California Labor Code § 4603.3

Determinative passage · p.5WCAB Rule 10786 (Cal. Code Regs., tit. 8, § 10786) sets forth the framework for a

The WCAB considered this rule in evaluating the cost petitioner's claims for sanctions.

Determinative passage · p.8II. A lien claimant holds the burden of proof to establish all elements necessary to establish its entitlement to payment for a medical-legal expense. (See § 3205.5, 5705; Torres v. AJC Sandblasting (2012) 77 Cal.Comp.Cases 1113, 1115 [2012 Cal. Wrk. Comp. LEXIS 160] (Appeals Board en banc).) Thus, a lien claimant is required to establish that: 1) a contested claim existed at the time the expenses were incurred; 2) the expenses were incurred for the purpose of proving or disproving the contested claim; and 3) the expenses were reasonable and necessary at the time they were incurred. (§ 4620, 4621, 4622(f); Colamonico v. Secure Transport, (2019) 84 Cal.Comp.Cases 1059 (Appeals Board en banc).) Section 4620(a) defines a medical-legal expense as a cost or expense that a party incurs "for the purpose of proving or disproving a contested claim." (Lab.

The WCAB applied these standards to find that a contested claim existed when the Application for Adjudication of Claim was filed and that the cost petitioner met its burden when it issued subpoenas for records.

Determinative passage · p.4A defendant is said to waive all objections to the medical-legal provider's billing if the defendant either "(I) failed to serve explanation of review (Explanation of Review) that complies with Labor Code section 4603.3 and any applicable regulations adopted by the Administrative Director and/or (II) failed to make payment consistent with that Explanation of Review." (8 CCR Section 10451.1(f)(1)(A)(i).) The [WCJ] finds that since the defendant did not serve any [EORs] that complied with Labor Code Section 4603.3, [defendant] waived all objection to the billing and that the matter is subject to the non-IBR process under 8 CCCR Section 10451.1(c)(1). The WCAB has jurisdiction over non-IBR disputes.

Applied to assess compliance of defendant's EORs.

Determinative passage · p.2If a lien claimant meets its burden of proof pursuant to sections 4620 and 4621, the analysis shifts to the reasonable value of the invoices pursuant to section 4622. A defendant has 60 days to review and analyze a medical-legal bill or invoice. (Lab. Code, § 4622(a)(1).) A defendant has two options within this 60-day window: It may pay the bill or invoice in full or pay less than the full amount. Should a defendant decide to pay less than the full amount within the 60-day window, it may still avoid the imposition of a penalty and interest by including an explanation of review (EOR) with its payment. Section 4622 requires that a defendant object to the invoice or billing with an EOR as described in section 4603.3. (Lab. Code, § 4622(a)(1), (e)(1); 4603.3.) Objecting to an invoice with an EOR within the 60-day window is defendant's burden.

The WCJ's analysis did not fully follow this framework, leading to reconsideration and remand.

Determinative passage · p.5Sections 4622 and 4603.3 provide the parties a framework to address the objections raised by defendant. Pursuant to section 4622, defendant has sixty (60) days to issue an EOR if it decides not to pay the full amount of cost petitioner's invoice. (Lab. Code, § 4622(a).) In the EOR, defendant is required to explain the reasons why it failed to pay the invoice in full consistent with section 4603.3. (Lab. Code, § 4622(e).) Section 4603.3 provides, as relevant herein, that the EOR shall include "[t]he basis for any adjustment, change, or denial of the time or procedure billed"; "[t]he additional information required to make a decision for an incomplete itemization"; and the reason for the denial "if a denial of payment is for some reason other than a fee dispute." (Lab. Code, § 4603.3(a)(3)-(5).) A purpose of the EOR is to allow the provider an opportunity to respond to any perceived issues, deficiencies, or errors in the invoice by defendant. Had defendant raised its concerns or questions in a timely EOR, defendant would have had a response from cost petitioner.3 This response could have been submitted as evidence by defendant.

Defendant failed to raise concerns in timely EOR, missing opportunity for provider response; burden shifted to defendant to prove unreasonableness.