Current Law On Utilization Review In California

The Courts are rigorously enforcing the process of determining medical necessity and medical causation to ensure that the Insurance Companies and Medical Providers follow the processes set forth in SB 899 and SB 228 regarding utilization review (medical necessity), and the medical legal process (causation) in order to streamline medical treatment for the injured worker.

“Utilization Review” 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.

The changes in the law and recent cases have caused some confusion in the area of utilization review and the distinction between what procedures are used to prove medical necessity and what procedures are used to prove medical causation.  Requests for spinal surgery are treated differently and are specifically discussed at the end of this article.

The medical legal process only comes into play when causation is at issue and can be initiated by both the employer and employee. However, the medical legal process may be initiated by only the employee in issues of medical necessity (utilization review denial).

In State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230 [73 Cal.Comp.Cases 981] (Sandhagen) the Supreme Court clarified 

“In summary, section 4062 simultaneously precludes employers from using its provisions to object to employees' treatment requests but permits employees to use its provisions to object to employers' decisions regarding treatment requests.  The Legislature's intent regarding employers' use of section 4062 to dispute treatment requests could not be more clear.”  

Contained below are the procedures set forth for proving both causation and medical necessity in both admitted cases and denied cases, based on statutory law and case law.

Definitions of Utilization Review 

a.    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. 

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

c.    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)) 

d.    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))

e.    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))

Utilization Review in Admitted Case

1. In admitted cases, utilization review must be performed whenever a request for medical treatment is made.

Supreme Court's decision in State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230 [73 Cal.Comp.Cases 981] (Sandhagen) clarified that when an employer is faced with deciding whether to approve or deny the treatment recommendation of an injured worker's physician, it must conduct utilization review pursuant to Labor Code section 4610.

2. If the employer fails to perform utilization review after a request for medical treatment, the employer is precluded from using the medical legal process to prove lack of medical necessity.

In State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230 [73 Cal.Comp.Cases 981] (Sandhagen) the Supreme Court clarified

“Taken together, the language of sections 4610 and 4062 demonstrates that (1) the Legislature intended for employers to use the utilization review process in section 4610 to review and resolve any and all requests for treatment, and (2) if dissatisfied with an employer's decision, an employee (and only an employee) may use section 4062's provisions to resolve the dispute over the treatment request.  An employer may not bypass the utilization review process and instead invoke section 4062's provisions to dispute an employee's treatment request.”

3. If the employer performs a timely utilization review and authorizes treatment the medical provider gets paid.

4. If the employer denies the necessity of the medical treatment through the timely utilization review process, then only the requesting provider may initiate the medical legal process.

Supreme Court's decision in State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230 [73 Cal.Comp.Cases 981] (Sandhagen) held:

“The Legislature made clear that an employer may not use section 4062 to object to a medical determination concerning medical issues “subject to section 4610” while expressly permitting employees to use section 4062 to resolve disputes over an employer's decision not to approve treatment requests (Stats. 2004, ch. 34, § 14) — i.e., the plain language of section 4062 establishes that only employees may use section 4062 to resolve disputes over requests for treatment.  This limitation is made even clearer when the current section 4062 is compared to previous versions.  Former section 4062 allowed employers to object to medical determinations concerning “the extent and scope of medical treatment . . . .” (Stats. 2003, ch. 639, § 17.)  In Senate Bill No. 899, the Legislature deleted that phrase.  (Stats. 2004, ch. 34, § 14.)” 

Supreme Court's decision in State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230 [73 Cal.Comp.Cases 981] (Sandhagen) held:

“Accordingly, in light of the clear statutory language and the Legislature's purpose in enacting the utilization review process in section 4610, we conclude the Legislature intended to require employers to conduct utilization review when considering employees' requests for medical treatment. Employers may not use section 4062 as an alternative method for disputing employees' treatment requests.”

Utilization Review in Denied Cases

1. The employer has 90 days from the date a claim is filed to either admit or deny the injury. Failure by the employer to deny the injury within the 90 days deems the injury admitted, and the procedures for utilization review of admitted claim govern.

Cal Lab Code § 5402

(a) Knowledge of an injury, obtained from any source, on the part of an employer, his or her managing agent, superintendent, foreman, or other person in authority, or knowledge of the assertion of a claim of injury sufficient to afford opportunity to the employer to make an investigation into the facts, is equivalent to service under Section 5400.

(b) If liability is not rejected within 90 days after the date the claim form is filed under Section 5401, the injury shall be presumed compensable under this division. The presumption of this subdivision is rebuttable only by evidence discovered subsequent to the 90-day period.

2. Within one working day after an employee files a claim form, the employer is responsible for the first $10,000.00 in medical treatment regardless of whether they deny the injury thereafter.

Cal Lab Code § 5402 (c) Within one working day after an employee files a claim form under Section 5401, the employer shall authorize the provision of all treatment, consistent with Section 5307.27 or the American College of Occupational and Environmental Medicine's Occupational Medicine Practice Guidelines, for the alleged injury and shall continue to provide the treatment until the date that liability for the claim is accepted or rejected. Until the date the claim is accepted or rejected, liability for medical treatment shall be limited to ten thousand dollars ($10,000).

3. Cal Lab Code § 5402 (c) applies to any date of injury – retroactive application

Heike M. Ruvalcaba, Applicant v. Scott Roberg, DPM, State Compensation Insurance Fund, Defendants W.C.A.B. No. OXN 0129714--Workers' Compensation Appeals Board (Panel Decision) Opinion Filed March 9, 2007

“The consequence of SB 899 as presented in the language of Section 47, noting that any amendments or additions under SB 899 are to be applied prospectively regardless of the date of injury, would make subsection (c) of 5402 applicable to any pending case. This conclusion is consistent with the appellate decisions in Kleemann, supra, Marsh, supra, and Rio Linda Union School District v. Workers' Comp. Appeals Bd. (Scheftner) (2005) 131 Cal.App.4th 517 [70 Cal.Comp.Cases 999], and thus would justify the WCJ's disposition herein…”

4. If the employer denies treatment based on causation, then the employer must initiate the medical legal process. However, the employee may initiate the medical process.

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

“Where a utilization review physician finds that a treatment is medically necessary but questions whether the need for that treatment is causally related to the industrial injury, the defendant must either: (a) authorize the treatment; or (b) timely deny authorization based on causation within the deadlines set forth in section 4610(g)(1); timely communicate the denial based on causation to both the treating physician and the applicant within the deadlines set forth in section 4610(g)(3)(a); and timely initiate the AME/QME process within 20 days of the receipt of the utilization of physician's report, if the employee is represented by an attorney, or 30 days, if the employee is unrepresented, in accordance with section 4062(a) and…”

5. Utilization review reports are admissible for the limited purpose of determining the need for the medical treatment requested and cannot be used to show that the injury was caused by the industrial accident.

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

“A utilization review physician's report is not admissible for the purpose of determining whether the industrial injury caused or contributed to the need for a particular treatment, i.e., a utilization review physician may address only the issue of whether a particular treatment is medically necessary;..”

6. If the employer denies the claim based on a medical legal report prior to denying the claim, the employer is not entitled to another medical legal report unless the treating physician puts medical causation with respect to another body part at in issue. Then the employer has 20 days to initiate the medical legal process. (See Lexis Blog  “The Dreaded Rule 30” Posted by Robert G. Rassp, Esq. August 25, 2009)

Pursuant to 8 CCR 30 (d)(3), once a claim has been denied in its entirety, only the employee may request a Panel QME. Therefore, the Courts must look to the reports of the self-procured treating physician.

8 CCR 30 (d)(3) "Whenever an injury or illness claim of an employee has been denied entirely by the claims administrator, or if none by the employer, only the employee may request a panel of Qualified Medical Evaluators, as provided in Labor Code sections 4060(d) and 4062.1  if unrepresented, or as provided in Labor Code sections 4060(c) and 4062.2 if represented."

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

“If in prescribing treatment for the disputed body part, the treating physician either explicitly or implicitly determines for the first time that the injury to the disputed body part is industrial, then utilization review is not appropriate. Instead, the defendant must initiate the AME/QME process within the deadlines established by section 4060(a)."

7. If the case is denied and the employer does not perform a medical legal evaluation and a request for treatment with a determination by provider for causation, then employer has a second chance to do medical legal.

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

“If in prescribing treatment for the disputed body part, the treating physician either explicitly or implicitly determines for the first time that the injury to the disputed body part is industrial, then utilization review is not appropriate.  Instead, the defendant must initiate the AME/QME process within the deadlines established by section 4060(a).”

8. It is the defendant's duty to object to the treating physician's causation determination and to initiate the AME/QME procedure under section 4062(a)).

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

“In essence, the defendant is objecting to the treating physician's explicit or implicit determination that the need for the prescribed treatment was caused, in whole or in part, by the industrial injury.  Such an issue of causation is outside the scope of utilization review.  Accordingly, it is not the employee's responsibility either to object to the treatment denial based on causation or to initiate the AME/QME procedure established by section 4062(a).  Rather, it is the defendant's duty to object to the treating physician's causation determination and to initiate the AME/QME procedure under section 4062(a)”.

Related Information

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

“Although the ACOEM guidelines are “presumptively correct on the issue of extent and scope of medical treatment” (Lab. Code, §4062.5(c) (emphasis added)), they are not presumptively correct on the issue of whether a need for medical treatment is causally related to the industrial injury.”

b.    Labor Code 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 4610.”

c.    Supreme Court's decision in State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230 [73 Cal.Comp.Cases 981] (Sandhagen) held:

“The Legislature made clear that an employer may not use section 4062 to object to a medical determination concerning medical issues “subject to section 4610” while expressly permitting employees to use section 4062 to resolve disputes over an employer's decision not to approve treatment requests (Stats. 2004, ch. 34, § 14) — i.e., the plain language of section 4062 establishes that only employees may use section 4062 to resolve disputes over requests for treatment.  This limitation is made even clearer when the current section 4062 is compared to previous versions.  Former section 4062 allowed employers to object to medical determinations concerning “the extent and scope of medical treatment . . . .” (Stats. 2003, ch. 639, § 17.)  In Senate Bill No. 899, the Legislature deleted that phrase.  (Stats. 2004, ch. 34, § 14.)  “We presume the Legislature intends to change the meaning of a law when it alters the statutory language [citation], as for example when it deletes express provisions of the prior version . . . .”  (Dix v. Superior Court (1991) 53 Cal.3d 442, 461.)  State Fund would have us read “the extent and scope of medical treatment” back into the statute as one of the matters employers may object to under section 4062.  We decline to do so.    

Accordingly, in light of the clear statutory language and the Legislature's purpose in enacting the utilization review process in section 4610, we conclude the Legislature intended to require employers to conduct utilization review when considering employees' requests for medical treatment.  Employers may not use section 4062 as an alternative method for disputing employees' treatment requests.”

Special Rules Apply for Requesting Spinal Surgery

En Banc Decision on Request for Spinal Surgery: Cervantes v. Workers' Comp. Appeals Bd., (En Banc) (2009)74 Cal. Comp. Cas. (MB) 1336  is as follows:

“The Appeals Board held that the procedures and timelines governing objections to a treating physician's recommendation for spinal surgery are contained in Labor Code sections 4610 and 4062 and in Administrative Director (AD) Rules 9788.1, 9788.11, and 9792.6(o) and are as follows:

(1) when a treating physician recommends spinal surgery, a defendant must undertake utilization review (UR);

(2) if UR approves the requested spinal surgery, or if the defendant fails to timely complete UR, the defendant must authorize the surgery;

(3) if UR denies the spinal surgery request, the defendant may object under section 4062(b), but any objection must comply with AD Rule 9788.1 and use the form required by AD Rule 9788.11;

(4) the defendant must complete its UR process within 10 days of its receipt of the treating physician's report, which must comply with AD Rule 9792.6(o), and, if UR denies the requested surgery, any section 4062(b) objection must be made within that same 10-day period; and

(5) if the defendant fails to meet the 10-day timelines or comply with AD Rules 9788.1 and 9788.11, the defendant loses its right to a second opinion report and it must authorize the spinal surgery.

The foregoing is a general synopsis of current California Law. For additional information on this topic, see 2009 Article entitled “California Post-Sandhagen Panel Decision Raises New Questions About Utilization Review” Posted By: Reid L. Steinfeld, and download referenced cases cited above.

© Copyright 2010 Reid Steinfeld, Esq. and Richard Boggan, J.D. All rights reserved. Reprinted with permission.