Cal. Ins. Guarantee Assn. v. WCAB

• Court: California Court of Appeal
• Decided: December 16, 2014
• Docket: D065072
• Status: Published

Opinion

Filed 12/16/14 CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

CALIFORNIA INSURANCE GUARANTEE D065072 ASSOCIATION et al. (WCAB No. ADJ2806916)

Petitioners,

v.

WORKERS' COMPENSATION APPEALS BOARD and ELITE SURGICAL CENTERS, ESCONDIDO, L.P. et al.,

Respondents.

Original proceeding to review a decision of the Workers' Compensation Appeals

Board. Affirmed.

Heggeness, Sweet, Simington & Patrico and Clifford D. Sweet III for Petitioners.

Law Offices of Allweiss & McMurtry and Michael A. Marks for California

Workers' Compensation Institution as Amicus Curiae on behalf of Petitioner California

Insurance Guarantee Association. Procopio, Cory, Hargreaves & Savitch, Anthony J. Dain and Brian J. Kennedy for

Respondents Elite Surgical Centers, Del Mar, L.P., Point Loma Surgical Center, L.P., and

Elite Surgical Centers, Escondido, L.P.

David Bryan Leonard for California Society of Industrial Medicine & Surgery,

Inc., as Amicus Curiae on behalf of Respondent Workers' Compensation Appeals Board.

I.

INTRODUCTION

We issued a writ of review on the petition filed by the petitioners in this matter to

address the two questions raised in the petition: (1) Does the Workers' Compensation

Appeals Board (the Board) retain jurisdiction over a medical billing dispute pertaining to

more than 300 consolidated claims, after the Legislature passed significant workers'

compensation reform legislation that created a new administrative independent review

process for the resolution of billing disputes?; and (2) if the Board does retain jurisdiction

over this dispute, is there substantial evidence to support the workers' compensation

judge's (WCJ) findings of fact regarding his determination of the "reasonable fee" to be

paid for arthroscopic knee procedures, arthroscopic shoulder procedures, and epidural

injection procedures performed at three commonly managed ambulatory surgical center

(ASC) facilities in San Diego County?

We conclude that although the text of the relevant legislation and resulting statutes

is ambiguous, the most reasonable interpretation of the legislation is that it does not

2 divest the Board of jurisdiction to decide the dispute at issue in this case. We further

conclude that the WCJ's findings, which the Board adopted in its decision on petitioners'

motion for reconsideration, are supported by substantial evidence. We therefore affirm

the decision of the Board.

II.

FACTUAL AND PROCEDURAL BACKGROUND

Petitioners1 were defendants in an action before the Board brought by respondents

Elite Surgical Centers, Escondido, L.P., Elite Surgical Centers, Del Mar, L.P., and Point

Loma Surgical Center, L.P. (collectively Elite), concerning billing disputes related to the

reasonable facility fees for arthroscopic knee procedures, arthroscopic shoulder

procedures, and epidural injection procedures provided by Elite to injured workers prior

to January 1, 2004.

The dispute over billing began when, in November 2000, Elite increased the

charges that it billed for certain outpatient services, including the services at issue in this

proceeding. The petitioners disputed the reasonableness of Elite's increased charges.

Rather than remitting the amounts billed, the petitioners paid only the amounts that they

believed were appropriate for the services performed. Elite filed notices of liens with the

1 The eight petitioners are the following employers and/or employers' insurance companies: California Insurance Guarantee Association; AIU Insurance Company; American Home Assurance Company (as insurer for Wal-Mart Associates, Inc.); Insurance Company of the West; Explorer Insurance Company; Solar Turbines, Inc.; BAE Systems Ship Repair, Inc.; and ACE American Insurance Company. The California Insurance Guarantee Association took over liability for one of the original defendants in this case after that defendant was declared insolvent and ordered into liquidation. 3 Board's San Diego office, seeking to collect the remaining balances.2 All of the facility

fee bills that are subject to consolidation in this matter are for services rendered between

November 2000 and December 31, 2003.

Division 4 of the Labor Code sets forth an extensive regulated system for the

medical treatment of employees who are injured at work. (Lab. Code, § 3200 et seq.)3

As part of this system, the administrative director of the Division of Workers'

Compensation (DWC) is responsible for adopting and periodically revising an official

medical fee schedule (OMFS) that establishes the "reasonable maximum fees" to be paid

for medical treatment provided to employees who are injured at work. (§ 5307.1.) For

the period between April 13, 2001 and December 31, 2003, the administrative director

adopted an OMFS with reasonable maximum fees for services performed by 21 San

Diego area hospitals. (8 Cal. Code Regs., § 9792.1.) This OMFS did not cover facility

fees charged by ASCs. As a result, there was no established "reasonable maximum fee"

for procedures provided at ASCs during the relevant time period.4

2 Elite originally filed thousands of liens for services rendered prior to January 1, 2004. The Board issued several orders to consolidate these liens. The most recent consolidation order involved 436 cases, but after resolution of a number of the cases, 333 cases remained unresolved at the time of trial before the WCJ.

3 Further statutory references are to the Labor Code unless otherwise indicated.

4 The Legislature amended the Labor Code in 2003 to require the administrative director to "adopt and revise periodically an [OMFS]" to "establish reasonable maximum fees paid for medical services other than physician services, drugs and pharmacy 4 At the time the parties' dispute over Elite's bills arose, billing disputes were

resolved through litigation before the Board. In a billing dispute case, the parties litigate

before a WCJ, who acts for the Board in the first instance. In this case, a 17-day trial was

held before the WCJ regarding the reasonable value for certain facility services provided

by Elite in the consolidated cases. Both parties presented extensive documentary and

testimonial evidence.

At trial, Elite introduced in evidence the billing itemizations and operative reports

for the facility services, to demonstrate the range of facility services that Elite had

provided for epidural, knee and shoulder procedures during the relevant time period.

David Kupfer, M.D., who served as the medical director and the general partner of Elite,

reviewed each of the bills and operative reports and described the multiple, distinct

procedures performed by the physician, the facility services provided by Elite, and the

differences in services between and among bills and reports. For example, Dr. Kupfer

testified that as to a number of the disputed bills, although the bills identified only a

services, health care facility fees, home health care, and all other treatment, care, services, and goods described in Section 4600 and provided pursuant to this section" for dates of service after January 1, 2004. (Stats. 2003, ch. 639, § 35, subd. (a).) This OMFS would include facility fees to be paid to an ASC. The Legislature also amended the Labor Code to provide that "the maximum facility fee for services performed in an [ASC], or in a hospital outpatient department, may not exceed 120 percent of the fee paid by Medicare for the same services performed in a hospital outpatient department." (Stats. 2003, ch. 639, § 35, subd. (c).)

5 single "CPT code,"5 the operative reports demonstrated that in fact, multiple procedures

had been performed, thereby increasing the facility fees for the services provided by

Elite. The petitioners' expert, Theresa Cokley, confirmed that, at least as to one of the

bills, five separate procedures had actually been performed, despite the fact that only a

single CPT code appeared on the bill. This evidence demonstrated that although only a

single CPT code appeared on the bills, with respect to many of the bills, Elite had in fact

provided multiple, distinct services.

Elite also presented collection data compiled over a period of approximately seven

years to demonstrate that it generally collected 62.7 percent of the amount that it charged

for facility fees.6 In addition, Elite presented the testimony of its expert, Rocky Gentner,

a health care financial management consultant, regarding the usual and customary fees

that Elite and other ASCs accepted as full payment for facility services provided between

2000 and 2003. To compile this information, Gentner relied on a database of facility fee

charges and payment amounts for all closed cases from all payers for facility services

provided between January 1, 2000 through December 31, 2003, for all southern

5 CPT is the acronym for the American Medical Association's "Current Procedural Terminology." "CPT codes were jointly developed by the American Medical Association and the Health Care Financing Administration and are the standardized nomenclature for use in insurance claims." (People ex rel. Allstate Insurance Co. v. Muhyeldin (2003) 112 Cal.App.4th 604, 607.) A CPT code is used to identify and refer to a particular medical, surgical, and/or diagnostic procedure or service.

6 For example, between 2000 and 2003, Elite recovered $41,984,699 of the $66,995,390 that it billed for facility fees. 6 California ASCs that were willing to participate in the database. Nineteen ASCs

participated in the database, which contained information regarding 73,319 closed cases.7

The petitioners presented a report and oral testimony from their expert, Henry

Miller, Ph.D. Dr. Miller offered his expert opinion that Elite's charges were grossly

disproportionate to those of other San Diego County providers, that Gentner's analysis

and opinion were fundamentally flawed, and that the ASC OMFS that went into effect as

of January 1, 2004 is the only objective and fair method for determining a reasonable fee

for Elite's services during the relevant time period. Dr. Miller also considered what other

ASC providers charged and accepted for similar services during the relevant period.

7 The petitioners suggest that Gentner's data should be viewed with suspicion because he "based his opinions on his 'statistical analysis' of unauthenticated data not in evidence" and "undertook no analysis as to whether any of the underlying services had been correctly coded or billed." However, the WCJ admitted this evidence, over petitioners' objections. Although petitioners state in their briefing that they "now renew [the] evidentiary objections [that they made to the WCJ and in their petition for reconsideration]," they do not specifically request that this court review the WCJ's rulings with respect to this evidence. Petitioners fail to provide any legal argument in their briefing in this proceeding as to how or why the WCJ's rulings with respect to the evidence in question were erroneous. Rather, they simply say, for example, "Petitioners filed pre-trial motions in limine, offered multiple evidentiary objections throughout the trial, and filed post-trial motions to strike Gentner's objectionable evidence," and then cite to numerous pages in the volumes of exhibits filed with the petition for review to demonstrate where in the record they objected to this evidence. This is insufficient to articulate any reversible error on the part of the WCJ. "Whether legal or factual, no error warrants reversal unless the [party seeking review] can show injury from the error." (City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266, 286.) Further, " '[a]ppellate briefs must provide argument and legal authority for the positions taken. "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived." ' [Citation.] 'We are not bound to develop appellants' arguments for them.' " (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.) 7 According to Dr. Miller, Elite's charges for the procedures at issue were more than two

times the maximum amount allowed by law for full service inpatient hospitals in the

same geographic area; up to seven times more than what Elite itself had customarily

charged for the same services prior to increasing its charges in 2000; up to 10 times more

than what Elite customarily accepted as full payment prior to 2000; up to four to five

times more than the fees charged by other ASCs in the same geographic area; up to 24

times more than the amount accepted for similar services by other ASCs in the same

geographic area; and up to seven times more than the maximum facility fee under the

ASC OMFS in effect after January 1, 2004, for the same or similar services. According

to Dr. Miller, the OMFS for ASCs in effect after January 1, 2004 is easily identifiable,

objective, transparent, easy to calculate, provides fair compensation, and would provide

an expeditious and straightforward way to resolve Elite's unresolved bills.

On January 1, 2013, after the case had been submitted to the WCJ but before the

WCJ issued a decision, certain legislative changes to the workers' compensation law that

were enacted in 2012 became effective.

One month later, on February 1, 2013, the WCJ issued his decision regarding the

consolidated claims. The WCJ determined that the reasonable fee for arthroscopic knee

procedures was "$5,207.85 or the amount billed, whichever is less." This amount is

approximately 28 percent of the amount that Elite customarily billed for such procedures,

and is $5,377 less than what Elite stated that it accepted, on average, per bill. The

reasonable fee for percutaneous lysis of epidural adhesions was "$2,337.52, or the

8 amount billed, whichever is less." This amount reflects approximately 45 percent of the

amount that Elite customarily billed for these procedures, and is approximately $854 less

than what Elite stated it was able to collect per bill. Finally, the WCJ determined that the

reasonable fee for arthroscopic shoulder procedures is "$4,340.95, or the amount billed,

whichever is less." This amount is approximately 22.5 percent of what Elite customarily

billed for these procedures, and is approximately $14,926 less than what Elite stated that

it accepted, on average, per bill.

In making these findings, the WCJ stated the following:

"A broad range of evidence was presented and considered in this case. It is noteworthy that no one proposed a formula incorporating all of the relevant factors into a broadly applicable equation to arrive at 'reasonable.' Maybe that is because there is none.

"The universe of 'relevant factors' is too big, subjective, random, and dissimilar for this. But the universe of relevant factors at least establishes that 'reasonable' facility fees will not be less than what Medicare would allow, and not more than what Elite contends it has collected on average over the years for the various types of facility fees.

"Within this range of evidence, there are two other relevant factors that significantly narrow the range of reasonable and are well constructed for broad and objective application. One is the Official Medical Fee Schedule for ambulatory surgical centers that went into effect on January 1, 2004. The other is the Official Medical Fee Schedule for hospitals in effect from April 13, 2001 through December 31, 2003. The halfway point between these two schedules constitutes the reasonable facility fee."

The petitioners moved for reconsideration of the WCJ's order. The WCJ issued a

Report and Recommendation on the petition for reconsideration, recommending that the

9 petition for reconsideration be denied in its entirety. In the Report and Recommendation,

the WCJ reviewed much of the evidence presented, and set forth the factual and legal

bases for his determination of the reasonable value of the services provided by Elite for

the procedures in dispute. The Board granted reconsideration. After considering the

petition for reconsideration, Elite's answer, and the WCJ's Report and Recommendation,

the full Board adopted the WCJ's Report and Recommendation, and affirmed in its

entirety the WCJ's original decision rendered on February 1, 2013.

The petitioners filed a petition for writ of review in this court. The Board filed an

informal response pursuant to this court's request. Elite filed a return in opposition to the

petition for writ of review. The California Workers' Compensation Institute filed an

amicus curiae brief in support of the petition, and the California Society of Industrial

Medicine and Surgery, Inc., filed an amicus curiae brief in support of the Board.

III.

DISCUSSION

A. Legal standards on a petition for review of a Board decision

As to findings of fact, a court defers to the Board's findings if those findings are

supported by substantial evidence. (§ 5952; Department of Rehabilitation v. Workers'

Comp. Appeals Bd. (2003) 30 Cal.4th 1281, 1290.) "The term 'substantial evidence'

means evidence 'which, if true, has probative force on the issues. It is more than a mere

scintilla, and means such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion . . . . It must be reasonable in nature, credible, and of

10 solid value . . . .' " (Braewood Convalescent Hospital v. Workers' Comp. Appeals Bd.

(1983) 34 Cal.3d 159, 164.) When considering a petition for a writ of review on a

decision of the Board, " ' " '[t]his court must determine whether the evidence, when

viewed in light of the entire record, supports the award of the WCAB. This court may

not reweigh the evidence or decide disputed questions of fact.' " ' " (Tenet/Centinela

Hospital Medical Center v. Workers' Comp. Appeals Bd. (2000) 80 Cal.App.4th 1041,

1045-1046 (Tenet/Centinela).)

" ' " 'Questions of statutory interpretation are, of course, for [a] court to

decide.' " ' " (Tenet/Centinela, supra, 80 Cal.App.4th at pp. 1045-1046.) However,

although the Board's conclusions on questions of law are not binding on this court

(Kuykendall v. Workers' Comp. Appeals Bd. (2000) 79 Cal.App.4th 396, 402), and the

interpretation of a labor statute is a legal question subject to our independent review

(Boehm & Associates v. Workers' Comp. Appeals Bd. (1999) 76 Cal.App.4th 513, 515-

516), we nevertheless "generally defer to the [Board's] interpretation of labor statutes

unless clearly erroneous" (City of Long Beach v. Workers' Comp. Appeals Bd. (2005) 126

Cal.App.4th 298, 316, fn. 5).

B. The Board's jurisdiction to determine this matter

Petitioners contend that as a result of legislative action in 2012, effective as of

January 1, 2013, the Board lacked jurisdiction to resolve this medical billing dispute.

Specifically, petitioners argue that through its passage of Senate Bill No. 863 (hereafter,

11 S.B. 863) (Stats, 2012, ch. 363), the Legislature divested the Board of jurisdiction over all

pending and future medical billing disputes.8

As passed, S.B. 863 includes 86 provisions, and makes a substantial number of

changes to a variety of aspects of workers' compensation law. Among the numerous and

significant changes implemented by the Legislature in S.B. 863 is the creation of an

independent bill review (IBR) process by which billing disputes between providers and

8 In their petition for reconsideration to the Board, the petitioners did not make precisely the same argument that they raise in this review proceeding. Although the petitioners referenced the new independent bill review system codified by S.B. 863 in their petition for reconsideration, they did so in furtherance of their argument that "retrospective application of the OMFS [for outpatient surgery centers in effect as of January 1, 2004] to resolve Elite's bills is fair, reasonable, expeditious, and consistent with the nationally recognized industry standards," and that "Elite has presented no plausible alternative method." In fact, the heading for the section in which the petitioners cited S.B. 863 was, "Substantial evidence supports application of the ASC fee schedule in effect on January 1, 2004." At one point in the petition for reconsideration, petitioners asserted, "Finally, the WCJ no longer has jurisdiction to determine the actual amount Defendants might owe a lien claimant ASC as those claims are now governed by the independent bill review process." However, they made no legal argument on this point and instead, immediately refocused on their argument that "[s]ubstantial evidence in this case supports a finding of fact that [a] reasonable facility fee for Elite's services rendered before January 1, 2004 is the maximum amount allowed under the Official Medical Fee Schedule for San Diego County [ASCs] that went into effect on January 1, 2004." Although Elite contends that the petitioners have forfeited this argument under section 5904 and Health v. Workmen's Comp. App. Bd. (1967) 254 Cal.App.2d 235, as petitioners point out, this is an issue regarding the Board's subject matter jurisdiction to determine this dispute, and subject matter jurisdiction is an issue that may be raised at any time until the finality of a decision. (See Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 307, fn. 9.)

12 employers are to be resolved administratively.9 In general, the new IBR process requires

an employer to respond, within certain time limits, to a bill sent by a medical provider,

and to provide an "explanation of review" detailing the reasons for the action that the

employer has decided to take with respect to the bill, i.e., to pay the bill in full, pay an

adjusted amount, or deny payment. If a provider disputes the amount that an employer

pays on the bill, the provider may request a "second review" within a certain time period.

S.B. 863 requires requests for a second review to be made in conformity with a form to

be created by the administrative director, and to include certain information listed in the

statute. If a provider is still unhappy with the amount paid by an employer after receiving

an employer's explanation of review after the second review, the provider may request to

have an independent reviewer review the bill and settle the dispute between the parties.10

S.B. 863 amends section 4603.2 by adding the following language as subdivision

(e), which sets forth the requirements for the second review that a medical provider may

request (and must request) prior to seeking independent review of a bill:

9 S.B. 863 also created a new administrative process by which disputes concerning medical treatment may be resolved without resort to litigation before the Board. The new "independent medical review" (IMR) process is "patterned after the long-standing and widely applauded IMR process used to resolve medical disputes in the health insurance system." (Sen. com. on Labor and Industrial Relations, Analysis of Sen. Bill No. 863 (2011-2012 Reg. Sess.) Aug. 21, 2012.)

10 Because the specifics of the new IBR process are important to our analysis of the issue concerning the Board's jurisdiction over billing disputes that were pending as of the effective date of S.B. 863, we will provide the full text of some of the relevant provisions. 13 "(e)(1) If the provider disputes the amount paid, the provider may request a second review within 90 days of service of the explanation of review or an order of the appeals board resolving the threshold issue as stated in the explanation of review pursuant to paragraph (5) of subdivision (a) of Section 4603.3. The request for a second review shall be submitted to the employer on a form prescribed by the administrative director and shall include all of the following:

"(A) The date of the explanation of review and the claim number or other unique identifying number provided on the explanation of review.

"(B) The item and amount in dispute.

"(C) The additional payment requested and the reason therefor.

"(D) The additional information provided in response to a request in the first explanation of review or any other additional information provided in support of the additional payment requested.

"(2) If the only dispute is the amount of payment and the provider does not request a second review within 90 days, the bill shall be deemed satisfied and neither the employer nor the employee shall be liable for any further payment.

"(3) Within 14 days of a request for second review, the employer shall respond with a final written determination on each of the items or amounts in dispute. Payment of any balance not in dispute shall be made within 21 days of receipt of the request for second review. This time limit may be extended by mutual written agreement.

"(4) If the provider contests the amount paid, after receipt of the second review, the provider shall request an independent bill review as provided for in Section 4603.6." (S.B. 863, § 36; Lab. Code, § 4603.2, subd. (e).)

In turn, section 4603.6 of the Labor Code, which was added by section 39 of S.B.

863, discusses when an IBR may be requested, what will occur if an IBR is not requested

14 within the prescribed time, how such a request is to be made, and how the IBR will be

assigned to, and addressed by, an independent reviewer:

"(a) If the only dispute is the amount of payment and the provider has received a second review that did not resolve the dispute, the provider may request an independent bill review within 30 calendar days of service of the second review pursuant to Section 4603.2 or 4622. If the provider fails to request an independent bill review within 30 days, the bill shall be deemed satisfied, and neither the employer nor the employee shall be liable for any further payment. If the employer has contested liability for any issue other than the reasonable amount payable for services, that issue shall be resolved prior to filing a request for independent bill review, and the time limit for requesting independent bill review shall not begin to run until the resolution of that issue becomes final, except as provided for in Section 4622.

"(b) A request for independent review shall be made on a form prescribed by the administrative director, and shall include copies of the original billing itemization, any supporting documents that were furnished with the original billing, the explanation of review, the request for second review together with any supporting documentation submitted with that request, and the final explanation of the second review. The administrative director may require that requests for independent bill review be submitted electronically. A copy of the request, together with all required documents, shall be served on the employer. Only the request form and the proof of payment of the fee required by subdivision (c) shall be filed with the administrative director. Upon notice of assignment of the independent bill reviewer, the requesting party shall submit the documents listed in this subdivision to the independent bill reviewer within 10 days.

"(c) The provider shall pay to the administrative director a fee determined by the administrative director to cover no more than the reasonable estimated cost of independent bill review and administration of the independent bill review program. The administrative director may prescribe different fees depending on the number of items in the bill or other criteria determined by regulation adopted by the administrative director. If any additional payment is

15 found owing from the employer to the medical provider, the employer shall reimburse the provider for the fee in addition to the amount found owing.

"(d) Upon receipt of a request for independent bill review and the required fee, the administrative director or the administrative director's designee shall assign the request to an independent bill reviewer within 30 days and notify the medical provider and employer of the independent reviewer assigned.

"(e) The independent bill reviewer shall review the materials submitted by the parties and make a written determination of any additional amounts to be paid to the medical provider and state the reasons for the determination. If the independent bill reviewer deems necessary, the independent bill reviewer may request additional documents from the medical provider or employer. The employer shall have no obligation to serve medical reports on the provider unless the reports are requested by the independent bill reviewer. If additional documents are requested, the parties shall respond with the documents requested within 30 days and shall provide the other party with copies of any documents submitted to the independent reviewer, and the independent reviewer shall make a written determination of any additional amounts to be paid to the medical provider and state the reasons for the determination within 60 days of the receipt of the administrative director's assignment. The written determination of the independent bill reviewer shall be sent to the administrative director and provided to both the medical provider and the employer.

"(f) The determination of the independent bill reviewer shall be deemed a determination and order of the administrative director. The determination is final and binding on all parties unless an aggrieved party files with the appeals board a verified appeal from the medical bill review determination of the administrative director within 20 days of the service of the determination. The medical bill review determination of the administrative director shall be presumed to be correct and shall be set aside only upon clear and convincing evidence of one or more of the following grounds for appeal:

16 "(1) The administrative director acted without or in excess of his or her powers.

"(2) The determination of the administrative director was procured by fraud.

"(3) The independent bill reviewer was subject to a material conflict of interest that is in violation of Section 139.5.

"(4) The determination was the result of bias on the basis of race, national origin, ethnic group identification, religion, age, sex, sexual orientation, color, or disability.

"(5) The determination was the result of a plainly erroneous express or implied finding of fact, provided that the mistake of fact is a matter of ordinary knowledge based on the information submitted for review and not a matter that is subject to expert opinion.

"(g) If the determination of the administrative director is reversed, the dispute shall be remanded to the administrative director to submit the dispute to independent bill review by a different independent review organization. In the event that a different independent bill review organization is not available after remand, the administrative director shall submit the dispute to the original bill review organization for review by a different reviewer within the organization. In no event shall the appeals board or any higher court make a determination of ultimate fact contrary to the determination of the bill review organization.

"(h) Once the independent bill reviewer has made a determination regarding additional amounts to be paid to the medical provider, the employer shall pay the additional amounts per the timely payment requirements set forth in Sections 4603.2 and 4603.4." (S.B. 863, § 39; Lab. Code, § 4603.6.)

17 In addition to these provisions, S.B. 863 also added sections 139.5, 4603.3, and

4903.5, and amended section 4622, all of which relate to the newly created administrative

IBR.11

According to petitioners, the Legislature made this new IBR system applicable to

pending billing disputes between employers and medical providers by way of a non-

codified provision in S.B. 863. The petitioners point to section 84 of S.B. 863 which

states, "This act shall apply to all pending matters, regardless of date of injury, unless

otherwise specified in this act, but shall not be a basis to rescind, alter, amend, or reopen

any final award of workers' compensation benefits."12 The petitioners argue that since

S.B. 863 does not elsewhere specify that the IBR procedure applies only to future billing

disputes, the IBR procedure set forth in the statute must apply to "all pending matters."

Looking solely at section 84 of S.B. 863, petitioners' argument that the Legislature

intended to immediately divest the WCAB of jurisdiction over medical billing disputes

might appear to be correct. However, further review of S.B. 863, as well as a review of

the entire framework of the newly created IBR procedure, demonstrates that the

legislative picture is not nearly as straightforward as petitioners maintain.

11 To the extent that these provisions are relevant to our discussion, we will provide the relevant language at that point in the discussion.

12 Although uncodified, this provision is nevertheless fully a part of the statutory law. (See County of Los Angeles v. Payne (1937) 8 Cal.2d 563, 574.) 18 "Our primary task in interpreting a statute is to determine the Legislature's intent,

giving effect to the law's purpose. [Citation.] We consider first the words of a statute, as

the most reliable indicator of legislative intent. [Citation.] ' " 'Words must be construed

in context, and statutes must be harmonized, both internally and with each other, to the

extent possible.' [Citation.] Interpretations that lead to absurd results or render words

surplusage are to be avoided." ' " (Tuolumne Jobs & Small Business Alliance v. Superior

Court (2014) 59 Cal.4th 1029, 1037 (Tuolumne Jobs), italics added.)

"[W]here a statute's terms are unclear or ambiguous, we may 'look to a variety of

extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied,

the legislative history, public policy, contemporaneous administrative construction, and

the statutory scheme of which the statute is a part.' " (In re M.M. (2012) 54 Cal.4th 530,

536.) "Moreover, ' "[every] statute should be construed with reference to the whole

system of law of which it is a part so that all may be harmonized and have effect." ' "

(Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593, 610; Robert L. v.

Superior Court (2003) 30 Cal.4th 894, 903 [" 'Statutory language should not be

interpreted in isolation, but must be construed in the context of the entire statute of which

it is a part, in order to achieve harmony among the parts' "].)

After considering S.B. 863 as a whole, we conclude that this legislation is

ambiguous with respect to whether the IBR process was intended to apply to pending

billing disputes, or, rather, was intended to apply only prospectively, to new billing

disputes that arise with respect to injuries that occur after the effective date of the

19 legislation. Attempting to apply section 84 of S.B. 863 in this case would leave these

parties without a process by which to have their dispute resolved by a third party, since

the new IBR process may be utilized only if certain conditions precedent have been met,

and the deadlines for meeting those conditions have passed. Leaving these parties

without a viable process to decide their dispute cannot be what the Legislature intended.

We conclude that in creating the IBR process, the Legislature intended to establish a new

dispute resolution procedure that would apply to disputes arising on or after the effective

date of the legislation, and not to disputes like this one that were pending at the time the

legislation went into effect.

Although petitioners suggest that we look only to section 84 of S.B. 863 to

conclude that the Legislature intended that the new IBR procedure applies to pending

billing disputes, section 84 provides for application of the provisions of S.B. 863 to

"pending matters . . . unless otherwise specified in this act" (Stats, 2012, ch. 363, § 84).

S.B. 863, section 7 also added Labor Code section 139.5, a provision that authorizes the

administrative director of the DWC (administrative director) to make contracts with

organizations that can provide reviewers to implement the newly created IBR and IMR

systems. Section 139.5 provides in relevant part:

"(a) (1) The administrative director shall contract with one or more independent medical review organizations and one or more independent bill review organizations to conduct reviews pursuant to Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of Division 4. . . .

20 "(2) To enable the independent review program to go into effect for injuries occurring on or after January 1, 2013, and until the administrative director establishes contracts as otherwise specified by this section, independent review organizations under contract with the Department of Managed Health Care pursuant to Section 1374.32 of the Health and Safety Code may be designated by the administrative director to conduct reviews pursuant to Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of Division 4. The administrative director may use an interagency agreement to implement the independent review process beginning January 1, 2013. The administrative director may initially contract directly with the same organizations that are under contract with the Department of Managed Health Care on substantially the same terms without competitive bidding until January 1, 2015." (§ 139.5, subd. (a), italics and boldface added.)

Although this provision does not expressly state that the Legislature intended that

the IBR and IMR processes go into effect only prospectively, it provides an indication

that the Legislature viewed both the IMR and IBR processes as applying to future

employment-related injuries and to future disputes as to medical care and billing for such

care.

Petitioners and amicus curiae California Workers' Compensation Institute suggest

that the relevant language in section 139.5, subdivision (b) exists only to permit the

administrative director to contract with IMR providers in order to meet the approaching

implementation date set forth for the IMR procedure as directed in section 4610.5.

However, subdivision (a) of section 139.5 requires the administrative director to contract

with "one or more independent medical review organizations and one or more

independent bill review organizations to conduct reviews pursuant to Article 2

(commencing with Section 4600) of Chapter 2 of Part 2 of Division 4." (§ 139.5, subd.

21 (a)(1), italics added.) It is therefore clear that the "independent review program"

(§ 139.5, subd. (a)(2)) referred to in section 139.5, subdivision (b) includes both the

medical review process and the bill review process. Further, the language of subdivision

(a) suggests that the Legislature anticipated that the contracts referred to in the

subdivision would have to exist before the review procedure could go into effect. Section

139.5 thus suggests that the Legislature intended that both the IMR and IBR processes be

implemented only prospectively, and that they were not intended to apply to pending

claims.

This conflict between the language of section 84 of S.B. 863 (i.e., "This act shall

apply to all pending matters, regardless of date of injury . . . ") and the reference to

"enabl[ing] the independent review program to go into effect for injuries occurring on or

after January 1, 2013" in section 139.5, subdivision (a)(2) renders the legislation

ambiguous with respect to whether it was intended to apply to pending billing disputes

such as the one at issue here, or rather, whether it was intended to apply only to disputes

that arose with respect to injuries that occur after the effective date of the legislation, i.e.,

January 1, 2013.13

13 Section 84 of S.B. 863 appears to be a "catch-all" provision, intended to assist in the implementation of a number of changes that were made to the workers' compensation law in S.B. 863. Again, S.B. 863 made significant changes to a number of different areas of workers' compensation law, and did not address solely the process by which resolution of medical treatment disagreements and billing disagreements shall occur. Among other things, S.B. 863 increases permanent disability values, alters/simplifies the permanent disability rating method, simplifies the supplemental job displacement voucher system, requires a fee for the filing of a lien, makes changes to the creation and maintenance of 22 In the face of such ambiguity, we are led to interpret the statute as operating

prospectively. (See Californians for Disability Rights v. Mervyn's, LLC (2006) 39

Cal.4th 223, 230 [statutes ordinarily are interpreted as operating prospectively in the

absence of a clear indication of a contrary legislative intent]; see also Myers v. Philip

Morris Companies, Inc. (2002) 28 Cal.4th 828, 841 [when a statute is ambiguous

regarding retroactivity, it is construed to be prospective in application].) In construing

statutes, there is a presumption against retroactive application unless the Legislature

plainly has directed otherwise by means of " 'express language of retroactivity

or . . . other sources [that] provide a clear and unavoidable implication that the

Legislature intended retroactive application.' " (McClung v. Employment Development

Dept. (2004) 34 Cal.4th 467, 475 (McClung), italics omitted.) Although, at first blush,

S.B. 863 section 84 might appear to constitute " 'express language of retroactivity' "

(McClung, supra, at p. 475), it specifically allows for other portions of the statute to

provide a different rule regarding retroactive/prospective application, and at least one

other provision of the statute, Labor Code section 139.5, suggests that the IBR process

was intended to apply only to disputes over medical treatment provided for injuries that

occur on or after January 1, 2013.

medical provider networks, updates the OMFS, establishes a fee schedule for various other services, including interpreters, vocational experts, and in-home health care, and provides for additional payments to be made to workers who suffer disproportionate wage loss. 23 The new process by which billing disputes are to be resolved provides an even

more compelling basis for our conclusion that the Legislature intended the IBR process to

apply only to new disputes over billing. Specifically, S.B. 863 sets forth a number of

conditions precedent that must be met, as well as strict time limits within which those

conditions must be met, before a provider may seek access to the IBR process to resolve

a billing dispute.

For example, after a medical provider submits a bill to an employer, the employer

is to either pay the bill with an explanation of review or notify the provider of any

objection to the bill (based on a contesting of the amount, denial of the bill, or an

objection that the itemization is incomplete). (§ 4603.2, subd. (b)(1).) Specifically,

within 45 days of receiving the bill, an employer must provide any payment to the

provider, along with "an explanation of review pursuant to Section 4603.3," and if the

employer considers the bill, or any portion of it to be "contested, denied, or considered

incomplete," the employer must notify the provider in the "explanation of review" of the

"items being contested, the reasons for contesting these items, and the remedies available

to the physician or the other provider if he or she disagrees" within 30 days of receipt of

the bill. (§ 4603.2, subd. (b)(2) & (b)(2)(B).)

Section 4603.3, as newly adopted pursuant to S.B. 863, section 37, sets forth what

an employer must include in its "explanation of review" when it pays, adjusts, or denies a

"complete or incomplete itemization of medical services." (§ 4603.3.) Although the

provision sets forth certain basic information that must be provided, it also states that

24 employers must provide an explanation of review "in the manner prescribed by the

administrative director."14 (Ibid.)

If the employer fails to meet these statutory requirements regarding the

explanation of review, the employer must pay "[a]ny properly documented list of services

provided" at the "rates then in effect under Section 5307.1 . . . and increased by 15

14 Section 4603.3, which was added by S.B. 863, section 37, provides in relevant part: "(a) Upon payment, adjustment, or denial of a complete or incomplete itemization of medical services, an employer shall provide an explanation of review in the manner prescribed by the administrative director that shall include all of the following:

"(1) A statement of the items or procedures billed and the amounts requested by the provider to be paid.

"(2) The amount paid.

"(3) The basis for any adjustment, change, or denial of the item or procedure billed.

"(4) The additional information required to make a decision for an incomplete itemization.

"(5) If a denial of payment is for some reason other than a fee dispute, the reason for the denial.

"(6) Information on whom to contact on behalf of the employer if a dispute arises over the payment of the billing. The explanation of review shall inform the medical provider of the time limit to raise any objection regarding the items or procedures paid or disputed and how to obtain an independent review of the medical bill pursuant to Section 4603.6." (Italics added.) 25 percent, together with interest at the same rate as judgments in civil actions retroactive to

the date of receipt of the itemization . . . ." (§ 4603.2, subd. (b)(2).)

S.B. 863 also adds another level of review that a provider may request if the

provider disagrees with the amount of payment remitted by an employer after the first

review of the bill. (§ 4603.2, subd. (e).) This second review, which is required prior to

initiation of the IBR process, must be requested by the provider within 90 days after

receipt of the explanation of review from the employer as to why the full amount of the

bill was not paid. (§ 4603.2, subd. (e)(1).) If the only dispute between the provider and

the employer is the amount of the payment, and the provider fails to request a second

review within 90 days, the bill is automatically deemed satisfied, and no further payment

will be required. (§ 4603.2, subd. (e)(2).)

Within 14 days after receipt of the request for second review, the employer must

issue a final written determination on the bill, and any amount not in dispute between the

provider and the claims administrator must be paid within 21 days after receipt of the

request for a second review. (§ 4603.2, subd. (e)(3).) If, however, the provider still

disagrees with the decision of the employer after the second review, the provider may

request the IBR process. This request must be made on a form designated by the

administrative director, and must be filed with the DWC within 30 days after receipt of

the second review decision. (§ 4603.6.) Only then may the request be assigned to an

independent bill reviewer.

26 As is clear from this framework, all of the relevant deadlines for the new

requirements enacted by S.B. 863 begin to run as of the date the employer receives the

provider's initial bill. All of the relevant deadlines that the parties to a billing dispute

must meet in order to be eligible to invoke the IBR process have long since passed in this

matter, years before S.B. 863 was passed by the Legislature. As a result, neither party

has satisfied the requirements imposed on it by the new procedure. The Legislature made

all of these events conditions precedent to the availability of the IBR process, and did not

provide for an expedited or alternative procedure for disputed bills that were pending at

the time S.B. 863 was enacted.

Further, under the new system, an employer's failure to respond to a provider's bill

as required under the statute would mean that the employer would have to pay for the

services at the "rates then in effect under section 5307.1 . . . and increased by 15 percent,

together with interest at the same rate as judgments in civil actions retroactive to the date

of receipt of the itemization." However, as is made clear by this case, there were no

relevant rates "then in effect" under section 5307.1 (a section that currently consists of the

OMFS), since there was no OMFS for ASCs during the relevant time period.

The practical effect of attempting to apply the new IBR review process to pending

disputes, such as the one at issue in this case, would be that the parties would be left with

no dispute resolution process at all. These parties would not be able to access the IBR

process because they have met none of the prerequisites, and it would not be possible for

them to meet them at this point in time; there would be no resolution by default because

27 there were no rates "then in effect" under section 5307.1; and the parties would not have

available to them the option of litigation before the Board to resolve their dispute.

Considering these obstacles to applying the new billing review process to pending

claims, it is clear that the Legislature could not have intended to leave parties who had

pending billing disputes on the effective date of the new statutory scheme with no

meaningful procedure for resolving their disputes.

Petitioners maintain that application of the new IBR procedure to pending claims

would not be "impossible." According to petitioners, since its amendment in 2001,

section 4603.2 has required an "explanation of review" if an employer uses a bill review

service. Thus, petitioners argue, "[t]he only thing needed to properly implement the new

IBR procedure consistent with the Legislature's mandate is for the administrative director

to simply promulgate regulations establishing a procedure for second bill review for any

unresolved provider bill for a date of service before January 1, 2013 where the employer

had previous provided the medical provider with an objection pursuant to the previous

requirements of section 4603.2 . . . ." Petitioners claim that "[s]uch regulations,

consistent with [S.B.] 863's intent, or those that are reasonabl[y] necessary to effectuate

the purpose of the statutes, are permissible

In making this argument, petitioners essentially concede that there is currently no

viable process by which Elite may obtain an IBR for the claims that have been pending

for years, without someone else stepping up to create such a process. According to

petitioners, this person should be the administrative director. We are not convinced that

28 the administrative director's "broad discretion to adopt rules and regulations as necessary

to promote the public welfare" (Calfarm Ins. Co. v. Deukmajian (1989) 48 Cal.3d 805,

824) is so broad as to permit the administrative director to do what petitioners suggest.

Any regulation adopted by the administrative director must be " 'within the scope of the

authority conferred' [citation] and . . . reasonably necessary to effectuate the purpose of

the statute.' " (Bearden v. U.S. Borax, Inc. (2006) 138 Cal.App.4th 429, 436.) Although

S.B. 863 authorizes the administrative director to promulgate many regulations in order

to implement the new review process created by the Legislature, it does not authorize the

administrative director to develop a separate, parallel process that would apply to billing

disputes that were pending between employers and medical providers on the effective

date of the legislation.

The administrative director's adopted regulations implementing the review

processes for medical treatment and billing indicate that the administrative director has

interpreted S.B. 863's creation of the IMR and IBR processes as applying only to new

disputes (both medical and billing) over care provided to employees as a result of a

employment-related injuries, and not to disputes that were pending when S.B. 863 was

enacted.15 For example, the administrative director adopted 8 California Code of

15 As stated above, although the interpretation of a labor statute is a legal question subject to independent review, we "generally defer to the [Board's] interpretation of labor statutes unless clearly erroneous." (City of Long Beach v. Workers' Comp. Appeals Bd., supra, 126 Cal.App.4th at p. 316, fn. 5.) 29 Regulations section 9792.5.5 in order to implement the second review process created by

the Legislature in S.B. 863. That regulation provides in pertinent part:

"(a) If the provider disputes the amount of payment made by the claims administrator on a bill for medical treatment services rendered on or after January 1, 2013, submitted pursuant to Labor Code section 4603.2, or Labor Code section 4603.4, or bill for medical-legal expenses incurred on or after January 1, 2013, submitted pursuant to Labor Code section 4622, the provider may request the claims administrator to conduct a second review of the bill.

"(b) The second review must be requested within 90 days of:

"(1) The date of service of the explanation of review provided by a claims administrator in conjunction with the payment, adjustment, or denial of the initially submitted bill, if a proof of service accompanies the explanation of review.

"(A) The date of receipt of the explanation of review by the provider is deemed the date of service, if a proof of service does not accompany the explanation of review and the claims administrator has documentation of receipt.

"(B) If the explanation of review is sent by mail and if in the absence of a proof of service or documentation of receipt, the date of service is deemed to be five (5) calendar days after the date of the United States postmark stamped on the envelope in which the explanation of review was mailed.

"(2) The date of service of an order of the Workers' Compensation Appeal Board resolving any threshold issue that would preclude a provider's right to receive compensation for the submitted bill." (8 Cal. Code Regs., § 9792.5.5, italics added.)

The regulation goes on to specify the forms to be used—forms created by the

administrative director after the enactment of S.B. 863, and the information to be

30 included in the request. The next section provides a visual copy of the form. (8 Cal.

Code Regs., §§ 9792.5.5, subds. (c), (d); 9792.5.6.)

In 8 California Code of Regulations section 9792.5.7, the administrative director

sets out the process by which a provider may request the IBR process under the new law:

"If the provider further contests the amount of payment made by the claims administrator on a bill for medical treatment services or goods rendered on or after January 1, 2013, submitted pursuant to Labor Code sections 4603.2 or 4603.4, or bill for medical-legal expenses incurred on or after January 1, 2013, submitted pursuant to Labor Code section 4622, following the second review conducted under section 9792.5.5, the provider shall request an independent bill review. . . ." (8 Cal. Code Regs., § 9792.5.7, subd. (a), italics added.)

It is clear from these regulations that the administrative director has interpreted

S.B. 863, and specifically, the new IBR process, as applying only prospectively—i.e., to

disputes that arise after enactment of the new IBR process, and not to pending disputes.16

We acknowledge that the Legislature was far less ambiguous with respect to the

prospective application of the newly created IMR process created by S.B. 863.

Specifically, section 4610.5, enacted by S.B. 863, section 45, explains that the new IMR

16 The administrative director has interpreted the statute as applying to disputes over bills for services rendered after January 1, 2013. The portion of the legislation that suggests the relevant date for purposes of the new IBR process, i.e., section 139.5, which authorizes the administrative director to contract with the entities that will be used to conduct the IBR process, refers to the "program . . . go[ing] into effect for injuries occurring on or after January 1, 2013." (§ 139.5, subd. (a)(2), italics added.) We need not determine whether the triggering event for purposes of application of the new IBR process to a dispute is whether the relevant employment-related injury occurred on or after January 1, 2013, or, rather, whether the service provided to an employee for which the bill is in dispute occurred on or after January 1, 2013, since the injuries and services at issue in this case all occurred many years prior to January 1, 2013. 31 process applies to "[a]ny dispute over a utilization review decision regarding treatment

for an injury occurring on or after January 1, 2013" (§ 4610.5, subd. (a)(1), and/or

"[a]ny dispute over a utilization review decision if the decision is communicated to the

requesting physician on or after July 1, 2013, regardless of the date of injury." (§

4610.5, subd. (a)(2), italics added.) Although S.B. 863 includes no similar language with

respect to the IBR process, section 139.5, subdivision (a)(2), which discusses the need for

the administrative director "[t]o enable the independent review program to go into effect

for injuries occurring on or after January 1, 2013," refers to the need for both the IMR

and IBR processes to go "into effect for injuries occurring on or after January 1, 2013."

(Ibid.) Given the language of section 139.5, subdivision (b), the fact that the Legislature

was clearer regarding the prospective application of the IMR process than it was with

respect to the IBR process does not, in our view, undermine our conclusion that S.B. 863

is ambiguous as to whether it intended to treat the IBR process differently with respect to

pending claims. Rather, this fact simply further demonstrates that S.B. 863 does not

provide clear guidance as to the Legislature's intention concerning retroactive versus

prospective application.

Our examination of the objectives to be achieved by the legislation, public policy,

and the statutory scheme together17 leads us to conclude that S.B. 863 does not divest the

17 We recognize that we have made no mention of the legislative history of S.B. 863 in our discussion of this matter. Neither the parties nor amici curiae referred to the legislative history in setting forth their arguments. Our independent review of the legislative history has revealed nothing that would provide insight into the Legislature's 32 Board of jurisdiction over pending billing disputes, thereby requiring that ongoing

litigation involving such disputes be abandoned.18 We therefore reject petitioners'

contention that S.B. 863 divests the Board of jurisdiction over the billing disputes at issue

in this matter.

C. Substantial evidence supports the Board's conclusions as to what a reasonable outpatient facility fee is for the relevant procedures during the relevant time period

The petitioners contend that even if the Board retains jurisdiction to resolve Elite's

consolidated lien claims, the Board's three findings of fact (determined in the first

instance by the WCJ and subsequently adopted by the Board en banc) are not supported

by substantial evidence. Specifically, the petitioners argue that there is insufficient

evidence to support the Board's determination that the reasonable facility fees for

arthroscopic knee procedures, arthroscopic shoulder procedures, and epidural injection

procedures were $5,207.85, $4,340.95, and $2,337.52, respectively.

intention with respect to the issue raised by petitioners. Although there was much discussion of the IMR process in various committee reports and other contemporaneous records, there was little discussion of the IBR process, and there is nothing mentioned regarding the Legislature's intention with respect to whether the new IBR process was to apply to pending billing disputes or only to future billing disputes.

18 In fact, all of the deadlines for the conditions precedent to obtaining IBR have passed, and those conditions precedent have not been met, so IBR would not be possible under the current statutory schedule. There is nothing in the legislation that would indicate that the conditions precedent may be dispensed with as to pending disputes, nor is there any legislative direction as to how the IBR process could go forward without those conditions having been met. Thus, as a practical matter, under the process created by S.B. 863, IBR would not be available to these parties at this point in time. 33 An outpatient surgery center has the affirmative burden of proving that its lien is

reasonable, and it must carry this burden by a preponderance of the evidence. (Tapia v.

Skill Master Staffing et al. (2008) 73 Cal.Comp.Cases 1338, 1342-1343 (Tapia), quoting

§ 5705 [" '[t]he burden of proof rests upon the party or lien claimant holding the

affirmative of the issue' "] and § 3202.5 [" '[a]ll parties and lien claimants shall meet the

evidentiary burden of proof on all issues by a preponderance of the evidence' " (italics

omitted)].)

When parties fail to agree on what constitutes the reasonable outpatient facility fee

for a particular service, the Board may take into consideration a wide array of factors,

including but not limited to, the amount the provider usually charges for that service,

what the provider usually accepts as full payment for the service, the usual fee of other

providers in the geographical area in which the services were rendered, what other

providers in the same geographical area usually accept as payment for the same or similar

services, and what inpatient hospitals or surgery centers in the same geographical area

charge and ultimately accept for the same or similar services. (See Tapia, supra, 73

Cal.Comp.Cases at pp. 1343-1344.) In considering these factors, the Board will not find

a particular billing for a service by an ASC to be "reasonable" if the charge is " 'grossly

disproportionate' " to the amount accepted by other outpatient and inpatient facilities in

the same geographical area for the same or similar services. (Id. at p. 1344, italics added,

quoting Kunz v. Patterson Floor Coverings, Inc. (2002) 67 Cal.Comp.Cases 1588, 1599

(Kunz).)

34 The factors discussed in Tapia do not constitute an exhaustive list of the evidence

that the Board may consider when determining the reasonableness of a fee for a service.

Rather, "in litigating the question of a reasonable outpatient surgery center fee, a

defendant or lien claimant may present any relevant evidence concerning that issue."

(Tapia, supra, 73 Cal.Comp.Cases at p. 1344, italics added.) In fact, in Tapia, the Board

considered evidence beyond just the billing and accepted rates for services. In addition to

this evidence, the Board considered what the inpatient OMFS allowed during the relevant

time period, what the Medicare fee schedule allowed, and what the outpatient OMFS

allowed, despite the fact that the outpatient OMFS applied to dates of service that were

not applicable to the claim at issue. (Ibid.) The Board was clear in stating that "neither

section 5307.1, [subdivision] (c) nor the OMFS [for ASCs], standing alone, is dispositive

of the issue of what constitutes a reasonable fee for outpatient surgery center services

before January 1, 2004." (Tapia, supra, at p. 1346.) The Board may also consider "other

aspects of the economics of the medical provider's practice that are relevant, and any

unusual circumstances in the case." (Kunz, supra, 67 Cal.Comp.Cases at p. 1598.)

Petitioners' contention that, with respect to the liens at issue before the Board "the

relevant evidence is limited to what Elite's 'similarly situated' competitor ASCs in [the]

San Diego County 'market place' charged and accepted for the same services" is simply

incorrect. Under Tapia, on which petitioners, themselves, rely, it is clear that the

"relevant evidence" that a party may present in support of a claim for fees "is not limited

to the fees accepted by other outpatient surgery centers in the same geographic area for

35 the services provided." (Tapia, supra, 73 Cal.Comp.Cases at p. 1340, italics added.)

Rather, "any evidence relevant to reasonableness may be offered to support or rebut the

lien." (Ibid., italics added.)

In this case, the parties presented abundant evidence to the WCJ, and the record

demonstrates that the WCJ considered that evidence, weighed it, and ultimately reached a

conclusion as to the "reasonable facility fee." In reaching this conclusion, the WCJ did

not adopt, in full, the position of either side in this matter.

The WCJ noted that, at the far and disparate ends of the spectrum of fees for the

relevant procedures, a "reasonable facility fee" should not be "less than what Medicare

would allow, and not more than what Elite contends it has collected on average over the

years for the various types of facility fees." The WCJ had evidence before him as to the

fee schedule that Medicare would allow for these procedures, as well as evidence as to

the average amount that Elite collected on its bills for the same or similar procedures

between 2000 and 2003.

In narrowing the range between these disparate figures, the WCJ considered the

amounts that other ASCs billed and accepted, as well as the OMFS for hospitals that was

in effect between April 13, 2001 and December 31, 2003. Beyond this evidence, the

WCJ considered the OMFS for ASCs that went into effect as of January 1, 2004.

The WCJ also considered evidence regarding the nature of Elite's facilities. One

witness, an administrator of a San Diego outpatient surgical center not affiliated with

Elite, testified that the facility at which she worked "was not set up to do the range of

36 services available at the Elite facilities." In order to provide those services, including

epidural lysis procedures and spinal surgeries, larger operating rooms and more

expensive medical equipment would have been required. In addition, arthroscopic knee

and shoulder surgeries did not present a "significant percentage of the income" at her

facility in 2003, and unlike the facility where the witness worked, Elite was equipped to

perform spinal surgeries. Further, Elite required that all epidural procedures be done in

an operating room, using IV sedation, as well as fluoroscopies and epidurograms. The

witness's facility did not perform epidural lysis procedures, but instead allowed

physicians to perform " 'blind stick' epidural injections, i.e. without fluoroscopy or

epidurogram." Elite also utilized state-of-the-art surgical equipment and was therefore

prepared to perform procedures that other ASC's were not equipped to perform. The

witness testified that if an expensive piece of equipment was needed for a particular

procedure for a patient at the facility where she worked, she would try to convince the

treating physician to perform the procedure at a hospital, instead. These facts go to the

"economics of the medical provider's practice" and may be considered "unusual

circumstances" in the case that support the WCJ's conclusion that the "reasonable" fee for

the services at issue for the Elite facilities might be different from, and higher than, the

"reasonable" fee for those services at other local ASCs during the relevant time period.

(Kunz, supra, 67 Cal.Comp.Cases at p. 1598.)19

19 Although the creation of an OMFS for ASCs in 2004 eliminated any distinctions 37 The WCJ ultimately concluded that a "reasonable" facility fee for Elite to be paid

for the three challenged procedures would fall between the OMFS established for ASCs

as of January 1, 2004, and the OMFS established for inpatient hospital facilities during

the relevant time period. For example, the OMFS for hospital facilities during between

April 13, 2001 to December 31, 2003 (i.e., most of the relevant time period) allowed for

an average payment of $3,859.55 for percutaneous lysis of epidural adhesions, an average

payment of $8,490.18 for arthroscopic knee procedures, and an average payment of

$5,652.43 for arthroscopic shoulder procedures. On the other hand, the OMFS that went

into effect for ASCs as of January 1, 2004, allowed for an average payment of $815.50

for percutaneous lysis of epidural adhesions, an average payment of $1,952.52 for

arthroscopic knee procedures, and an average payment of $3,029.48 for arthroscopic

shoulder procedures. The WCJ concluded that the "reasonable" facility fees with respect

to Elite's liens were (1) $2,337.52 for percutaneous lysis of epidural adhesions, (2)

$5,207.85 for arthroscopic knee procedures, and (3) $4,340.95 for arthroscopic shoulder

procedures, all of which represent the average between the allowance for these

procedures under the OMFS for hospitals between April 2001 and December 2003 and

the allowance for these procedures under the OMFS for ASCs in place as of January

2004.

in payment as between local ASCs, during the relevant time period no such OMFS was in place. Given the absence of a standardized fee schedule for these procedures, it was up to the WCJ to determine what a "reasonable facility fee" was for these procedures. In doing so, the WCJ was clearly not required to select any particular point of evidence as determinative of what "reasonable" meant in the context of this dispute. 38 As the WCJ noted, the formula that he used to calculate the "reasonable" facility

fees for the relevant time period for the procedures at issue took into consideration what

Medicare allowed, what Elite charged, what Elite accepted as payment, what the OMFS

for ASCs as of January 1, 2004 allowed, what the OMFS for hospitals during much of the

relevant period allowed, and the fees that other ASCs billed and accepted for the same or

similar services. The WCJ considered evidence as to all of these factors, and arrived at

results that fell somewhere in the middle of all of these figures. These conclusions are

supported by the evidence and are clearly permissible. (See San Diego Metropolitan

Transit Development Bd. v. Cushman (1997) 53 Cal.App.4th 918, 931 [ultimately, the

trier of fact " 'may accept the evidence of any one expert or choose a figure between them

based on all of the evidence' "].)

IV.

DISPOSITION

The decision of the Board after reconsideration is affirmed. The parties are to

bear their own costs in this proceeding.

AARON, J.

WE CONCUR:

HUFFMAN, Acting P. J.

IRION, J.