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California: SB 863 Tweaks the Medical Provider Network Paradigm

October 05, 2013 (10 min read)

Historical Perspective:

Medical Provider Networks (MPN) came into being as part of the 2004 Workers’ Compensation Reform package set forth in Senate Bill 899. MPNs allowed employers to retain greater control over the medical treatment (MT) provided to injured workers, by allowing employers to create a network of employer-selected physicians to provide treatment on an industrial basis.

Labor Code §§ 4616 through 4616.7 and 8 CCR §§ 9767.1-9767.16 set forth the framework for this MPN paradigm.

MPN Issues:

After enactment of SB 899, employers enthusiastically availed themselves of the benefits of the MPN system. To a large extent, it has worked for the workers’ compensation community.

However, several problems continued to arise on a regular basis.

Employers complained that injured workers were given permission to treat outside of the employer’s MPN due to relatively minor breaches of regulatory mandates. They argued that this was contrary to the legislative intent behind SB 899.

In addition, injured workers were often frustrated by unsuccessful attempts to schedule an appointment with an MPN physician. Many MPN lists contained physicians who were no longer available or who refused to treat industrial injuries.

Changes to MPNs per SB 863:

In 2012, while drafting the workers’ compensation reform package of SB 863, the legislature attempted to resolve the MPN-based complaints of both employers and injured workers. They focused on two major areas:

1. Statutes were enacted to facilitate access of medical treatment within the MPN for injured workers; and

2. Statutes were revised to tighten the burden of proof for injured workers who attempted to treat outside of the MPN, due to a breach in the MPN regulations.

Access to Treatment within the MPN:

With regard to access to treatment issues, Labor Code § 4616 was amended to include Labor Code § 4616(a)(3)-(5), which requires the following:

> As of January 1, 2014, all MPNs are required to list their doctors on their website for ease of access by all injured workers.

> As of January 1, 2014, all MPNs are required to provide medical assistants to help injured workers find a doctor in the MPN and to help them schedule appointments with MPN physicians.

Tightening the Injured Worker’s Burden of Proof

With regard to tightening of the injured worker’s burden of proof in treating outside the MPN, Labor Code § 4616(b)(1) now provides that an MPN is conclusively presumed valid, upon a showing by the employer that MPN has been approved by the Administrative Director.

In addition, Labor Code § 4616.3(b) provides that the employer must still comply with all obligatory MPN notice provisions. However, if there is a violation of one of the MPN regulations, treatment by the injured worker outside the MPN is not automatic as it often was in the past. Under the reform law, in order for an injured worker to treat outside the MPN, the judge will have to make a specific finding that the “failure to provide notice resulted in a denial of medical care.” (Emphasis added.)

The question then becomes what types of notice violations rise to the level of a “denial of medical care.”

This issue was examined extensively in the pre-SB 863 WCAB en banc decision of Knight v. UPS, (2006) 71 Cal. Comp. Cases 1423 (, 71 Cal. Comp. Cases 1423 (Lexis Advance) (WCAB en banc). In that case, the employer’s failure to provide the injured worker with the required MPN notices was deemed a sufficient violation so as to be construed as an unreasonable refusal to provide medical treatment, allowing the injured worker to treat outside the MPN. The issue in this case turned on which types of notice violations will rise to this level of a “denial of medical care.”

In the Knight case, the injured worker was told about the existence of the employer’s MPN after his industrial injury. However, he was not told “where and how to obtain that treatment.” In addition, when the injured worker’s attorney requested a list of MPN providers, he was given the “run around” for several months, until a list of orthopedic surgeons from the MPN network was finally mailed to him. The WCAB found this to be such an egregious violation of the mandatory MPN notice provisions so as to equate such violation with a “denial of medical care.”

After Labor Code § 4616.3(b) was implemented post SB 863, the legal community wondered if the standard set forth in Knight, supra, for determining whether a notice violation rose to the level of a denial of care had been overturned or codified. From the trail of recent post-SB 863 panel decisions discussed below, it appears as if the latter is the case.

In both panel decisions, the WCAB commissioners cite and rely on the holding in the Knight decision, as well as the post-SB 863 statute of Labor Code § 4616.3(b). The concept behind both the Knight decision and Labor Code § 4616.3(b) appear to be in sync, albeit with slightly different wording. The unifying concept being that an injured worker must sustain their burden of proving that the employer’s failure to provide mandatory MPN notices essentially resulted in a “denial of medical care” to the injured worker.

As set forth in the discussions below of the post-SB 863 decisions on this issue, the WCAB appears to continue to follow the pre-SB 863 Knight standard.

Recent WCAB Panel Decisions Interpret SB 863 Changes

Martinez v. New French Bakery, 2013 Cal. Wrk. Comp. P.D. LEXIS --

In the noteworthy panel decision (NPD) of Martinez v. New French Bakery, the WCAB overruled the Judge’s finding that the injured worker was allowed to treat outside of the MPN.

The WCAB explained the process for making this determination was a two-step process. First, the defendant must prove they have complied with the MPN regulations. (See Knight v. UPS, (2006) 71 Cal. Comp. Cases 1423 (WCAB en banc).) Second, if the defendant has not sustained their burden of proof, the burden shifts to the injured worker to prove that the violation of the MPN regulation has resulted in a “denial of medical care.”

With regard to the specific facts in the Martinez case, Mr. Martinez suffered an industrial injury to his shoulder, which required surgery. He claimed that he was entitled to treat outside the MPN, because the defendant failed to comply with 8 CCR § 9767.5, which sets forth the MPN accessibility standards, including the geographic range of listed MPN physicians. Specifically, Mr. Martinez argued that defendant violated 8 CCR § 9767.5(b), which requires, “A MPN must have a primary treating physician …. within 30 minutes or 15 miles of each covered employee's residence or workplace.”

Applicant produced evidence at trial that indicated there were no “physicians within the specialty of ‘orthopedic surgery’ within 15 miles of the applicable zip code,” nor within a 30 minute drive of applicant’s home or work. At trial, defendant failed to offer proof of compliance with 8 CCR § 9767.5.

Instead, defense offered a utilization review decision into evidence that approved shoulder surgery for Mr. Martinez by an MPN orthopedic surgeon, Dr. Bulczynksi, establishing that medical care had not been denied.

The Judge agreed with applicant and ordered that he be allowed to treat outside the MPN.

The defense filed a Petition for Reconsideration of this decision with the WCAB, who overturned the Judge’s decision.

First, although MPN’s must have “treating physicians” located within 30 minutes or 15 miles of an injured worker’s home or office per 8 CCR § 9767.5(b), the mandate is different for “specialists.” Pursuant to 8 CCR § 9767.5(c), “a MPN must have… specialists within 60 minutes or 30 miles of a covered employee's residence or workplace.” (Emphasis added.)

In this case, Mr. Martinez needed the services of a specialist in the form of an orthopedic surgeon (not a primary treating physician) to perform surgery on his industrially injured shoulder. Therefore, the distance requirement was extended from 15 miles to 30 miles and the driving time was extended from 30 minutes to 60 minutes. However, as stated above, no evidence was offered at trial by defense to prove that the employer’s MPN complied with either MPN access provision.

PRACTICE TIP: Since it is the defense burden to show compliance with the regulations, defense should produce such evidence at trial. For instance, in this case, defendant should have offered into evidence a list of three orthopedic surgeons within 60 minutes or 30 miles of Mr. Martinez’ home or work to show compliance with 8 CCR § 9767.5(a) and (c).

Although it’s not clear in this case whether a regulation was breached, it does not appear to matter. The WCAB explained that even if an MPN regulation had been violated, the applicant failed to prove that the violation resulted in a “denial of treatment.” In this case, no evidence was presented to support a position of “denial of treatment” by the injured worker. On the contrary, defense presented evidence at trial to establish that they had, in fact, authorized the requested medical treatment, i.e., the shoulder surgery.

Therefore, the Findings of Fact were amended to include the following “Finding of Fact – (3) Applicant did not carry his burden of showing that there was neglect, refusal or denial of medical treatment.”

Hernandez v. Aramark, ACE/USA, 2013 Cal. Wrk. Comp. P.D. LEXIS 310 (, 2013 Cal. Wrk. Comp. P.D. LEXIS 310 (Lexis Advance)

A similar result was reached by the WCAB panel in the noteworthy panel decision of Hernandez. Aramark, ACE/USA. That case dealt with an employer who had a valid MPN. The evidence was not clear as to whether there had been a violation of the MPN notice requirement. The initial MPN notices may have been sent to an incorrect address. However, the attorney for Ms. Hernandez did receive all appropriate notices.

The WCAB explained that even if the MPN notices had been defective, the burden of proof then shifted to applicant to show that this defect resulted in a “denial of medical care” per Labor Code § 4616.3(b) as amended by SB 863.

The WCAB noted that there was no denial of care since Ms. Hernandez treated with the MPN physicians for three months after her industrial injury. She only transferred her care outside of the MPN once she hired representation. Thus, the second prong of the MPN test was not met. The WCAB amended the Findings of Fact as follows: “(4) Defendants did not neglect, refuse, or deny to provide reasonable medical treatment.”


Whether the amendments made to the MPN process by SB 863 will cure the various issues encountered by the various parties is still an open question.

However, the WCAB has been quite rigorous in reversing judges who fail to adhere to the new requirement that a violation in MPN regulation must result in a “denial of medical care” in order to allow the injured worker to seek medical care outside of an employer’s MPN.

© Copyright 2013 LexisNexis. All rights reserved. This article will appear in a forthcoming issues of California WCAB Noteworthy Panel Decisions Reporter.



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