California consistently fails to uphold one of the most important legal principles of its workers’ comp system: treatment authorization assures payment to the healthcare provider.

Insurers like The Hartford are the beneficiaries of this non-enforcement.

As daisyNews reported previously, The Hartford declined to pay a provider for an injured worker's psychotherapy, absurdly claiming that the treatment was "unrelated" to the injury, despite having previously paid for the same exact treatment on the same claim.

Now, The Hartford has also denied the provider's Second Review appeal that disputed the improper payment denial.

As with another recent Hartford denial, The Hartford authorized the treatment. There should be no question as to its legal obligation to pay, regardless of any sudden, inexplicable questions about whether the treatment was appropriate (which it was).

Unfortunately, the California Division of Workers' Compensation (CA DWC) has repeatedly failed to recognize the binding nature of authorization and may declare the dispute ineligible for Independent Bill Review (IBR). We urge the agency to take a different tack and demonstrate that authorization is more than just a piece of paper.

The Hartford’s Laughable Denial Reasoning

After authorizing psychotherapy treatment, The Hartford denied payment by claiming the treatment was “UNRELATED TO THE CLAIMED WORK ILLNESS OR INJURY.”

This obvious untruth becomes downright farcical in light of three facts:

1. The Hartford authorized the treatment in response to the provider’s Request for Authorization.
2. The Hartford had already paid for psychotherapy treatment on this claim prior to the denial.
3. The Hartford has paid for psychotherapy treatment on this claim since the denial.

The provider submitted a Second Review appeal, at which point The Hartford could have acknowledged its error. Instead, the insurer stood by its denial, insisting that it was not liable for the psychotherapy session on that particular date of service that The Hartford authorized.

Is it wild incompetence? Purposeful disregard of the law? A gaping void where The Hartford’s sense of shame should be? We cannot know. Regardless, it’s another example of how authorization is technically legally binding, but effectively meaningless.

Authorization Has to Mean Something

Providers already have to endure an authorization and Utilization Review process that costs time and administrative resources (on top of navigating the circus known as the Medical Provider Network system) to obtain all the permissions necessary to render care.

Once a provider obtains that permission, state law and regulations state clearly that it's irreversible. The California Code of Regulations legally defines "Authorization" as "assurance" of reimbursement. California Labor Code states that no payer can un-authorize treatment for literally any reason.

As the California Court of Appeals, Second District noted in a case regarding payer demands for refunds, the state cannot expect providers to accept comp patients without a reasonable expectation of reimbursement (emphasis ours):

“It is more than theoretical importance in the workers’ compensation system that medical providers be paid promptly and treated fairly, for without them the entire benefit system would fail.”

Too often, the CA DWC seems to forget this.

As we discussed in a previous article, the agency renders disputes ineligible for IBR when the payer claims a "threshold" issue, i.e., that it is not liable to pay at all, regardless of the correct amount owed. Because IBR is strictly a process by which the state determines the correct reimbursement amount, questions about liability, compensability, and the provider's eligibility to treat are outside IBR's lane.

All too easily, payers can exploit a loophole by simply claiming a threshold issue, even when it’s blatantly obvious that none exists. This is absurd on its face, where proof of authorization is present, considering the binding and irreversible nature of authorization. Yet, somehow, the CA DWC fails to catch on.

This loophole does not have to be a permanent feature of the billing dispute process.

It is within the CA DWC's power and within the spirit and intent of state law and regulations to enact a policy allowing IBR whenever documented proof of authorization is present.

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