SCOTT KUNZ, Applicant,
v.
PATTERSON FLOOR COVERINGS, INC.; and GOLDEN EAGLE INSURANCE CO. Defendants.
No. SJO 0224503
California Workers Compensation Decisions
Workers Compensation Appeals Board State of California
2002
OPINION AND DECISION AFTER RECONSIDERATION (EN
BANC)
MERLE
C. RABINE, Chairman
On
October 22, 2002, the Board granted reconsideration of the
Findings and Order issued on August 9, 2002, in order to
further study the factual and legal issues raised in the
petition filed by lien claimant, Alpine Surgery Centers, LP,
dba Silicon Valley Surgery Center ("Alpine"), an
outpatient surgical facility.
In the
August 9, 2002 decision, the workers' compensation
administrative law judge ("WCJ") found that
applicant, Scott Kunz, sustained industrial injury to his
left knee on February 3, 2000, while employed as a carpet
installer by Patterson Floor Coverings, Inc., the insured of
Golden Eagle Insurance Company ("Golden Eagle").
The WCJ, however, disallowed Alpine's lien claim in the
amount of $7,902.00, which represented the balance of
Alpine's "facility fee" bill relating to
applicant's April 4, 2001 left knee surgery, after Golden
Eagle had paid $1,810.00 on the bill, as recommended by a
bill review service. In disallowing the lien, the WCJ stated,
among other things, "there has been absolutely no
medical evidence offered, and no testimony presented, to
establish that the knee surgery … was reasonably
required to cure or relieve from the effects of the
industrial injury."
1
In its
petition for reconsideration, Alpine contended in substance:
(1) under Labor Code section 4603.2,
2 if a defendant objects to
any portion of a medical treatment bill, it must advise the
medical provider of the items being contested and the reasons
for contesting these items, and, if a bill reviewer does not
recommend payment as billed, the bill reviewer must provide
"a specific explanation as to why the reviewer altered
the procedure code or amount billed and the specific
deficiency in the billing or documentation that caused the
reviewer to conclude that the altered procedure code or
amount recommended for payment more accurately represents the
service performed;" (2) in determining a medical
treatment lien claim, the Board is limited to resolving the
specific objections made to the billing by the defendant and,
here, Golden Eagle did not object to Alpine's charges on
the basis that the April 4, 2001 left knee surgery was not
medically required; (3) at trial, Golden Eagle failed to
rebut the testimony Alpine offered regarding the
appropriateness of the billing in this case; and (4)
outpatient surgery centers are not subject to the Official
Medical Fee Schedule, and facility 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.
Golden
Eagle filed an answer to Alpine's petition for
reconsideration.
Because
of the important legal issues presented, and in order to
secure uniformity of decision in the future, the Chairman of
the Board, upon a majority vote of its members, has
reassigned this case to the Board as a whole for an en banc
decision. (Lab. Code, §115.)
3 Based on our review of the
relevant statutes, regulations, and case law, we conclude:
(1) under section 4603.2, a defendant's failure to
specifically object to a medical treatment lien claim on the
basis of reasonable medical necessity (or on any other basis)
does not effect a waiver of that objection;
(2) the provisions of section 4603.2 do not apply unless the
prerequisites to the section's application have been met,
i.e., the medical treatment in question must have been
"provided or authorized by the treating physician
selected by the employee or designated by the employer
[pursuant to section 4600]" and the medical
provider's billing to the defendant must have been
"properly documented" with an "itemized
billing, together with any required reports and any written
authorization for services that may have been received;"
(3) the Official Medical Fee Schedule applies to medical
services provided, referred or prescribed by
"physicians" at an outpatient surgical facility;
(4) the Official Medical Fee Schedule generally does not
apply to outpatient surgery facility fees, however,
such fees nevertheless must be "reasonable;" and
(5) in determining the reasonableness of an outpatient
surgery facility fee, the Board may take into consideration a
number of factors, including but not limited to the
following: the medical provider's usual fee and the usual
fee of other medical providers in the same geographical area,
which means the fee usually accepted, not the fee
usually charged; the fee the outpatient surgery
center usually accepts for the same or similar services (both
in a workers' compensation context and in a
non-workers' compensation context, including
contractually negotiated fees); and the fee usually accepted
by other providers in the same geographical area (including
in-patient providers).
BACKGROUND
Applicant
sustained an admitted left knee injury on February 3, 2000.
On
April 4, 2001, applicant had left knee surgery, performed by
Michael Butcher, M.D., at Alpine's outpatient surgery
center. Alpine billed for a total of $9,712.00 for three
procedures, i.e., (1) $4,856.00 for a knee arthroscopy -
lateral and medial menisectomies (CPT Code 29880), (2)
$2,428.00 for a chondroplasty (debridement) knee arthroscopy (CPT Code 29877), and
(3)$2,428.00 for a knee synovectomy (CPT Code
29876).
4
At some
time not established by the present record, Alpine submitted
its billing to Golden Eagle.
Thereafter,
Golden Eagle sent Alpine's billing to a bill review
service. In a written "explanation of review"
statement served on Alpine, the bill review service allowed a
payment of $1,810.00 for the first procedure, which, it
asserted, was the usual, customary and reasonable rate in
Alpine's geographic area. The bill review service did not
allow any payment for the other two procedures, stating that
they were being "denied according to the surgical
record." The bill review 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 February 13, 2002, it filed a
declaration of readiness to proceed to trial on the generic
issue of its "lien."
A
mandatory settlement conference ("MSC") took place
on April 25, 2002. At the MSC, Alpine and defendant
generically placed the "lien" in issue.
At the
June 25, 2002 trial, the issues framed were, in essence: (1)
liability for the lien of $7,902.00, representing the
difference between the amount billed by Alpine and the amount
allowed by the bill review service; (2) section 4603.2
penalties and interest to Alpine; and (3) a section 5814
penalty to applicant. The parties placed in evidence
Alpine's $9,712.00 billing, Dr. Butcher's operative
report (but no other medical reports), the bill review
explanation, a copy of the $1,810.00 check paid, a U.S.
Department of Labor report (apparently, to show that labor
costs in Alpine's geographic area are high), and some
pages of CPT codes. Also, Alpine presented the testimony of
Steven F. Kanter, M.D., a "managing principal" at
Alpine.
Dr.
Kanter testified, in substance, that Alpine prepares a bill
based on the procedures specified in the operative report,
that the three billing codes used here involve...
