California has laws and regulations requiring claims administrators to timely and compliantly conduct Utilization Review (UR) of every treatment recommended by an injured worker’s treating physician.

Unfortunately, California’s Division of Workers’ Compensation (DWC) shirks its duty to enforce those laws, potentially allowing claims administrators to disregard them with impunity.

In 2016, after reported UR abuses by claims administrators that may have delayed or impeded injured workers’ care, the legislature passed a law demanding that the DWC establish an electronic system to monitor every UR decision issued by claims administrators for compliance.

But there is no evidence that the DWC implemented this system as mandated. To our knowledge the DWC simply disregarded this legislation, applying to itself the same permissiveness with which the DWC allows claims administrators to disregard UR laws and regulations.

Below, learn how the DWC has de-facto established a double standard of compliance, and so far announced no action to execute the sensible laws legislators passed to balance the scales and protect injured workers.

UR Enforcement Legislation Ignored by DWC

As we explored in this article, California Senate Bill 1160 amended Labor Code Section 4610 to add subsection (o), which requires that the DWC “...develop a system for the mandatory electronic reporting of documents related to every utilization review…”

In 2016, over two years after the legislature passed the authorization requirement, California legislators recognized a significant problem: injured workers struggled to obtain treatment because claims administrators failed to adhere to UR regulations.

To protect their injured worker constituents, legislators passed SB 1160, demanding the DWC implement oversight of every UR decision. Analyses of SB 1160, part of the California government’s online legislative record, include the following unambiguous statements (emphasis ours):

“Recently, UR has become an increasingly notable area of concern from a variety of stakeholders. Specifically, both injured workers and medical providers report delays and denials of medical care due to the UR process. While existing research does not support the argument of significant delays or denials due to UR, recent research suggests that, while such delays and denials may not be system-wide, they may be specific to certain employers or UR entities. This suggests, in part, that the implementation of best-practices across the system will lead to improvements for injured workers who are having their care delayed or denied.”

“With this information, SB 1160 will shine a bright light on how UR impacts claims, both system-wide and for specific employers and UR entities. This data will make possible targeted audits and legislative initiatives that address unnecessary medical disputes, while preserving important protections against unnecessary and abusive medical treatment.”

The following subsection of the Labor Code, §4610(p), goes on to empower the DWC to impose penalties on claims administrators found to be conducting UR in a non-compliant manner (emphasis ours):

“If the administrative director determines that the employer, insurer, or other entity subject to this section has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the administrative director may assess, by order, administrative penalties for each failure.”

Yet, as far as we know, more than seven years later, claims administrators and their utilization reviewers are under no obligation to send UR documents to the DWC.

Further, even if these UROs electronically sent the documents required by Labor Code 4610, any data analysis would require a herculean effort because the DWC has failed to standardize the UR forms from which the DWC could collect pertinent compliance information.

In this instance, the California state government stepped up and adjusted laws to protect workers. However, the agency tasked with implementing these adjustments ignores these demands for oversight. For all the DWC knows, UR physicians decide whether injured workers receive care by tossing a coin — or worse, by prioritizing the financial interests of their claims administrator employers.

Authorization & UR 101

In California, claims administrators must approve every treatment, x-ray, aspirin, and splint (essentially, any service or good that costs money) prescribed by an injured worker’s treating physician.

For a physician to receive payment for the treatment, UR laws and regulations operate as follows:

1. To request approval for treatment, the physician must submit a compliant Request for Authorization (RFA) form to the injured worker’s claims administrator.
2. In response to each treatment listed on an RFA form, the claims administrator must timely issue a compliant (UR) decision approving, denying, or modifying the RFA-recommended treatment.

California laws empower claims administrators to enforce authorization requirements by allowing the claims administrator to deny payment for any treatment if the physician lacks proof of authorization (though it’s sadly not uncommon for payment to be denied improperly for authorized treatment).

Yet, in an illustration of California’s lopsided regulatory environment, neither physicians nor injured workers have recourse when claims administrators fail to timely or compliantly conduct UR. And even when state law demands otherwise, the DWC fails to take action to enforce compliance.

This lack of oversight has resulted in bloated, often ambiguous, or nonsensical UR decisions — many of which have been untimely and/or arguably denied care improperly.

Legislation passed in 2016 mandated that the Division of Workers’ Compensation (DWC) establish a means by which claims administrators must submit documentation for every UR decision issued. Using these UR decisions, the DWC could identify and address non-compliance or any other practices that may deprive injured workers of medically necessary care.

However, the DWC fails to adhere to this law intended to protect injured workers. Why should claims administrators do any differently?

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