CA Med-Legal How-To: Collect Penalty & Interest Payments

CA Med-Legal How-To: Collect Penalty & Interest Payments

California physician evaluators, be advised: when claims administrators are late in paying for Medical-Legal services, penalty and interest payments apply. However, inadequate enforcement mechanisms for workers’ comp billing requirements make collecting penalty and interest payments an uphill battle.

When the claims administrator fails to remit payment for Medical-Legal services within the mandated 60-day time frame, the claims administrator owes penalty and interest payments directly to the physician. In theory, penalty and interest payments should both:

  • Compensate the physician for expending administrative resources to chase down late payments, and
  • Deter claims administrators from paying untimely

California law mandates penalties and interest when payers fail to pay a Medical-Legal bill after 60 calendar days. Unfortunately, there is no way to directly bill or appeal for these “self-executing” payments.

Read on for details regarding penalty and interest payment rates, and why physicians may not want to hold their breath while waiting for these (nominally) mandatory (but unenforced) fines.

Penalties & Interest: Time Frames & Calculations

California Code of Regulations Section 9794(b) dictates claims administrators must pay Medical-Legal bills within 60 calendar days:

All medical-legal expenses shall be paid within 60 days after receipt by the employer of the reports and documents required by the administrative director unless the claims administrator, within this period, contests its liability for such payment. [emphasis added]

California Labor Code (LAB) Section 4622(a)(1) establishes the penalty and interest rates for failure to adhere to the time frame:

…within 60 days after receipt by the employer of each separate, written billing and report, and if payment is not made within this period, that portion of the billed sum then unreasonably unpaid shall be increased by 10 percent, together with interest thereon at the rate of 7 percent per annum retroactive to the date of receipt of the bill and report by the employer. [emphasis added]

In other words, when the claims administrator fails to timely remit payment, the claims administrator also owes the provider a 10% penalty and 7% accrued interest per annum (retroactive to the date the claims administrator received the bill).

Why Claims Admins Fail to Pay Penalties & Interest

As with late payments for medical services, penalty and interest payments for untimeliness in paying Medical-Legal bills are “self-executing.” In other words, the Division of Workers’ Compensation simply trusts claims administrators to remit penalty and interest payments to the physician, on the honor system.

Physicians cannot bill for penalties and interest, nor does the DWC or any other entity compel the claims administrator to remit these self-executing fines.

As is so often the case, the only way for providers to pursue appropriate payment is to expend further administrative resources. When the claims administrator fails to “self-execute” penalty and interest payments, the physician’s only recourse is to pay $150 to file a lien with the Workers’ Compensation Appeals Board (WCAB).

Penalties and interest for untimely paid Medical-Legal bills are just another example of the quietly payer-friendly mechanisms California put in place to create the appearance — if not the reality — of the rule of law in workers’ comp billing payment.

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