Workers’ Comp Trials Opened to More Parties : Labor: State Supreme Court paves way for doctors, therapists to participate in cases. Move means costs could go up.

Doctors who treat injured workers have won an important legal victory--while employers and insurers were dealt a potentially costly setback--by the California Supreme Court’s refusal to reconsider an appellate court ruling benefiting a controversial Beverly Hills medical practice.

The decision left standing by the high court deals with technical but possibly far-reaching issues in workers’ compensation trials. In effect, the case strengthens the legal hand of doctors, therapists and other “lien claimants” seeking payment for services provided to injured workers by enabling them to participate fully in patients’ cases.

The decision, issued without comment by the Supreme Court last week, stems from a case brought by Beverly Hills Multispecialty Group. Bills totaling $158,000 submitted by the medical practice were branded fraudulent and disallowed by a Long Beach workers’ compensation judge in a sweeping decision in April, 1993.

The judge also accused the patients treated by Beverly Hills Multispecialty--10 workers laid off by El Segundo-based International Rectifier Corp.--and their lawyers of conspiring with the doctors to commit insurance fraud by submitting bogus claims.

Beverly Hills Multispecialty challenged the judge’s decision, arguing that it was unfairly prevented from doing such things as cross-examining witnesses, raising objections or otherwise fully participating in the workers’ trials. The suit challenged a common workers’ compensation court practice of treating doctors and other lien claimants as secondary participants who were not entitled to the same rights as the injured workers.

Beverly Hills Multispecialty argued that this practice denied the medical group the opportunity to demonstrate that it treated the patients and submitted its bills in good faith.

In July, the California Court of Appeal ruled in favor of the medical practice, but the defendants--including Argonaut Insurance Co. and the state Workers’ Compensation Appeals Board--appealed to the California Supreme Court.

Dan Lispi, the lawyer for Beverly Hills Multispecialty, said his client’s court victory “peeled back the veneer on this putrid workers’ comp system that purported to provide due process.”

“Now,” Lispi said, “they will conduct themselves more like a court, and jurisprudence will refresh the California workers’ compensation system, and we’ll be able to distinguish the claims and claimants who are fraudulent versus those that just look that way.”

Insurance lawyers, however, said the decision will encourage further litigation, worsening the backlog in the workers’ compensation courts and leading to higher settlement payouts by insurers and employers.

What the courts did “was add another party to the (trial) proceedings, which can only increase the frequency of litigation and extend cases,” said Barry F. Evans, a lawyer for Argonaut.

Beverly Hills Multispecialty and its principals, including medical director James Showghy, are among a group of defendants named in a lawsuit filed in 1992 by Ticketmaster Inc. The suit claims that the defendants submitted phony stress claims, overcharged for services and provided unnecessary treatment.