To:         California Commission on Health and Safety and Workers Compensation

From:         Grant & Weber, Reid L. Steinfeld esq., and Richard J Boggan JD

Re:    Response and or comment to the California Commission on Health and Safety and Workers
Compensation Draft Liens Report. Released on December 16, 2010, Recommendations response  /
comments to Recommendations, 1, 6, 7, 8, 9, 10, 13, 14, 16, 18, 19, 20, 21.

Grant & Weber is a Collection Agency with offices in Sacramento and Calabasas California. Reid L.
Steinfeld has been General Counsel to the Agency for the past 18 years. Grant & Weber a corporation has
been in existence since 1977 and Reid L. Steinfeld has been licensed to practice law in California for more
than 30 years. Grant & Weber represents many health care providers throughout the State of California
and is responding to the Draft report because it affects its clients as well as medical providers throughout
California. Grant & Weber, through Reid Steinfeld has filed thousands of liens over the last several years,
with approximately 1180 liens filed in 2009 and 1000 liens filed in 2010 throughout the state of California.
Although the report seems accurate in the assessment of the problem of unnecessary lien filing, some the
recommendations if adopted as law would not achieve the desired result and may have the opposite effect
in causing more litigated issues and or unjust forfeitures by medical providers.  In addition a result of denial
of reasonable medical treatment to the injured worker may be the unintended consequence as a result if
some the recommendations are adopted.


RECOMMENDATION 1
RESPONSE / COMMENT AS TO RECOMMENDATION 1:
“REINSTATE A FILING FEE FOR MEDICAL AND MEDICAL-LEGAL LIENS.”

Filing a lien does not ensure payment, nor does it make it easy for reimbursement for reasonable and
necessary treatment. The idea behind the lien-filing fee is to do away with meritless liens which is based
upon outdated and inaccurate data.  During the time that a filing fee was in place, Insurance Companies
and or Defense Attorneys who represented them would not settle medical treatment bills or even deal with
a medical provider unless a lien was filed. By enacting a filing fee again, there may a reduction of lien filing
not based on meritless claims but on valid claims that are now too expensive to pursue.

Therefore, if a filing fee is enacted it has to have determinates to both parties, such as a filing fee for filing
a lien and a filing fee for the one contesting the lien.  The fact that, insurance companies are in a stronger
position to object to claims, must be considered by the Commission. If a fee is to be charged it needs to be
borne by both parties.  A fee of $10 to $25 each would be more reasonable than going from $0 to
$100.00.  This charge represents an unreasonable hardship to medical providers.

To resolve, the issue of a filing fee a recommendation would be to ensure that the employer / insurance
company deal with the medical services with dates certain to respond and failure would result in the
allowance of the medical bills, which is similar to what is enacted in other states specifically Texas.  



RECOMMENDATION 6
RESPONSE / COMMENT AS TO RECOMMENDATION 6:
“ESTABLISH AN ADMINISTRATIVE SYSTEM FOR FEE SCHEDULE DETERMINATIONS, SUBJECT TO
LIMITED JUDICIAL REVIEW.”

We have read the rationale, behind this recommendation and agree in general to its merits. However, in its
application it may generate abuse if all possibilities are not addressed. An example would be in admitted
industrial injury cases when a carrier pays less than fee schedule.  The provider submits the claim as a fee
schedule dispute and in return the carrier asserts a PPO discount.  This recommendation does not
address such a result and therefore may defeat any beneficial results from the adoption of the regulation
as an unjustifiable reduction of medical payments below fee schedule.

More than ever in recent years the selling of contract discounts through bill review companies and other
methods below fee schedule has risen to the point that one could almost visualize that payment in
accordance with the Official Medical Fee Schedule will be an exception and not the rule.

The selling of contract discounts and providers getting paid less than fee schedule has left the Courts split
and sometimes at a loss how to handle such reductions which continues to cause litigation. The monies
involved for the profit of selling and purchasing contract discounts has resulted in unwarranted profits to
network companies and bill review companies in alarming amounts at the expense of medical providers,
with frustration to medical providers and increased litigation.

California has enacted Labor Code § 4609 that attempts to address these issues, but most Courts have
not construed or allowed its intended results. This abuse is on the rise and is being pushed to all avenues
of medical treatment with no end in sight; this has to be addressed if this study is to be considered
complete and accurate.

Therefore, it is recommended that if a claim is submitted to an administrative system for fee schedule
determinations, subject to limited judicial review”, that if a provider submits a fee schedule dispute and the
Defense claims a PPO discount that the Defense has to submit a signed agreement with the providers
signature consenting to the discount by the particular payor claiming the discount, clear and concise as
reflected in the case of Virginia Woodruff, Applicant v. Greenfield Trucking, State Compensation Insurance
Fund, Defendants, (2007) Cal. Wrk. Comp. P.D. LEXIS 93, Opinion Filed September 4, 2007.

“Also, the undersigned WCJ is troubled by the very nature of the extreme discount that SCIF wishes to
impose on the provider Good Samaritan. Labor Code 5307.1 provides for reasonable maximum rates to be
paid for services provided. In this case, the parties stipulated that the OMFS for the services provided by
Good Samaritan was $21,237.00. Yet, SCIF proposes to pay only less than half this amount and a sum
which is only about 13% of the billed amount. It would appear to this WCJ that it is (or should be) against
public policy to allow such deeply discounted fees,  [*10]  unless there are clear and unambiguous facts
present that the parties have agreed to such deep discounts. The next ''crisis'' that appears to be looming
in workers compensation will be that of a failure of providers to offer services to injured workers. Already it
is getting more and more difficult to find doctors and medical providers willing to provide treatment to
injured workers. To allow such deeply discounted rates will only add to this looming crisis. Thus, it would
appear that as a matter of public policy, that unless there is an absolutely clear and unambiguous
agreement to the contrary, the OMFS amounts should apply. There is no clear and unambiguous
agreement between the provider Good Samaritan and SCIF in this case. As such, all else being equal, the
OMFS should prevail.”

RECOMMENDATION 7
RESPONSE / COMMENT AS TO RECOMMENDATION 7:
“THE BOUNDARIES OF MPN CONTROL OVER MEDICAL TREATMENT SHOULD BE MORE CLEARLY
DEFINED TO MINIMIZE THE POTENTIAL FOR DISPUTES OVER RIGHTS TO SELECT MEDICAL
PROVIDERS.”


In Recommendation 7, the data is misplaced.  When an injured workers treats outside an MPN it is because
the employer failed to provide proper notice and or refused medical treatment. The reason why the data is
incorrect is because, when the employer denies injury they are labeling the issue as an MPN in addition to
a denied injury and we have adequate law that addresses this issue.

The present law is clear enough; send notice and offer reasonable medical treatment. The abuse is when
the issues of MPN’s are asserted just to add additional issues to the litigation, which appears standard
when the defense is contesting the medical bill. Any further regulation will result in the injured worker going
without treatment because the employer refuses to offer treatment within the MPN and medical providers
outside the MPN will not treat because the adopted regulation would make it impossible to get paid. En
Banc decision of Bruce Knight, United Parcel Service; and Liberty Mutual Insurance Company October 10,
2006  71 Cal. Comp. Cases 1423.

“The Board held that an employer or insurer's failure to provide required notice to an employee of rights
under the MPN (medical provider network) that results in a neglect or refusal to provide reasonable medical
treatment renders the employer or insurer liable for reasonable medical treatment self-procured by the
employee.”

RECOMMENDATION 8
RESPONSE / COMMENT AS TO RECOMMENDATION 8:
“ DISPUTES OVER ASSERTIONS OF MPN CONTROL OVER MEDICAL TREATMENT SHOULD BE
BROUGHT TO ADJUDICATION PROMPTLY.”

8 CCR 9767.9 which is used both to transfer medical treatment into an MPN which was not in existence at
the time the injury and case law, has extended this to include transfer of medical treatment after denial of
injury and defective notice of MPN, and courts intervention has been used under this regulation which
addresses “Recommendation 8.” As shown by the En Banc decision of Babbitt v. Workers' Compensation
Appeals Bd., (2007) 72 Cal. Comp. Cas. (MB) 830

“The majority also indicated in relevant part that nothing in the MPN statutes limited MPN transfers to only
those employees with injuries or awards occurring after the statutes' January 1, 2005, effective date, that
an employer or insurer need not demonstrate a change of condition or defective or incomplete medical
treatment before transferring an injured worker into an MPN, and that the four statutory exceptions allowing
an employee to continue with his or her current treating physician for a limited time under specified
circumstances (i.e., acute conditions, serious chronic conditions, a terminal illness, or certain surgical or
other procedures) would be rendered null and void by an additional requirement that employers or insurers
prove there had been defective or incomplete medical treatment, or a change in condition, before
transferring employees into an authorized MPN.”


To put the burden on the medical provider to seek court intervention for continued medical treatment
outside the MPN would have the result of the injured worker foregoing necessary medical treatment when
the employer does not offer medical treatment and resulting increased litigation.

We recommend that Recommendation #8 not be adopted as there is valid law dealing with this issue as
stated above.

RECOMMENDATION 9
RESPONSE / COMMENT AS TO RECOMMENDATION 9:
“SANCTIONS SHOULD BE IMPOSED ON PROVIDERS AND CLAIMS ADMINISTRATORS ALIKE FOR
REPEATED PATTERNS OF INCORRECTLY ASSERTING OR DENYING THE STATUS OF AN AUTHORIZED
MEDICAL PROVIDER.”

RECOMMENDATION 10
RESPONSE / COMMENT AS TO RECOMMENDATION 10:
“CONSIDER ESTABLISHING A MAXIMUM DURATION FOR TREATMENT THAT CAN BE CLAIMED BY LIEN
IN THE ABSENCE OF A DECLARATION OF READINESS BY THE WORKER TO SEEK AUTHORIZATION
FOR THE WORKER’S CHOSEN PROVIDER.”

As to Recommendations 9 and 10 there enactment would increase litigation and defeat the entire purpose
of these recommendations.  In addition the report does not take into consideration the California Supreme
Court case of State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230;
73 Cal.Comp.Cases 981 (Sandhagen) which in short clarified that when an employer is faced with deciding
whether to approve or deny the treatment recommendation of an injured worker’s physician, it must
conduct utilization review pursuant to Labor Code Section 4610. and the En Banc Decision of Simmons v.
California, 70 Cal. Comp. Cases 866 (W.C.A.B. 2005). If in prescribing treatment for the disputed body
part, the treating physician either explicitly or implicitly determines for the first time that the injury to the
disputed body part is industrial, the defendant must initiate the AME/QME process within the deadlines
established by section 4062(a)."


RECOMMENDATION 13
RESPONSE / COMMENT AS TO RECOMMENDATION 13:
“ENACT A STATUTE OF LIMITATIONS, EFFECTIVE PROSPECTIVELY BASED ON DATE OF SERVICES
TO BAR ANY LIEN UNLESS THE SERVICE IS BILLED IN ACCORDANCE WITH REGULATIONS AND THE
LIEN IS FILED WITHIN A DEFINED TIME FOLLOWING THAT SERVICE.”

The time limits suggested by the report of; 60 days, one year and no longer than 18 months has no logical
application to any comparable study that demands billing in 60 days. Private insurance allows one year,
and Medicare up to one year. Sometimes, the determination that the injury was or not work related by the
provider, (especially hospitals), is not clear form the information provided by the injured worker.  Medical
providers’ bill as fast as possible as it would defeat any profession or business including the medical
profession economic stability if billing the responsible party for the medical treatment was habitually
delayed past a time period that was necessary to prepare documents, gather information and find the right
payor. So if providers are billing past 60 days it is probably with good cause and to try and force them to
bill sooner without assessing a motivation for not sending medical bills to the responsible party, would
result in medical provider / medical facilities in not treating injured workers.

RECOMMENDATION 14
RESPONSE / COMMENT AS TO RECOMMENDATION 14:
“ENACT A STATUTE OF LIMITATIONS TO BAR ANY LIEN FOR SERVICE, REGARDLESS OF DATE OF
SERVICE, WHICH IS NOT FILED WITHIN THREE YEARS OF THE DATE OF MEDICAL SERVICE.”

As to Recommendations 14, the recommendation will increase litigation in that it must be considered that
the medical provider is not in possession of all the case information including WCAB#’s, settlement
documents and / or the status of the work related injury.  Furthermore Claims Adjusters do not give out the
necessary information freely and because of this an increase in lien filing will result if Recommendation 14
is adopted.
The effects of such a proposal are both severe and significant.
Every medical provider who treats an injured worker would have to create a policy that whenever they
receive an EOB or objection by the insurance carrier they would have to file a lien if the bill is not properly
paid, regardless of the additional amount owed -- whether it be $10.00 of $100,000.00 -- to protect its
interest, regardless of the potential for settlement.  This would result in a floodgate of liens filed and mass
confusion at the WCAB, and may break down and defeat the intent of the Recommendation. Therefore, the
lien process at the WCAB would increase tenfold, taking away resources allocated to the injured worker.

The Commission should not find fault of the medical providers when old outstanding lien claims are being
filed years after the case is resolved.  It has been the responsibility by law for the Defendants to serve
medical providers with the settlement documents, which they do not always provide. So the proposed
recommendation, in fact, rewards the wrongful conduct of the insurance companies.

The proposal in effect creates an organizational nightmare for hospitals, clinics and other medical
providers in that they would have to train their staff and set up a system that would allow them to protect
the medical bills. By complicating the collection of medical bills in workers' compensation and making it so
difficult that even the most diligent of medical providers would forego treating industrial injury patients, this
would further reduce the number of medical providers willing to treat injured workers. In many instances, at
the time of payment to the medical provider, the provider does not know if they have been incorrectly paid
under the fee schedule.  We presently have statutory limitations on lien filing enacted by the legislature in
2004.

RECOMMENDATION 16
RESPONSE / COMMENT AS TO RECOMMENDATION 16:
“IMPOSE AUTOMATIC DISMISSAL BY OPERATION OF LAW FOR ANY LIEN WHICH IS NOT ACTIVATED
FOR HEARING WITHIN FINITE TIME.”


Recommendation 16 proposes to dismiss liens that are not activated within a certain amount of time. First,
there is a process used in the California Workers Compensation Courts where a party may seek dismissal
of a lien for failure to pursue / prosecute a lien claim. A party may also directly seek dismissal of the lien by
filing such a petition. However to make a lien dismissed by operation of law within a specified time because
the Lien Claimant failed to file a Declaration of Readiness (DOR) carriers a double edged sword.  Lien
Claimants, in the present system are hit with sanctions if they file a DOR before the Case in Chief is
resolved unfortunately, finding out if the Case in Chief is resolved is not a simple task. The Claims Adjuster’
s do not give case information to medical providers freely or in the spirit of cooperation and if this
recommendation is adopted it may encourage Claims Adjuster’s to hold back information, as the reward
would be a dismissal of liens. In addition, this would increase the filing of DORs which defeats the purpose
of this study to lessen the Courts burden in hearing lien claims

RECOMMENDATION 18
RESPONSE / COMMENT AS TO RECOMMENDATION 18:
“A LIEN CLAIMANT SHOULD BE REQUIRED TO DISCLOSE ITS RELATIONSHIP TO THE ORIGINAL
PROVIDER OF GOODS OR SERVICES AND PRODUCE DOCUMENTATION ON DEMAND.”

Recommendation 18 is presently required by 8 CCR §10550   Proper Identification of the Parties and Lien
Claimants. We would recommended that as part of the lien filing, a notice of representation along with a
statement of whether the claim has been referred, assigned and or purchased, filed under penalty of
perjury.




RECOMMENDATION 19
RESPONSE / COMMENT AS TO RECOMMENDATION 19:
“A LIEN REPRESENTATIVE SHOULD BE REQUIRED TO PROVIDE DOCUMENTATION OF THE
REPRESENTATIVE’S AUTHORITY UPON DEMAND.”

See response to Recommendation 18.



RECOMMENDATION 20
RESPONSE / COMMENT AS TO RECOMMENDATION 20: “MISREPRESENTATIONS OF OWNERSHIP OF A
LIEN OR THE AUTHORITY OF A REPRESENTATIVE SHOULD BE PUNISHED AS CONTEMPT AND
SHOULD BE GROUNDS FOR DISMISSAL OF THE LIEN OR FOR BARRING THE REPRESENTATIVE FROM
APPEARING IN ANY PROCEEDINGS BEFORE THE APPEALS BOARD.”

This is not a sincere proposal but a threat in the form of a Recommendation that will have only negative
consequences, because the Defense will seek privileged contracts, assert that the Lien Claimant is lying,
refuse to negotiate medical bills, resulting in causing unnecessary delay and repeated hearings and
continued litigation.  If the DWC wants to regulate companies that purchase medical provider liens than
they should do so directly.  It is already law that a Lien Claimant Representative most divulge information if
the claims were purchased (see # 18 above).  But to try and accomplish it by frustrating the litigation
process and or threatening unreasonable sanctions or penalties for such arraignments will only increase
litigation for those who purchased medical liens and in addition to those who have not.   As set forth the
simplest would be that at the time the lien claimant files its lien it discloses under penalty of perjury its
relationship to the provider of services and / or goods and if its purchased same.



RECOMMENDATION 21
RESPONSE / COMMENT AS TO RECOMMENDATION 21: PAYMENTS IN SATISFACTION OR
SETTLEMENT OF LIENS SHOULD BE MADE ONLY TO THE ORIGINAL PROVIDER OF GOODS OR
SERVICES UNLESS A BONA FIDE ASSIGNMENT IS DOCUMENTED.


This Recommendation clearly appears to be a result of CIGA’s basis for not paying for medical services
when the relationship between the “Collection Company” and the medical provider has an assignment
contract for collections of its medical bills. This assertion has caused increased litigation, unnecessary lien
filing and increased hearings. In relation to Recommendation 21 we assert without hesitation it is bound to
increase litigation, delay hearings, increase the number of hearing per case and force lien filings.   The
distinction should be between a purchaser of the claim verses an assignee of the claim.  By adopting this
Recommendation every representative of medical providers will be denied payment. CIGA is presently not
paying nor negotiating any medical bills presented by Collections Companies and / or represented by
anyone other than the original provider.  As a way of seeing how litigation will increase, CIGA is relying
upon Insurance Code section 1063.1 et seq which was originally enacted when an automobile insurance
company went out of business and these individuals were left with no recourse and had to pay for
automobile damages. CIGA has a misguided use of the word “assignment” as most medical providers retain
ownership interest in their claims and have “assigned” their claims to collection companies to assist in the
recovery of medical bills because medical providers are in business treating patients not collecting money
(see article below, that discusses the law and cases in this area)
Article posted LexisNexis Communities Workers' Compensation Law Community Powered by Larson's:
Does CIGA Have to Pay Medical Providers When They’re “Assigned” to a Collection Company?
Posted by Reid L. Steinfeld

There has been a great deal of litigation as to when CIGA is responsible for payment of benefits after
taking over from an insolvent insurer. Now, with a recent panel decision, a question that has arisen is:
When a medical provider assigns its rights and title to a collection account, is CIGA responsible for
payment of that “assigned claim”?
Purpose of CIGA in regards to paying benefits from an insolvent insurer

California Insurance Guarantee Associations’ (CIGA) general purpose is to pay the obligations of an
insolvent insurer. When an insurance company becomes insolvent, CIGA takes over the claim and pays
benefits that the insolvent insurance carrier was obligated to pay, which includes medical liens.
CIGA primarily receives it funding from Member Insurers, distributions from the estates of insolvent Member
Insurers, and investment income.
Waite v. California Insurance Guarantee Assn., 71 Cal. Comp. Cas. 591 (Cal. App. 2d Dist. 2006)
While CIGA's general purpose is to pay the obligations of an insolvent insurer, it is not itself an insurer. (R.
J. Reynolds Co. v. California Ins. Guarantee Assn., supra, 235 Cal.App.3d at p. 600.) ''CIGA is not in the
'business' of insurance . . . . CIGA issues no policies, collects no premiums, makes no profits, and assumes
no contractual obligations to the insureds.'' (Isaacson v. California Ins. Guarantee Assn., supra, 44 Cal.3d
at p. 787.) Rather, it is authorized by statute to pay only covered claims of an insolvent insurer, those
determined by the Legislature to be in keeping with the goal of providing protection for the insured public.
(R. J. Reynolds Co. v. California Ins. Guarantee Assn., supra, at p. 600.)
What is a “covered claim” that makes CIGA liable when it takes over an insolvent insurer?
An issue to be resolved is whether the payment sought is for a “covered claim”.
Insurance Code section 1063.1, subdivision (c)(9) provides: “ ‘Covered claims’ does not include (i) any
claim to the extent it is covered by any other insurance … nor (ii) any claim by any person other than the
original claimant under the insurance policy in his or her own name … and does not include any claim
asserted by an assignee or one claiming by right of subrogation, except as otherwise provided in this
chapter.”
California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd., 153 Cal. App. 4th 524, 62 Cal. Rptr. 3d
855, 2007 Cal. App. LEXIS 1196, 72 Cal. Comp. Cas. 910 (Cal. App. 2d Dist. 2007)
“As is relevant here, a “covered claim” means “(1) … the obligations of an insolvent insurer, including the
obligation … (i) imposed by law and within the coverage of an insurance policy of the insolvent insurer; (ii)
which were unpaid by the insolvent insurer; … (iv) which were incurred prior to the date coverage under
the policy terminated … (vi) in the case of a policy of workers' compensation insurance, to provide workers'
compensation benefits under the workers' compensation law of this state … .” (Ins. Code, § 1063.1, subd.
(c)(1).)”
Woodliff v. California Ins. Guarantee Assn., 110 Cal. App. 4th 1690, 3 Cal. Rptr. 3d 1, 2003 Cal. App.
LEXIS 1207, 2003 Cal. Daily Op. Service 7076 (Cal. App. 2d Dist. 2006)
In regard to the requirement that a “covered claim” be “within the coverage of the insurance policy of the
insolvent insurer,” we concluded the latter phrase “to mean within the risks of loss protected against by an
insurance policy. Thus the reading of the pertinent portion of subdivision (c)(1) would be: the obligations of
an insolvent insurer within the risks of loss protected against by an insurance policy of the insolvent
insurer.”
Subdivision (c)(1) of Insurance Code section 1063.1 defines the term “covered claim” to include, “in the
case of a policy of workers’ compensation insurance,” “the obligations of an insolvent insurer … to provide
workers’ compensation benefits under the workers’ compensation law of this state.”
Medical services are covered under Insurance Code section 1063.1.
However, recently CIGA has attempted to claim the defense that an assignment of a claim from the original
provider is a basis for not paying medical provider liens. According to CIGA an assignment relieves them of
their responsibility to pay medical providers claims against insolvent Workers’ Compensations Carriers that
have been taken over by CIGA.
There are several appellate cases that address the issue of when CIGA is responsible for covered claims.
This includes, but is not limited to, another solvent insurance carrier, whether fully liable, partially, liable, or
mistakenly pays the claimed benefits. In such instances, CIGA is not responsible for payment or
indemnification of those claims.
Furthermore, in the case of California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd., 153 Cal. App.
4th 524, 62 Cal. Rptr. 3d 855, 2007 Cal. App. LEXIS 1196, 72 Cal. Comp. Cas. (MB) 910 (Cal. App. 2d
Dist. 2007)

“The Legislature did not intend CIGA to defray or diminish the responsibility of other carriers. Because
other insurance was available, and the insurers were jointly and severally liable to satisfy the employer's
responsibility to the worker, CIGA had no liability for any portion of the award. (Garcia, supra, 60 Cal.App.
4th at p. 559.) Even if Garcia had elected to proceed against only one of the solvent insurers for all his
benefits, that insurer would have been obligated to pay the entire award and could not institute
proceedings against CIGA for contribution.”
California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd., 128 Cal. App. 4th 307, 26 Cal. Rptr. 3d
845, 2005 Cal. App. LEXIS 540, 70 Cal. Comp. Cas. (MB) 556, 2005 Cal. Daily Op. Service 3060, 2005 D.A.
R. 4123 (Cal. App. 2d Dist. 2005)
“Under the unambiguous language of the statutory scheme, an original claimant can be any person (other
than the insurer) instituting a liability claim within the coverage of the policy, provided that he or she does
so in his or her own name and not through assignment or by right of subrogation.”
What does the recent panel decision in Licea mean?
In a recent Panel Decision of Mirna Licea v. Minson Corporation; California Insurance Guarantee
Association for Phico Insurance Company, in liquidation ADJ 1857578 (AHM 0089872) decided June 23,
2009, it appears that the WCAB panel interpreted CIGA’s liability in respect to an assigned claim. The facts
of the case are as follows:
Applicant Mirnia Licea, while employed as a laborer by Minson Corporation sustained injury, arising out of
and in the course of employment to her back, right leg, right wrist, right hand and right hip. At the time of
the injury, the employer’s workers’ compensation carrier was Phico Insurance Company. CIGA assumed the
obligations of Phico Insurance which it became insolvent. The matter resolved by Compromise and Release
for $70,000.00.
Missurian Orthopedic provided treatment to the applicant for charges in the amount of $39,354.07.
The Trial Judge’s Opinion and Recommendation on Petition for Reconsideration, which was incorporated
into the Appeals Boards’ Denial of Petition for Reconsideration, held that “[KM Financial] did not establish
any basis for reimbursement under the Guarantee Act and accordingly, its lien in the amount of $39,354.07
was correctly disallowed.’’

The Trial Judge relied on the case of Baxter Healthcare Corp v. California Insurance Guarantee Assn.
(2000) 85 Cal. App. 4th 306, 314, wherein the Court held,
“The Guarantee Act excludes from coverage claims asserted by an assignee. That term is not defined or
qualified by the act. It must be read in the context of the entire statute and given the meaning it bears in
ordinary usage.”
It is unclear from the documents reviewed if KM Financial purchased the account of Missirian Orthopedic
Medical Group (Missirian) or if they assigned KM Financial for collections (based on wording below it
appears the account was purchased), as set forth in the Trial Judge’s recommendation and opinion;
“The Notice of Assignment is undated but indicates that Missirian “hereby assigns all title and thereby
transfers, without recourse, to KM Financial Services, Inc. “Assignee” or “Buyer” all rights, title interest in
the attached Medical Account Receivable’ KM in turn appointed Alliance Medical Billing and Collection
Services as representative In Fact for the purpose of securing payment of Medical Bills. KM offered no
evidence to refute this assignment. Thus the asserted claim here is clearly the claim of the assignee.”
In the language of Licea supra, the Judge states that the claim in the case was clearly a claim of assignee
in that the provider transferred all interest in the claim without recourse, and, therefore, no dispute of an
assignment for the purpose of relieving the original claimant has taken place and would be different if the
claim had been assigned for collection purposes only with the original claimant retaining title and ownership
interest.
Further in Baxter Healthcare Corp v. California Insurance Guarantee Assn, supra
The Guarantee Act, which created CIGA in 1969, requires CIGA to "pay and discharge covered claims and
in connection therewith pay for or furnish loss adjustment services and defenses of claimants when
required by policy provisions." (§ 1063.2, subd. (a).) The term "covered claims" means, "the obligations of
an insolvent insurer, including the obligation for unearned premiums, (i) imposed by law and within the
coverage of an insurance policy of the insolvent insurer; (ii) which were unpaid by the insolvent insurer; (iii)
which are presented as a claim to the liquidator in this state or to the association on or before the last date
fixed for the filing of claims in the domiciliary liquidating proceedings; (iv) which were incurred prior to the
date coverage under the policy terminated and prior to, on, or within 30 days after the date the liquidator
was appointed; (v) for which the assets of the insolvent insurer are insufficient to discharge in full; (vi) in
the case of a policy of workers' compensation insurance, to provide workers' compensation benefits under
the workers' compensation law of this state; and (vii) in the case of other classes of insurance if the
claimant or insured is a resident of this state at the time of the insured occurrence, or the property from
which the claim arises is permanently located in this state." (§ 1063.1, subd. (c)(1).)

Excluded from the definition of "covered claims" is "any claim by any person other than the original claimant
under the insurance policy in his or her own name, . . . and . . . any claim asserted by an assignee . . . ." (§
1063.1, subd. (c)(9)(ii).)
KM Financial in its petition for reconsideration cited two cases, the first of which is Richey v. Ziegler (1938)
89 Cal App. 35, in which the Court found that the award to the employee could be assigned legally to the
assignee. However, the court dismissed the relevancy of the case as not addressing the Insurance Code
1063.1 issue of assignment.
The second case cited by KM Financial in its petition for reconsideration was the case of Burrow v. Pike
(1987) 190 Cal. App. 3d 384, which held that the California Department of Transportation’s lien for workers’
compensation benefits was not excluded from the definition of a ‘covered claim” and found CIGA liable for
reimbursement of benefits to the injured worker. However, the Court stated the case had no applicability as
the case had to do with the employer failing to file a claim with CIGA regarding the obligations of a third
party liability carrier.
It appears in Licea, supra, that the WCAB panel stated that an assigned claim cannot be brought forth
against CIGA:
Subdivision (c)(1) of Insurance Code section 1063.1 defines the term “covered claim” to include, “in the
case of a policy of workers’ compensation insurance,” “the obligations of an insolvent insurer … to provide
workers’ compensation benefits under the workers’ compensation law of this state.”
Case research
In the workers’ compensation system, medical benefits are considered a covered claim, regardless of
whether the provider is bringing forth the claim.

California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd., 136 Cal. App. 4th 1528, 39 Cal. Rptr. 3d
721, 2006 Cal. App. LEXIS 265, 71 Cal. Comp. Cas. (MB) 139, 2006 Cal. Daily Op. Service 1668, 2006 D.A.
R. 2296 (Cal. App. 2d Dist.)
“CIGA's authority and liability in discharging ‘its statutorily circumscribed duties’ are limited to paying the
amount of ‘covered claims.’ [Citations.]” ’ ” (California Insurance Guarantee Assn. v. Workers' Comp.
Appeals Bd., supra, 112 Cal.App.4th at p. 363.) With certain exceptions, “covered claims” are “the
obligations of an insolvent insurer” ’ (Ins. Code, § 1063.1, subd. (c)(1)), including the obligation “to provide
workers compensation benefits under the workers' compensation law of this state.” (Ins. Code, § 1063.1,
subd. (c)(1)(vi).)”
St. Joseph's Hospital v. Workers' Compensation Appeals Bd., 70 Cal. Comp. Cas. 1612 (Cal. App. 1st Dist.
2005)
“With regard to the lien of St. Joseph's Hospital, the WCAB stated that reasonable charges for treatment
that relate to Applicant's injury would constitute a ''covered claim'' within the meaning of Insurance Code §
1063.1.”
California Insurance Guarantee Assn. v. Workers' Compensation Appeals Bd. , 71 Cal. Comp. Cas. 808
(Cal. App. 1st Dist.2006)
“In addressing CIGA's contention that the WCJ erred in allowing the lien claim of EDD and in ordering CIGA
to pay EDD, the WCAB observed that the parties stipulated at trial to defer all liens. The WCAB stated in
relevant respects:
"Furthermore, we note that CIGA must generally pay and discharge the ''covered claims'' of an insolvent
insurer. (Ins. Code § 1063.2.) However, ''covered claims'' do not include ''any obligations to any state''
government. (Ins. Code § 1063.1(c)(4).) EDD is a ''state'' agency for purposes of applying Insurance Code
section 1063.1(c)(4) (Gov. Code, §§12800, 12803.)”

“In Viveros, supra, and in its companion case, Karaiskos v. Metagenics, Inc. (2002) 69 Cal.Comp.Cases
900 [Appeals Board en banc opinion], the Appeals Board en banc held that EDD's liens for UCD benefits
are not obligations to the state and therefore are ''covered claims'' for which CIGA is responsible. We
explained that when the Appeals Board finds CIGA or its insolvent carrier ''liable for compensation against
which an EDD lien may be allowed, whether by Findings & Award, Stipulations & Award, or Order Approving
Compromise & Release (OACR), the EDD lien is, in essence, an 'obligation' to the injured worker and not
to the 'state.' '' Therefore, we concluded that Insurance Code section 1063.1(c)(4)] does not exclude EDD's
liens from the definition of ''covered claims.'' (Italics added [by WCAB]).”
Black Diamond Asphalt, Inc. v. Superior Court, 114 Cal. App. 4th 109, 7 Cal. Rptr. 3d 466, 2003 Cal. App.
LEXIS 1827, 2003 Cal. Daily Op. Service 10641, 2003 D.A.R. 13420 (Cal. App. 3d Dist. 2003)
Section 1063.1, subdivision (g), states a “claimant” includes “any insured making a first party claim or any
person instituting a liability claim.” . . .Accordingly, the plaintiffs in this action are claimants within the
meaning of laws applicable to CIGA since they assert liability claims under third party insurance.
The question must be asked: If it is the obligation of CIGA to pay the claims of the insolvent insurer, is there
an obligation of the insolvent insurer to pay the medical bills? If the answer is yes, how could CIGA be
relieved from the obligation to pay the medical benefits? If CIGA is not responsible for paying the medical
benefits, then what is the purpose of CIGA?
It is understood that Licea supra was decided because the medical provider no longer retained any legal or
financial interest in the claim based on the language of the assignment, and in this writers’ opinion, this
may have been the justification for the decision.
Claim Assigned to Collection Agency
The question that remains unanswered in Licea supra is what happens when a claim is assigned to a
collection company for collection purposes only, where the provider does not assign all right, title, and
interest to the claim and is not substituting one claimant for another?
Under the language of the Insurance Code § 1063.1, an original claimant can be any person (other than
the insurer) instituting a liability claim within the coverage of the policy, provided that he or she does so in
his or her own name and not through assignment or by right of subrogation. As interpreted by the case
cited below, subrogation and assignment of a claim is the passing of title of a cause of action. Therefore,
when a party transfers a claim and or “assigns” a claim to a representative for the qualified and limited
purpose to collect on an account in the name of the medical provider without transferring title, it is not
excluded under Insurance Code § 1063.1 as not being a covered claim.

National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc., 171 Cal. App.
4th 35, 89 Cal. Rptr. 3d 473, 2009 Cal. App. LEXIS 170, 74 Cal. Comp. Cas. (MB) 184 (Cal. App. 1st Dist.
2009)
“Whether the transfer be technically called assignment or subrogation or equitable assignment or
assignment by operation of law its ultimate effect is the same, to pass the title to a cause of action from one
person to another.''
In Licea supra it can be seen that the title and rights to the claim was transferred to KM Financial, with the
provider retaining no legal right to the claim of liability..
“The Notice of Assignment is undated but indicates that Missirian “hereby assigns all title and thereby
transfers, without recourse, to KM Financial Services, Inc. “Assignee” or “Buyer” all rights, title interest in
the attached Medical Account Receivable.”
One may argue that this is not a subrogated claim, however, because of the plain language of Insurance
Code § 1063.1. It would be hard pressed, if not impossible, to show that the claim was not assigned, as the
provider in this case no longer had any rights and/or claim against CIGA. Therefore, the ruling that the
claim was not a covered claim seems justified at face value. In addition, as stated by the Trial Judge, KM
Financial did not argue the issue of assignment.
Conclusion
This writer contends, even in the strictest interpretation of “Insurance Code § 1063.1, subd. (c)(9)(ii))”, the
law does not limit the providers’ legal right to assign a claim to a Collection Company for collection
purposes.
Due to the lack real clarity in Licea supra, we contend that the issue of assignment may cause additional
litigation and force medical providers to once again rethink if practicing industrial medicine is financially
feasible and viable.
Based upon the case law cited and from a practical standpoint, we contend that CIGA must pay when a
claim is assigned for collection purposes only, but may have a valid defense under the Insurance Code if
the original provider has divested itself of all interest in the claim.
End of Article



In summary we commend the Commission for the preparation of this draft report in its attempt to address
the issue of lien filing, however the Commission seems to have lost their impartiality as we can find no
Recommendation that deters the insurance companies from fostering litigation, nor any Recommendation
as to regulating Review Companies or ‘Silent PPOs” that profit only when reducing payments below fee
schedule for valid medical bills.  Therefore, the adoption of any of these Recommendations only addresses
a partial problem and some even encourage more litigation. For the Recommendations to be fair and
achieve there objective deterrents, the Commission needs to put into place rules to dissuade Insurance
Companies, Bill Review Companies, and PPO networks from wrongfully denying treatment, reducing
medical bills below fee schedule, the selling of contract discounts, and the failure of Claims Adjusters to
deal with medical providers until a lien is filed.

Therefore, it is recommended and asserted that the report is incomplete and contains persuasive
inaccuracies and should be a starting point for fair and balanced regulations to protect medical providers,
injured workers, employers, and insurance companies.


Respectfully Submitted