Workers Compensation Case Study

In a workers’ compensation case, providers often finance services for an injured worker and file a lien with the Workers’ Compensation Appeals Board.[ SOC §15.90] This is essentially a stake or interest in the final indemnity award.[ Kaiser Foundation Hospitals v. WCAB (Keifer) (1974) 39 CCC 857, 859.] These types of claims are a peculiarity to California. Additionally, they often take a form of their own. They even have their own separate proceedings. In part, SB863 was passed in 2012 to reduce litigation involving liens.[ (Stats. 2012, ch. 363, §§ 63, 70.)] Due to the nature of these claims, the California system experienced a massive backlogging. Essentially, the main disputes stemming from lien claims are how much the provider should be
reimbursed, whether or not the medical treatment in question was authorized, and whether or not there are applicable caps pertaining to the bill.[ Honor. (Bill Review Pg._)] Knowledge of coding and billing procedures is required when reviewing these bills. Otherwise, the reviewer is likely to be staring at a bill with no knowledge of how to interpret the information contained within it. Liens can be settled informally. However, if they are not resolved, carriers must pick up the tab for litigation expense. It is pricey and time-consuming for defense attorneys to resolve outstanding liens. Likewise, a medical bill specialist likely has better tools and is better equipped. As such, informal lien resolution has its advantages to litigation.

Much like the court system, liens can also be burdensome for insurance companies. This is because medical bills are subject to issues with coding and insurance guidelines. Also, the complexity of the medical fee schedule requires expertise to utilize. Usually, coding issues with medical bills are better left to the experts. Procedure codes, modifiers, and fee schedule formulas are not typically in the repertoire of a legal professional, no matter how qualified or competent they may be with the applicable laws. Similarly, attorneys are motivated to have hearings and litigate. For the most part, insurance companies don’t need help litigating liens; they need help keeping them from going into litigation.

Likewise, informal resolution mitigates cost.
It allows the dispute to be effectively settled without incurring astronomical attorney’s fees. Hypothetically, informal resolution can potentially save an insurance carrier millions per year. This is not only due to the lack of mustering up litigation costs, but because the limitations laid out in the Official Medical Fee Schedule largely act as a decent defense against the lien claimant.[ (CCR, ARTICLE 5.3)]

Lastly, informal resolution is advantageous because it releases time burdens on claims personnel. Instead of having to tediously redirect lien claimants, bills can be reviewed by someone knowledgeable in medical coding and billing procedures. This allows claim files to be closed more quickly and more efficiently. Not only will the claims personnel be relieved of dealing with constant collection calls, more time can be spent on attentively handling the claim.

Ultimately, liens are burdensome, time consuming, and costly. Using the fee schedule on a practical basis is difficult to do because of its complexity. Medical bills fail to tell us whether treatment was authorized, if a cap was applicable, or the reasonable value of the services provided. Claims Administrators want to mitigate risk exposure. Insurance Companies want to avoid costly litigation. Adjusters want to simplify the claims process. With informal resolution, the aim is to ensure a smooth cost-effective
procedure.