The Continuing Saga of Fictitious Name Permits
and Litigating Lien Claims Before the WCAB

By Robert B. Hill

With the implementation of medical provider networks (MPN) and the official medical fee schedule (OMFS) as applied to outpatient (or ambulatory) surgery centers, we have begun to see a peak and the first decline in litigation of lien claims at the WCAB.

However, there remains a large backlog of such claims, with one of the lingering issues of the requirement that medical centers using fictitious names have a valid permit (FNP) as issued by the California Medical Board at that the time of the
date(s) of service, as set out in the Business and Professions Code.

The WCAB has had an uneven application of this rule, with some judges indicating that the requirement is inapplicable altogether to these liens, and others indicating that certain conditions apply before the FNP is required.

The recent WCAB panel decision in Stokes v. Patton State Hospital (2007) 72 CCC 996 contains an excellent restatement of the law, and is a “must read” in those cases where the FNP is in issue.

At issue in this case was the lien of the Ambulatory Surgery Center of Pomona (ASCP), based on a balance owing of $44,548.06, which had been disallowed by the WCALJ at trial level for the failure to have a valid FNP at the time of service. It was the lien claimant’s contention on appeal that as it was only claiming “facility fees” and not “professional fees” that it was not required to have
FNP. While the Decision and Order issued at the trial level disallowing the lien was vacated, and remanded for further development of the record, the WCAB panel restated several key points of both statutory and case law on this issue (the issue as to the reasonableness of the fees charged were bifurcated at trial level and deferred.)

• The requirement of the FNP is set out in the Business and Professions Code Sections 2285 and 2415, as further set out in the decision Zenith Insurance Co. v. WCAB (2006) 71 CCC 374. Noteworthy is while both the WCALJ and the WCAB on reconsideration had found that the FNP did not apply to the lien claimants Beach Cities Surgery Center and Pain Intervention of San Diego, the court of appeals annulled the decision and remanded the case back to the trial level. While holding that the lien claimants bore the burden of proof (under Labor Code Section 5705) that they were properly “licensed” or “accredited”, it did not address the distinction between “clinics” and “outpatient settings” as noted below.

• Business and Professions Code Section 2415 further provides that any physician and surgeon, who as a professional corporation, desires to practice under any name that would otherwise be a violation of sections 2285 may practice under that name if the corporation obtains and maintains in current status an FNP issued by the Department of Licensing.

• Business and Professions Code Section 17900(a)(3) further indicates that a corporation, doing business under any name but its own, is likewise required to have the FNP (nothing that it this case Pomona Surgery Center, Inc. was doing business as Ambulatory Surgery Center of Pomona, and as such was not utilizing its corporate name.

THE CONTINUING SAGA OF FICTITIOUS NAME PERMITS
AND LITIGATING LIEN CLAIMS BEFORE THE WCAB

Page Two

• 16 California Code of Regulations [CCR] Section 1350.2 provides that no licensed person shall render professional services using a fictitious name unless and until a fictitious name permit has been issued by the division.

• With specific reference to outpatient surgery centers, the Legislature has determined that quality assurance is needed to ensure that such facilities are safe and effective, as enacted through Business and Profession Code Sections 2215-2217.

• However, Health and Safety Code Section 1200 and 1248(c) draw distinctions between an “outpatient setting” and a “clinic”, and as noted above this distinction was not addressed in the Zenith decision.

• The general requirements for a physician practicing under a fictitious name in a “clinic”, to have an FNP as a prerequisite for maintaining a lien before the WCAB, remains with prior case law. Hand Rehabilitation Center v. WCAB (Obernier) (1995) 60 CCC 289; Gandhi v. WCAB (Matus) (2000), 65 CCC 719 (writ denied); Continental Medical Center of Paramount v. WCAB (Greene) 2000 65 CCC 162 (writ denied).

The dicta of the decision raises several key points in addressing medical liens filed under fictitious names:

• Generally there is a requirement for the FNP for which the lien claimant has the burden of proving (1) existed at the time of service, or (2) for which it would otherwise be exempted.
 
• There is a distinction between the FNP requirement for a physician or professional corporation operating under a fictitious name in a “clinic”, where clearly the FNP is required, as opposed to the “outpatient setting” where such FNP may not be required where the lien claimant has other accreditation under the statute.

• A professional corporation which operates under the corporate name is not required to maintain the FNP, as in fact its corporate name is not fictitious.

This issue will continue to be hotly contested at lien trials at the WCAB for the foreseeable future, although with the implementation of the MPN’s, utilization review (U.R.), and the official medical fee schedule applied to outpatient settings effective January 1, 2004, with time will lessen in importance, and will be primarily restricted to those situations of self-procured medical care which is otherwise deemed “reasonable and necessary” under Labor Code Section 4600.