Sedgwick Claims Management Services, Inc. is notorious for failing to respond compliantly to California providers’ bills for treating injured workers. But the Third-Party Administrator (TPA) is even worse at responding to Second Review appeals providers submit to dispute Sedgwick’s improper denials and payment reductions.

When a claims administrator improperly denies or adjusts payment, California law requires the provider to submit a Second Review appeal within 90 days to allow the claims administrator to rectify their error.

According to our data, between 2021 and 2023 Sedgwick denied payment for 41,218 compliant Second Review appeals daisyBill providers sent to Sedgwick. Of those, Sedgwick erroneously denied 20,294 as “duplicates” of the original bills.

Yes, almost half (49%, to be precise) of Sedgwick’s appeal denials cited the laughable notion that the appeals were simply copies of original bills that providers submitted in error. (We explain below why this is so laughable). By comparison, Zurich Insurance North America was a distant second, with 15% of its Second Review appeal denials citing “duplicate bill.”

The data does not lie. Sedgwick incorrectly denied 20,294 appeals as duplicate bills, either intentionally or unintentionally — and we’re not sure which is worse.

Sedgwick: A History of Improper Second Review Denials

California workers’ comp law and regulations require Sedgwick to respond to a Second Review appeal with a “final written determination on each of the items or amounts in dispute.” Instead, at a mind-boggling rate, Sedgwick simply denies these appeals as duplicate bills.

Failing to compliantly respond to Second Review appeals is nothing new for Sedgwick. We pointed out their unfortunate habit of labeling perfectly compliant appeals as “duplicates” in 2019, again in 2021, and again in 2022.

In June 2022, daisyBill submitted 4,930 Audit Complaints to the California Division of Workers’ Compensation (DWC) detailing Sedgwick’s Second Review appeal violations. Given Sedgwick’s continued strategy of failing to properly process Second Review appeals, we must assume that the DWC promptly filed the Audit Complaints under “Do Absolutely Nothing About This.”  

For the last three years (2021 - 2023), the data below shows the top 10 California claims administrators by count of original bills received from providers, data on Second Review appeals, and the rate at which these claims administrators denied the appeals as duplicate bills.

Clearly, with a 49% rate of improperly denying appeals as duplicates, Sedgwick outperforms all other claims administrators in non-compliance.

As for the 49% of appeals Sedgwick improperly denied as “duplicates,” the providers’ only recourse is to request Independent Bill Review (IBR) — which the DWC is unlikely to conduct timely, and which requires further expenditure of practice resources (including the $180 IBR filing fee which the provider is unlikely ever to see reimbursed even if the provider prevails).

Bear in mind that when providers submit Second Review appeals through daisyBill:

• The appeal is submitted using DWC Form SBR-1, which is only used for Second Review appeals and never for original bills.
• The bill itself, per DWC instructions, includes code ‘BGW3’ in box 10d of the CMS-1500 billing form to indicate a Second Review appeal.
• Code 7 for “Replacement of prior claim (bill)” is entered in box 22 of the CMS-1500, along with the bill’s original reference number assigned by the claims administrator, again to indicate an appeal per DWC instructions.
• The word RECONSIDERATION! is entered in Box 19 of the CMS-1500 for “Additional Claim Information” — literally in all caps with an exclamation point.

Somehow, despite all this, Sedgwick still manages to mistake half of its denied appeals for “duplicates.” In a related story, our credulity is currently on indefinite leave due to excess strain.

This is the current state of California workers’ comp:

1. A claims administrator consistently exhibits high rates of non-compliance with payment laws and regulations over several years, costing providers inestimably in time and practice resources.
2. The non-compliance is well-documented and formally reported to the DWC.
3. The claims administrator continues the non-compliance.

California workers’ comp has laws, regulations, and rules regarding how providers bill; if the provider is non-compliant, Sedgwick keeps the provider’s reimbursement. California workers’ comp also has laws, regulations, and rules regarding how claims administrators pay. If the claims administrator is non-compliant…it’s business as usual.

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