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California: Don’t Expect 5814 Penalties for Mishaps During Utilization Review

May 07, 2020 (4 min read)

When there is an unreasonable delay in the provision of medical treatment to an industrially injured worker, applicant attorneys aren’t hesitant to raise the possibility of a Labor Code section 5814 penalty. Section 5814 exists both as a remedial and penal measure to insure that injured workers promptly obtain the cure or relief to which they are entitled under the law without unreasonable delay by compelling they employer to provide that cure or relief in a timely manner. (Davison v. Industrial Acci. Com. (1966) 241 Cal. App. 2d 15 [31 Cal. Comp. Cases 77]; Ramirez v. Workers’ Comp. Appeals Bd. (1970) 10 Cal. App. 3d 227 [35 Cal. Comp. Cases 383].) What about such delays that occur in the context of Utilization Review (UR)? Shouldn’t an alleged unreasonable delay in an otherwise timely UR of treatment requests be subject to the imposition of a 5814 penalty? No, says a unanimous opinion of an Appeals Board panel. The case is Diaz v. Southern California Gas Company, 2020 Cal. Wrk. Comp. P.D. LEXIS 68.)

Diaz, a customer service representative, sustained a cumulative industrial injury to her bilateral upper extremities, psyche, and in the form of hypertension. Her primary treating physician (PTP) submitted four separate requests for authorization (RFA) of treatment. One RFA was for an EMG. A second RFA was for a prescription of Norco medication. The third RFA requested approval of both Norco medication and chiropractic care. The fourth RFA was for bilateral upper extremity nerve conduction studies. Defendant submitted each of these requests to UR. A UR physician evaluated each request and denied all four RFAs. Defendant refused to authorize the treatment requests.

Diaz appealed each of the UR denials to Independent Medical Review (IMR), contending that the UR physician denied each RFA based upon application of an incorrect treatment guideline. IMR subsequently overturned each of the four UR denials, in apparent agreement with Diaz’ claim.

Diaz then filed a petition claiming entitlement to 5814 penalties on account of the unreasonable delay in obtaining approval for the four RFAs, which delay was attributed to the UR physician’s application of the incorrect guideline or standard. Defendant asserted that the UR physician did not apply incorrect guidelines and that an injured employee is not entitled to 5814 penalties for delays that occur during the course of UR.

Following trial, a WCJ denied Diaz’ request for 5814 penalties. Although he found that the UR doctor applied the incorrect treatment guidelines to the four RFAs, there was no wrongdoing on the part of defendant. He also found that since the UR denials were timely, and since applicant’s appeal of those UR denials to IMR is part of the UR process, section 4610.1 applies and immunizes defendant from imposition of a 5814 penalty. Both applicant and defendant sought reconsideration. Applicant argued her entitlement to 5814 penalty assessments because her medical treatment was unreasonably delayed during UR when the UR physician improperly denied the four RFAs. Defendant, on the other hand, claimed that the evidence did not show that the UR physician improperly or inaccurately applied the mandatory treatment guidelines.

In its Opinion and Decision after Reconsideration, the panel affirmed the WCJ’s finding that Diaz is barred by section 4610.1 from recovering 5814 penalties because the claimed unreasonable delay occurred while utilization review was in process. As the panel decision points out, Diaz did not promptly receive the four specific modalities of treatment recommended by her PTP because the RFAs were denied by the UR physician. Diaz chose to appeal those denials to IMR and was ultimately successful in obtaining a reversal of the denials. While there was a “delay” during the IMR appeal, that appeal was part of the UR process, and section 4610.1 insulates the employer from liability for a penalty for unreasonable delay. Section 4610.1 is unequivocal: it clearly states that an employee shall not be entitled to a 5814 penalty assessment for an unreasonable delay in providing medical treatment for those periods of time necessary to complete the utilization review process.

As to defendant’s claim that the WCJ erroneously concluded that the UR physician performed an inaccurate and/or improper application of the mandatory treatment guidelines, the panel observed that the performance of UR physicians in the timely application of mandatory treatment guidelines is a subject matter outside the WCAB’s jurisdiction, with reference to Dubon v. World Restoration, Inc. (2014) 79 Cal. Comp. Cases 1298 (Appeals Bd. en banc), writ den. 2-5-2015 [see 80 Cal. Comp. Cases 192]. In other words, if the UR decision is timely, any challenge to that timely UR decision must be through IMR rather than the WCAB. Because the UR denials in this case were timely, the panel held that it was improper for the WCJ to exercise jurisdiction over the propriety of those UR denials.

What can we learn from Diaz? Foremost, an injured worker is not entitled to a 5814 penalty where his/her medical treatment is delayed through a timely UR process, which includes an appeal of UR denials to IMR. Section 4610.1 is crystal clear on that issue. Further, as long as the UR decision is timely made, the WCAB lacks jurisdiction to determine whether there were improprieties or errors in the UR process. If, however, a UR decision is untimely and that untimely decision unreasonably delays medical treatment, a strong argument can be made that section 4610.1 does not apply and the injured worker is entitled to seek 5814 penalties.

Practitioners should check the subsequent history of any cases before citing to them.

Any information or opinions contained in this commentary are not necessarily endorsed by LexisNexis® or its affiliates.

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