Workers' Compensation

California: IBR Update and Lien Litigation Status

By David Bryan Leonard, Esq.

At the 22nd Annual DWC Educational Conference a terrific panel presented an update on the independent bill review (IBR) process and discussed the status of the constitutional legal challenge to the lien activation fee.[fn1] Of interest, while there appears to be some clarity of application and factors of ineligibility, there is low utilization of the IBR process.

The speakers—Associate Chief Judge Mark Fudem, Acting Chief Legal Counsel George Parisotto and DWC Medical Unit Nurse Consultant Katy Lind Evelyn, RN, MS—explained that in comparison to Independent Medical Review (IMR), IBR is a “lonely child”. In 2014, there were approximately 15,000 eligible IMR applications per month. In comparison, there were approximately 130 IBR applications per month. In short, IBR is not as active as IMR.

The speakers also discussed the prerequisites for filing an IBR request. IBR was designed to be a process to resolve disputes regarding the amounts paid for medical services in the workers’ compensation system. It only applies to medical services covered by the official fees. It does not apply to unscheduled services. Hence, if there is no official medical fee schedule for a service provided, is not subject to IBR. The IBR process can be initiated with electronic filings or paper. In either instance, a DWC form IBR-1 must be used.

[Publisher’s Note: Citations link to Bracketed citations link to Lexis Advance.]

The speakers summarized the work up required prior to the IBR process: Labor Code section 4603.2 [LC 4603.2] requires that when a bill is submitted, the payer has 45 days to issue payment. If the payer contests the billing, an explanation of review detailing the reasons for the dispute and the remedies available must issue. If the provider is not satisfied with the explanation, they may request a second review within 90 days of receipt of the first explanation. The payer then has 14 days to respond with a second explanation. If the provider still disagrees, the provider may request IBR pursuant to Labor Code section 4603.6 [LC 4603.6].

The IBR application should be indexed and organized to allow the DWC to easily assess the problem presented. Unorganized applications delay the IBR process. The application must be complete, signed and dated. It must include copies of the original itemized bill and supporting documents. The application should include the explanation of review, the request for second review and supporting documentation submitted with that request, and the final explanation of the second review. The application must include payment. The speakers noted that IBR costs have gone down. Initially it was $335 per application. Now, it is $250.

In some instances, a medical provider may request consolidation of IBR disputes. Consolidation may be allowed on cases involving multiple dates of medical treatment or medical-legal services if the requests involve one injured employee, one claims administrator, and one billing code under an applicable fee schedule or contract. Requests involving multiple billing codes may be consolidated with no limit on the total dollar amount if the request involves one injured employee, one claims administrator, and one date of medical treatment service. After consultation with the Administrative Director, the IBRO may allow the consolidation of requests of IBR by a single provider showing a possible pattern and practice of underpayment by a claims administrator for specific billing codes. A pattern or practice circumstance can involve multiple injured employees, one claim administrator, one billing code, one or multiple dates of service, and aggregated amounts in dispute up to $4,000.

Even with a completed IBR application, some requests may be found ineligible. Common reasons for ineligibility include late IBR requests, incomplete applications, disputes involving services that do not have a fee schedule, dates of services provided prior to the creation of IBR, and unauthorized contested services.

In reviewing the statistical outcome of the IBR process through July 7, 2014, the speakers observed that approximately 60% of the IBR appeals are resolved in the medical provider’s favor. Approximately 40% of IBR determinations find no additional payment owed. If an IBR appeal is successful, the medical provider is reimbursed for the cost of the IBR appeal.

The categories of services typically seen in IBR essentially reflect those found in the official medical fee schedule. These include physician services, hospital outpatient and ambulatory surgical centers, medical legal fee disputes, inpatient hospital services, pharmacy ambulance, pathology, clinical, and durable medical equipment.

The speakers provided some excellent IBR tips, e.g.:

> follow the billing regulations; bill only allowable amounts; obtain secondary review

> separate and label the types of documents submitted

> respond promptly when contacted regarding an IBR appeal

> use IBR determinations posted by the DWC as a learning tool to gauge future conduct

In limited circumstances, a party may appeal an IBR determination. A verified appeal must be submitted within 20 days. If an appeal is successful, the case will be returned for re-review by a different reviewer. Absent an appeal, all IBR determinations are final.

Moving on to the issue of liens, costs and expenses, Judge Fudem began with a discussion of the federal litigation in Angelotti Chiropractic v. Baker (US District Court— 8:13-cv-01139-GW-JEM). This case involved a constitutional challenge to the lien activation fees. It did not challenge the lien filing fees. Judge Fudem observed that as of November 19, 2013, a preliminary injunction enjoined the collection of the $100 activation fee and stopped implementation of the regulations (see 78 Cal. Comp. Cases 1218 [78 CCC 1218]). The case was heard by the Federal District Court on November 18, 2014. A decision by the court will issue any time. There are a number of potential outcomes. For instance, the injunction may be upheld until the final case is decided. The injunction could be overruled and the activation fee reinstated with a certain number of weeks for compliance. The case may be remanded for final determination on all issues. It remains to be seen how the court will rule.

Judge Fudem noted that under Labor Code section 4903 [LC 4903], there are nine types of liens:

1. Attorney fees

2. Medical treatment

3. Living expenses

4. Burial expenses

5. Spousal support

6. Child support

7. EDD unemployment

8. EDD family disability benefits

9. Victims of crimes indemnification

Unless subject to IBR, and with several exemptions, medical treatment, costs filed liens, and medical legal expenses must pay a lien filing fee. There are many costs that are not considered a lien. These include Labor Code section 5710 [LC 5710] deposition attorney fees, Labor Code section 5811 [LC 5811] litigation costs, and out-of-pocket expenses owed to the injured worker. It was explained that medical legal expenses are not considered costs outside of the lien requirement. Stated differently, petitions for costs are not permitted for medical legal expenses. A lien must be filed if IBR is not appropriate. Liens for medical treatment and medical legal costs must be filed electronically. The filing fee of $150 must be paid at the time the lien is filed. Failure to pay the filing fee renders the lien invalid and does not preserve any statute of limitations. This means that simply filing a lien without payment has no legal significance. Starting in 2013, liens must be filed within three years of the last date of service. For services after July 1, 2013, liens must be filed within 18 months last date of service.

Author’s comment: It is anticipated that there will be appeals raising legal issues regarding the IBR process. These legal issues will be outside the IBR process and will have to be decided by the WCAB and/or reviewing courts. In addition, there will probably be questions regarding the eligibility for IBR and the impact of noncompliance with initial medical bill management by medical providers and payers. These legal questions regarding the consequences for initial non-compliance will also have to be resolved outside of the IBR process.


1. At the outset, it must be noted that Judge Fudem shared his personal opinion. His discussion did not represent the interests of the Department of Industrial Relations or WCAB. Also, this author participated as an amicus attorney in the underlying federal litigation. The comments, structure and presentation of this article are for educational purposes only. They do not represent the position of any party. Furthermore, while not discussed in this article, other points may exist.

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