ADJ1428798 · June 3, 2024

The WCJ erred in using Labor Code 4622 instead of Labor Code 4603.2 for penalty rate; interest rate corrected to 10% simple interest under Code of Civil Procedure 685.010; Government Code 970.1 does not apply to pre-judgment interest here.

From the decision · page 4With respect to the first issue, it would appear that lien claimant is correct and that the undersigned used the wrong Labor Code section. The undersigned used Labor Code § 4622 instead of Labor Code § 4603.2. The Findings and Order needs to be corrected to provide for a 15% penalty under Labor Code § 4603.2 instead of the 10% under Labor Code § 4622. It is clear that the undersigned erred in using the penalty rate for medical legal services for a bill involving medical treatment issues. However, the issue of the interest rate requires further discussion.

No bad faith or frivolous conduct found; differences of opinion on medical billing do not warrant sanctions; public policy disfavors sanctions for changing positions to more moderate ones.

From the decision · page 6On the issue of Sanctions, the undersigned did not see a need for sanctions. The sanctions provision in workers compensation law, Labor Code § 5813 was originally based on Code of Civil Procedure § 128.5. Now while these two code sections have evolved apart from each other, the key to interpreting either of them is to keep in mind that the original version of section 5813 was based on Code of Civil Procedure § 128.5. In civil practice, sanctions under this code section are not mere discovery sanctions but must be the "result of bad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay." See Labor Code § 5813 and similar language in Code of Civil Procedure § 128.5. The modern version of section 128.5 also contains more detail, including a definition of "frivolous" which is defined as, "totally or completely without merit or for the sole purpose of harassing an opposing party."

No evidence of bad faith or frivolous conduct by defendant in obtaining a new audit of the bill and changing positions.

Favours Defendant prevailed

This justified denial of sanctions under Labor Code 5813.

From the decision · page 7Lien claimant tries to argue that Exhibits B through M are evidence of bad faith on the part of defendant and that Exhibit P proves the point. These documents do not show bad faith, they show a difference of opinion. The topic of medical billing is a very complex subject and requires special training or education. There are colleges that provide classes and certifications in medical billing. Differences of opinion on this subject often occur and they do not necessarily result from bad faith or frivolous conduct.

The WCJ used the incorrect penalty statute (Labor Code 4622) instead of the correct one (Labor Code 4603.2).

Favours Applicant prevailed

This error led to an incorrect penalty rate being applied, which was corrected on reconsideration.

From the decision · page 4With respect to the first issue, it would appear that lien claimant is correct and that the undersigned used the wrong Labor Code section. The undersigned used Labor Code § 4622 instead of Labor Code § 4603.2. The Findings and Order needs to be corrected to provide for a 15% penalty under Labor Code § 4603.2 instead of the 10% under Labor Code § 4622. It is clear that the undersigned erred in using the penalty rate for medical legal services for a bill involving medical treatment issues. However, the issue of the interest rate requires further discussion.

Government Code 970.1(c) applies only to post-judgment interest and tax or fee judgments, not to pre-judgment interest on medical bills.

Favours Applicant prevailed

This interpretation led to applying a 10% simple interest rate instead of a 7% limit, increasing the interest awarded.

From the decision · page 5Now at this point we need to examine defendant's argument that Government Code § 970.1 subsection (c) stands as an exception to the 10 % amount and limits the recovery to 7%. Now, while reasonable minds may differ, the problem with this argument is that this would violate the "plain meaning rule" of statutory construction. Subsection (c) of Government Code § 970.1 plainly applies only to post-judgment interest. Also, the plain meaning of section 970.1 appears to apply only to a tax or fee judgment. Since this is not a tax or fee judgment the 7% limitation would not apply. Thus, Code of Civil Procedure § 685.010, which provides for 10 percent as the statutory

Labor Code 5813

Sanctions under Labor Code 5813 require bad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.

No bad faith or frivolous conduct found in defendant's actions; sanctions denied.

From the decision · page 6On the issue of Sanctions, the undersigned did not see a need for sanctions. The sanctions provision in workers compensation law, Labor Code § 5813 was originally based on Code of Civil Procedure § 128.5. Now while these two code sections have evolved apart from each other, the key to interpreting either of them is to keep in mind that the original version of section 5813 was based on Code of Civil Procedure § 128.5. In civil practice, sanctions under this code section are not mere discovery sanctions but must be the "result of bad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay." See Labor Code § 5813 and similar language in Code of Civil Procedure § 128.5. The modern version of section 128.5 also contains more detail, including a definition of "frivolous" which is defined as, "totally or completely without merit or for the sole purpose of harassing an opposing party."

Defendant served and offered a new review of Dr. Silver's bill as Defense Exhibit P, which was admitted without objection and used to compute the principal amount of recovery.