In Murphy v. Petsmart, Inc., 2015 Cal. Wrk. Comp. P.D. LEXIS --, a split panel WCAB rescinded the WCJ’s order awarding a maximum 25 percent penalty under Labor Code § 5814 for the defendant’s delay in providing dental treatment to an applicant cashier who suffered an industrial injury to her right foot and psyche, and held instead that the defendant did not act unreasonably when it refused to make an advance payment of $25,600 to the applicant’s treating physician, Dr. Evans, for oral surgery and dental implants approximately seven months after the proposed dental treatment was requested and approved by the defendant’s utilization review (UR).
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The WCAB determined that although Dr. Evans specifically asked for pre-payment as part of his request for treatment authorization and also insisted that pre-payment for the requested treatment was customary due to the high overhead in his office, the defendant had no legal obligation to pay for the applicant’s dental treatment in advance pursuant to Labor Code § 4603.2(b)(2) [LC 4603.2], which provides that payment for medical services must be made within 45 days after medical services have been rendered. The WCAB also determined, based on the provisions in Labor Code § 4603.2(b)(2), that the defendant legitimately had a genuine doubt as to its liability for the advance payment of medical or dental charges.
The WCAB reasoned that the defendant’s UR did not authorize pre-payment for treatment, as UR specifically addressed the medical necessity of a proposed treatment pursuant to Labor Code § 4610(a) [LC 4610] and did not expressly approve payment of any sum of money to Dr. Evans or mention advance payment. The WCAB further reasoned that a UR approval could not be construed as an agreement with respect to anything other than the medical necessity of treatment without a more explicit agreement. The WCAB accordingly concluded that the defendant maintained its rights with regard to the amounts billed and the manner of payment, as governed by Labor Code §§ 4603.2 and 4610, and that the defendant did not act unreasonably.
Commissioner Sweeney, dissenting from the majority panel opinion, believed that a penalty under Labor Code § 5814 [LC 5814] was justified under the specific factual scenario presented in this case. While agreeing with the majority that it is generally reasonable for a defendant to withhold payment until after an applicant’s medical services are rendered pursuant to Labor Code § 4603.2, Commissioner Sweeney agreed with the WCJ that the defendant in effect agreed to Dr. Evans’ billing terms when it approved the suggested treatment without communicating until almost five months later that it did not approve the stated payment requirements. Commissioner Sweeney also agreed with the WCJ that the defendant’s failure to promptly clarify its position on prepayment deprived the applicant of necessary medical treatment for almost seven months. However, while Commissioner Sweeney agreed that these facts justified the penalty, she would nevertheless have returned the matter to the WCJ to perform an analysis of the factors set forth in Ramirez v. Drive Financial Services (2008) 73 Cal. Comp. Cases 1324 [73 CCC 1324] (Appeals Board en banc opinion), in order to determine the proper amount of the penalty and to explain the basis for his penalty calculation.
COMMENTARY BY ROBERT G. RASSP, ESQ.:
The WCAB made it clear in this opinion that the utilization review process under Labor Code section 4610 is strictly limited to a determination of whether or not a request for authorization for medical treatment is reasonable and medically necessary under the medical treatment utilization schedule. The UR process has nothing to do with payment for medically necessary treatment. The WCAB panel makes it clear that payment for treatment, in this case dental implants, are also subject to Labor Code section 4603.2 wherein payment for authorized treatment must be made within 45 days from the date the treatment was “provided.” Here, Applicant sought and received a penalty for what she thought was an unreasonable delay of treatment due to the disagreement between the defendant and Dr. Evans over pre-payment for his services.
This case reflects the friction caused by a dental office’s policy to receive payment on the date of service and the Labor Code that says payment for authorized medical treatment shall be made within 45 days of the date of service. Here, the Defendant in good faith made a pre-payment for the dentist’s services but the RFA had been received by the Defendant on July 11, 2012 and the pre-payment was dated February 4, 2013, almost six months later. Despite this delay, the WCAB panel reversed the WCJ award of penalties under Labor Code section 5814 since the delay of dental services was caused by the doctor and the Defendant had a genuine doubt about its liability to make a pre-payment for treatment since the Labor Code, including Sections 4610 (the UR process) and 4603.2 (payment within 45 days of providing treatment) does not require or allow for pre-payment for dental or any other medical services.
COMMENTARY — ANOTHER PERSPECTIVE:
One of the fundamental purposes of the California Workers' Compensation System is to guarantee not only meaningful medical treatment but also prompt medical treatment. In fact, Labor Code section 4600 [LC 4600] provides: “Medical … treatment … shall be provided by the employer.” The duty to provide care is not limited to simply paying for the medical treatment after the treatment has been provided. The obligation to provide medical treatment is an affirmative obligation to make sure that an injured worker timely receives the care that he or she is entitled to.
Indeed, the legislature not only intended that UR would be used for ensuring that quality, standardized medical care would be provided to injured workers, but also that timely care would be provided to injured workers. That is the very reason UR involves such short and strict timeframes. Much the same can be said for the Independent Medical Review (IMR) process. The mandatory deadlines provided for both UR and IMR are intended to facilitate the prompt, expeditious resolution of the employee's request for medical treatment.
In Murphy, the oral surgeon recommended a major oral surgery on July 5, 2012. UR approved the surgery on July 19, 2012. From this point in the case, it took over seven months for applicant to be able to proceed with his surgery. The majority opined that the defendant did not act unreasonably because there was no obligation to pay for the surgery in advance (citing Labor Code section 4603.2(b)(2)). However, as pointed out by the dissent, defendant approved the treatment in the face of the requirement for pre-payment and then, after authorizing the treatment, did nothing to clarify the pre-payment requirement with the doctor for months. It was not until approximately five months after the authorization of the treatment that defendant even informed the surgeon that pre-payment was not the standard in workers’ compensation.
In this day of UR, IMR and fee schedules, unless the commissioners start placing more emphasis on the employer’s affirmative duty to provide timely medical care, the types of delays experienced in Murphy are going to become commonplace.
Read the Murphy noteworthy panel decision.
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