California Workers’ Compensation Reform SB 863 Analysis: Medical Treatment Provisions (9/7/2012)

The following analysis is based on the 8/30/2012 amended version of SB 863:

SB863, widely lauded as the “new and improved” workers’ compensation reform package passed both the houses of the legislature on Friday, August 31 and is now on the Governor’s desk waiting to be signed. The package contains a plethora of revisions to current law intended to improve delivery of benefits to injured workers (IWs) while reducing costs for employers. This is especially true in the area of medical treatment, which will be discussed below.

The previous reform package of 2004, SB899, contained a revolutionary new program called the Medical Provider Network (MPN). It was created to give employers control over the selection of treating physicians. It was assumed that by doing so, medical expenses (which are perhaps the most significant cost driver of the workers’ compensation system) would be reduced.

However, several problems arose with the MPN system. Costs were not reduced as much as employers had hoped. And injured workers (IWs) often find it difficult, if not impossible, to secure physicians in this new network.

Once an IW is in the MPN system, the Independent Medical Review (IMR) dispute resolution system was intended to resolve all disputes over medical treatment (MT). However, it is rarely, if ever used. Instead, parties continue to bring their MT issues to the WCAB for expedited hearings, with rights of appeal to higher courts, including the Supreme Court, if necessary.

The current reform package attempts to resolve these issues, along with many others. The primary change in this current proposal is that the IMR process was made mandatory for almost all medical treatment disputes in the entire workers’ compensation system, with little or no involvement from the WCAB. Only an IMR reviewer is permitted to make a decision on medical treatment. In almost all MT cases, neither the WCAB nor any higher authority is permitted to weigh in on the issue of what constitutes reasonable and necessary medical treatment. The reform legislation seems to be designed to eliminate attorneys and the judicial system from the MT dispute resolution process.

Proponents of SB863 argue that eliminating attorneys and judges from the medical dispute resolution process will streamline the system and expedite the delivery of MT services to IWs. They propose this IMR system will guarantee IWs top quality medical care, since MT decisions will be made solely by graduates of medical schools, rather than by graduates of law schools.

However, those opposed to the reform package feel that quality of care is secondary to access to care. If an IW is unable to access MT, quality is irrelevant. And it is this access to care, that attorney and judicial involvement guarantee. IWs have encountered various struggles over the past several years to obtain needed MT. Without a legal advocate to assist them, and without a right of appeal of the IMR decision, those in opposition to SB863 are concerned that the IW’s struggles to secure MT will increase exponentially.

In addition, some people have suggested that the new IMR system may be unconstitutional as it takes the decision making process outside the judicial arena and allows for a medical decision based solely on a records and document review, rather than on an “in person” examination of the IW. (SB863 does not seem to require or even allow for the IMR physician to personally examine the IW.) This fact, combined with the loss of all rights of appeal, raises all sorts of questions of due process. Some have argued that IMR system deprives the IW of notice and their opportunity to be heard on the determination of their MT needs, which may be considered unconstitutional.

Section 84 at page 159 states that the provisions of SB863 apply to all pending matters regardless of the date of injury, unless otherwise stated. Once SB863 is signed into law by the Governor, practitioners will have to get up to speed on the new provisions rather quickly, since the most of the provisions go into effect as of January 1, 2013, for all matters, regardless of dates of injury. 

Listed below is a summary of the major changes to the medical treatment provision of SB 863: (All page numbers references to the PDF text of SB 863.)

I. Medical Dispute Resolution Options:

1. All MT disputes in the MPN system, must be resolved through the “old” IMR process set forth in LC 4616.3 & 4616.4. (See LC 4062(c) at p.66.)

2. If the IW objects to a Utilization Review (UR) decision, the “new” IMR process set forth in LC 4610.5 is the IW’s only option. (See LC 4062(b) at p. 66 and LC 4610.5(a) at p.93.)

QUERY: If the UR decision is deemed invalid, (for instance, UR denial is untimely) by a Workers’ Compensation Judge (WCJ), does that remove the MT dispute resolution process from the IMR system and return it to the WCAB trial level? (For an example of an invalid UR decision see Academy of Arts College v. WCAB (Zedd), (2011) 76 CCC 352.)

II. IMR Process:

1. LC 4610.5(c)(2) (at p.94) states that the IMR is to authorize MT that is “Medically necessary” as defined below, listed in order of preference. A lower ranked standard may only be used if every higher standard is not applicable.

(A) The Medical Treatment Utilization Schedule (MTUS) (LC 5307.27)

(B) “Peer-reviewed scientific and medical evidence regarding the effectiveness of the disputed service.”

(C) “Nationally recognized professional standards.”

(D) “Expert opinion.”

(E) “Generally accepted standards of medical practice.”

(F) “Treatments that are likely to provide a benefit to a patient for conditions for which other treatments are not clinically efficacious.”

2. If the IW objects to a UR denial, the IW has 30 days to file their objection and request an IMR. (LC 4610.5 (h)(1) at p. 96) This IMR review shall then be based on a records and document review only. (LC 4610.5(f)(3) at p.95, LC 4610.5(l)(1) at p. 97, LC 4610.5(m) at p. 98 and LC 4610.6 at p. 98)

3. The IW may designate anyone to represent them in this IMR process, including their attorney. (LC 460.5(j) at p.96.) There does not seem to be a provision for attorney’s fee for this service. However, applicant attorneys have never been paid for advocating for MT on behalf of their clients at expedited hearings. Therefore, failure to be paid for providing legal services would hardly seem to be a reason applicant’s attorneys would suddenly refuse to provide this service at this point.

4. LC4610.6(g) at p.100 provides, “The determination of the IMR organization shall be deemed to be the determination of the AD and shall be binding on all parties.”

5. A final determination in favor of the MT requested following the IMR process is not conclusive evidence that MT was unreasonably delayed. However, if the IMR process was used to unreasonably delay reasonable and necessary MT, the IW may request penalties per LC 5814. (See LC 4610.1 at p. 92.)

6. The “new” IMR applies to dates of injury on or after 1.1.2013 and to all MT requests made on or after 7.1.2013. (LC4610.5(a)(1) & (2) at p.93)

III. Appeal of IMR:

1. The IMR determination is presumed correct. LC 4610.6(h) at p.100 limits parties’ right of appeal to the WCAB to the following circumstances:

(1) AD acted in excess of powers

(2) Fraud

(3) Conflict of interest

(4) Bias

(5) “determination was the result of a plainly erroneous express or implied finding of fact, provided that the mistake of fact is a matter of ordinary knowledge based on the information submitted for review pursuant to Section 4610.5 and not a matter that is subject to expert opinion.”

2. Even if the WCAB reverses the decision of the IMR, the matter is then returned to the AD to refer to another IMR for another decision. LC4610.6(i) at p.100 provides, “In no event shall the WCJ, the appeals board, or any higher court make a determination of medical necessity contrary to the determination of the IMR organization.”

IV. Ability to Treat Outside the MPN:

Case law previously held that IW who had not received appropriate MPN notices were permitted to treat outside of the MPN. (See Knight v. UPS, (2006) 71 CCC 1423 (WCAB en banc – 10.10.06) and Zanette v. Simpson Painting, (2007) 2007 Cal. Wrk. Comp. P.D. LEXIS 45.) The reform law tweaks that rule a bit. LC 4616.3(b) at p.109 provides that the employer must notify IW of the existence of the MPN, the IW’s right to change primary treating physicians (PTPs) inside the MPN and the process to do so. However, failure to provide these notices is not a basis for the IW to treat outside the MPN unless “it is shown that the failure to provide notice resulted in a denial of medical care.”

It has been noted that IWs have had a difficult time over the years accessing doctors in the MPN system. WCJs have complained that they themselves have called the list of MPN doctors provided to the IW at expedited hearings, with the result that none of the doctors on the list are available, for reasons such as, they have passed away, they don’t treat in the workers’ comp system, or that they no longer practice medicine. Therefore, the rules in this regard have been tightened. As of Jan. 1, 2014, each MPN will now be required to list their doctors on their website for ease of access by all. In addition, as Jan. 1, 2014, each MPN will provide medical assistants to help IWs find a doctor in the MPN and to help them make appointments. (LC 4616(a)(3)-(5) p.102)

V. Fast Track for Backs Zapped

The entire spinal surgery approval process which followed an entirely different medical dispute resolution track from the general MT dispute resolution process has been completely eliminated. (Legislative Counsel Digest at p.4.)

VI. AME/Panel QME Process

There were changes to the AME/Panel QME process, although with emphasis that this was not to be used in place of the IMR system. It would seem therefore, to be used only for disputes other than MT. (See LC 4062.2(f) at p. 68 and LC 4064(a) at p. 70)

LC 4062.3(g) prohibits ex parte communications with the Agreed Medical Examiners (AME.) However, LC 4062.3(f) at p.68 provides for limited ex parte communication w/ the AME for procedural purposes only (not substantive purposes). It appears that all ex parte communication, even for procedural purposes only, is still prohibited for panel QMEs. (See Alvarez v. WCAB, (2010) 187 Cal. App. 4th 575; Osequera v. Links, (2010) 2010 Cal. Wrk. Comp. P.D. LEXIS 60.)

LC 139.2(h)(3)(B) at p. 22 states that QMEs “shall not conduct qualified medical evaluations at more than 10 locations.”

VII. Medical Reports Paid for by IW or Defense:

LC 4064(d) at p. 76, still allows parties to obtain medical evaluations or consultations at their either expense. And LC4605 at p.88 provides that the IW may obtain, at his or her own expense, a consulting physician or any attending physician whom he or she desires. However, the new law clarifies that any report generated from such a physician can’t be the “sole basis of an award of compensation.” However, the medical evaluator or primary treating physician (PTP) is required to discuss this report and explain whether they agree or disagree with it and explain why.

VIII. MT for Psych, Sleep & Sexual Injuries

LC4660.1 is added to the Labor Code to abolish increases in permanent disability for psych, sleep & sexual impairments. However, an important MT safeguard has been added to this section which allows MT for these injuries if it is deemed that are a compensable consequence of an industrial injury. (See LC4660.1(c)(1) at p. 126.)

IX. IWs entitled to Interpreters at Medical Exams

LC 4620 at p. 110 state that IWs are entitled to interpreters at defendant’s expense, at medical exams, if needed. However, the employer, and not the IW, is the one authorized to choose which interpreter is used for such purposes. (See also LC 4600(f) at p. 78.)

X. Limitation on Chiropractors

1. LC 4600(c) at p. 76 disallows chiropractors from acting as PTPs after the IW has received the maximum number of visits allowed by LC 4604.5.

2. LC139.2(b)(4)(A) currently allows a chiropractor to qualify as a QME by completing a chiropractic post graduate program. LC 139.2(b)(4) at p. 18 deletes this section and mandates that chiropractors be certified in California and that the certification program include instruction on disability evaluation report writing.

XI. Limitation re Home Health Care Services

LC 4600(h) at p. 78 limits payment for home health care services to those services that are “reasonable and necessary to cure or relieve the IW from effects injury. Services must be prescribed by a physician. 

CONCLUSION: SB 863 will substantially change the way workers’ compensation law is practiced in the State of California. Prudent practitioners are encouraged to study the reform package carefully and in detail, as it contains a multitude provisions that can be used to greatly benefit their client’s interests (whether defense or applicant). In addition, it is hoped that the new legislation will increase the effective and efficient administration of the workers’ compensation system as a whole.

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