Enriquez Esquivel v. SEC Wheel Group: Missing Evidence in a Reasonable-Value Lien Dispute

Case Background and Factual Framework

In Edelmin Enriquez Esquivel v. SEC Wheel Group; Employers Preferred Insurance Company (Adjudication Number ADJ10310043), the Workers' Compensation Appeals Board addressed the evidentiary standards required to establish the reasonable value of medical services exempt from the Official Medical Fee Schedule (OMFS). The applicant sustained an industrial injury on February 10, 2019, while working as a delivery driver for SEC Wheel Group. The underlying workers' compensation claim was ultimately settled by Compromise and Release on April 3, 2024 (Opinion and Order Granting Petition for Reconsideration, pp. 1–2).

Between March 26 and March 27, 2019, the applicant underwent authorized cervical spine fusion surgery with overnight hospitalization at Monrovia Memorial Hospital (MMH), a fully accredited and licensed Long-Term Acute Care Hospital (LTACH). The treatment fell under Diagnostic Related Group (DRG) code 473. MMH billed $94,529.47 for the medical services. The employer's insurance carrier, Employers Preferred Insurance Company, remitted payment of $24,836.67 (p. 3). MMH filed a lien for the unpaid balance.

Procedural Posture and the WCJ's Ruling

The lien claim proceeded to trial on July 9, 2025. At trial, the parties explicitly stipulated that MMH is exempt from the OMFS for the facility services at issue (p. 3). On September 23, 2025, the Workers' Compensation Administrative Law Judge (WCJ) issued a Findings and Order concluding that the reasonable value of MMH's services was $31,442.51, and awarded that amount less prior payments. The WCJ based this valuation on the trial testimony of defense witness Donald Hodge, finding his analysis more credible (p. 3).

MMH filed a timely Petition for Reconsideration, arguing that as an OMFS-exempt facility, its charges were not governed by fee schedule rates used by other acute care hospitals in the geographical area. MMH further asserted that the WCJ failed to evaluate its trial evidence, specifically Exhibit 4, a 1,051-page compilation entitled "Kunz Study and Declaration, dated August 14, 2017," which summarized 121 claims to establish its usual and customary reimbursement (pp. 1, 4). The WCJ issued a Report and Recommendation advising the Appeals Board to deny reconsideration. The WCJ served the report on October 30, 2025 (p. 2).

Statutory Timeliness Under Amended Labor Code Section 5909

Before examining the merits, the Appeals Board evaluated its statutory authority to act under Labor Code Section 5909, as amended effective July 2, 2024. Under Section 5909(a), the Board must act on a petition for reconsideration within 60 days of transmission of the case to the Appeals Board. Transmission is recorded in EAMS as "Sent to Recon" (p. 2).

The case was transmitted to the Appeals Board on October 30, 2025, making December 29, 2025, the 60th day. Section 5909(b)(1) requires that parties receive notice of transmission, and Section 5909(b)(2) specifies that service of the WCJ's report constitutes such notice. Because the WCJ served the report on October 30, 2025—the exact day the case was transmitted—the parties received proper actual notice of the commencement of the statutory period. By issuing its decision on December 29, 2025, the Board acted within its statutory timeframe (pp. 2–3).

Appeals Board Reasoning: Expert Evidence and Record Deficiencies

The Appeals Board granted reconsideration and deferred a final decision on the merits, concluding that preliminary review revealed significant evidentiary deficiencies regarding whether the trial record supported the WCJ's decision (pp. 2, 5). The Board highlighted multiple flaws in the evidentiary record:

• Lack of Expert Witness Qualification: Under California Evidence Code Section 720, a witness must be qualified through specialized knowledge, skill, experience, training, or education before offering expert testimony. The Board observed that the record contained no stipulation or evidence establishing Mr. Hodge as an expert witness (pp. 3–4).
• Inadmissible Bill Review and Inapplicable Benchmarks: Defendant offered no documentary evidence, and its bill review was not admitted into evidence (p. 4). Defense counsel objected to references to the bill review. Although Mr. Hodge testified to averaging fee schedule allowances from three local facilities (Long Beach Memorial, Providence St. John's, and Torrance Memorial) for DRG code 473, this methodology relied on fee schedule rates that were inapplicable given the parties' explicit stipulation that MMH was exempt from the OMFS (p. 4).
• Unexamined Lien Claimant Evidence: MMH offered Exhibit 4, a 1,051-page Kunz study of 121 claims. However, MMH's witness testified he could not recall details of its preparation, the defense witness did not address its relevance, and the WCJ failed to analyze or address Exhibit 4 in the trial decision (p. 4).
• Missing Physical Billing Exhibit: The Board noted it was unable to locate MMH's Exhibit 2, identified in the record as a UB-92 billing form dated March 27, 2019 (p. 4).

The Board reiterated the lien claimant’s affirmative burden under Labor Code sections 3202.5 and 5705. Through the earlier authorities discussed in its opinion, it explained that exempt-service reasonable value requires evidence of customary charges and rates accepted by comparable providers in the area. A valuation decision still needs substantial evidentiary support; neither party’s deficient presentation automatically establishes the correct amount. Enriquez Esquivel, slip op. at 5.

Limitations and Practical Record Consequences

The Board emphasized that granting reconsideration and deferring the merits is an interlocutory procedural order, not a final disposition on the value of MMH's lien. Under Labor Code Sections 5907, 5908, and 5803, granting reconsideration opens the entire record, allowing the Board to review the full matter, order further record development, or evaluate voluntary mediation options encouraged by the Board (pp. 6–7).

For practitioners and claims administrators, this decision highlights critical record-building rules in workers' compensation lien disputes:

1. Formally Qualify Witnesses: Cost-containment analysts and bill review witnesses must have their expert qualifications formally established under Evidence Code Section 720 before testifying on valuation.
2. Avoid Fee Schedule Averages for Exempt Care: When care is exempt from the OMFS, defense witnesses cannot measure reasonable value by averaging OMFS rates from standard acute care hospitals.
3. Substantiate Pricing Studies: Providers relying on multi-claim studies must present witnesses who can explain how historical data establishes current, local market value.
4. Audit EAMS Exhibits: Parties must ensure every offered exhibit, including essential UB-92/UB-04 billing forms, is physically present in the EAMS record.

For additional analysis on presenting medical fee evidence and navigating fee schedule exemptions, see our companion discussion on evidence of reasonable value in OMFS-exempt medical bill disputes.