ADJ12210104 · February 14, 2022

The WCJ and WCAB found that federal law expressly preempts California Labor Code Section 5307.1 and the OMFS with respect to the VA's billings, and that applicable federal billing schedules apply instead.

From the decision · page 1Defendant seeks reconsideration of the Findings, Award and Order of December 1, 2021, in which the Workers' Compensation Judge (WCJ) found that on February 7, 2018, the injured employee, the applicant, sustained industrial injury to his left thumb while employed as a machinist by Sepragen Corporation, insured by The Hartford (defendant). The WCJ also found that the injury resulted in the need for medical treatment and surgery provided by the lien claimant herein, the United States Department of Veterans Affairs (V.A.). In addition, the WCJ found that the injured employee's case-in-chief was never the subject of a Stipulated Award or Compromise and Release, that the case was administratively closed by defendant, that the current proceeding was initiated by the V.A.

Federal law expressly preempts California Labor Code Section 5307.1 and the OMFS with respect to the VA's billings.

Favours Applicant prevailed

This preemption means that the VA's billings are governed by federal billing schedules, not the California OMFS, which supports the applicant's position.

From the decision · page 1Defendant seeks reconsideration of the Findings, Award and Order of December 1, 2021, in which the Workers' Compensation Judge (WCJ) found that on February 7, 2018, the injured employee, the applicant, sustained industrial injury to his left thumb while employed as a machinist by Sepragen Corporation, insured by The Hartford (defendant). The WCJ also found that the injury resulted in the need for medical treatment and surgery provided by the lien claimant herein, the United States Department of Veterans Affairs (V.A.). In addition, the WCJ found that the injured employee's case-in-chief was never the subject of a Stipulated Award or Compromise and Release, that the case was administratively closed by defendant, that the current proceeding was initiated by the V.A.

The issue of reasonableness of the VA's medical treatment charges under federal law remains outstanding and was deferred for further proceedings.

Favours neutral

The WCJ deferred the reasonableness issue, indicating that the VA must still prove the reasonableness of its charges under federal standards, which does not affect the preemption ruling.

From the decision · page 2That is, there are various kinds of preemption, but here defendant erroneously relies upon conflict preemption, which is not on point given the facts of this case. (See People v. Hamilton (2018) 30 Cal.App.5th 673 [The four species of preemption include express, conflict, obstacle, and field preemption].) We also reject, as premature, defendant's allegation that the V.A.'s medical treatment charges are unreasonable. As noted by the WCJ on page six of his Opinion on Decision, the V.A. "still has the burden of establishing the reasonableness of its charges in accordance with the billing applicable to V.A. cases, as well as establishing all other applicable elements justifying the payment sought." In other words, the issue of reasonableness of the V.A.'s medical treatment charges under applicable federal law remains outstanding, and thus there is no "final order" on the issue of reasonableness. (Maranian v. Workers' Comp. Appeals Bd. (2000) 81 Cal.App.4th 1068, 1070, 1075 [65 Cal.Comp.Cases 650].) To be clear, however, we affirm the WCJ's finding that the V.A.'s medical treatment charges are not governed by California state law, but rather are subject to the "applicable federal billing schedules."

38 USC 1729; 38 CFR 17.106(e); People v. Hamilton (2018) 30 Cal.App.5th 673

Federal law expressly preempts state law on the question of the extent of the VA's entitlement to reasonable reimbursement.

The WCJ and WCAB applied federal statutes and regulations to find that the California OMFS and Labor Code Section 5307.1 are preempted by federal law regarding VA billings.

From the decision · page 2The V.A. filed an answer. We have considered the allegations of defendant's Petition for Reconsideration and the contents of the WCJ's Report and Recommendation ("Report") with respect thereto. Based on our review of the record, and for the reasons stated below and in the WCJ's Report, which we adopt and incorporate, we will deny defendant's Petition for Reconsideration. We further note that although defendant states it does not contend that the California OMFS applies to the V.A.'s billings for medical treatment, defendant nevertheless contends that the V.A.'s billings are subject to a standard of reasonableness under California state law. (Petition for Reconsideration, p. 6:26-28.) As such, defendant's contention indirectly attacks part of the WCJ's seventh Finding, wherein the WCJ found that "applicable federal billing schedules" apply to the V.A.'s billings in this case. We deny defendant's contention that the V.A.'s billings are subject to a standard of reasonableness under state law, because the contention is based on the incorrect premise that the WCJ found federal preemption based on a conflict between state and federal law. Rather, the WCJ stated on page five of his Opinion on Decision that federal law expressly preempts state law on the question of the extent of the V.A.'s entitlement to reasonable reimbursement.

Testimony of the applicant confirming injury and treatment at VA facility

Billing expert testimony supporting reasonable charges under California OMFS