California Post-Sandhagen Panel Decision Raises New Questions About Utilization Review

California Post-Sandhagen Panel Decision Raises New Questions About Utilization Review

On June 24, 2009, in a panel decision dealing with utilization review, the California Workers' Compensation Appeals Board in Vasquez v. Colton Unified School District ADJ992523(SBR 0278781), decided that the school board's failure to conduct a timely utilization review “renders its arguments that the treatment is not medically necessary moot”.

The facts of the case are not important other than to say that a request was made by the provider for specific treatment and the school district did not respond. The significance of the Vasquez case is that it specifically states that if utilization review is not done properly after a request for authorization, medical necessity is established.

Utilization Review (UR) is the process used by employers or claims administrators to review medical treatment requested for the injured worker to determine if the proposed treatment is medically necessary. All employers or their workers’ compensation claims administrators are required by law to have a UR program. This program is used to decide whether or not to approve medical treatment recommended by a physician.

UR begins when the request for authorization is first received, whether by the employer, claims administrator or utilization review organization (URO).

Authorization means assurance that appropriate reimbursement for a specific treatment will be paid. 8 CCR § 9792.6(b) sets forth how a doctor requests treatment, diagnostic tests or other medical services for an injured worker. A request for authorization may initially be made verbally, but it must be confirmed in writing within 72 hours of the doctor’s “First Report of Occupational Injury or Illness” (form DLSR 5021), the “Primary Treating Physician Progress Report” (DWC form PR-2), or in a narrative report that contains the same information required in the PR-2 form. If a narrative report is used, the document must be clearly marked at the top as a request for authorization. (8 CCR § 9792.6(o))

In the California Supreme Court Case of Sandhagen v. Workers' Comp. Appeals Board (2008) 44 Cal. 4th 230, 233-234 (73 Cal. Comp. Cases 981), the Court held:

The insurer referred the matter for utilization review but did not communicate its decision within the 14-day statutory deadline set forth in § 4610, subd. (g) (1). A workers' compensation judge found that the insurer's failure to comply with the statutory deadlines precluded it from relying on the utilization review process or on its doctor's report to deny the requested treatment.

Thus, employers and their insurers could not use § 4062 as an alternative method for disputing employees' treatment requests. Only an employee could use the provisions of § 4062 to resolve a dispute over a treatment request; an employer could not do so.

As stated above, the Vasquez panel further interpreted mandatory utilization review, holding that the failure to perform utilization review made the issue of medical necessity moot (i.e., medical necessity as requested was established).

This raises several questions, including: What happens when the case is denied AOE/COE, with respect to UR and causation decisions?

As held in the En Banc Decision of Simmons v. California, 70 Cal. Comp. Cases 866 (W.C.A.B. 2005):

However, we further hold that Dr. Pegram's utilization review reports are not admissible for the purpose of determining the issue of whether applicant's industrial injury caused or contributed to her need for right shoulder surgery. To admit Dr. Pegram's reports for this purpose would be inconsistent with the utilization review scheme established by section 4610.

In this regard, section 4610(a) states:

"For purposes of this section, 'utilization review' means utilization review or utilization management functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, as defined in Section 3209.3, prior to, retrospectively, or concurrent with the provision of medical treatment services pursuant to Section 4600.'' (Emphasis added.)"

Thus, by section 4610(a)'s express terms, utilization review is directed solely at determining the ''medical necessity'' of treatment recommendations. Therefore, section 4610 does not authorize a utilization review physician to determine whether the employee's industrial injury caused or contributed to a need for treatment.

This interpretation of the utilization review statutory scheme is consistent with section 4610(f)(2), which provides that utilization review criteria shall be consistent with the medical treatment utilization review schedule adopted pursuant to section 5307.27. Section 5307.27, in turn, states that this medical treatment utilization schedule ''shall address, at a minimum, the frequency, duration, intensity, and appropriateness of all treatment procedures and modalities commonly performed in workers' compensation cases.'' (Emphasis added.) Accordingly, section 4610(f)(2) and section 5307.27, when read together, demonstrate that utilization review does not encompass an assessment of whether a need for treatment is causally related to the industrial injury”.

So the question in anticipation of further litigation with respect to this issue is: When an insurance company denies a claim without UR, and UR is requested, does that request for authorization turn into an implied authorization for the services if the claim is later determined to be industrially related? (There does not seem to be at this point an appellate decision dealing with this specific issue)

Who can make UR decisions?

A non-physician reviewer may:

  • Request appropriate additional information necessary to render a decision (8 CCR § 9792.7(b)(3))
  • Approve a request for authorization (8 CCR § 9792.7(b)(3))
  • Discuss applicable medical guidelines with the requesting physician when requested treatment appears to be inconsistent with medical guidelines (8 CCR § 9792.7(b)(3))

The non-physician reviewer may discuss the treatment plan with the requesting physician. If the requesting physician decides to make a change in the treatment plan, the physician should provide documentation for that change. (8 CCR § 9792.7(b)(3))

For example, the URO or claims adjuster could fax the modified request to the requesting provider to approve, sign and return it.

A "reviewer" is a medical doctor, doctor of osteopathy, psychologist, acupuncturist, optometrist, dentist, podiatrist or chiropractic practitioner licensed by any state or the District of Columbia, competent to evaluate the specific clinical issues involved in the medical treatment services that are the subject of the request for authorization, where these services are within the scope of the reviewer's practice. (8CCR § 9792.6(q))

The Vasquez case at first glance seems to resolve an issue of utilization review, but in this writer’s opinion, may well open up a flood gate of litigation against insurance carriers because of past practices of not properly conducting utilization review.

  This blog was written by Reid Steinfeld, Esq. and Richard J. Boggan, J.D. 


Reid L. Steinfeld
  • 08-13-2009

Regardless of school district's failure to conduct timely UR, doesn't applicant have evidentiary burden to establish the requested treatment is medically necessary and based upon ACOEM or other evidence/scientifically-based treatment guidelines per LC 4600 and 'Lamin v City of Los Angeles' 69 CCC 1002? What if a request for chiropractic treatment in excess of 24 visits was not timely processed by UR? Does defendant lose the ability to argue no entitlement to treatments in excess of 24 per LC 4604.5 as medically necessary issue is moot?