ADJ10428400 · July 18, 2024

Defendant failed to prove existence of a valid PPO contract to reduce lien reimbursement; WCJ properly allowed statutory increase and interest under Labor Code 4603.2(b)(2).

From the decision · page 1We have considered the Petition and the Report. We have also reviewed the record in this matter. Based upon our review of the record, and for the reasons stated in the WCJ's Report, which we adopt and incorporate, and for the reasons discussed below, we will grant the Petition for

Defendant failed to prove existence of a valid PPO contract to reduce lien reimbursement.

Favours Applicant prevailed

Without proof of a valid PPO contract, defendant could not reduce reimbursement to lien claimant.

From the decision · page 2As the party with the affirmative of the issue, it is defendant who carries the burden of proof. (Lab. Code § 5705, "[t]he burden of proof rests upon the party or lien claimant holding the affirmative of the issue.") Here, defendant relied on an alleged PPO contract to reduce the amounts reimbursed to lien claimant. It is therefore defendant's affirmative burden to establish the existence of a valid and enforceable PPO contract governing its reimbursement arrangement with lien claimant. Defendant claims lien claimant failed to deny existence of the contract, but in an April 13, 2016 letter sent to defendant, which was attached to a document titled "Provider's Second Request for Bill Review," lien claimant stated that the PPO network agreement either "does not exist," or lien claimant was unaware that defendant was "a beneficiary of the alleged PPO network agreement." (Exhibit 2.) Further, notwithstanding lien claimant's letter, whether lien claimant formally denied the existence of the PPO contact is irrelevant in so far as section 5705 is concerned. Defendant still carries the burden of proof. Accordingly, we agree with the WCJ that defendant's affirmative burden of establishing the existence of a valid and applicable PPO agreement was not met herein. (Report, pp. 4-5.)

Operative report by Dr. John Itamura supported the appropriateness of DRG 483 coding used by lien claimant.

Favours Applicant prevailed

Supported lien claimant's billing and rebutted defendant's claim of improper coding.

From the decision · page 2Defendant contends lien claimant used the incorrect DRG2 code. According to defendant's bill review expert, the correct code is DRG 563, which "relates to fractures," rather than the code applied, DRG 483, which "relates to major limb attachment." (Petition, p. 5.) The allegation of improper coding, however, was not raised prior to the matter being set for trial, either in the original bill review completed on January 13, 2016, or otherwise. Further, it is unclear how DRG 483 would be more applicable than DRG 563 given that the operative report signed by Dr. John Itamura on September 22, 2015 indicated that the surgery performed on applicant included irrigation, debridement, radial head replacement, and repairs of the lateral collateral ligament and flexor pronator mass. (Exhibit 4, Operative Report of Dr. Itamura, September 22, 2015, p. 1.) We therefore agree with the WCJ that it would appear applicant's surgery was not "more akin to `Fracture, Sprain, and Dislocation Except Femur, Hip, Pelvis and Thigh w/o MCC' than to `Major

Operative report indicated surgery included radial head replacement and repairs, supporting the appropriateness of DRG 483 coding over DRG 563.

Operative report described surgery consistent with DRG 483 rather than DRG 563, supporting lien claimant's billing code.

From the decision · page 2Defendant contends lien claimant used the incorrect DRG2 code. According to defendant's bill review expert, the correct code is DRG 563, which "relates to fractures," rather than the code applied, DRG 483, which "relates to major limb attachment." (Petition, p. 5.) The allegation of improper coding, however, was not raised prior to the matter being set for trial, either in the original bill review completed on January 13, 2016, or otherwise. Further, it is unclear how DRG 483 would be more applicable than DRG 563 given that the operative report signed by Dr. John Itamura on September 22, 2015 indicated that the surgery performed on applicant included irrigation, debridement, radial head replacement, and repairs of the lateral collateral ligament and flexor pronator mass. (Exhibit 4, Operative Report of Dr. Itamura, September 22, 2015, p. 1.) We therefore agree with the WCJ that it would appear applicant's surgery was not "more akin to `Fracture, Sprain, and Dislocation Except Femur, Hip, Pelvis and Thigh w/o MCC' than to `Major

Labor Code section 5705

Burden of proof rests on party holding affirmative of the issue.

Defendant had burden to prove existence of valid PPO contract to reduce lien reimbursement.

From the decision · page 2As the party with the affirmative of the issue, it is defendant who carries the burden of proof. (Lab. Code § 5705, "[t]he burden of proof rests upon the party or lien claimant holding the affirmative of the issue.") Here, defendant relied on an alleged PPO contract to reduce the amounts reimbursed to lien claimant. It is therefore defendant's affirmative burden to establish the existence of a valid and enforceable PPO contract governing its reimbursement arrangement with lien claimant. Defendant claims lien claimant failed to deny existence of the contract, but in an April 13, 2016 letter sent to defendant, which was attached to a document titled "Provider's Second Request for Bill Review," lien claimant stated that the PPO network agreement either "does not exist," or lien claimant was unaware that defendant was "a beneficiary of the alleged PPO network agreement." (Exhibit 2.) Further, notwithstanding lien claimant's letter, whether lien claimant formally denied the existence of the PPO contact is irrelevant in so far as section 5705 is concerned. Defendant still carries the burden of proof. Accordingly, we agree with the WCJ that defendant's affirmative burden of establishing the existence of a valid and applicable PPO agreement was not met herein. (Report, pp. 4-5.)

Labor Code section 4603.2(b)(2)

Statutory increase and interest apply to unpaid balances if payment not made within 45 days at rates in effect with explanation of review.

Employer liable for statutory increase and interest on unpaid lien amounts due to untimely payment and lack of valid PPO contract.

From the decision · page 4Turning to the issue of penalties and interest, section 4603.2(b)(2) provides:

Defendant failed to establish existence of valid PPO contract; lien claimant denied such contract in letter dated April 13, 2016.

From the decision · page 2As the party with the affirmative of the issue, it is defendant who carries the burden of proof. (Lab. Code § 5705, "[t]he burden of proof rests upon the party or lien claimant holding the affirmative of the issue.") Here, defendant relied on an alleged PPO contract to reduce the amounts reimbursed to lien claimant. It is therefore defendant's affirmative burden to establish the existence of a valid and enforceable PPO contract governing its reimbursement arrangement with lien claimant. Defendant claims lien claimant failed to deny existence of the contract, but in an April 13, 2016 letter sent to defendant, which was attached to a document titled "Provider's Second Request for Bill Review," lien claimant stated that the PPO network agreement either "does not exist," or lien claimant was unaware that defendant was "a beneficiary of the alleged PPO network agreement." (Exhibit 2.) Further, notwithstanding lien claimant's letter, whether lien claimant formally denied the existence of the PPO contact is irrelevant in so far as section 5705 is concerned. Defendant still carries the burden of proof. Accordingly, we agree with the WCJ that defendant's affirmative burden of establishing the existence of a valid and applicable PPO agreement was not met herein. (Report, pp. 4-5.)

Operative report by Dr. John Itamura describing surgery consistent with DRG 483 coding rather than DRG 563.

From the decision · page 2Defendant contends lien claimant used the incorrect DRG2 code. According to defendant's bill review expert, the correct code is DRG 563, which "relates to fractures," rather than the code applied, DRG 483, which "relates to major limb attachment." (Petition, p. 5.) The allegation of improper coding, however, was not raised prior to the matter being set for trial, either in the original bill review completed on January 13, 2016, or otherwise. Further, it is unclear how DRG 483 would be more applicable than DRG 563 given that the operative report signed by Dr. John Itamura on September 22, 2015 indicated that the surgery performed on applicant included irrigation, debridement, radial head replacement, and repairs of the lateral collateral ligament and flexor pronator mass. (Exhibit 4, Operative Report of Dr. Itamura, September 22, 2015, p. 1.) We therefore agree with the WCJ that it would appear applicant's surgery was not "more akin to `Fracture, Sprain, and Dislocation Except Femur, Hip, Pelvis and Thigh w/o MCC' than to `Major