On November 14,2019, the WCAB issued its en banc decision in Colamonico v. Secure Transportation (ADJ9542328) regarding a medical-legal lien claimant’s burden of proof and the question of whether a defendant waives its defenses by failing to issue an Explanation of Review (EOR) regarding the bill in question. En banc decisions of the Workers’ Compensation Appeals Board are binding precedent on all Appeals Board panels and workers’ compensation judges. (Title 8, California Code of Regulations Section 10341.)

The Board held that a medical-legal lien claimant (in this instance, a photocopy service) must always establish that it has complied with Labor Code Sections 4620 and 4621—particularly the provision of Section 4621(a), which defines a medical-legal expense as an expense or cost incurred to prove or disprove a contested claim—and that the claim was “contested’ at the time the service was performed. A “contested claim” is one where “1) the employer knows or reasonably should know of an employee’s claim for workers’ compensation benefits; and 2) the employer denies the employee’s claim outright or fails to act within a reasonable time regarding the claim” (citing Labor Code Section 4620(b)).

Once the medical-legal lien claimant has met this initial burden of proof, it must establish that the expense was “reasonably, actually, and necessarily incurred,” pursuant to the provision of Labor Code Section 4621(a).

After establishing that the claim was contested, that the expense was incurred to disprove a contested claim, and that this expense was reasonably, actually, and necessarily incurred, then the lien claimant may address the reasonable value of its services pursuant to Labor Code Section 4622.

The Board then addressed whether this defendant had waived all of its objections to reasonableness and necessity due to its failure to timely issue EOR’s relating to the subject bills. The Board held that the defendant had not waived its objections and defenses as a consequence of failure to issue timely EOR’s. The Board emphasized that the initial burden of proof remains on the lien claimant to establish that the bills were reasonable and necessary.

The Board acknowledged that its holding that a defendant may not waive its objections and defenses by failing to issue a timely EOR could engender bad faith litigation tactics. “Should a defendant pursue this type of litigation strategy, a defendant potentially exposes itself to penalties and interest. […] Furthermore, if a defendant failed to communicate these objections to a lien claimant before the lien conference, the WCJ has the discretion to consider whether it is engaging in bad-faith tactics to delay the resolution of the lien. Any bad-faith action or tactic may be the basis for potential sanctions pursuant to [Labor Code] section 5813.  (Section 5813; Cal. Code Regs., tit. 8, section 10561.)”