Gorman: Is Strategic Consolidation Proper for You?| Staff Compensation Information

By Patrick C. Gorman

Thursday, May 20, 2021 | 0

Strategic consolidations have become more common in California’s compensation system in recent years, prompting defendants to weigh the pros and cons of consolidated litigation.

Patrick C. Gorman

So far, most consolidations have been limited to strategic consolidations of medical providers’ mortgage liens and costs. However, later consolidations with ancillary services such as copy services were assigned to the Special Adjudication Unit, which I described in detail in this blog post and commented on to WorkCompCentral around 2019.

Service providers invented the frictional cost dilemma when addressing services that are supposedly “medically legal” requiring not just the full amount of the invoice, but an additional $ 800 or more for a boiler plate petition. It appears that the business model of these service providers is to insist on a claim (including interest, penalty, and cost) that is approximately 70% of the cost of dispute resolution and sometimes a multiple of 30: 1 over the invoice amount.

On the face of it, or from a claim point of view, these seem like just a few petitions or bills. However, below the service is teeming with thousands of petitions and inflated bills, making this industry a multi-million dollar niche.

In delivering training and information across the state, I’ve promoted the idea of ​​strategic consolidation. When I started to continue, I found a hurdle that the service providers were putting in my way at every turn. From missed appearances to dismissed petitions the night before a hearing, total refusal to produce named and summoned witnesses, and what I expect as petitions for removal in response to any filing here, some ancillary service providers have absolutely no appetite for that What could come out of a great consolidation and discovery in their business practices.

How big is the extent of this cost leakage? To what extent are these service providers providing services that have never been requested? Are invoices never issued for services rendered? If this is done under the guise of discovery, is this not a violation of litigation?

While a large strategic consolidation is not very flexible when it comes to a quick fix or discovery, petitioning thousands of individual cases to force the discovery is also not enough. The friction costs are drastically reduced as some very clever lawyers can handle this forked problem over a large number of cases. In addition, the strategic consolidation eliminates the frictional cost burden that ancillary service providers have vis-à-vis network operators and administrators, and makes it possible to refer to the facts and laws instead of an inflated cost-benefit analysis.

Will we see real reform as the result? I expect this will ultimately be the case as more payers in the system embark on the path of strategic consolidation and discovery. In the meantime, any “reform” will come in the form of confidential settlements in the back room so that the status quo can be maintained for as long as possible.

Put simply, this is a multi-million dollar industry practice and a significant amount of funding will be available to keep this from changing.

Patrick C. Gorman is a partner at Bradford and Barthel and executive attorney for the firm’s Redding office. This entry from Bradford & Barthel’s blog is published with permission.