to the PTP, who under this case, would have to be the MPN based PTP. But, if the applicant went out and obtained a medical      report at their own expense, out of network, finding the applicant had impairment, would this be admissible as a consulting report?  Or, what if applicant’s attorney simply issues a subpoena duces tecum for the records of their own out-of-network MPN?  Are these admissible?  This decision seems to imply that they might be.   Are these records admissible if sent to an MPN based PTP who reviews and comments upon those findings?  Again, we don’t know.  What happens if the applicant is evaluated by an MPN PTP, who learns that the applicant went out of network and that physician “wants” to review those records?  Are they not part of that record and hence would become potentially admissible under this decision?  Again, we don’t know.

If we take a look at Labor Code 4062, it provides that by following the QME process, that “no other medical evaluation shall be obtained?  But, what if the evaluation was “obtained” prior to this process being activated?  What if applicant’s attorney portrays the examination as something other than “an evaluation?”  We know the applicant cannot obtain a comprehensive medical evaluation under the statutes, but what about obtaining a medical report simply to determine the nature of the physical condition, whether the applicant’s physical complains connects between the body parts, so the analysis is neither for treatment or for diagnosis, but rather to connect the “body part” dots between multiple body part allegations arising from a single injury?  What about an applicant getting an evaluation on an emergency basis for pain?

It would appear that this decision essentially covers the treatment and diagnosis issues and therefore we would therefore take the position that any issue relating to TD, PD and apportionment, should fall exclusively under Labor Code 4061/4062 and thus, no reports   from out-of-network physicians should be admissible on any of these issues.

Stay tuned, since it is highly likely a writ of review will be filed within the next 45 days.  As I said before, this decision is still not yet “cast in stone.”

WCAB EN BANC DECISIONS:

By Corey Ingber^[i]

MESSELE V. PITCO FOODS

MEDICAL REPORTS FROM NON-MPN PHYSICIANS ARE

INADMISSIBLE AND MAY NOT BE RELIED UPON TO AWARD COMPENSATION

In a decision which can only be characterized as “stunning,” the WCAB has filed an En Banc Decision after Reconsideration in the case of Elayne Valdez v. Warehouse Demo Services, declaring that the medical reports of non-MPN physicians are neither admissible before the WCAB nor can they be relied upon either to award medical treatment or compensation, including TD and PD.

In a “nutshell,” this holding can be distilled to this:

• If the defendant has a validly established and properly noticed MPN^[2], then medical reports from any out-of-network or non-MPN physician are now inadmissible and may not be relied upon to support any WCAB  award either for medical treatment or compensation, including T.D.
• The defendants are not liable for the cost of the out-of-network medical treatment rendered by a non-MPN provider.
•  The defendants are not liable for the cost of any medical report from an out-of-network primary treating physician.  This would also include any charges for review of records, diagnostic tests, X-rays, MRI’s, laboratory work, etc., since they are not recoverable expenses under this decision.
• If the applicant goes outside a validly established and properly noticed MPN, the selected physician is not the PTP and this improper selection does not otherwise change the status of any prior MPN treating physician, who remains the PTP.
• This decision recognizes that the Labor Code currently provides the applicant with two important remedies within the MPN: (1) Free choice to any physician within the MPN; and (2) Second and third opinions from a physician within the MPN for issues relating to diagnosis or medical treatment, followed by Independent Medical Review (IMR).
•  Neither Labor Code Sections 4605 nor 5703(a) dealing with so-called “consulting, attending, or examining physicians” can be used to support or justify the admission into evidence of medical reports from non-MPN physicians^[3] who are treating impermissibly outside of the MPN

ANALYSIS BY COREY INGBER:

This decision looks like a potential “game changer” at least in the near short term.  For one thing, if we are getting reports, billings and liens from the notorious out-of-network treating physicians, the so-called sleep, pain and psychiatric “multi-specialty clinics” and the prolific self-procuring orthopedic and chiropractic physicians, then we know that if we have a validly established and noticed MPN, that:  (1) The medical reports and other offerings from these facilities are “out”; (2) We have no liability either for the costs of the treatment or for the expenses associated with the preparation of the medical reports; (3) These inadmissible medical reports cannot later be “shoehorned” into evidence under the guise of an examining, consulting or attending physician under Labor Code sections 4605 or 5703.   This is all good.

But, you should expect that once this decision is fully digested and studied by CAAA, they will surely come up with some creative strategies for launching potential “end runs” around and collateral attacks upon this case decision, since this has been the modus operandi since the very advent of SB 899 reforms.

WHAT TO EXPECT NOW:

Here is my take:

1. WHAT ABOUT THAT NOTICE TO EMPLOYEE POSTER?: Expect nearly every applicant attorney to now automatically demand a copy of the “Notice Poster” which as of October, 2010 was changed and amended by the DWC, to include additional language and some deletions from the prior notice poster.  (Labor Code section 3550).  For any employer who does not have the latest revised Notice to Employee Poster in a conspicuous place upon the date of injury, applicant attorneys will argue that the failure to post the updated notice is a defect, for which the penalty is the failure to control treatment from day one, following the industrial injury or notice of said injury.  THIS BECOMES A CRITICAL ELEMENT TO PERFECT MPN CONTROL. 
2. You now need to be very careful and respond to every demand from applicant attorneys asking for a copy of: 1) Notice Poster pursuant to Labor Code Section 3550; 2) Pre and post injury notices pursuant to CCR sections 9767.12; 3) The applicant’s right to pre-designate a personal physician per 8 CCR sections 9780-9783.  Remember, this decision was premised entirely upon the assumption that the employer has done everything right and that all notices were posted and provided timely.  If not, then all bets are off.
3.  Expect more attention now to the Second and Third opinion process and IMR related to medical treatment and diagnosis, and we may begin seeing applicant attorneys going down this route because if they prevail at the level of the Independent Medical Review, then applicant can seek the disputed treatment or the contested diagnostic service either within or outside of the MPN.^[4]Up until now, I don’t think I have even seen the IMR process initiated since its inception.
4.  PREPARING THE MPN DEFENSE “PACKAGE” Expect some direct attacks on the MPN and specifically the pre and post injury notices.  A good practice suggestion is the preparation of an MPN defense “package” which can be used to defend the MPN and which can be easily distributed to and used by your defense counsel.  This would include copies of the employee notice poster, the pre and post injury notices and a copy of the link or the link for the access to the MPN.  Also, copies of all employee notices and benefit letters, including the timely provision of benefits under Labor Code section 5402.  And of course, having the employer or the MPN witness who can testify to this process named and made available for hearing.
5. This decision should also impact how we deal with bills and liens and current reports from NON-MPN PHYSICIANS.  My opinion is that this decision is effective NOW for all pending cases and therefore since it goes to statutory interpretation, YOU SHOULD CONISDER TAKING THE POSITION THAT FOR ALL OPEN CASES, ANY REPORTS FROM NON-MPN PHYSICANS ARE INADMISSLBLE FOR ANY PURPOSE.  Again, this assumes you have a validly established and properly noticed MPN.  THIS CREATES ENORMOUS LITIGATION AND SETTLEMENT OPPPORTUNITES.

There are perhaps few other provisions of the SB 899 reforms, which have caused a wider level of confusion and misunderstanding, than the so-called 15% PD “bump up/bump down” provisions of the PD statute, which were grafted onto to Labor Code 4658, under the 2004 era reforms.

For starters, we know there is a problem with the timing of the employee notice provisions, because 4658(d)(2) is tied to the “permanent and stationary date” but the S.J.D.B. which contains another return to work notice provision, is linked to the end of T.D.  Ideally, if an applicant returns to work the same day he or she is permanent and stationary, then the issue is easy.  But, what happens when an injured worker never misses any time from work or returns to work at the end of TD, but is not permanent and stationary for another six months?

While this is not a major “issue of the day” I am getting a number of questions and voiced concerns about how to handle the notices and the time frames involved.

FROM WHEN DOES THE 60 DAYS RUN?

Both Labor Code Section 4658(d)(2) and 8 CCR 10117(b) specify that the service of the return to work offer, whether regular, modified or alternative, is due within 60 calendar days from the date the condition of an injured worker with permanent partial disability becomes permanent and stationary. 

• EXAMPLE No. 1:  Applicant is examined by an orthopedic PQME, Dr. Stretch, on 8/2/11.  The report is late but neither side objects so the report comes out on 9/28/11 and is received by the defendant on 10/3/11.  Dr. Stretch finds the applicant is permanent and stationary as of 8/2/11.  He also finds impairment for the back at 8% whole person. QUESTION:  Does the 60 days run from 8/2/11? If, so, even if we add 5 days for mailing, the return to work notice, under 4658(d)(2), would have to go out as of 10/7/11, which gives the defendant 4 days within which to comply with the statute. 

• Let us take the same example, but change the permanent and stationary date to a time retrospective.  So, the medical report of Dr. Stretch now deems the applicant was permanent and stationary from 4/1/11.  If we take a literal approach to the statute and its implementing regulation, then factually, there would be no way in which the defendant could timely issue its notice, since the 60 calendar days from the permanent and stationary date, long passed.  I know this sounds absurd, but no more so then getting a late medical report, declaring the applicant permanent and stationary months prior to its receipt by defendant.

• EXAMPLE NO. 2:  The parties decide to go to Dr. Armlong, the famous hand AME.  The examination is set for 7/6/11.  However, Dr. Armlong is a notoriously slow report writer, and he needs more time to reflect.  So, the report finally comes out on 10/31/11. (remember when using an AME, there is no 30 day report rule)  The parties finally receive the report the next day.  In his evaluation, Dr. Armlong declares the applicant was permanent and stationary on 7/6/11.  If we apply the statute and the regulations to their literal meaning, there is a functional impossibility for the defendant to comply, since the 60 days would have run as of 9/6/11.  This makes no sense and does not comport with the elements of due process.

• ADVICE:  It is my position that the 60 calendar days runs from “the time of receiving notice” that the applicant was permanent and stationary and not from the actual date upon which the applicant became permanent and stationary. To conclude otherwise, would lead to absurd and unfair results, not to mention a denial of due process by simple lack of notice.    In at least one WCAB Panel Decision, Ornelaz v. Albertsons Inc., the panel found that the 60 days commenced within 60 days of receiving notice of permanent and stationary status, plus 5 more days for mailing, under CCP 1013. ⁱ

• MORE ADVICE:  If you get a late medical report or a report where there has been a retrospective permanent and stationary date, you might want to include the date that you received the report and therefore notice, within your return to work offer, so you are making a good record.

IS THE UP AND DOWN STATUTE APPLICIABLE IF THE INJURY RESULTS IN NO LOST TIME?

• This subject may not come up often, but it does arise.  We have a worker who suffers an injury, obtains medical treatment, is not permanent and stationary but remains at work and therefore there is no period of TD.  When the applicant is finally declared permanent and stationary and there is PPD, does 4658(d)(2) apply?

• The law here is anything but settled.  We have a couple of WCAB Panel Decisions, which may lend some insights but they are hardly dispositive.  In Hisato Tsuchiya v. County of Los Angeles, Sheriff’s Department (ADJ2508984/VNO 0541888) the WCAB Panel held that 4658(d)(2) was not intended to apply, and hence no notice of return to work was required, when there had been not lost time following injury.  As they stated on page 2, “The provisions have no purpose if the employee is continuing to perform his or her regular work.  Accordingly, we interpret them as being applicable only when the employee is not working.”  In this case, the injured worker, a Deputy Sheriff, was found to have suffered injury to his heart and hypertension, resulting in PD at 49%, but he had missed no time from work.   Therefore, the case was remanded back to the WCAB, as the trial judge had applied the statute and permitted a 15% reduction in PD payments.  The Commissioners disagreed, concluding that notice was not required because the statute did not apply and therefore neither the 15% bump/up/down was operable unless there had been lost time.     In another WCAB Panel Decision, Audiss v. City of Rohnert Park (2007) 35 Cal. Workers’ Comp. Rrptr. 12, (cited in Tsuchiya on page 2). The employer made an untimely offer of regular/modified/alternative work, (beyond the 60 days) but since the applicant had missed no time from work, the WCAB Panel therefore concluded that continuation of the work was the substantial equivalent of having given notice.ⁱⁱ  This is probably a very big reach.

• ADVICE:   I see nothing in either 4658(d) (2) or 10117(b), which conditions the 15% up/down to whether or not the applicant missed time from work. There is no stated connection to TD found. Instead, the elements are:(1) 50 or more employees at time of policy inception, for a self-insured employer, at time of most recent filing of the Self Insurer’s Annual Report or for a legally uninsured employer, at the time of the injury; (2)  Applicant is permanent and stationary:  (3)  Applicant has permanent partial disability; THESE ARE THE ONLY ELEMENTS:  I see nothing which ties in having to miss time from work.  I therefore recommend taking the position that the 4658(d)(2) “up/down” applies when these conditions are met, regardless of whether there is time lost from work.  Also, I even question whether the WCAB must make a 15% up/down finding, since it appears that that this provision is already built into the statute governing PD.  I have further concerns that the failure to provide these notices may subject the claims administrator to potential DWC Audit Penalties.   I therefore recommend that the return to work notices go out even if the applicant has missed no time from work.  At least, you avoid a potential Audit Penalty and your rights are otherwise fully preserved.

Unfortunately, we have no published decisions on point, but stay tuned.

New laws that take effect 1-1-12ⁱ

• AB 228 – SCIF MAY INSURE TEMPORARY OUT-OF-STATE EMPLOYEES: Amends the California Insurance Code to authorize the State Compensation Insurance Fund (SCIF) to provide workers’ compensation coverage to a California employer, whose principal place of business is in California, for those California employees, temporarily working outside of California on a specific assignment, provided that SCIF insures the employer’s other employees who work within California.
• AB 335 – NEW NOTICES TO INJURED WORKERS AND BOOKLET: Requires the Division of Workers’ Compensation Administrative Director (AD) in consultation with the Commission on Health and Safety and Workers’ Compensation (CHSWC) to prescribe reasonable rules and regulations regarding notices to injured workers; requires AD in consultation with CHSWC, to prescribe and make accessible, a booklet written in plain language, about the overall workers’ compensation claims process and it making it available on the department’s Internet Web site. Requires notices to be written in “plain language.”
• AB 378 – COMPOUND DRUGS/OTHER DRUGS: This bill requires any “compounded drug product” as defined in 16 CCR 1735 to be billed by the pharmacy at the ingredient level, with each ingredient identified by using the applicable National Drug Code (NDC) of the ingredient and quantity thereof, in accordance with regulations adopted by the State Board of Pharmacy. Ingredients with no NDC shall not be separately reimbursable. Establishes set maximum reimbursement for a dangerous drug, dangerous device or other pharmacy goods, dispensed by a physician. This bill also amends existing law by adding pharmacy goods to the list of “medical goods” or services for which it is unlawful for a physician to refer to a person, if there is a financial conflict-of-interest.
• AB 397: LICENSED CONTRACTORS: Bill requires active contractor, upon renewal, with an exemption for workers’ compensation insurance on file, either to recertify the exemption or provide valid Certificate of Workers’ Compensation Insurance or Certificate of Self-Insurance. Also, permits retroactive license renewal upon showing of proper documentation.
• AB 585: EXTENSION OF CANCER PRESUMPTION: Extends the cancer presumption for active firefighters and peace officers under Labor Code 3212.1 to firefighters of a fire department serving NASA, provided there is adherence to the training standards under the Health and Safety Code.
• AB 1168: FEE SCHEDULE FOR VOCATIONAL EXPERTS: Adds Section 5307.7 to the Labor Code, and requires the AD to adopt regulations on or before 1/1/13, establishing a new fee schedule of hourly fees for vocational experts, including vocational evaluations and for testimony.
• AB 1426: COURT ADMINISTRATOR ABOLISHED: The position of the Court Administrator is eliminated and those former duties are now distributed to the WCAB and to the Administrative Director of the DWC. (This bill actually took effect by urgency in 2011). This bill amends Labor Code 5307 to exclude all references to the Court Administrator. But, all existing regulations of the Court Administrator remain, unless and until they are amended or repealed either by the WCAB or the AD.
• SB 459: MISCLASSIFICATION OF EMPLOYEES AS INDEPENDENT CONTRACTORS: Adds Section 226.8 to the Labor Code making it unlawful to misclassify an individual as an independent contractor; imposes civil penalties for violations.
• SB 826: DWC CAN ASSESS ADMINISTRATIVE PENALTY FOR VIOLATION OF DATA REPORTING REQUIREMENTS: This bill would require the DWC to impose administrative penalties, based upon a schedule, of no more than $5,000 against a Claims Administrator, in any single year, for a violation of the data reporting requirements. Also, requires the AD to publish an annual report, disclosing compliance rates of Claims Administrators.

Mileage Remains The Same

• Mileage for 1/1/12: Effective 7/1/11 the mileage rate is $.555 (55.5 cents) per mile, regardless of the date of injury and there is no change.
• According to the DWC Newsline No. 59-11, 12/16/11. ⁱⁱ
• No change for mileage rate for medical and medical-legal travel expenses in 2012
• The current mileage rate of 55.5¢ for medical and medical-legal travel expenses will remain unchanged in 2012. This rate must be paid for travel on or after Jan. 1, 2012 regardless of the date of injury.
• Labor Code section 4600, in conjunction with Government Code section 19820 and the Department of Personnel Administration regulations, establishes the rate payable for mileage reimbursement for medical and medical-legal expenses and ties it to the Internal Revenue Service (IRS) published mileage reimbursement rate.
• The latest announcement marks the first time since 2007 that claims administrators will not need to apply a new rate for travel on or after January 1. The mileage reimbursement form is posted on the Division of Workers’ Compensation Web site.

What about the COLAS?

COLA ADJUSTMENTS:

TTD: [Labor Code 4453(a)(10)]: For injuries on 1/1/07, and each January thereafter, COLA adjustment for 1/1/12 increased by 1.0241351% (2.4%) based upon the reported increase in the SAWW from to $979.90 to $1003.55. Therefore, the new maximum TD rate is $1,010.50 per week.

LIFE PENSION AND PTD: [Lab Code 4659(c)]: COLA APPLIES for injuries on or after 1/1/03, as life pension payments are increased annually effective 1/1/04 and each January thereafter. NOTE: The California Supreme Court Issued its decision on the “Duncan issue” in Baker v. WCAB (X.S.) 8/11/11 and has therefore clarified that the COLA provisions apply prospectively from the January 1st following the year in which the worker first becomes entitled to receive a life pension or total permanent disability indemnity, i.e., when the payments actually commence. Here, the high court rejected the previous “Duncan” holding in which potential retroactive COLA adjustments could apply to post 1/1/03 injuries so that in effect, someone with an injury in 2010, who became eligible for a life pension in 2015, could go back to 1/1/04 and have retroactive “COLA” adjustments made to date. Therefore, for 100% permanent disability cases, the COLA’s take effect on the January 1st following the date the injured worker reaches MMI/P & S status. As to life pensions from 70:0 to 99:0, the COLA’s take effect on the January 1st, following the date on which the partial permanent disability becomes exhausted and the life pension payments commence.

WCAB EN BANC DECISTIONS OF 2011

[En banc decisions are binding on all WCAB three member panels and upon all WCAB offices and are therefore citable authority until reversed by the WCAB or by an appellate court]

Some other notable decisions

CITY AND COUNTY OF SAN FRANCISCO v. WCAB (OGILVIE III): On 7/31/11, the First District Court of Appeal held that there are now three ways to “rebut” the PDRS. (From our Client Bulletin): [note, The Supreme Court declined review of this decision so this case law stands, for now]

• Method One: Presentation of evidence of a factual error in the application of the PDRS, a forumula or a component thereof of an error in the calcuation or application of the formula for the PD rating;
• Method Two: Presentation of evidence that the employee’s diminished future earning capacity is greater than the DFEC adjustment factor in the 2005 PDRS.
• Method Three: “In certain rare cases ⁱⁱⁱ” the scheduled DFEC component may be rebutted by showing that by the nature or severity of the claimant’s injury, the DFEC is not captured within the data used by RAND with their sampling of disabled workers.  Therefore, the schedule can be rebutted by showing the extent to which the injured worker’s actual PD has been aggravated by complications not considered within the RAND data sampling and therefore not provided for within the 2005 PDRS.^iv  Note: this may portend the return of the “vocational expert” which we are already seeing in some cases. 

CITY AND COUNTY OF SAN FRANCISCO v. WCAB: [(2011) 76 CCC 1088]: The 2 year TD Cap under Lab C 4656(c)(1), did not run from the payment of one day of wage loss to attend a PQME examination. This is a writ denied case, which is citable but not in the strength of a published opinion.

CONSTANZA v. HOLIDAY INN: [ADJ 389222/1530924]. Post Termination defense and CT Claims: This comes up often. You receive a new claim from an employee, who was terminated and they go out and file a claim of cumulative trauma after the date upon which they are terminated. Weren’t Labor Code Sections 3600(a)(10) and 3208.3(e) (psyche) supposed to have prevented this? The short answer, at least for CT claims, is not really. Here, the applicant was terminated from his job as a waiter. Two years before, he had a specific injury to his lower back and received care at Kaiser, but did not file a claim.  He filed a CT claim only after he was terminated.  The WCAB found there were  actually two exceptions to the post-termination defense; the first was the specific injury reflecting medical treatment existing prior to notice of termination and the other was the fact that the CT was filed after termination.  Here, once again we go back to the definition of a CT claim (Lab C 5412) which is the date upon which there is concurrent knowledge that the disability is work related.  Here, the concurrence of knowledge did not occur until after the notice of termination, so the CT exception was also applicable.  This was a writ denied case as reported in Work Comp Central.^v

PRACTICE SUGGESTIONS FOR THE NEW YEAR

• NON-MPN TREATMENT AND VALDEZ:

1. In light of Valdez, we strongly recommend that you secure copies of employer required MPN notices, the Labor Code 3550 notice poster, photographs at time of injury and designation of employer witness as to MPN issues, at the onset of your cases.  Assure your attorneys are also provided with the employer notices; photographs, name of employer MPN witness and authorization contacts.  Include a copy of all notices with all lien objections when the provider is not an MPN physician or the provider was a referral from a non-MPN physician.
2. Manage your medical costs further through prompt and timely UR. Also, be alert that some treatment decisions such as the treatment is “out of network”  or “parts of body disputed” are legal defenses and are therefore not UR based, so be on alert for RFA’s which may raise both UR and non-UR issues.

• CHRONIC PAIN:  IS THIS THE NEXT “WAVE” FROM TREATING PHYSICIANS?: The Chronic  Pain Medical Treatment Guidelines, under 8 CCR 9792.20-9792.26, went into effect 7/18/09 and consist of 127 pages of protocols and guides, which are part of the Medical Treatment Utilization Schedule under Lab C 5307.27 and hence are presumptively correct. Here is the link:  http://www.dir.ca.gov/dwc/DWCPropRegs/MTUS_Regulations/MTUS_ChronicPainMedicalTreatmentGuidelines.pdf    A common problem in extended treatment cases often involves the  unlimited and ongoing use of opioids (e.g. Hydrododone, Norco, Oxycodone, Oxycontin, Vicodin, etc.) for the treatment of a condition, for which there is no specific treatment plan addressing the protocols  for chronic pain.  Many doctors don’t even bother with a functional assessment which is the general “baseline” for assessing whether opoid use has resulted in some return to function.  Instead, some doctors will simply ignore the protocols and simply see the patient every 30 days and provide yet another prescription for an opioid or possibly a “pain cocktail.

This is a major problem which should be addressed with the PTP either through a 9785(f)(7) “request for information” letter demanded a reply, as well as through UR.  Also, it is my opinion that failing to consider these Guidelines, may raise issues beyond UR and may permit objections to medical care outside the scope of UR. [on the basis that the report is non-compliant and is therefore not substantive evidence]  Be sure to hold the treating physicians accountable to follow these guidelines. Don’t be afraid to notice the deposition of a recalcitrant PTP.

• REVIEWING A PQME REPORT:  Whether obtained under Lab C 4061.1 or Lab C 4062.2, the PQME reports are critical to the case.  When you receive a report, a first good “rule of thumb” is to immediately check the report to determine whether the physician actually received and then reviewed all of the forwarded exhibits and documents, including non-medical records, if applicable, which were transmitted to the physician, prior to the examination.  A practical problem is that some doctors will examine the applicant before they get around to reviewing records, so that the history as told by the applicant might go unchallenged, if the QME is unfamiliar with the prior records.  Another potential problem is when the QME simply “appends” the records to his/her report without making a single comment about those records or the summary contains information which is inconsistent with the histories but the doctor doesn’t reference this anywhere in the report)!  Next, you should check on apportionment. If the doctor did not “address apportionment to causation” then you can bet the report is probably flawed and it might not even constitute substantial medical evidence.  [Remember, a “late report” must be objected to before it is received or you waive the lateness –per 8 CCR 38] ^vi You should also carefully review the impairment discussion and determine whether the doctor is following the AMA Guides. Quite often, a PQME will write an essentially “fair” report overall but with flaws and errors, which can be used in a litigated case, to possibly negotiate a favorable resolution.
• APPORTIONMENT AND CAUSATION:  The failure to “address” apportionment, under Lab C 4663 and Escobedo rather than failing to find apportionment is the recurrent problem.  Unfortunately, many physicians still view apportionment through the “old” law of pre -SB 899 and will not find “factors of apportionment” unless they believe there was actual disability before the injury.  A “canned” sentence or two, setting forth apportionment is probably not sufficient here.  Every doctor should list “all factors” which caused the impairment, not simply the ones they believe stem from the industrial injury.  Also, some doctors confuse “factors” of apportionment with actual causation of an injury, which often occurs in a psyche case.
• 15% BUMP “UP AND DOWN”: As reported earlier in our Client Alert (10/11), the case law is still unsettled as to from what date does the 60 days to provide the offer to return to work run?  Does it run from the actual time the applicant was permanent and stationary?  As discussed previously in our Client Alert, a strict reading of the regulations, would lead to absurd results, especially when an AME or PQME finds the applicant was MMI/permanent and stationary months or even years before the evaluation, so that it would be functional impossibility to comply with the statute and regulations in a timely fashion as literally written.  As we have recommended previously, we take the position that the 60 days should run from the time the report was received and not upon the actual date the applicant was otherwise found permanent and stationary.  (One panel decision, Ornelez v. Albertertson’s Inc., supports this view –plus 5 days for mailing). 

We hope that 2012 is a healthy and happy year for you and your family.

Thanks

Corey

Almost one year ago, the voters in this state elected Governor Jerry Brown to serve his THIRD term as Governor of California.  This was after his prior stint as Governor from 1975-1983 – a gap of almost thirty years between service.  Since his re-election, businesses have been on edge wondering what type of anti-business measures he would sign into law.  The California Chamber of Commerce was also on edge and immediately started monitoring the laws that could be classified as “Job Killers.”  The Chamber did an excellent job opposing these identified bills and were successful on most counts.

At the start of the busy bill-signing cycle in October, 2011, the Governor appeared to have seen the light and was briefly characterized as being diplomatic in his approach to businesses – particularly in this economic climate.  He vetoed several of the laws that he reviewed first.  Most critics and the Chamber were pleased by the early victories.  However, towards the end of the cycle, Governor Brown did stay true to his roots and sign into law a few very terrible and expensive laws for employers that on one end, limits the ability of an employer to select a qualified candidate, and on the other end, increases the costs of doing business in this state.  This Jekyll & Hyde behavior should be a call to all California businesses to stay on guard throughout the legislative process.

The following are a sampling of provisions enacted by Governor Brown:

AB 22 – Mendoza (D-Artesia) – Credit Checks

California has now decided to follow a growing trend in other states by barring employers from obtaining credit reports during the application process for many job positions.  Currently, employers are required to inform the prospective employee that a credit check might be performed, and get written consent.  But now, thanks to AB 22, employers cannot obtain or use the credit reports of its prospective employees for many positions.

The new law prohibits employers from using a consumer credit report for “employment purposes” except for certain types of job classifications.  The positions for which a credit report can be obtained during the hiring process include:

•  a managerial position;
• a position for which credit information is required by law;
• a position that requires regular access to bank or credit card account information, social security numbers, and date of birth;
• a position in which the employee would be a signatory on the employer’s bank account, or authorized to transfer money on behalf of the employer, or authorized to enter into financial contracts on behalf of the employer;
• a position that involves access to confidential or proprietary information, including trade secrets;
• a position that involves regular access to cash totaling ten thousand dollars ($10,000) or more of the employer, a customer, or client, during the workday; or
• certain financial institutions.

When an employer does intend to obtain a credit report during the hiring process, the employer must inform the applicant of the specific reason the employer is obtaining the report, meaning the provision set forth above that applies to the position.  This new requirement is in addition to the other requirements already imposed on employers under the Fair Credit Reporting Act and other similar laws.

SB 299 – Evans (D – Santa Rosa) – Health Insurance Coverage for Pregnancy Disability Leaves

Currently, employers with 50 or more employees are subject to the federal Family & Medical Leave Act as well as California’s Family Rights Act.  Both laws require that a covered employer continue to provide health insurance coverage to employee who must take a leave of absence for a serious health condition.  The right to have continued health insurance coverage extended for a period of three months for certain employees who have 1250 hours and 12 months of service.  Employers who were not covered by FMLA/CFRA, but had employees who needed to take a pregnancy disability leave, were required to provide up to four months of leave – but were not required to continue health insurance coverage because the costs to employers was previously consider too burdensome to impose on the smaller business.  Now, this new law requires that companies with 5 or more employees (no tenure requirement) provide continued health insurance costs for up to four (4) months – longer than what is required by FMLA or CFRA.

The financial burden on smaller employers is blatantly evident.  Employers with just a handful of employees must continue to provide health insurance coverage during a PDL leave, when one was not required before.  My fear is that this will cause some smaller employers to reconsider providing health insurance at all to their employees.  Accordingly, effective January 1, 2012, employers will have to revise their leave policies.

SB 459 – Corbett (D – San Leandro) – Independent Contractor Misclassification

This bill has now created an entire administrative scheme and additional causes of action for companies that engage the services of individual independent contractors.  If the individual is subsequently found to have been improperly classified as an independent contractor and that individual should have been classified as an employee, the contracting entity may be fined anywhere from $5,000 to $25,000 for EACH violation!

This new law is going to be difficult to comply with as differing state agencies utilize differing determinations of who is an independent contractor.  I have not seen clear guidance yet, but it would be my recommendation to comply with all of the tests concerning determining independent contractor status, in particular, the 11-point test utilized by the California Labor Commissioner.  If in doubt, classify any individual contracting worker as employee.  By all means, seek legal advice if you have any individuals who are currently being 1099’d for work.

SB 272 – DeSaulnier (D – Concord) Organ Donor/Bone Marrow Leave of Absence

Last year SB 1304 was enacted with relatively little fanfare.  This law added sections 1508-1513 to the California Labor Code.  SB 1304 created an additional leave of absence for employees of private organizations which entitled that employee up to 30 days of leave to donate an organ, and up to 5 days for someone to donate bone marrow.  This new law brings renewed attention to this new law and clarifies that the 30 days are business days and not calendar days.  This new law also clarifies that the time off cannot be seen as a break in service for pay increases or the accrual of benefits, including vacation and seniority.

AB 469 – Swanson (D – Oakland) California Wage Theft Prevention Act

Among the flurry of bills Governor Jerry Brown signed recently, the Wage Theft Prevention Act of 2011 (“Act”) imposes new requirements on California employers.  One significant provision now requires employers to provide non-exempt employees with a written notice, at the time they are hired, of various compensation information and information on the company.

In particular, Labor Code Section 2810.5 (as of January 1, 2012) will require that at the time of hiring, an employer shall provide each employee a written notice, in the language the employer normally uses to communicate employment-related information to the employee, containing the following information:

1. The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime, as applicable.
2. Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances.
3. The regular payday designated by the employer in accordance with the requirements of this code.
4. The name of the employer, including any “doing business as” names used by the employer.
5. The physical address of the employer’s main office or principal place of business, and a mailing address, if different.
6. The telephone number of the employer.
7. The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.
8. Any other information the Labor Commissioner deems material and necessary.
9. The Labor Commissioner is in the process of preparing a template that complies with the above requirements and estimates that the template shall be made available to employers by mid-December.

If an employer changes any of the eight items, it shall notify the impacted employees in writing of any changes within seven calendar days after the time of the changes, unless all changes are reflected on a timely wage statement furnished in accordance with Section 226; or notice of all changes is provided in another writing required by law within seven days of the changes.

This “New Hire Statement” applies to private, non-exempt employees but does not apply to public employees; exempt employees; or employees who are covered by a valid collective bargaining agreement.

The Act also requires employers to maintain records itemized wage statements and records of deductions for three years.  The Act also dramatically strengthens certain penalties and the enforcement powers of the California Labor Commissioner.  One particular provision now allows the Labor Commissioner to collect penalties and fees for up to three (3) years whereas the prior limit was one (1) year.

AB 1369 – Assembly Committee on Labor & Employment – Written Commission Agreement

The new law requires all employers doing business in California to draft written contracts for any agreements with employees that involve commissions as a method of payment for services. Commission wages are defined as compensation paid to any person for services rendered in the sale of an employer’s property or services and based proportionately upon the amount or value thereof.

The deadline for employers to reduce all commission agreements to writing is January 1, 2013.  In addition to outlining the commission plan in writing, employers must provide a signed copy of the contract to every employee covered by the commission agreement and obtain a signed receipt for the contract from each employee.  There are no penalties associated with a violation of the new statute but presumably it could be a basis for suit under California’s Private Attorneys General Act (PAGA) and Unfair Competition Law.  Accordingly we recommend commencing with the implementation as soon as possible.

Other laws have gone into effect, and we will attempt to provide guidance on more as the impact on businesses become clearer.  In conclusion, the start of Governor Brown’s tenure does not bode well for California businesses.   It is important to stay diligent in any and all advocacy efforts and work with your local, state and federal Chambers of Commerce or industry associations to protect the interests of businesses.