Scott Kunz vs. Patterson Floor Covering, Inc.; and Golden Eagle Insurance Co.

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WORKERS’ COMPENSATION APPEALS BOARD 1 STATE OF CALIFORNIA 2 3 SCOTT KUNZ, 4 Case No. SJO 0224503 5 Applicant, 6 vs. 7 PATTERSON FLOOR COVERINGS, INC.; and GOLDEN EAGLE INSURANCE CO. 8 OPINION AND DECISION AFTER RECONSIDERATION (EN BANC) Defendants. 9 10 11 On October 22, 2002, the Board granted reconsideration of the Findings and Order issued 12 on August 9, 2002, in order to further study the factual and legal issues raised in the petition filed 13 by lien claimant, Alpine Surgery Centers, LP, dba Silicon Valley Surgery Center (“Alpine”), an 14 outpatient surgical facility. 15 In the August 9, 2002 decision, the workers’ compensation administrative law judge 16 (“WCJ”) found that applicant, Scott Kunz, sustained industrial injury to his left knee on February 17 3, 2000, while employed as a carpet installer by Patterson Floor Coverings, Inc., the insured of 18 Golden Eagle Insurance Company (“Golden Eagle”). The WCJ, however, disallowed Alpine’s 19 lien claim in the amount of $7,902.00, which represented the balance of Alpine’s “facility fee” bill 20 relating to applicant’s April 4, 2001 left knee surgery, after Golden Eagle had paid $1,810.00 on 21 the bill, as recommended by a bill review service. In disallowing the lien, the WCJ stated, among 22 other things, “there has been absolutely no medical evidence offered, and no testimony presented, 23 to establish that the knee surgery … was reasonably required to cure or relieve from the effects of 24 the industrial injury.”1 25 26 27 1 Restitution of the previously paid $1,810.00 was neither requested nor ordered. 1 In its petition for reconsideration, Alpine contended in substance: (1) under Labor Code 2 section 4603.2,2 if a defendant objects to any portion of a medical treatment bill, it must advise the 3 medical provider of the items being contested and the reasons for contesting these items, and, if a 4 bill reviewer does not recommend payment as billed, the bill reviewer must provide “a specific 5 explanation as to why the reviewer altered the procedure code or amount billed and the specific 6 deficiency in the billing or documentation that caused the reviewer to conclude that the altered 7 procedure code or amount recommended for payment more accurately represents the service 8 performed;” (2) in determining a medical treatment lien claim, the Board is limited to resolving 9 the specific objections made to the billing by the defendant and, here, Golden Eagle did not object 10 to Alpine’s charges on the basis that the April 4, 2001 left knee surgery was not medically 11 required; (3) at trial, Golden Eagle failed to rebut the testimony Alpine offered regarding the 12 appropriateness of the billing in this case; and (4) outpatient surgery centers are not subject to the 13 Official Medical Fee Schedule, and facility fees for such centers are reasonable if they do not 14 exceed the center’s usual and customary charges and are consistent with the charges of similarly 15 situated providers in the same geographic area. 16 Golden Eagle filed an answer to Alpine’s petition for reconsideration. 17 Because of the important legal issues presented, and in order to secure uniformity of 18 decision in the future, the Chairman of the Board, upon a majority vote of its members, has 19 reassigned this case to the Board as a whole for an en banc decision. (Lab. Code, §115.)3 Based 20 on our review of the relevant statutes, regulations, and case law, we conclude: 21 (1) under section 4603.2, a defendant’s failure to specifically object to a medical treatment 22 lien claim on the basis of reasonable medical necessity (or on any other basis) does not 23 effect a waiver of that objection; 24 25 2 26 3 27 All further statutory references are to the Labor Code, unless otherwise noted. The Board’s en banc decisions are binding precedent on all Board panels and WCJs. (Gee v. Workers’ Compensation Appeals Bd. (2002) 96 Cal.App.4th 1418, 1425, fn. 6 [67 Cal.Comp.Cases 236, 239, fn. 6]; WCAB/DWC Policy & Procedure Manual, Index No. 6.16.1.) KUNZ, Scott 2 1 (2) the provisions of section 4603.2 do not apply unless the prerequisites to the section’s 2 application have been met, i.e., the medical treatment in question must have been 3 “provided or authorized by the treating physician selected by the employee or 4 designated by the employer [pursuant to section 4600]” and the medical provider’s 5 billing to the defendant must have been “properly documented” with an “itemized 6 billing, together with any required reports and any written authorization for services that 7 may have been received;” (3) the Official Medical Fee Schedule applies to medical services provided, referred or 8 prescribed by “physicians” at an outpatient surgical facility; 9 (4) the Official Medical Fee Schedule generally does not apply to outpatient surgery facility 10 fees, however, such fees nevertheless must be “reasonable;” and 11 12 (5) in determining the reasonableness of an outpatient surgery facility fee, the Board may 13 take into consideration a number of factors, including but not limited to the following: 14 the medical provider’s usual fee and the usual fee of other medical providers in the 15 same geographical area, which means the fee usually accepted, not the fee usually 16 charged; the fee the outpatient surgery center usually accepts for the same or similar 17 services (both in a workers’ compensation context and in a non-workers’ compensation 18 context, including contractually negotiated fees); and the fee usually accepted by other 19 providers in the same geographical area (including in-patient providers). BACKGROUND 20 21 Applicant sustained an admitted left knee injury on February 3, 2000. 22 On April 4, 2001, applicant had left knee surgery, performed by Michael Butcher, M.D., at 23 Alpine’s outpatient surgery center. Alpine billed for a total of $9,712.00 for three procedures, i.e., 24 (1) $4,856.00 for a knee arthroscopy - lateral and medial menisectomies (CPT Code 29880), 25 (2) $2,428.00 for a chondroplasty (debridement) knee arthroscopy (CPT Code 29877), and 26 (3) $2,428.00 for a knee synovectomy (CPT Code 29876).4 27 4 The “CPT” codes are the Current Procedural Terminology codes of the American Medical Association. KUNZ, Scott 3 At some time not established by the present record, Alpine submitted its billing to Golden 1 2 Eagle. Thereafter, Golden Eagle sent Alpine’s billing to a bill review service. 3 In a written 4 “explanation of review” statement served on Alpine, the bill review service allowed a payment of 5 $1,810.00 for the first procedure, which, it asserted, was the usual, customary and reasonable rate 6 in Alpine’s geographic area. The bill review service did not allow any payment for the other two 7 procedures, stating that they were being “denied according to the surgical record.” The bill review 8 service then issued a check to Alpine in the amount of $1,810.00. On January 17, 2002, Alpine filed a lien for the $7,902.00 balance of its billing and, on 9 10 February 13, 2002, it filed a declaration of readiness to proceed to trial on the generic issue of its 11 “lien.” 12 13 A mandatory settlement conference (“MSC”) took place on April 25, 2002. At the MSC, Alpine and defendant generically placed the “lien” in issue. 14 At the June 25, 2002 trial, the issues framed were, in essence: (1) liability for the lien of 15 $7,902.00, representing the difference between the amount billed by Alpine and the amount 16 allowed by the bill review service; (2) section 4603.2 penalties and interest to Alpine; and (3) a 17 section 5814 penalty to applicant. The parties placed in evidence Alpine’s $9,712.00 billing, Dr. 18 Butcher’s operative report (but no other medical reports), the bill review explanation, a copy of the 19 $1,810.00 check paid, a U.S. Department of Labor report (apparently, to show that labor costs in 20 Alpine’s geographic area are high), and some pages of CPT codes. Also, Alpine presented the 21 testimony of Steven F. Kanter, M.D., a “managing principal” at Alpine. 22 Dr. Kanter testified, in substance, that Alpine prepares a bill based on the procedures 23 specified in the operative report, that the three billing codes used here involve different parts of the 24 anatomy of the knee, that the fees charged here were those usually charged by Alpine, and that the 25 fees charged were less than those generally charged by other providers in the same geographic area. 26 He also stated that it was customary for providers to charge for secondary surgical procedures, but 27 to reduce the charges for the secondary procedures by 50-percent. KUNZ, Scott 4 1 On August 9, 2002, the WCJ issued his decision finding that Alpine had failed to establish 2 a prima facie case of entitlement to reimbursement and disallowing the lien. As noted above, the 3 WCJ’s Opinion recited, among other things, that “there has been absolutely no medical evidence 4 offered, and no testimony presented, to establish that the knee surgery … was reasonably required 5 to cure or relieve from the effects of the industrial injury.” 6 DISCUSSION 7 I. Where Section 4603.2 Applies, A Defendant’s Failure To Timely Make Specific Objections To A Medical Treatment Billing Does Not Result In The Waiver Of The Objections. 8 9 10 We will first consider whether the WCJ properly disallowed Alpine’s lien on the basis that it failed to present medical evidence to establish that the knee surgery was reasonably required. 11 Where a lien claimant (rather than the injured employee) is litigating the issue of 12 entitlement to payment for industrially-related medical treatment, the lien claimant stands in the 13 shoes of the injured employee and the lien claimant must prove by preponderance of the evidence 14 all of the elements necessary to the establishment of its lien. (Lab. Code, §§3202.5, 5705; Kaiser 15 Foundation Hospitals v. Workers’ Comp. Appeals Bd. (Martin) (1985) 39 Cal.3d 57, 67 [50 16 Cal.Comp.Cases 411, 418]; Industrial Indemnity Co. v. Industrial Acc. Com. (Lohnes) (1935) 2 17 Cal.2d 397, 404-409 [20 IAC 311, 313-317]; Hand Rehabilitation Center v. Workers’ Comp. 18 Appeals Bd. (Obernier) (1995) 34 Cal.App.4th 1204, 1210 [60 Cal.Comp.Cases 289, 291-292]; 19 Beverly Hills Multispecialty Group v. Workers’ Comp. Appeals Bd. (Pinkney) (1994) 26 20 Cal.App.4th 789, 801 [59 Cal.Comp.Cases 461, 469-470].) 21 Alpine essentially contends, however: (1) Golden Eagle had an obligation under section 22 4603.2 to timely and specifically state all of its objections to Alpine’s lien, including any 23 objection that applicant’s knee surgery was not reasonably required; and (2) because Golden Eagle 24 allegedly failed to object on the basis of reasonable medical necessity, it waived this objection 25 and, therefore, Alpine had no burden to come forward with any proof regarding this issue. 26 27 KUNZ, Scott 5 1 We conclude that a defendant’s failure to specifically object to a lien on the basis of 2 reasonable medical necessity (or on any other basis) does not result in a waiver of that objection 3 under section 4603.2. It is true that section 4603.2(b)(2) requires a defendant to advise the 4 medical provider “of the items being contested [and] the reasons for contesting these items.” (Lab. 5 Code, §4603.2(b)(2) (emphasis added).) Yet, nothing in section 4603.2 states or implies that the 6 consequence of a defendant’s failure to make any particular specific objection is that the 7 defendant is thereafter precluded from raising that objection, or that the lien claimant is relieved 8 of any portion of its obligation to prove by preponderance of the evidence all of the elements 9 necessary to the establishment of its lien. To the contrary, the only potential consequences of a 10 defendant’s failure to timely state any given specific objection under section 4603.2 are: (1) the 11 defendant may become liable for a ten-percent penalty and/or interest, accrued from the date the 12 defendant received the lien claimant’s bill, on the unpaid balance of the lien allowed by the Board 13 (Lab. Code, §4603.2(b); Boehm & Associates v. Workers’ Comp. Appeals Bd. (Lopez) (1999) 76 14 Cal.App.4th 513 [64 Cal.Comp.Cases 1350]); and (2) the defendant may become liable for a 15 section 5814 penalty to the applicant, if the defendant’s failure to object and pay is unreasonable. 16 (Lab. Code, §4603.2(b).)5 17 defendant will timely raise all specific objections, including (where appropriate) an objection that 18 the treatment rendered was not reasonably required to cure relieve the effects of an industrial 19 injury. (See, Lab. Code, §4600.) However, a defendant does not forever waive any specific 20 objection(s) it does not make. 21 /// 22 /// 23 /// 24 /// 25 /// Because these potential consequences can be serious, a prudent 26 5 27 A defendant’s failure to properly object under section 4603.2 may also subject it to audit penalties. (Cal. Code Regs., tit. 8, §§10108(e), 10111(a)(9).) KUNZ, Scott 6 1 In reaching this conclusion, we are mindful of our decision in Otis v. City of Los Angeles 2 (1980) 45 Cal.Comp.Cases 1132 (Board en banc). In Otis, we interpreted former section 4601.5, 3 which had some similarities to section 4603.2.6 We held, in substance, that former section 4601.5 4 required a defendant to make a specific and non-conclusionary written objection to the 5 reasonableness of any medical-legal bill within 60 days of its receipt and, if the defendant failed to 6 do so, it was precluded from raising (and the Board was precluded from considering) the 7 reasonableness of the medical-legal cost. 8 However, Otis does not compel a conclusion that, under section 4603.2, a defendant should 9 be deemed to waive any objection to a medical treatment billing that was not specifically made, 10 including (but not limited to) an objection that the treatment rendered was not reasonably required 11 to cure relieve the effects of an industrial injury. First, there are significant differences between medical-legal billings and medical treatment 12 13 billings. A defendant may be liable for a medical-legal billing even where it is ultimately 14 determined that there is no industrial injury or that the employee’s claim is barred by the statute of 15 limitations. (Subsequent Injuries Fund v. Industrial Acc. Com. (Roberson) (1963) 59 Cal.2d 842, 16 843 [28 Cal.Comp.Cases 139, 139-140]; Beverly Hills Multispecialty Group, Inc. v. Workers’ 17 Comp. Appeals Bd. (Pinkney) (1994) 26 Cal.App.4th 789, 802 [59 Cal.Comp.Cases 461, 471]; 18 Turudich v. Industrial Acc. Com. (1965) 237 Cal.App.2d 455, 457-459 [30 Cal.Comp.Cases 316, 19 318-319].) A defendant, however, will not be liable for a medical treatment billing if there was no 20 industrial injury (Lab. Code, §4600) or if the injury claim is time-barred. (Lab. Code, §5404.) 21 Also, because medical-legal cost claims generally are relatively simple, the policy adopted in Otis 22 to largely remove such claims from the litigation process was appropriate. Claims for medical 23 24 6 25 26 Former section 4601.5 had provided, in relevant part, that unless payment of a medical-legal billing was made within 60 days of receipt, “that portion of the billed sum then unpaid shall be increased by 10 percent, together with interest thereon at the rate of 7 percent per annum.” It further provided, among other things: “Where the employer within the 60-day period, contests the reasonableness and necessity for incurring such fees, services, and expenses, payment shall be made within 20 days of the filing of an order of the appeals board directing payment.” 27 KUNZ, Scott 7 1 treatment costs, however, are not nearly so simple and straightforward.7 Finally, the amounts in 2 issue in medical treatment lien litigation are often significantly greater than the amounts involved 3 in medical-legal lien litigation. 4 Second, the medical-legal cost provisions of section 4601.5 were repealed by the 5 Legislature in 1984 (Stats. 1984, ch. 596, §3) and were replaced by sections 4620 et seq. 6 Although, notwithstanding the repeal of section 4601.5, “[t]he reasoning of the Otis decision 7 continues to be sound” in some respects (American Psychometric Consultants, Inc. v. Workers’ 8 Comp. Appeals Bd. (Hurtado) (1995) 36 Cal.App.4th 1626, 1640 [60 Cal.Comp.Cases 559, 569]), 9 the fact remains that, since Otis, there have been “major revisions” and a “massive [legislative] 10 effort to strengthen and clarify the perceived weaknesses” in the procedures pertaining to medical- 11 legal billings. (American Psychometric Consultants, Inc. v. Workers’ Comp. Appeals Bd. 12 (Hurtado), supra, 36 Cal.App.4th at pp. 1641, 1643 [60 Cal.Comp.Cases at pp. 570, 571].) In 13 particular, under sections 4620 et seq., a defendant now can raise (and the Board can consider) 14 certain objections to a medical-legal billing, even if those objections were not specifically raised 15 within 60 days of the receipt of the billing. (Lab. Code, §4622(d) [“Nothing contained in this 16 section shall be construed to create a rebuttable presumption of entitlement to payment of an 17 expense upon receipt by the employer of the required reports and documents. This section is not 18 applicable unless there has been compliance with Sections 4620 and 4621.”]; see also, American 19 Psychometric Consultants, Inc. v. Workers’ Comp. Appeals Bd. (Hurtado), supra, 36 Cal.App.4th 20 at pp. 1641-1645 [60 Cal.Comp.Cases at pp. 569-573] [holding that a defendant is not liable for 21 medical-legal costs under section 4622 unless there has been compliance with sections 4620 22 (contested claim) and 4621 (medical-legal expenses reasonably, actually, and necessarily 23 24 25 26 27 7 For example, a defendant can be liable for the cost of treatment for a non-industrial condition, if the evidence establishes that such treatment is reasonably required to cure or relieve the effects of an industrial injury. (Lab. Code, §4600; Braewood Convalescent Hospital v. Workers’ Comp. Appeals Bd. (Bolton) (1983) 34 Cal.3d 159,165-166 [48 Cal.Comp.Cases 566, 570]; Granado v. Workmen’s Comp. Appeals Bd. (1968) 69 Cal.2d 399, 405-406 [33 Cal.Comp.Cases 647, 652]; Abdala v. Aziz (1992) 3 Cal.App.4th 369, 376 [57 Cal.Comp.Cases 94, 97]; Dorman v. Workers’ Comp. Appeals Bd. (1978) 78 Cal.App.3d 1009, 1020 [43 Cal.Comp.Cases 302, 309]; Vela v. Workmen’s Comp. Appeals Bd. (1971) 22 Cal.App.3d 513, 520-521 [36 Cal.Comp.Cases 807, 812-813].) KUNZ, Scott 8 1 incurred)]; Del Rio v. Quality Hardware (1993) 58 Cal.Comp.Cases 147 (Board en banc); Apex 2 Medical Group v. Workers’ Comp. Appeals Bd. (Real) (1994) 59 Cal.Comp.Cases 743 (writ den).) 3 Nevertheless, although there has been no waiver of the issue of whether applicant’s knee 4 surgery was reasonably required, we will remand to allow the parties to present evidence (or reach 5 a stipulation) regarding that issue. This is because, based on the generic “lien” issues framed by 6 the parties at the MSC and trial (and based on the absence of any evidence in the record that 7 Golden Eagle objected to the surgery on the ground it was not reasonably required), we conclude 8 the parties (or, at least, Alpine) understandably did not anticipate that this question might be in 9 issue. 10 II. The Provisions Of Section 4603.2 Apply Only Where Its Prerequisites Have Been Met. 11 In any event, it is not clear that section 4603.2 even applies to Alpine’s lien claim. Before a 12 lien claimant can invoke the provisions of section 4603.2, it must establish that the prerequisites 13 to that section’s application have been met. 14 First, section 4603.2 does not apply unless the medical treatment in question was “provided 15 or authorized by the treating physician selected by the employee or designated by the employer 16 [pursuant to section 4600].” (Lab. Code, §4603.2(a) & (b).)8 Thus, the statute provides that 17 defendants are potentially subject to penalties and interest only if they do not promptly pay (or 18 contest) billings for medical treatment provided or authorized by the primary treating physician.9 19 However, there appears to be no similar legislative concern about other medical treatment.10 20 21 22 23 24 25 26 27 8 See also, Cal. Code Regs., tit. 8, §9792.5(a)(5) & (b) [providing that, within 60 days, the defendant must pay or contest the billings of the “treating physician,” with that term defined to mean “the one physician managing the care of the injured employee who has been selected by the employee pursuant to Labor Code section 4603.2”]; cf., Cal. Code Regs., tit. 8, §9784 [the employer shall promptly authorize the primary treating physician to provide all reasonably required medical treatment].) 9 We note that the primary treating physician must periodically report to the defendant, including providing treatment plans (Lab. Code, §§ 4061.5, 4603.2(a); Cal. Code Regs., tit. 8, §9785(d), (e), (f), & (g)) and, if a dispute arises over the treatment prescribed by a primary treating physician, the employee and the defendant must follow specific dispute resolution procedures. (Lab. Code, §4061, 4062.) There are no comparable provisions with respect to treatment rendered by or obtained from other physicians. 10 This does not mean that a defendant is not liable for, and a lien claimant cannot seek payment for, any reasonably required medical treatment that is not “provided or authorized” by the primary treating physician. It merely means that the procedures and remedies of section 4603.2 are not applicable to such treatment. KUNZ, Scott 9 1 Second, section 4603.2 applies only where the medical provider’s billing to the defendant is 2 “properly documented,” i.e., the section does not apply unless the medical provider has provided 3 the defendant with an “itemized billing, together with any required reports and any written 4 authorization for services that may have been received.” (Lab. Code, §4603.2(b).) 5 Here, Alpine did not present any evidence regarding who, if anyone, was applicant’s 6 properly designated primary treating physician. Further, assuming there was a properly designated 7 primary treating physician, Alpine did not present any evidence regarding whether that physician 8 performed or authorized the surgery. Moreover, the parties made no stipulations regarding these 9 issues.11 10 Also, there are serious questions regarding whether Alpine submitted a “properly 11 documented” and “itemized” billing to Golden Eagle. As discussed above, Alpine’s billing merely 12 consisted of three CPT codes, with three corresponding brief descriptions of three surgical 13 procedures. From the CPT pages that Alpine offered in evidence, however, it appears the CPT 14 codes utilized by Alpine relate only to the surgical procedures themselves (i.e., the services 15 performed by the physician). 16 applicant was at the outpatient surgery center (and, very generally, what happened while he was 17 there). In any event, Alpine’s billing does not set forth what specific services it actually provided 18 in connection with applicant’s surgical procedures. For example, although Dr. Butcher’s operative 19 report reflects that applicant was given general anesthesia, Alpine’s billing does not reflect whether 20 it provided the anesthetic. Similarly, although Dr. Butcher’s operative report reflects that various 21 instruments and supplies were used (e.g., a Stryker arthroscope, a Mitek thermal radio frequency 22 probe, a shaver, mechanical instruments, a pain pump catheter, Steri-Strips, sterile dressing, a 23 6-inch Ace bandage, and crutches), Alpine’s billing does not reflect whether it provided these 24 instruments and supplies. Also, although it might be inferred that Alpine provided the operating Thus, it appears that Alpine’s billing merely establishes why 25 11 26 27 Although the medical reports filed with the recently submitted stipulations with request for award suggest that Dr. Butcher (who performed the April 4, 2002 left knee surgery) was applicant’s primary treating physician, these reports are not presently in evidence. (Cal. Code Regs., tit. 8, §10600 [“The filing of a document does not signify its receipt in evidence.”].) KUNZ, Scott 10 1 room and recovery room, the time period that these rooms were in use for applicant, and the rates 2 at which these rooms were charged, are not specified. Further, Alpine’s billing does not specify 3 what medical support staff (other than physicians) Alpine provided during the course of the pre- 4 operative preparations, the operation itself, or the post-operative recovery (and it does not specify 5 the time expended and the rate(s) charged for any medical support staff). 6 Of course, where the Board’s record is not adequately developed to permit the reasoned 7 resolution of the issues before it, it may direct the further development of the record. (See, Lab. 8 Code, §§133, 5701, 5906, 5908; Kuykendall v. Workers’ Comp. Appeals Bd. (2000) 79 9 Cal.App.4th 396, 403-406 [65 Cal.Comp.Cases 264, 268-269]; Tyler v. Workers’ Comp. Appeals 10 Bd. (1997) 56 Cal.App.4th 389, 392-395 [62 Cal.Comp.Cases 924, 926-928]; Raymond Plastering 11 v. Workmen’s Compensation Appeals Bd. (King) (1967) 252 Cal.App.2d 748, 753 [32 12 Cal.Comp.Cases 287, 291]; West v. Industrial Acc. Com. (Best) (1947) 79 Cal.App.2d 711, 719 13 [12 Cal.Comp.Cases 86, 89].) Here, for the reasons outlined above, the record is not adequately 14 developed for us to conclude whether section 4603.2 applies to Alpine’s lien, so we will remand 15 the matter for development of the record. 16 III. The Official Medical Fee Schedule Applies To Medical Services Provided, Referred Or Prescribed By “Physicians” At An Outpatient Surgical Facility. 17 18 19 20 21 22 23 24 Alpine asserts that outpatient surgery centers are not subject to the Official Medical Fee Schedule under any circumstances. It also asserts that fees for such centers are reasonable if they do not exceed the center’s usual and customary charges and are consistent with the charges of similarly situated providers in the same geographic area. We do not agree (if Alpine is so asserting) that the Official Medical Fee Schedule is entirely inapplicable to all services performed at an outpatient surgery center. Administrative Director Rule 9791 (Cal. Code Regs., tit. 8, §9791 states, in relevant part: “Except as provided in this article, the Official Medical Fee Schedule applies to all covered medical services provided, referred or prescribed by physicians (as defined in Section 3209.3 of the Labor Code), regardless of the type of facility in which the medical 25 26 27 KUNZ, Scott 11 services are performed, including clinic and hospital-based physicians working on a contract basis.” (Cal. Code Regs., tit. 8, §9791 (emphasis added).) 1 2 3 Moreover, page 1 of the General Instructions of the Official Medical Fee Schedule states: 4 “Outpatient procedures and services which are included in this fee schedule and which are provided in the emergency room or operating room of a hospital or in a freestanding outpatient surgery facility shall be reimbursed in accordance with this fee schedule.” (Emphasis added.) 5 6 7 8 Thus, medical services provided, referred or prescribed by physicians at an outpatient facility are 9 covered by the Official Medical Fee Schedule12 and, in general, the reasonable value of such 10 medical services will be established by the relevant unit values and conversion factors. (See Cal. 11 Code Regs., tit. 8, §§9791, 9791.1, 9792, 9792.1.) That is, to obtain a fee in excess of the 12 reasonable maximum, the “medical service” provider must submit an itemization and (1) show that 13 the requested fee is reasonable and is not in excess of the provider’s usual fee; and (2) explain the 14 extraordinary circumstances, related to the unusual nature of the services rendered. (Lab. Code, 15 §§5307.1(b), 5307.6(b); Cal. Code Regs., tit. 8, §§9792(c), 9792.5(c).) Here, it is not clear whether Alpine’s billing included the services of Dr. Butcher or any 16 17 other physician. Accordingly, we will remand on that question. 18 IV. The Official Medical Fee Schedule Generally Does Not Apply To Outpatient Surgery Facility Fees, However, Such Fees Nevertheless Must Be “Reasonable.” 19 We do agree with Alpine, however, that outpatient surgery facility fees generally are not 20 21 22 subject to the Official Medical Fee Schedule. Administrative Director Rule 9791 (Cal. Code Regs., tit. 8, §9791) provides, in relevant part: “Nothing contained in this schedule shall preclude any hospital as defined in subdivisions (a), (b), or (f) of Section 1250 of the Health and Safety Code, or any surgical facility which is licensed under subdivision (b) of Section 1204 of the Health and Safety Code, or 23 24 25 26 27 12 Although section 5307.1(a)(1) specifically refers to medical facilities licensed under Health and Safety Code section 1250 (i.e., medical facilities to which patients are admitted for a 24-hour stay or longer), this language constitutes language of inclusion, not of exclusion and limitation. KUNZ, Scott 12 any ambulatory surgical center that is certified to participate in the Medicare program under Title XVIII (42 U.S.C. Sec. 1395 et seq.) of the federal Social Security Act, or any surgical clinic accredited by the Accreditation Association for Ambulatory Health Care (AAAHC), from charging and collecting a facility fee for the use of the emergency room or operating room of the facility.” (Cal. Code Regs., tit. 8, §9791 (emphasis added).) 1 2 3 4 5 6 Although Rule 9791 refers to a facility fee “for the use of the emergency room or operating room 7 of the facility,” this language does not appear to specifically limit “facility fees” to emergency 8 room or operating room fees. Rather, the term “facility fee” appears to include all services 9 provided at an outpatient surgery center, except for the professional medical services provided, 10 referred or prescribed by a surgeon, assistant surgeon, anesthesiologist, or other “physicians” 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 within the meaning of section 3209.3 et seq. (Cal. Code Regs., tit. 8, §9791; see also, Lab. Code, §§5307.1(a)(2); 5307.21(a)(1) [effective January 1, 2003.].) Thus, without now deciding the question, a “facility fee” might include charges for the operating room, the recovery room, nursing services, medicines, medical and surgical supplies, and medical apparatus. (See, Lab. Code, §§3209.5, 4600.) V. Factors To Be Considered In Determining Reasonableness Of A Facility Fee. 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 [57 Cal.Comp.Cases 157, 165].) We emphasize that the “usual fee” to which we refer is the fee usually accepted, not the fee usually charged, because that is an aspect of the economics of a medical provider’s practice in the 26 current market. In the absence of persuasive rebuttal evidence from the defendant, the outpatient 27 KUNZ, Scott 13 1 surgery center’s billing, by itself, will normally constitute adequate proof that the fee being billed is 2 what the outpatient surgery center usually accepts for the services rendered (and that the fee being 3 billed is also consistent with what other medical providers in the same geographical area accept). 4 The defendant, however, may present evidence that the facility fee billed by the outpatient surgery 5 center is greater than the fee the outpatient surgery center usually accepts for the same or similar 6 services, both in a workers’ compensation context and a non-workers’ compensation context, 7 including contractually negotiated fees. Similarly, the defendant may present evidence that the 8 facility fee billed by the outpatient surgery center is greater than the fee usually accepted by other 9 providers in the same geographical area, including in-patient providers. Although neither the 10 contractually negotiated amount that an outpatient surgery center usually accepts nor the amount 11 that in-patient providers usually accept will necessarily be determinative of what constitutes a 12 “reasonable” facility fee, these factors nevertheless will be relevant to what constitutes a 13 “reasonable” fee (particularly if the fee being billed is grossly disproportionate either to the 14 contractually negotiated amount that the outpatient surgery center usually accepts or to the amount 15 that in-patient providers usually accept for the same or similar services). Of course, if a defendant 16 offers such rebuttal evidence, the outpatient surgery center is free to offer contrary evidence, and 17 the Board will resolve the issue of the lien based on the most persuasive evidence in the record as a 18 whole. 19 Accordingly, for all the reasons above, we will rescind the August 9, 2002 Findings and 20 Order, and we will return this matter to the WCJ for further proceedings and a new decision 21 consistent with our opinion.13 22 /// 23 /// 24 /// 25 /// 26 13 27 On remand, the WCJ should also act on the recently filed stipulations with request for award (which do not relate to Alpine’s lien). KUNZ, Scott 14 1 For the foregoing reasons, 2 IT IS ORDERED, as the Decision After Reconsideration of the Board (En Banc), that the 3 Findings and Order issued by the workers’ compensation administrative law judge on August 9, 4 2002 be, and it hereby is, RESCINDED and that this matter is REMANDED to the workers’ 5 compensation administrative law judge for further proceedings and a new decision consistent with 6 this opinion. WORKERS’ COMPENSATION APPEALS BOARD (EN BANC) 7 8 _________________________________________ MERLE C. RABINE, Chairman 9 10 _________________________________________ WILLIAM K. O’BRIEN, Commissioner 11 12 13 _________________________________________ JAMES C. CUNEO, Commissioner 14 15 _________________________________________ JANICE J. MURRAY, Commissioner 16 17 18 _________________________________________ FRANK M. BRASS, Commissioner 19 20 DATED AND FILED AT SAN FRANCISCO, CALIFORNIA 21 22 23 24 SERVICE BY MAIL ON SAID DATE TO ALL PARTIES AS SHOWN ON THE OFFICIAL ADDRESS RECORD, EXCEPT LIEN CLAIMANTS BUT INCLUDING PETITIONING LIEN CLAIMANT. NPS/tab 25 26 27 KUNZ, Scott 15

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