Appeals Board Clarifies Medical-Legal Lien Burden of Proof

The Workers’ Compensation Appeals Board (WCAB) issued a unanimous en banc decision on November 14, 2019 clarifying what the initial burden of proof is for a medical-legal lien claimant and what are defendant’s obligations in review of medical-legal bills.

In Ashley Colamonico v. Secure Transportation (ADJ9542328), Med-Legal Photocopy Service (Med-Legal) served several subpoenas and copied records between July 25, 2014 and March 19, 2015 at the request of Ms. Colamonico’s attorney. Med-Legal transmitted numerous invoices for these services to defendant and defendant issued Explanations of Review (EOR) between August 22, 2018 and August 25, 2018 in which it denied payment of the bills.

Following a trial on Medical-Legal bills , the Workers’ Compensation Judge (WCJ) ruled that defendant waived all objections to the unpaid portion of the charges from Med-Legal, that the lien claimant was entitled to reimbursement of the unpaid charges, plus penalties and interest on that amount, as well as penalties and interest on the charges which were paid in full, but not within 60 days of receipt of the invoices.

In its Petition for Reconsideration, defendant asserted that under the pertinent code sections, Labor Code §§4620 or 4621, it could not be held to have waived objections to the charges. Further, Med-Legal was not entitled to the unpaid portions of its bills or penalties and interest, because it had not proven that the charges were reasonable and necessary at the time that they were incurred.

The WCAB held that:

  1. A medical-legal provider has the initial burden of proving that a contested claim existed at the time the expenses were incurred; that the expenses were incurred for the purpose of proving or disproving a contested claim pursuant to Labor Code §4620; and, that medical-legal services were reasonably, actually, and necessarily incurred pursuant to §4621(a).
  2. Per §4622 defendant does not waive any objection that is based on §§4620 or 4621 by failing to raise the objections in an Explanation of Review.
  3. Once these elements are met, the lien claimant may then assert the reasonable value of its charges in accordance with §4622.

The Appeals Board found that the WCJ failed to adhere to both §4622 and WCAB Rule 10451.1(f)(1)(A), which provides that a defendant “shall be deemed to have finally waived all objections to a medical-legal provider’s billing, other than compliance with Labor Code sections 4620 and 4621” if it does not properly respond to the charges. Therefore, the defendant may raise the issue of reasonableness and necessity of medical-legal charges for the first time at a WCAB Lien Conference, even if the objection was not previously raised in an EOR.

However, the court cautioned that failing to communicate these objections in an EOR in advance of the Lien Conference could result in the potential for retroactive penalties and interest as outlined in §4622(a), and may be considered to be bad faith tactics.

The case was remanded to the trial level to determine whether Med-Legal met its burden of demonstrating that the charges were reasonable and necessary.

The Colamonico case clarifies that the medical-legal provider has the burden of proving that its charges were reasonable and necessary to prove a contested claim before asserting the reasonable value of its charges. Objection to the reasonableness and necessity of these charges is not waived if the defendant does not assert the objection in an EOR within 60 days of receipt of the invoice, and may be raised for the first time at a Lien Conference. However, the defendant is better served by communicating its objection to medical-legal charges in an EOR in advance of a Lien Conference to avoid possible exposure to penalties and interest and the allegation of bad faith tactics.

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November 20, 2019