A lot of news has been made lately in the California Workers’ Compensation community regarding a multitude of arrests and prosecutions for various fraud issues. As a response, a few new bills have recently passed in an attempt to crack down on some of the more egregious abuses of the system. This BLOG will focus on some of the key provisions in these bills. Governor Brown recently signed both of these measures into law, and they will have far reaching implications into various aspects of the workers’ compensation system. Let’s address some of the more basic aspects of each bill:
SB 1160: UR Changes and Anti-Fraud Measures:
There is plenty in the new bill for defendants to like as well as some concerns that are raised. SB1160 focuses on UR as well as provides some anti-fraud measures for lien claims. The intent of the UR measures is to streamline the UR and treatment processes. Some of the streamlined processes or reinforcement of existing measures require:
- The AD to implement a Medical Treatment Utilization Schedule (MTUS). The MTUS will be presumed correct unless rebutted by a preponderance of the evidence (LC 5307.27 and 4604.5).
- Employers create a UR process under Labor Code 4610.
- UR process be governed by written policies filed with the AD. (LC4610(c)). UR disputes on or after 07/01/2014 are resolved by IMR. (LC 4610.5 and 4610.6).
- AD is to create and maintain Worker’s Compensation Information System (WCIS), which to be used as a measure of the system (LC 138.6)
The bill also makes a series of wide ranging changes to the UR processes, and approval of UR processes. Some of these will leave something to be desired for employers.
- Medical treatment in MPN, HCO, and with pre-designated doctors will not allow prospective UR within the first 30 days of treatment. However, there are exceptions for surgery, medications not covered by the formulary, psychological treatment, imaging other than x ray imaging, durable medical equipment if total costs for all DME exceeds $250, and Home Health Care Services.
- All treatment within the first 30 days must be reported to the employer or claims administrator. Failure by the provider to properly report treatment constitutes grounds to revoke the “no UR” rule.
- Employers may conduct retrospective UR for the purpose of ensuring the provider is complying with evidence based medicine standards. If a pattern and practice of a failure to comply with evidence based standards is determined, this can be grounds to revoke.
- Employers and claims adjusters may not provide financial incentives to deny or modify treatment.
- UR entities must disclose financial interests.
- UR organizations must obtain accreditation as specified by the DWC.
- URAC accreditation processes and the availability of peer-to-peer consults are required in the event of UR modification or denial.
- The AD is to develop mandatory electronic system sharing documents necessary to conduct UR.
There are also anti-fraud measures contained in the bill. These include:
- Liens filed on or after 01/01/2017 require the lien filer to specify in the lien the basis upon which the lien is authorized.
- Lien claims filed before 01/01/17 have until 07/01/17 to provide the above information. Failure to comply in either case will result in a dismissal with prejudice.
- If the lien claimant is charged with workers’ compensation fraud or Medi-Cal fraud, all liens are stayed pending resolution of charges.
- Any lien filed after 01/01/17 cannot be assigned unless the person or entity has ceased doing business in the capacity held at the time the expenses were incurred. Assignments in violation of this rule will be dismissed by operation of law.
- Additional clarifications regarding Chorn v WCAB (2016) are codified, in line with that finding indicating restrictions on assignments are constitutional and the effect of LC 4908.3 is to prohibit the WCAB from ordering or awarding lien payments to anyone other than the medical provider.
AB 1244: Anti-Fraud and Medical Providers
AB 1244 is intended to crack down on abuses by medical providers by amending section 4906 of the labor code and section 14123 of the Welfare and Institutions Code, along with adding Labor Code Section 139.21. Some key issues are:
- The AD is required to suspend medical providers from participating in ANY capacity in the workers’ compensation system if they are: 1) convicted of a felony; 2) convicted of a misdemeanor involving fraud or abuse of the Medi_Cal program, Medicare program; or Workers’ Compensation; 3) convicted of a misdemeanor involving fraud or abuse of any patient, or otherwise related qualifications, functions, or duties of a provider; 4) suspended from the federal Medicare or Medicaid program programs due to fraud or abuse; 5) lose or surrender a license, certificate or approval to provide health care.
- This system requires 1) the AD to provide written notice to the medical provider who is eligible for suspension; 2) the notice must advise the providers of the right to contest the suspension; 3) the provider has 30 days to object or is automatically suspended
- If the provider does request a hearing within 30 days of the notice letter, the suspension is stayed.
- Upon suspension the AD must notify the relevant licensing, certification, or registration board.
- This will PROHIBIT a suspended provider of medical services (whether an individual, clinic, group, corporation, or other association) from submitting or pursuing a claim for payment.
Overall, it appears that many of the new provisions will clean up some of the systematic abuses coming for the worst players in the workers’ compensation system. One can certainly see some concerns raised by the revamping of the UR process, and there will likely be some unscrupulous providers abusing the 30 day rule in UR. However, it appears as though the objective of rooting out these providers quickly through the attendant anti-fraud provisions has a significant chance of success.
Alec T. Bradford is a Senior Partner and Managing Attorney of B&B’s San Diego office. Mr. Bradford has worked in the defense of workers’ compensation since becoming an attorney in 2010. He can be reached at email@example.com or (619) 641-7942.
Sherri Dozier is the Director of Client Development & Relations for Bradford & Barthel, LLP. She started in workers’ compensation in 1987. Ms. Dozier provides training on a variety of workers’ compensation and employment law topics, along with actively participating in client file reviews and meetings with a focus on client service. Contact Ms. Dozier anytime at firstname.lastname@example.org or (909) 476-0552.
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