Improper payment denials and reductions are inevitable for providers who treat injured workers (more so than in group health or Medicare, which is why many physicians avoid workers’ comp).

However, once in a while, we see a payer reverse course and take appropriate steps to ensure correct reimbursement.

Case in point: California’s State Compensation Insurance Fund (CA State Fund) denied a provider’s bill for authorized treatment, citing that it had denied liability for the injured worker’s claim entirely. But subsequently, with no appeal or other action from the provider, CA State Fund remitted:

• A new Explanation of Review (EOR) indicating that CA State Fund accepted liability for the claim
• Correct reimbursement for the treatment
• Penalty and interest payments for having failed to reimburse timely

We commend CA State Fund for choosing to correct the error. In particular, honoring the mandated penalties and interest (which are laughably “self-executing” for payers) is a refreshing act of decency in an extraordinarily indecent industry.

Payers, like providers and everyone else, will get things wrong sometimes. The measure of an organization is how it corrects its errors. By that metric, CA State Fund deserves a gold star for its efforts to make California workers’ comp function properly.

Unfortunately, the honor system is no way to manage workers’ comp.

Any system that depends solely on payers “self-executing” and otherwise choosing to respect providers’ rights is destined to fail. The California Division of Workers’ Compensation (CA DWC)’s laissez-faire approach to enforcing laws and regulations makes workers’ comp a tough sell for providers, ultimately saddling employers with higher costs as their injured employees struggle to access care.

CA State Fund Denies Reimbursement

Treatment authorization is irrevocable in California once the provider has furnished the authorized treatment, regardless of any questions around liability. California Labor Code Section 4610.3 states (emphasis ours):

“...an employer [or their insurer] that authorizes medical treatment shall not rescind or modify that authorization after the medical treatment has been provided based on that authorization for any reason…”

Moreover, California Code of Regulations Section 9792.6.1 clearly declares that payment must be remitted for authorized treatment (emphases ours again):

“Authorization” means assurance that appropriate reimbursement will be made for an approved specific course of proposed medical treatment…”

On July 30, 2025, a daisyBill client submitted a bill to the CA State Fund for treatment that the insurer authorized. However, CA State Fund initially responded to the bill with the EOR below, which denied payment for the following reasons:

• “Workers’ Compensation claim adjudicated as non-compensable. Carrier not liable for claim or service/treatment.”
• “Claim denied.”

CA State Fund Makes It Right

On December 2, 2025, unexpectedly, the provider received a second EOR from CA State Fund with payment for the denied visit. This second EOR noted "Liability has changed. Requesting possible payment for bill.”

Even more admirably, the EOR indicated payment of penalties and interest under California Labor Code Section (LAB) 4603.2, which mandates additional reimbursement when a payment is untimely.

• Payment for treatment: $155.63
• Penalty (15% of amount due per § 4603.2): $23.34
• Interest (10% per annum per § 4603.2) : $6.13

In a sad reality of California workers’ comp, there’s a decent chance that CA State Fund could have gotten away with denying reimbursement.

Despite the law and regulations outlined above, if CA State Fund had denied the provider’s Second Review appeal disputing the denial, the provider’s only recourse would be to file a lien rather than requesting Independent Bill Review (IBR).

Unfortunately, the CA DWC rigged the system by declaring that questions around authorization are “threshold” issues that render a dispute “ineligible” for IBR. Accordingly, these payment disputes require a provider to file a (costly, time-consuming) lien to receive payment.

…which makes it all the more refreshing that CA State Fund ultimately paid the provider for the treatment the insurer authorized.

The CA DWC’s Medical Billing and Payment Guide directs that penalty and interest payments are “self-executing.” In other words, CA State Fund could also have gotten away with paying only the charges as billed (as payers often do, even when payments are late).

This is the kind of honest, good-faith commitment to accountability that would make California workers’ comp function much more smoothly, if only more payers honored their legal (and moral) obligations the way CA State Fund does.

California providers should not be forced to rely on a workers’ comp system that operates on the honor system, in which payers are blindly trusted to “self-execute” compliance and decide for themselves which laws to follow.

Unfortunately, an honor system is all that is available because the CA DWC has seemingly implemented a payer-friendly policy of non-enforcement, which forces too many providers to abandon workers’ comp and burdens employers with a scarcity of care for their injured workers.

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