In keeping with years of consistent violations of California laws and regulations, Sedgwick Claims Management Services continues to fail to send mandatory electronic Explanations of Review (e-EORS) to providers in response to electronic bills.

Once again, daisyBill has submitted thousands of formal Audit Complaints to the Division of Workers’ Compensation (DWC) to report this pattern of non-compliance, along with irrefutable data documenting each instance thereof.

This most recent submission reflects 13,248 new violations. Previously, daisyBill had submitted 132,758 Audit Complaints to report Sedgwick's prior offenses, bringing the total number of Sedgwick violations reported by daisyBill to 146,006.

e-EORs are mandatory in California, saving immeasurable time and resources for providers. Sedgwick's failure to remit e-EORs at such a high rate means that tens of thousands of e-bills have either not been paid or that Sedgwick’s non-compliance has essentially robbed practices of the time and resources necessary to manually post payment details to their systems.

No Excuse for Sedgwick

A Sedgwick representative recently contacted daisyBill to explain that compliantly remitting e-EORs is difficult, given Sedgwick’s size and complexity.

We reminded the representative that California e-billing regulations and rules were enacted in October 2012. We asked them how long California physicians must wait for Sedgwick to comply with legal requirements that have been in effect for over a decade. The representative did not have an answer.

We are unaware of caveats in California law and regulations that make exceptions for claims administrators that are especially large or complex. Moreover, the claims administrators below have succeeded in consistently delivering e-EORS in 2023 — demonstrating that compliance is not only mandatory but achievable.

Below is the text of the formal Audit Complaint submitted by daisyBill on September 28, 2023 to the DWC.

Audit Complaint

To: XXXXXXXX@dir.ca.gov

Subject: Sedgwick EDI Non-compliance: X12 835 Missing - Count 13,248

Below is an Audit Complaint reporting credible data that Sedgwick Claims Management Services, Inc. failed to send 13,248 electronic EORs (X12 835) to daisyBill providers as mandated by California law.

Since June 22, 2022 daisyBill has filed 132,758 Audit Complaints to report Sedgwick for failing to adhere to California EDI as follows:

• 835 e-EOR Missing - Sedgwick Missing e-EORs: 25,970 Audit Complaints Submitted
• 835 e-EOR Late - Sedgwick Late e-EORs: 13,999 Audit Complaints Submitted
• 835 e-EOR Missing / Second Review Denied as Duplicate - Audit Complaint: Sedgwick 16,261 Noncompliant Second Review Responses
• 835 e-EOR Missing - Sedgwick Missing e-EORs: 31,906 Audit Complaints Submitted
• 835 e-EOR Missing - Sedgwick Racks Up 79,318 DWC Audit Complaints
• 835 e-EOR Missing - Sedgwick Must Be Fined: An Open Letter to the CA DWC

A provider's receipt of an electronic EOR (X12 835) is a critical component of electronic billing for the following three reasons:

1. The electronic EOR closes the payment loop for a workers’ comp e-bill, and
2. Automatically posts to the respective e-bill, thereby significantly reducing a provider's administrative burden of manually recording payment information to the respective e-bill, and
3. Allows the gathering of essential payment data about the claims administrator hidden in the paper EORs mailed to individual providers.

This Audit Complaint data represents California workers’ comp e-bills submitted to Sedgwick by daisyBill providers from July 1, 2023 through August 31, 2023.

As the data below indicates, in July and August 2023, Sedgwick failed to respond to 23% of e-bills with the required electronic Explanations of Review. Further, the historical data indicates that Sedgwick has made little effort to comply with California’s EDI requirement that a claims administrator send EORs electronically when a provider sends a bill.

Attached is a CSV list containing 13,248 e-bills providers submitted where Sedgwick failed to return a mandated electronic EOR to the provider. The attached CSV list includes the following columns:

• Column L: [Bill] Transmission Date
• Column W: EOR (835) Compliance Due Date
• Column X: 835 EOR: Receipt Date - This column is BLANK because Sedgwick failed to send the provider an electronic EOR (835).
• Column AO: Patient Name
• Column AP: Claim Number

Audit Complaint Details

This Audit Complaint Data submitted to the DWC represents a credible complaint and credible information on claims handling violations. Per Title 8, California Code of Regulations section 10111.2(b)(10),(11), Sedgwick should be subject to audit penalties.

EDI Non-compliance: Claims administrator failed to send an electronic Explanation of Review (EOR) in the mandated ASC X12N/005010X221A1 (835) format, despite the claims administrator sending a 277 Acknowledgement accepting the Original Bill / Second Review Appeal.

DWC Rule 7.1 requires the claims administrator to electronically send an EOR to the provider using the X12 835 EDI standard within 15 working days of receipt of an e-bill.

Per California DWC Medical Billing and Payment Guide 7.2, any electronically submitted bill determined to be completed, not paid, or objected to within the 15 working day period shall be subject to audit penalties per Title 8, California Code of Regulations section 10111.2(b)(10),(11).

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