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Attorneys Fees Allowed for Disputes over UR Post Award 

January 16, 2007

Labor Code § 4607 Allows Attorney's Fee for Representation in Medical Disputes

Will a Litigation Firestorm Be the Result?

 

The 2nd District Court of Appeals has issued a decision that potentially could be a serious blow to the efforts of employers, carriers and third party administrators to control medical costs through Utilization Review.  In a consolidated opinion in involving two cases, the court has ruled that applicant attorney are entitled to be paid under Labor Code § 4607 for their efforts at enforcing a medical award care where the defendant has denied a specific form of treatment but did not petition to terminate the award of medical care. 

 

In Smith v W.C.A.B. and Amar v W.C.A.B., both injured workers had awards for medical care.  In Smith, the defendant denied authorization for an epidural injection.  The IW contacted his attorney and the parties referred applicant to an AME who recommended the treatment which was then authorized.  Counsel for applicant demanded a fee under Labor Code § 4607 in the sum of $1485 which was denied by the WCJ and the W.C.A.B. on appeal.  In Amar the IW was denied access continued to a weight loss program and treatment for the IW non-industrial diabetes.  At hearing the WCJ ordered continuation of the weightloss program but not the treatment for the diabetic condition.  Both the WCJ and the W.C.A.B. denied Applicant Attorney's request for a fee under Labor Code § 4607.

 

Both cases were appealed and the Court ordered them consolidated for hearing. In a unanimous decision the court ruled that in spite of the very specific language of Labor Code § 4607, the legislature's intent was to provide Injured workers with a remedy for denials of medical care by defendants and that, in effect, the specific language of the legislature that such awards of attorney's fees were to be made where a Petition to Terminate was filed by defendant did not mean what it said.

 

Labor Code § 4607 reads as follows:

 

Where a party to a proceeding institutes proceedings to terminate an award made by the appeals board to an applicant for continuing medical treatment and is unsuccessful in such proceedings, the appeals board may determine the amount of attorney's fees reasonably incurred by the applicant in resisting the proceeding to terminate the medical treatment, and may assess such reasonable attorney's fees as a cost upon the party instituting the proceedings to terminate the award of the appeals board.

 

The Court held that the legislature's intent was not as specific as the language of the statute:

 

But, a literal reading under these facts defeats the statute's purpose.  The Board acknowledges that when a carrier informally denies all care, applicant is entitled to attorney fees to enforce the award.  We see no difference when a carrier informally denies some of the treatment that is a necessary part of medical care previously awarded.  This is tantamount to a petition to deny medical care even though the carrier continues to provide treatment for some of applicant's medical care. 

 

The court also concluded that the result it reached avoided an "absurd result" by construing the statute as a whole and not simply reading the language of the statute:

 

As we have stated above, our task is to determine the purpose and intent of the statute, reading it as a whole and in context with the statutory scheme.  The meaning of a statute is not limited to a literal reading of its words, especially if such an interpretation leads to mischief or absurdity.

Similarly, it would be absurd to deny attorney fees to industrially injured workers simply because the carrier withdrew care without bothering to file a formal petition to do so.  If attorney fees are available to counsel who oppose formal petitions, they should be available to counsel who must initiate proceedings to challenge the informal denial of medical care. 

 

While the court did rely on two existing writ denied cases as the legal precedent for it decision; the court's motivation to reach this extension of the statutory language is revealed near the end of its decision:

 

"California's workers' compensation law functions in large part through the expertise, dedication and professionalism of the attorneys who represent the parties involved in individual cases.  Attorneys representing insurance carriers are not expected to work for free.  Neither are applicants' attorneys.  Insurance carriers who fail to provide previously awarded medical care may not avoid attorney fees to successful applicants' attorneys through the expedient of an informal denial, even when they do so in good faith".

 

The court clearly wished to fashion a remedy for injured workers to obtain representation in cases where UR has resulted in a denial of care and is concerned for how the system is to function without such a remedy.  However it is difficult to image a clearer example of a court "legislating" a result that is not in the statute.  While the court cites it obligation to interpret worker's compensation law liberally under Labor Code § 3202, it ignores the substantial appellate authority that the language of a statute is to be used to interpret the legislature's intent and only if the language is unclear or subject to different interpretations, is the court to look outside the language of the statute for that intent.  This statute has no such lack of clarity.  It applies in one situation and one situation only, where a Petition to Terminate is filed by defendant.  Absent such a Petition being filed, the court has no reason to impose this statutory language to provide a remedy for applicant attorney fee inequities  That is clearly and issue for the legislature to address (and arguably it did in the amendment of Labor Code § 4815.5 providing a penalty for enforcing an award where defendant's conduct was unreasonable).

 

From a pragmatic standpoint, this decision will have the effect of imposing a penalty for defendant's use of Utilization Review to attempt to control medical care issues where an award of medical care exists  Given the chance to obtain attorneys fees in such cases, there is little incentive for Applicant Attorney to act reasonably in attempting to resolve such issues.  With applicant attorneys asking for and obtaining rates up to $300 per hour for their services, the court has now created a significant incentive to litigate for applicants, or at least their attorneys and a substantial disincentive for employers and carriers to attempt to control medical care in the future.  It is certainly also predicable that applicant attorneys will not want to seek awards of medical care early in the case in order to seek a payday later on in the file whenever a dispute arises over medical care.  

 

With the observable distaste that so many WCJ's have for any effort to limit medical treatment, the hostility to the UR process and the willingness to rubber stamp whatever medical care the PTP wants to recommend for IW, this case could be the start of the applicant attorneys desires to strike a deathblow to controlling medical costs through UR.  Whatever gains may have been made over the past 3 years through UR will almost certainly start shrinking as a result of this decision.  For defendants, this decision means that Utilization Review decisions must be even more carefully considered and the impact of potential litigation will have to be considered in many situations, rather than the appropriateness of the treatment.

 

Presumably these two decisions will be appealed further.  Given our recent experience with different appellate districts arriving at different results on the same issue, it is certainly conceivable that a different result might be obtained.  Perhaps a different appellate district court would be more inclined to interpret a statute based on its actual language rather than what the court perceives as a legislative oversight requiring judicial correction.

 

The case can be located by the link on the name above.


Richard M. Jacobsmeyer

Certified Specialist, Workers' Compensation Law

The State Bar of California Board of Legal Specialization

 

SHAW, JACOBSMEYER, CRAIN & CLAFFEY

475 – 14th Street, Suite 850

Oakland, CA 94612

Tel: (510) 645-7172

Fax: (866) 563-0092

jakejacobsmeyer@shawlaw.org

Certified Specialist, Workers' Compensation Law The State Bar of California Board of Legal Specialization
Shaw, Jacobsmeyer, Crain & Claffey, PC
475 14th Street Suite 500, Oakland, CA 94612 Phone:(510) 645-7172 Fax (866) 563-0092

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