BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: April 29, 2009 2009-2010 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: SB 403
Author: Benoit
Version: As Amended April 27, 2009
SUBJECT
Workers' compensation: lien claims.
KEY ISSUES
Should the Legislature impose a statute of limitations on the
filing of lien claims in order to prevent lien claims from being
filed years after an injury?
Should the Legislature impose a retroactive statute of
limitations on the filing of a lien claim?
PURPOSE
To impose a one-year statute of limitations under which a lien
for medical and hospital treatment may be filed in a workers'
compensation case.
ANALYSIS
Existing law requires employers to secure the payment of
workers' compensation for injuries incurred by their employees
that arise out of, or in the course of, employment. Workers'
compensation insurance provides six basic benefits which include
medical care, temporary disability benefits, permanent
disability benefits, supplemental job displacement benefits or
vocational rehabilitation and death benefits. Existing law
authorizes the Workers' Compensation Appeal Board (WCAB) to
determine and allow certain expenses, including certain
reasonable expenses incurred by or on behalf of the injured
employee and medical-legal expenses, as liens against any award
of compensation.
Under existing law , the statute of limitations for lien claims
is the later of:
Six months from the date on which the appeals board or
workers' compensation administrative law judge issues a
final decision, findings, order, including an order
approving compromise and release, or award, on the merits
of the claim;
Five years from the date of the injury for which the
services were provided; or
One year from the date the services were provided.
The injured worker is not liable for any underlying obligation
if a lien claim has not been filed and served within the
allowable period, as specified.
This Bill would prohibit a lien claim for expenses, incurred by
or on behalf of the injured employee, for medical and hospital
treatment from being filed more than one year from the date the
health provider, or the health care provider's agent, was sent
an explanation of benefits (EOB) or explanation of review (EOR)
paying a bill pursuant to the official medical fee schedule, as
specified, or a preferred provider organization (PPO) agreement.
The bill would provide that this prohibition shall apply to all
injuries, without regard to whether the injury occurs before,
on, or after the operative date of March 1, 2010.
COMMENTS
1. Need for this bill?
According to current law, payments for medical treatment
provided or authorized by the treating physician must be made
by the employer within 45 working days after receipt of each
Hearing Date: April 29, 2009 SB 403
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
separate itemization of medical services provided, and if any
discrepancies are found, the employer must notify the
physician within 30 working days. [Labor Code 4603.2(b)]
Existing statutes of limitations for the filings of lien
claims allows a health care provider, or other specified
party, to file a lien claim for expenses and treatment no
later than six months from the date of an award or settlement,
five years from the date of injury, or one year from the date
services were provided, whichever is later.
The WCAB has decided in several cases that a payor's knowledge
of a provider's billing is equivalent to the filing of a lien.
This bill would reinforce the Legislature's objective in
establishing statutes of limitations for lien filings and
would address a legitimate problem in the workers'
compensation system that currently holds many stale liens,
however, unintended consequences could include a high number
of lien claims being filed by providers seeking protection due
to fear that the one year statute of limitations could keep
them from their right to compensation.
2. Staff Comment/Question:
The operative date of this bill is March 1, 2010, however,
this includes any lien claim for treatment of injuries that
may have occurred on or before this date, thus, possibly
pressuring providers with unpaid or questionable payments to
file a lien claim for that treatment before this bill
prohibits them from doing so. Any lien claim for injuries
occurring after the March 1, 2010 date would have to be filed
within the one year time frame. If the bill is passed by the
Legislature and signed, it would become law on January 1,
2010, giving those interested in filing a lien claim only
three months to file before this bill begins on March 1. The
author may wish to extend the operative date of the bill in
order to provide more time for providers to file a lien for
payments that are currently in the system.
3. Double Referral to the Senate Judiciary Committee:
If this bill is passed out of the Senate Labor and Industrial
Relations Committee, it will next be referred to the Senate
Hearing Date: April 29, 2009 SB 403
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
Judiciary Committee.
4. Proponent Arguments :
According to the author, litigation over medical provider fees
is one of the fastest growing cost drivers in the workers'
compensation system. The author believes that although payors
are required to pay or object to medical treatment bills
within 45 working days, and to send a written EOB or EOR
notice, medical providers often wait years to dispute those
payment decisions. Proponents argue that this time delay and
resubmission of bills is a very expensive cost driver due to
the amount of research needed to amass the proof of prior
notices, prior payments, and prior contracts, much of which
could be lost or destroyed because the payor was not on notice
that the provider intended to dispute a payment decision.
Proponents believe that this bill is a reinstatement of law
which places a statue of limitation of one year on
medical-legal lien claims which, unfortunately they argue,
have been nullified by subsequent Workers' Compensation
Appeals Board (WCAB) rulings holding that the knowledge of a
claim is equivalent to the filing of a lien. They argue that
as a result, providers that had never filed a lien for
services rendered are being allowed to come back at any time
and file a lien. They claim that this situation is causing
problems in determining what claims are appropriate and is
impairing insurers' ability to process timely filed claims.
Proponents believe that a year from the EOB/EOR notice to file
a lien is certainly not unduly short since the majority of
workers' compensation treatment today is provided through MPN
or PPO contracts, most of which require the provider to
dispute the EOR/EOB within 60 to 90 days or the dispute is
waived. In addition, proponents argue that although this bill
would require them to file the lien with the WCAB within one
year, it would not require them to actually go to trial within
that time frame, thus, giving the provider as much time as the
WCAB finds reasonable. Lastly, proponents argue that delaying
the operations of the new statute of limitation under this
bill until March 2010 allows providers ample time to file
their lien claims.
Hearing Date: April 29, 2009 SB 403
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
5. Opponent Arguments :
According to opponents, this bill would establish an
impractical and unnecessary retroactive statute of limitations
for filing medical treatment liens no later than one year from
the date the provider was sent an EOB or EOR notice. Opponents
argue that often times the review of claims and decisions in
workers' compensation are lengthy in nature and it may take
longer than one year for a final decision to be issued or an
award to be released on a claim. They believe that
prohibiting a physician from claiming an expense based on a
timeline that may be unrealistic is unfair and prohibitive of
a provider's right to receive payment for services rendered.
In addition, opponents argue that this bill could have the
opposite result as many, including a number of state and
federal agencies and insurance companies, would be forced to
protect themselves by unnecessarily filing more liens than
they currently do and initiating WCAB cases in every instance
where the employer or workers' compensation carrier fails to
issue full payment within the statutorily allowed 45 days.
Opponents also argue that this increase in claims will further
backlog the system, delay adjudication of injured workers
claims, burden the already overburdened WCAB district offices,
and force employers to foot the bill for increased court
system costs through user funding of the division's operation.
Opponents argue that as a consequence, providers could be
tempted to file collection actions directly against the
injured employee for the value of the services rendered,
discouraging the injured worker from seeking necessary
treatment. In addition, opponents argue that allowing for the
retroactive application of the statute of limitations this
bill seeks is unfair and potentially unconstitutional.
SUPPORT
California Association of Joint Powers Authorities (Sponsor)
Association of California Insurance Companies (ACIC)
Hearing Date: April 29, 2009 SB 403
Consultant: Alma Perez Page 5
Senate Committee on Labor and Industrial Relations
Central Region School Insurance Group
Contra Costa County Schools Insurance Group (CCCSIG)
CSAC-EIA - California Joint Powers Authority
Republic Indemnity Company of America
School Insurance Authority
OPPOSITION
American Federation of State, County and Municipal Employees
[oppose unless amended]
Boehm & Associates
California Applicants' Attorneys Association (CAAA)
California Association of Collectors
California Association of Psychiatric Technicians [oppose unless
amended]
California Hospital Association [oppose unless amended]
California Labor Federation, AFL-CIO [oppose unless amended]
California Medical Association (CMA)
California Nurses Association
California Society of Industrial Medicine and Surgery (CSIMS)
California Society of Physical Medicine and Rehabilitation
(CSPM&R)
California State Employees Association
National Nurses Organizing Committee
VQ Orthocare
* * *
Hearing Date: April 29, 2009 SB 403
Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations