Governor Jerry Brown enacted numerous changes that will help carriers fight fraudulent lien claimants when he closed out the 2016 legislative session by signing new lien procedures into law. The governor signed Senate Bill 1160 and Assembly Bill 1244 into law on September 30, the last possible day for him to do so. SB 1160 is a 20,300-word omnibus bill that ushers in a plethora of changes that will impact all participants in the workers’ compensation system, with the most newsworthy being that lien claimants who are facing fraud charges can be subjected to automatic stays.
Lawmakers doubled down on the action against fraudulent providers by passing AB 1244, which requires the DWC to suspend any providers who are convicted of fraud from practicing in the workers’ compensation system, and creates a rebuttable presumption that any lien filed by a convicted provider is not compensable if it is connected to the fraud.
The Legislature approved a number of other changes that will impact providers, insurance carriers, and attorneys as it made changes to medical care during the first 30-days of the claim, attorney fees, adjuster penalties, and more. We’ve summarized the most pertinent bills for your review below.
BILLS APPROVED BY THE GOVERNOR
Approved: Senate Bill 1160: Everything but the kitchen sink
SB 1160 provides for automatic stays of any physician or provider lien, once that provider has been charged with medical fraud. The DWC will need to draft regulations to specify exactly what type of fraud charges will result in a stay, meaning that the exact definitions will be fleshed out at a later date.
Please note that lawmakers also approved AB 1244, which creates a special lien proceedings and a rebuttable presumption for those convicted of fraud. The bill is described in greater detail below.
Another section of the SB 1160 requires lien claimants to file declarations under penalty of perjury. Failure to file said declarations will result in lien dismissals. This change applies to any new liens filed on or after January 1, 2017. These declarations require lien claimants to make a variety of statements, including whether the lien claimant is the applicant’s treating physician, whether the provider tried to determine whether an MPN existed, and whether they filed an RFA that was refused or ignored. I suspect most lien claimants will draft boilerplate language in an effort to sidestep these requirements.
The bill bars utilization review during the first 30 days of a work injury for most treatments provided by a MPN doctor, as of January 1, 2018. The exceptions: surgery and hospitalization care will still be subject to prospective utilization review, as will psyche treatment, durable medical equipment, home health care, and MRIs and CT scans.
SB 1160 will also impact attorney fees and deposition fees, inasmuch as it allows the DWC’s Administrative Director (AD) “to determine the range of reasonable fees to be paid to a deponent.” That could impact LC 5710 fees, and potentially prohibit certain applicant’s attorneys’ firms from billing outrageous $400 per hour bills and liens. As many of us know, that is the going rate for an applicant’s attorney with more than a decade’s worth of experience, yet I have seen firms bill at this rate for an attorney with one month’s experience.
Other sections of the bill will:
- Require the DWC to create regulations establishing criteria to verify the identity and credentials of interpreters.
- Allow the DWC to add additional requirements to treating physician reports.
- Increase fines for adjusters who fail to comply with data reporting requirements, and create increased penalties for repeat offenders.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/sen/sb_1151-1200/sb_1160_bill_20160906_enrolled.html
Approved: AB 2503: RFAs go to the adjuster
Lawmakers approved this bill to squeeze in some additional amendments to the utilization review system that are mentioned in SB 1160. The bill requires providers to send all RFAs directly to the claims administrator. This bill was drafted to address confusion among providers about where to send RFAs. This law takes effect on Jan. 1, 2017.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_2501-2550/ab_2503_bill_20160930_chaptered.htm
Approved: AB 1244: Suspension of physicians
This bill requires the DWC to suspend any physician, practitioner or provider from participating in the workers’ compensation system if that person has been convicted of a felony. It also calls for a suspension if the provider’s license has been revoked by their respective licensing board. Lastly, the DWC must suspend any practitioner, provider, or physician if Medicare or Medicaid has suspended them due to fraud or abuse. That last part is notable as Medicare fraud is quite rampant, as is evidenced by the countless press releases issued by prosecutors’ offices.
Once flagged by the DWC for one of these reasons, the AD must also “ring the bell” and notify the various state and regulatory boards overseeing the offending provider’s profession.
The DWC will also notify the chief judge about offending person’s actions, and enact special lien proceedings for that person’s bills. Interestingly enough, special lien proceedings are called for if the offending provider has been convicted of a “felony or a misdemeanor” that meets specified criteria (which means that a felony is not necessary to enact special lien proceedings).
During those special lien proceedings, carriers will benefit from a presumption stating that they need not pay any bill arising from or “connected to” criminal, fraudulent, or abusive conduct or activity. Lien claimants may rebut the presumption by a preponderance of the evidence.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_1201-1250/ab_1244_bill_20160831_enrolled.html
Approved: SB 482: Doctors must check the CURES database
Governor Brown approved this bill on September 27, which requires doctors check the online Controlled Substance Utilization Review and Evaluation System (CURES) database before prescribing various types of controlled substances. Doctors must check the database at least once every four months when prescribing Schedule II, Schedule III, or Schedule IV drugs. Those schedules include drugs like OxyContin, Percocet, Dilaudid, Fentanyl, Klonopin, Valium, Ativan, and Soma.
The bill calls for doctors who fail to comply with the bill to be reported to the Medical Board of California, but the bill does not say who is to report them. Pharmacists and veterinarians are exempted from this bill.
The target of this bill is a subset of doctors who recklessly prescribe drugs to just about anyone. Without any monitoring provisions, I suspect that subdivision of physicians will continue to ignore the CURES database and will keep on prescribing.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/sen/sb_0451-0500/sb_482_bill_20160927_chaptered.html
Approved: AB 2883: Directors’ and officers’ worker’s compensation exemptions
Directors and officers must own at least 15% of the stock of a corporation before being exempted from workers’ compensation coverage. Likewise, the bill allows a general partner (from a partnership) and managing members of a limited liability company to be exempted from coverage. In order to be exempt, these members must specify in writing that they are waiving coverage, while noting under penalty of perjury that they are a director, officer, general partner, or managing member.
The motivation for this bill was to close a loophole that some businesses were using to keep premiums down. The offending businesses would often give lower-ranking employees executive titles, even though those employees were not actually executives.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_2851-2900/ab_2883_bill_20160826_chaptered.html
Approved: AB 2710: Ensuring that carriers do not overcharge for CIGA assessments
This bill requires insurers to bill policyholder employers for assessments that are paid to CIGA the year after the assessment is paid to CIGA. Under this bill, carriers cannot charge employers for CIGA assessments that happened years ago.
Should a carrier overcharge a policyholder employer more than the minimum CIGA surcharge, that carrier must send that additional money to CIGA as well.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_2701-2750/ab_2710_bill_20160817_chaptered.html
BILLS VETOED BY THE GOVERNOR
Vetoed: SB 897: Salary continuation benefits bill
Under this bill, first responders who suffer a “catastrophic injury” would have been able to collect up to two years of salary-continuation pay instead of temporary disability. Prior to this bill, safety workers could only collect up to one year of salary-continuation pay.
Keep in mind that salary continuation pay is 67% of preinjury wages. The bill’s definition of catastrophic injury includes amputations, shootings, stabbings, severe injuries stemming from building collapses, and severe burns. I suspect we may see a different version of this bill in future legislative sessions.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/sen/sb_0851-0900/sb_897_bill_20160826_enrolled.html
Vetoed: AB 2086: Neuropsychologist category of QMEs
Governor Brown vetoed this bill for the second year in a row, despite strong support from both the Assembly and Senate. The bill would have given neuropsychologists their own QME designation within the DWC Medical Unit. The DWC eliminated this designation in 2015.
Lawmakers tried to differentiate this bill from the failed 2015 version by stating that neuropsychologists who want to be listed as a neuropysche QME must prove that they had been used as an AME on at least five occasions before making the QME list. Apparently that was not enough to avoid the “Veto” stamp that sits on the governor’s desk.
Expect lawmakers to try and push a slightly-edited version of this bill through in 2017.
Here is a link to the bill:
http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB2086
Vetoed: AB 1643: Reintroduction of the “breast PD” bill
Like AB 2086, this is another bill vetoed by Governor Brown for the second year in a row. This bill would have increased the maximum PD rating for a mastectomy from 5% PD to 16% PD. The reasoning behind the increase is that the PD value of a woman’s breast should be equal to the PD value of a man’s prostate. The bill would have also barred apportionment to pregnancy, menopause, carpal tunnel syndrome, or osteoporosis. I suspect we will see a slightly different version of this bill in 2017.
Here is a link to the bill:
http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB1643
Vetoed: AB 1922: Ancillary agreements to the WCIRB
Carriers and employers backed this bill, which would have eased mandatory filing requirements that call for ancillary agreements to be filed with the state before they can be deemed effective. The Department of Insurance had adopted rules in April 2016 specifying the documents to be filed before they may be used by carriers and employers.
Under the bill, carriers would not have to submit ancillary agreements to the state, as long as the policy has deductibles of $250,000 or more. For this exemption to apply, the ancillary agreements may not have changed cancellation terms, impacted alternative-dispute resolution agreements, altered premiums, or tweaked costs/benefits payable under the policy.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_1901-1950/ab_1922_bill_20160831_enrolled.html
Vetoed: SB 1451: State Fund’s hiring of eight new executives
This bill would have allowed State Compensation Insurance Fund to create and fill up to eight new senior management positions in the areas of underwriting, technology, claims, finance, and actuary.
Here is a link to the bill:
http://www.leginfo.ca.gov/pub/15-16/bill/sen/sb_1451-1500/sb_1451_bill_20160826_enrolled.html
John P. Kamin is a workers’ compensation defense attorney at Bradford & Barthel’s Woodland Hills location. Mr. Kamin previously worked as a journalist, where he reported on legislative developments in workers’ compensation law across all 50 states. Feel free to contact John at jkamin@bradfordbarthel.com or at (818) 654-0411.
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