PERMANENTE MEDICAL GROUP v. WORKERS COMPENSATION APPEALS BOARD (1985)

Permanente Medical Group/Kaiser Foundation Hospitals (hereafter Kaiser), lien claimants in a proceeding before the Workers' Compensation Appeals Board (hereafter Board), seek review of an order of the Board denying their petition for reconsideration and awarding Stanford Hospital (hereafter Stanford), employer of applicant Susan Vollman King, the sum of $320 to reimburse Stanford's medical expert, Dr. Joseph Bernstein, for time lost when a hearing scheduled for the purpose of the doctor's cross-examination was cancelled due to the illness of Kaiser's counsel.   We granted review to consider the propriety of the award by the Board of medical-legal costs to Stanford.

Applicant, an occupational therapist employed by Stanford, alleged injury to her low back on January 19, 1978, while she was lifting a heavy patient.   After several hearings at which applicant and three expert medical witnesses testified, the workers' compensation judge made a finding of no industrial injury.   The judge found the opinion of Dr. Bernstein, who had been engaged by Stanford as its defense medical expert, to be persuasive.

Applicant and Kaiser, who had provided medical services to applicant through her health plan, filed petitions for reconsideration.   Kaiser contended that it had received no notice of the second hearing at which Dr. Bernstein's testimony had been completed.   On review of an order of the Board denying the petitions for reconsideration, and the Board having admitted that Kaiser had been denied notice and opportunity to be heard, this court on December 4, 1979, annulled the Board's order of June 26, 1979, and remanded the matter to the Board for further proceedings.  (King v. Workers' Compensation Appeals Board (Dec. 4, 1979) 1 Civ. 47566 [unpub. order];  Permanente Medical Group et al. v. Workers' Compensation Appeals Board (Dec. 4, 1979) 1 Civ. 47570 [unpub. order].)

The Board set the matter for further hearing on September 2, 1980, at 9 a.m., with Dr. Bernstein subpoenaed to appear.   On the morning of September 2, 1980, Kaiser, through its attorneys, Airola & Ringgold, notified the Board that Ms. Ayoob, the attorney scheduled to handle the appearance, was ill and could not appear.   The Airola office also contacted Dr. Bernstein's office and advised the doctor not to appear.   Dr. Bernstein, who had reserved an entire morning for his testimony, thereafter submitted a bill in the amount of $320 to Airola & Ringgold.¹  After Mr. Airola declined to pay for Dr. Bernstein's time, Stanford petitioned the Board for an order requiring the payment of medical-legal expenses.

On August 17, 1981, a further hearing was held, at which Dr. Bernstein appeared and was cross-examined by Kaiser.   Applicant testified in rebuttal.   On January 29, 1982, the Board, after reviewing the record, including the August 1981 testimony of Dr. Bernstein and the applicant, affirmed the finding of no industrial injury.   In addition, the Board found that the $320 represented by the bill of Dr. Bernstein was incurred as a direct result of Kaiser's inability to appear at the hearing of September 2, 1980, and the Board ordered Kaiser to pay the sum of $320 to Dr. Bernstein in satisfaction of his claim.

 Again, applicant and Kaiser petitioned for reconsideration.   Applicant's petition for reconsideration was not timely filed and was properly dismissed.  (Lab.Code, § 5903.)   With respect to Kaiser's petition, the Board concluded that the finding of no industrial injury was justified by substantial evidence.   The Board is empowered to resolve conflicts in the evidence and to make its own credibility determinations.   The Board, after a review of all the evidence, including that of applicant, chose to rely upon the opinion of Dr. Bernstein.   The Board's findings were supported by substantial evidence.  (Smith v. Workmen's Comp. App. Bd. (1969) 71 Cal.2d 588, 592, 78 Cal.Rptr. 718, 455 P.2d 822.)   The Board also concluded that it acted properly in ordering Kaiser to satisfy Dr. Bernstein's billing.   The Board reasoned that when Kaiser subpoenaed Dr. Bernstein to appear for cross-examination on September 2, 1980, it engaged his services, and since Dr. Bernstein incurred expenses of $320 by reason of Kaiser's cancellation of the hearing, Kaiser was liable under the theory of quantum meruit.

 The Board justified its action in imposing costs on Kaiser on the basis that it may exercise judicial powers in the manner of a court.  (Bankers Indem. Ins. Co. v. Indus. Acc. Com. (1935) 4 Cal.2d 89, 97, 47 P.2d 719.)   But the general rule relating to judicial tribunals is that the right to recover costs is wholly dependent upon statute.  (4 Witkin, Cal.Procedure (2d ed. 1971) Judgment, § 80, p. 3242.)

 Statutory authority for the reimbursement to an applicant of medical-legal costs incurred in prosecuting a workers' compensation claim is provided by sections 4600 and 5811 of the Labor Code.  (Adams v. Workers' Comp. Appeals Bd. (1976) 18 Cal.3d 226, 231, 133 Cal.Rptr. 517, 555 P.2d 303.)   The applicant may be reimbursed for medical-legal costs even though the applicant is unsuccessful in his or her claim.  (Subsequent Injuries Fund v. Industrial Acc. Com. (1963) 59 Cal.2d 842, 844, 31 Cal.Rptr. 477, 382 P.2d 597.)

At the time of the Board's order, Labor Code section 4600, in relevant part, provided:  “․ In accordance with the rules of practice and procedure of the appeals board, the employee, or the dependents of a deceased employee, shall be reimbursed for expenses reasonably, actually, and necessarily incurred for X-rays, laboratory fees, medical reports, medical testimony, and, as needed, interpreter's fees, to prove a contested claim.   The reasonableness of and necessity for incurring such expenses to prove a contested claim shall be determined with respect to the time when such expenses were actually incurred․”  (Emphasis added.)  Labor Code section 5811, in relevant part, provides:  “․ In all proceedings under this division before the appeals board, costs as between the parties may be allowed by the appeals board.”

Labor Code section 4600 does not address the question raised here.   It provides for reimbursement of the employee's medical-legal costs, but is silent as to the rights of a lien claimant or employer to obtain reimbursement.

 Labor Code section 5811 is broader in scope, permitting awards of “costs as between the parties.”   A lien claimant is considered a “party in interest” within the meaning of Labor Code section 5501, which provides that “[t]he application may be filed with the appeals board by any party in interest, ․” (Independence Indem. Co. v. Indus. Acc. Com. (1935) 2 Cal.2d 397, 41 P.2d 320.)   It is apparent, therefore, that a lien claimant who files an application with the Board is a “party” within the meaning of section 5811.

 Petitioners raise the specter that reading Labor Code section 5811 as authority for an award of costs to a lien claimant or employer could lead to awards of costs against an employee.   However, the Board recognizes that the constitutional mandate to “accomplish substantial justice in all cases ․ and without encumbrance of any character” (Cal. Const., art. XIV, § 4) bars such a use of Labor Code section 5811.  Section 5811 costs may be awarded only against an employer or lien claimant.

 The remaining questions are (1) what kinds of costs may be awarded, and (2) what standards should control the exercise of discretion by the Board.   In spite of our letter requesting that the parties address these issues, the briefs do not illuminate.   These questions are of great significance in workers' compensation practice.   We will not answer them in the vacuum created by the parties' apparent lack of interest.

The Board did not purport to act under Labor Code section 5811.   Indeed, in its opinion and order denying the lien claimants' petition for reconsideration, it stated that “․ Labor Code Section 5811 may not apply, ․”  We therefore remand the matter to the Board for reconsideration of whether the $320 assessment against Kaiser should be imposed under that section.

The Board's brief argues that the award is justified by Labor Code section 5811.   Thus, our remand will probably result in reimposition of the assessment against Kaiser.   However, we urge the Board to take this opportunity to establish general guidelines for awarding costs pursuant to section 5811.   This case raises important questions about who bears the financial burden associated with presenting expert evidence and about what costs may be assessed against a party who causes cancellation of a hearing.   Expenses such as these may be incurred on either the employer's or the lien claimant's side of the case.   Practitioners, litigants, and the Board itself would be benefited by published standards governing these and other cost issues.   As the body vested with discretion in awarding costs and familiar with compensation practice, the Board is the appropriate body to set standards in the first instance.

The portion of the Board's order awarding medical-legal costs to Stanford is annulled, and the matter is remanded to the Board for reconsideration.

FOOTNOTES

1.   On his statement for the “Morning reserved for Court appearance,” Dr. Bernstein listed “4 hours at 80.00 an hour,” for a total sum of $320.   At the hearing, Dr. Bernstein testified that his total fee for an entire morning of testimony would have been $650, but because he did get some work done in his office the fee was reduced to $320.

BARRY–DEAL, Associate Justice.

WHITE, P.J., and SCOTT, J., concur.