Attorneys, Copy Shops Question Carrier's Request

Published on 09/03/2015 by WorkCompCentral, authored by Greg Jones 

State Farm Fire and Casualty Co. negotiated a good deal on copy service rates in California, but its request for applicants' attorneys to help it control costs by using its vendor has some copy shops and attorneys scratching their heads.

The Division of Workers' Compensation's copy service fee schedule, which was mandated by SB 863 and went into effect July 1, sets reimbursement at $180 for a set of records up to 500 pages, and 10 cents for each additional page. 

State Farm claim representative Larry Harrison in a July 14 letter said the carrier negotiated prices with copy services as part of its "desire to protect the premium dollars paid for workers' compensation coverage." The fee schedule reimbursement "far exceeds" what State Farm negotiated, Harrison says in the letter to Henen Law Corp., an applicants' firm in Valencia.

"We are asking for your assistance," the letter says. "We are ready and willing to order any records which you, as applicants' counsel, want ordered and to provide you with copies. Therefore, we request that you contact us by telephone or in writing advising us promptly of any records you would like ordered. As defendants, we will object to any liens for photocopying records as unnecessary expenses."

Dan Mora, founder and chief executive officer of copy service Gemini Duplication in Rocklin, who provided a copy of the letter to WorkCompCentral as well as the DWC on Wednesday, said he thinks the letter constitutes "bad faith" on the part of State Farm.

"What I see is a blatant refusal to work within the system," he said.

State Farm spokesperson Jordi Ortega did not respond to requests for comment about the letter Wednesday. Emil Larry Henen of the Henen Law Corp. also did not return a call on Wednesday.

Peter Melton, a spokesman for the Division of Workers' Compensation, could not provide an immediate comment on the appropriateness of State Farm's request Wednesday afternoon.

The DWC's copy service fee schedule prohibits payment for services provided within 30 days of a written request by an injured worker to an employer, claims administrator or carrier for copies of records that are relevant to the claim.

Mora said the injured worker or applicants' attorney has to request documents from the carrier to start the 30-day clock. Without an initial request for documents, the carrier doesn't have to pay for obtaining these documents from another source.

But after those 30 days have passed, Mora said the DWC's rules require the carrier to pay for documents at the rates established in the fee schedule.

It might not be illegal for a carrier to ask the applicants' attorney to agree to this kind of arrangement, but the manner in which State Farm is seeking cooperation is "less than ethical," he said. 

The carrier appears to be saying that it will deem as necessary only those document requests that allow State Farm to use its contracted copy service providers, and that independent discovery is unnecessary, Mora said.

"I'm not surprised at all, but I haven't heard of anyone else doing it and putting it in print," he said.

Applicants' attorney Alan Gurvey, managing partner of Rowen, Gurvey & Win, said he had to read the letter twice because he couldn't believe it was memorialized in writing. 

"Are these people serious? They want us to bypass the regulations in order to save them money?" he said. "We should be ignoring the administration so we can save the insurance companies money?"

Gurvey said the proposition was "offensive." Rather than proposing "unsavory paths" for applicants' attorneys to help carriers save money, he said the carriers could find savings by authorizing more treatment instead of sending everything to utilization review or by settling claims as opposed to "litigating the hell out of them."

Copy shops go out of their way to get documents when employers aren't willing or able to expeditiously help in obtaining requested records, according to Gurvey. That kind of service is not something most applicants' attorneys would agree to go without, he said.

"To think that an applicant attorney would actually consider this proposal a good faith, honest approach to claims handling is absurd," he said. "This just shows us how far this system has broken down."

Richard M. "Jake" Jacobsmeyer, founding partner of workers' compensation defense firm Shaw, Jacobsmeyer, Crain & Claffey, said he views the letter as an attempt by State Farm to obtain cooperation. It's "an interesting approach," he said, but not one he is sure will be successful.

"I am not certain that objections to bills for copy services which are obtained appropriately by an applicant attorney and billed at the fee schedule will be considered valid," he said. "I have taken the position in currently pending cases that where either I or my client have obtained records and provided the applicant attorney with an opportunity to obtain the records using the same copy service, that issuing a separate subpoena to obtain the same records is not reimbursable, and am having success with that approach."

Jacobsmeyer said he hopes defendants will "exercise discretion" and object to copy service bills only when there is a legitimate reason to dispute the charges. He also said he does not think employers have the authority to dictate which copy services can or can't be used.

"While the Labor Code and the newly adopted regulations provide defendants with some tools to control copy costs, including both total costs per service and repetitive orders for the same records, I do not interpret the rules as allowing a defendant to direct an applicant attorney to utilize a defendant's selected vendor even if it results in lower expenses," he said. "The fee schedule is designed to do that and the Labor Code did not give complete power to a defendant to control copy providers."