California Self-Procured Medical Treatment on Denied Injury: Valdez

Prior to 2004, it was not difficult for a medical provider who took a denied case to be paid its usual and customary fees when the claim was later admitted as industrially related. However, over time, and as illustrated in recent case law, getting paid usual and customary fees is not as clear-cut as it once was.

The case of CNA Ins. Cos. v. Workers' Compensation Appeals Bd. (Valdez), (1997) 62 Cal. Comp. Cas. (MB) 1145, 1146 (writ denied) held as follows:

“Additionally, the WCJ again concluded that when an employer or carrier disputes a claim of industrial injury and refuses for that reason to pay the charges of the treating physician, the OMFS is not applicable if the injury is later found to be compensable and the physician is entitled to payment of his or her reasonable, usual and customary charges”.

The Valdez case was not an “En Banc Decision” (a matter reassigned by the chairman on a majority vote of the commissioners to the Appeals Board as a whole in order to achieve uniformity of decision or in cases presenting novel issues). Nor was the Valdez case a “Significant Panel Decision” (cases that are identified for dissemination by the WCAB in order to address new or recurring issues of importance to the workers' compensation community).

However, the Valdez case was well reasoned and its findings are hard to dispute. The bases for awarding the Lien Claimants’ usual and customary fees when a case is denied and later admitted are two fold. First, it encourages medical providers to take the risk of not getting paid in treating an injured worker when the claim has been denied. Thus, the awarding of usual and customary fees ensures that the injured worker will be provided medical treatment while his claim is being determined. Secondly, it ensures that insurance carriers do not arbitrarily deny a claim without a good faith belief that the injury is non-industrial. The Valdez case sets up a deterrence for insurance carriers from denying claims without merit.

Therefore, the award of usual and customary fees in denied cases later determined compensable is one of the checks and balances that the Workers’ Compensation System has kept in place to ensure the injured worker receives medical treatment even when the claim is in question and the medical provider stands the risk of not being paid.

There have been no case law or statutes overturning the Valdez, case, yet one will find few judges enforcing usual and customary charges in denied cases later admitted. This may be attributed to the Kunz case [(2002) 67 Cal. Comp. Cas. (MB) 1588 (Appeals Board en banc)] and the Tapia case [(2008) 73 Cal. Comp. Cas. (MB) 1338 (Appeals Board en banc)] and the assertion that the fee schedule has been revised and updated to reflect reasonable fees. However, this does not take away from the rationale in Valdez, i.e., if the provider is taking the risk of not being paid, then the benefits of being paid if the claim is found compensable should be above the normal fees.

The Kunz case and the Tapia case both dealt with facts as to treatment prior to 2004 when no fee schedule existed for outpatient services. However, they did set the ground rules for how to prove usual and customary fees when one is asserting that the fee schedule is not applicable, not reasonable or when no fee schedule exists for a particular service.

Kunz v. Patterson Floor Coverings Inc. (2002) 67 Cal. Comp. Cas. (MB) 1588, 1598 held

“Although facility fees are not subject to the Official Medical Fee Schedule, any facility fee still must be ''reasonable.'' (Lab. Code, § 4600.) In determining the reasonableness of a facility fee (as with any medical treatment charge that is not subject to the Official Medical Fee Schedule), the Board may take into consideration a number of factors, including but not limited to the medical provider's usual fee, the usual fee of other medical providers in the geographical area in which the services were rendered, other aspects of the economics of the medical provider's practice that are relevant, and any unusual circumstances in the case. (See Gould v. Workers' Comp. Appeals Bd. (1992) 4 Cal.App.4th 1059, 1071 [6 Cal. Rptr. 2d 228] [57 Cal. Comp. Cases 157, 165].)

A case that was post Kunz but pre Tapia was San Mateo County Transit Dist. v. Workers' Compensation Appeals Bd. (2004) 69 Cal. Comp. Cas. (MB) 133, 134 (writ denied) in which the WCAB held:

“In their post-trial briefs, both Defendant and St. Mary's cited Southern California Edison C. v. W.C.A.B. (Wells) (1999) 65 Cal. Comp. Cas 100 (writ denied), in which the WCAB concluded that if the employer disputes the reasonableness of the medical charges, it must show proof of unreasonableness. The WCAB also concluded that the Official Medical Fee Schedule does not apply when an employer denies liability for a claim.”

In theory, the Valdez case stands for the proposition that the provider is entitled to her usual and customary charges, which would mean that Tapia would not apply.

Therefore, as long as the provider bills the same for workers’ comp patients as they do for private insurance or anybody else, then the provider should be paid its billed charges.

However, in factual settings, the medical provider must, according to Tapia, prove up its usual and customary charges.

Tapia v. Workers' Comp. Appeals Bd. (2008) 73 Cal. Comp. Cas. (MB) 1338, 1340; held

“We hold that, consistent with Kunz: (1) an outpatient surgery center lien claimant (or any medical lien claimant) has the burden of proving that its charges are reasonable; (2) the outpatient surgery center lien claimant's billing, by itself, does not establish that the claimed fee is ''reasonable''; therefore, even in the absence of rebuttal evidence, the lien need not be allowed in full if it is unreasonable on its face; and (3) any evidence relevant to reasonableness may be offered to support or rebut the lien; therefore, evidence is not limited to the fees accepted by other outpatient surgery centers in the same geographic area for the services provided.”

Therefore, when a medical provider asserts that he or she is entitled to usual and customary fees under the Valdez decision, the provider has to address the Kunz case and the Tapia case and prove up its case as to what usual and customary is for their services.

The medical provider has the burden to show what its usual and customary fees are. At present this is proving very difficult for many providers.

In these writer opinions, the Valdez case has not been adequately tested in the Courts in order to realize the logic set forth in its decision. Nevertheless, Valdez is still good law and good legal logic that medical providers should use to assert their usual and customary fees.

   This blog post was written by Reid Steinfeld, Esq., and Richard Boggan, J.D.