Louis Jones vs. Target Stores Constitution State Services,
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1 WORKERS' COMPENSATION APPEALS BOARD 2 STATE OF CALIFORNIA 3 Case No. 4 PAS 0040032 LOUIS JONES, 5 Applicant, 6 vs. 7 OPINION AND ORDER GRANTING RECONSIDERATION AND DECISION AFTER RECONSIDERATION TARGET STORES; CONSTITUTION STATE SERVICES, 8 Defendants. 9 10 Defendant employer seeks reconsideration of the Findings of Fact and 11 Order 12 Administrative Law Judge (WCJ) George C. Rothwell found that defendants 13 “are to pay to lien claimant Integrative Industrial [II] the sum of $666.16 14 which may be adjusted to reflect credit for any subsequent payments made 15 and/or any additional services rendered.” WCJ Rothwell found that II had 16 not violated Labor Code section 139.3 (§ 139.3), and therefore ordered 17 defendant to pay the lien claim in an adjusted amount. issued August 11, 1998, in which Workers’ Compensation 18 Defendant contends error, asserting that Dr. Peter Lucero, applicant’s 19 physician and a salaried staff physician employed by II, illegally referred 20 applicant for physical therapy (PT) to be performed at the same clinic where 21 Dr. Lucero was employed, by therapists who were also employees of II. 22 Defendant alleges that it has no duty to pay II”s lien claim for the PT it 23 provided because the referral was unlawful pursuant to § 139.3 and Labor 24 Code section 139.31(e) (§ 139.31(e)). 25 Based on the record, and for the reasons set forth below, we will grant 26 reconsideration, rescind the decision of August 11, 1998, and issue a 27 substitute decision finding that defendant is not liable for II’s lien claim. We 1 will also take this opportunity to note that § 139.31(e), as presently stated, 2 simply omits the word “shall” in the phrase referring to the need for 3 preauthorization. 4 I. 5 The facts disclose that applicant Louis Jones, a stocker born March 6 15, 1998, sustained an admitted industrial injury to his low back, left foot 7 and left leg on December 16, 1995. Defendant voluntarily provided benefits, 8 including medical treatment. Applicant subsequently selected Dr. Lucero of 9 the Integrative Industrial and Family Practice Medical Clinic (II) as his free- 10 choice primary treating physician. Dr. Lucero ordered PT for applicant, and 11 referred him to the therapists employed by II, his own employer. 12 On March 25, 1996, defendant wrote Dr. Lucero authorizing treatment 13 but requesting that it be contacted for authorization for referrals for PT, 14 diagnostic studies, and similar procedures. 15 raised the issue of § 139.3. 16 subsequent correspondence dated April 9, 1996, May 30, 1996, August 30, 17 1996, and September 18 qualifications 19 qualifications and curriculum vitae (CV). Defendant did not receive any 20 response(s) to these requests. of the In its letter, defendant first Defendant raised the same statutory issue in 24, 1996 and also requested people providing PT, as well the names and as Dr. Lucero’s 21 On November 13, 1996, defendant filed a Motion to Disallow II’s lien 22 claims in their entirety, and to strike II’s medical reports, based upon II’s 23 alleged failure to produce the requested information (see Lab. Code §4628 24 (e) (k); § 139.31(e)). 25 On November 16, 1996, a Mandatory Settlement Conference (MSC) 26 was held and the parties prepared 27 defendant again raised the issue of II’s alleged violation of both § 139.3 and Stipulations and Issues in which - 2 - 1 § 4628(k). The matter was continued on notice to the trial calendar, but 2 before the matter came up for trial, II partially complied with defendant’s 3 requests and served a copy of Dr Lucero’s CV on January 7, 1997. Dr. 4 Lucero’s CV noted that he held three physician positions (a full time 5 position at the L.A. Multi-Specialty Medical Center, a staff position at Th e 6 California Hospital Medical 7 Department of Social Services), 8 employment by II. II simultaneously served a request that the lien issues be 9 set for trial. Center, and a part-time position but it did not indicate at the Dr. Lucero’s 10 On January 30, 1997, pursuant to Stipulations With Request for Award 11 (SWRA) submitted by the parties, the parties resolved the principal issues in 12 this case and an Award issued which was approved by the WCJ. The Award 13 provided that applicant was entitled to future medical treatment pursuant to 14 Dr. Lucero’s opinion, but the SWRA deferred II’s lien claim of $3,879.74 for 15 medical-legal expenses, providing instead that defendant was to pay, adjust, 16 or litigate it in the future. A Lien Trial was scheduled for July 16, 1997, 17 before WCJ Rothwell. 18 At trial on July 16, 1997, the parties agreed to submit the issue of the 19 alleged violation of § 139.3 for decision on the record, with each party 20 having the opportunity to file 21 argument. 22 determined that Dr. Lucero’s referral of applicant to his employer for P T 23 was not in violation of § 139.3. It is from this ruling that defendant seeks 24 reconsideration. 25 After considering Points and Authorities and/or written both parties’ arguments, WCJ Rothwell II. 26 In his Report and Recommendation on Petition for Reconsideration 27 (Report), the WCJ indicates that the “crux of the dispute in this case is one - 3 - 1 of statutory interpretation of the provisions of [§§] 139.3 and 139.31.” 2 also points out that applicant received PT at II, both before and after 3 issuance of the Stipulated Award of January 30, 1997; that defendant has 4 consistently objected to this treatment, alleging it was obtained in violation 5 of § 139.3; and that defendant 6 substantial payments to II. nevertheless He appears to have made 7 Section 139.3 makes unlawful a physician’s referral to a person or 8 entity with which the physician has a financial interest, and states, in 9 pertinent part: 10 11 12 13 14 15 “(a) Notwithstanding any other provision of law, to the extent those services are paid pursuant to Division 4 (commencing with Section 3200), it is unlawful for a physician to refer a person for clinical laboratory, diagnostic nuclear medicine, radiation oncology, physical therapy, physical rehabilitation, psychometric testing, home infusion therapy, or diagnostic imaging goods or services whether for treatment or medicallegal purposes if the physician or his or her immediate family has a financial interest with the person or in the entity that receives the referral. 16 17 18 “(b) For purposes of this section and Section 139.31, the following shall apply: 19 .... 20 “(3) "Physician" means a physician as defined in Section 3209.3. 21 22 23 24 25 “(4) A "financial interest" includes, but is not limited to, any type of ownership, interest, debt, loan, lease, compensation, remuneration, discount, rebate, refund, dividend, distribution, subsidy, or other form of direct or indirect payment, whether in money or otherwise, between a licensee and a person or entity to whom the physician refers a person for a good or service specified in subdivision (a).... 26 27 “(5) A "physician's office" is either of the following: - 4 - 1 “(A) An office of a physician in solo practice. 2 “(B) An office in which the services or goods are personally provided by the physician or by employees in that office, or personally by independent contractors in that office, in accordance with other provisions of law. Employees and independent contractors shall be licensed or certified when that licensure or certification is required by law. 3 4 5 6 7 8 9 10 11 12 “(6) The "office of a group practice" is an office or offices in which two or more physicians are legally organized as a partnership, professional corporation, or not-for-profit corporation licensed according to subdivision (a) of Section 1204 of the Health and Safety Code for which all of the following are applicable: .... “(f) No insurer, self-insurer, or other payor shall pay a charge or lien for any good or service resulting from a referral in violation of this section.” (Emphases added.) 13 14 15 16 17 18 19 20 21 Exceptions to § 139.3 are set forth in § 139.31 which states, in pertinent part: “Section 139.31. The prohibition of Section 139.3 shall not apply to or restrict any of the following: ..... “(c)(1) A physician may refer a person to a health facility as defined in Section 1250 of the Health and Safety Code, ... if the recipient of the referral does not compensate the physician for the patient referral.... .... 22 23 24 25 26 27 “(c)(3) A physician may refer a person to a health facility for any service classified as an emergency under subdivision (a) or (b) of the Health and Safety Code. For nonemergency outpatient diagnostic imaging services performed with equipment for which, when new, has a commercial retail price of four hundred thousand dollars ($400,000) or more, the referring physician shall obtain a service preauthorization from the insurer, or self-insured employer. Any oral - 5 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 authorization shall be memorialized in writing within five business days. ... “(e) The prohibition of Section 139.3 shall not apply t o any service for a specific patient that is performed within, or goods that are supplied by, a physician's office, or the office of a group practice. Further, the provisions of Section 139.3 shall not alter, limit, o r expand a physician's ability to deliver, or to direct or supervise the delivery of, in-office goods or services according to the laws, rules, and regulations governing his or her scope of practice. With respect to diagnostic imaging services ... or for physical therapy services, ... the referring physician [] obtains a service preauthorization from the insurer or self-insured employer. Any oral authorization shall be memorialized in writing within five business days. “(f) The prohibition of Section 139.3 shall not apply where the physician is in a group practice as defined in Section 139.3 and refers a person for services specified in Section 139.3 to a multispecialty clinic, as defined in subdivision (l) of Section 1206 of the Health and Safety Code. For diagnostic imaging services[,] ... or physical therapy services, ... the referring physician shall obtain a service preauthorization from the insurer or self-insured employer. Any oral authorization shall be memorialized in writing within five business days. “(g) The requirement for preauthorization in sections (c), (e), and (f) shall not apply to a patient for which the physician or group accepts payment on a capitated risk basis. 20 The record discloses that Dr. Lucero testified he worked at II for a flat 21 salary which did not depend upon the number of people he treated or the 22 extent of the treatment he provided. Dr. Lucero further stated he was free to 23 refer patients to other medical groups for therapy when he felt it was 24 warranted. Because Dr. Lucero’s compensation did not depend upon the 25 number of patients he referred 26 received, the WCJ found there was no “quid pro quo” and therefore found no 27 violation of § 139.3. The WCJ further noted that the sole remaining issue is or the duration of the treatment they - 6 - 1 whether Dr. Lucero’s referral was statutorily authorized by the “physician’s 2 office” exception set forth in § 139.31(e). 3 We agree with the WCJ that the facts establish that Dr. Lucero did not 4 have a “financial interest” in referring patients for PT to II’s therapists, since 5 his salary (“compensation”) was independent of any such referrals. 6 agree that the present factual situation may come within the exception 7 described in § 139.31(e) which deals with a service being provided to a 8 specific patient within a physician’s office. 9 sentences of subsection (e), like the final two sentences of subsections (c) and 10 (f), require that the referring physician first obtain a preauthorization from 11 the insurer or self-insured employer, or in the case of an oral authorization, 12 that it be memorialized in writing within five days. 13 We also Furthermore, the final two In the present case, it appears that while the service may have been 14 performed 15 preauthorization was not obtained, which would thus preclude recovery. 16 Furthermore, because the II group does not appear to accept payment on a 17 capitated basis, § 139.31(g) is inapplicable to the present factual situation, but 18 it additionally evidences legislative intent to require the preauthorization 19 procedures set forth in subsections (c), (e), and (f). We finally note, however, 20 that the word “shall” appears simply to have been omitted in subsection (e) in 21 the phrase referring to the preauthorization requirement, and the word 22 “obtains” is erroneously substituted for “obtain.” This omission appears to be 23 a drafting error in subsection (e), since the plain language contained in 24 subsections (c) 25 preauthorization requirement. Accordingly, for purposes of a plain reading of 26 the statute, we are persuaded that the language of the preauthorization within the physician’s office, the condition precedent and (f) appears to be 27 - 7 - the correct phrasing for of a the 1 requirement set forth in subsections (c), (e), and (f) should be understood as 2 meaning that the referring physician “shall obtain” such preauthorization. 3 Given this record, and in light of II’s failure to obtain the requisite 4 statutory preauthorization for Dr. Lucero’s PT referral, and particularly in light 5 of the employer’s request for such preauthorization as well as its consistent 6 objection to the PT absent such preauthorization, we are persuaded that 7 defendant employer is not liable for II’s lien claim for PT. 8 will rescind the WCJ’s decision of August 11, 1998, and issue a substitute 9 decision 10 preauthorization pursuant to § 139.31(e). finding that II’s recovery Accordingly, w e is barred by its failure to obtain 11 For the foregoing reasons, 12 IT IS ORDERED that defendant employer’s Petition for Reconsideration 13 filed August 26, 1998 is GRANTED. 14 IT IS FURTHER ORDERED, as the Decision After Reconsideration of the 15 Workers’ Compensation Appeals Board, that the Finding of Fact and Order 16 issued August 11, 1998 is RESCINDED, and the following is SUBSTITUTED in 17 its place: 18 “FINDING OF FACT 19 “1. The physical therapy portion of the lien claim of Integrative 20 Industrial and Family Practice Medical Clinic, which provided physical therapy 21 to applicant pursuant to the referral of its staff physician, Dr. Peter Lucero, 22 without obtaining preauthorization for such therapy as set forth in Labor Code 23 section 139.31(e), is denied. 24 /// 25 /// 26 /// 27 /// - 8 - 1 "ORDER 2 "IT IS HEREBY ORDERED that lien claimant Integrative Industrial 3 Family Practive Medical Clinic shall take nothing further with respect to that 4 portion of its lien claim for physical therapy as set forth above." 5 WORKERS' COMPENSATION APPEALS BOARD 6 7 /s/ Richard P. Gannon______________________ 8 9 10 I CONCUR 11 12 /s/ Douglas M. Moore, Jr.___________ 13 14 /s/ Arlene N. Heath_________________ 15 16 17 18 19 20 DATED AND FILED IN SAN FRANCISCO, CALIFORNIA October 26, 1998 SERVICE BY MAIL ON SAID DATE TO ALL PARTIES LISTED ON THE OFFICIAL ADDRESS RECORD EXCEPT LIEN CLAIMANTS BUT SERVING LIEN CLAIMANT INTEGRATED INDUSTRIAL AND FAMILY MEDICAL CLINIC/DR. PETER LUCERO. csl 21 22 23 24 25 26 27 - 9 -
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