Sedgwick Claims Management Services is breaking the law. We encourage the California Division of Workers’ Compensation (DWC) to assert its role in upholding workers’ comp law, and to impose appropriate consequences on this claims administrator for its blatant disregard of e-billing requirements.

From January 1 to May 15, 2022, Sedgwick failed to send electronic Explanations of Review (X12 835 e-EORs) in response to daisyBill providers’ e-bills 25,970 times.

Below is the message and formal Audit Complaints daisyBill submitted to the DWC on our provider clients’ behalf, documenting and reporting the scope of Sedgwick’s violations.

e-EORs significantly reduce providers’ administrative burden by automatically posting to the e-bill sent by the provider, closing the payment loop, and cutting the time and effort necessary to manage practice revenue.

Bottom line: failing to return timely e-EORs, as Sedgwick did, breaks the law. California Labor Code 4603.4 guarantees providers who choose to e-bill an electronic EOR response and payment in 15 working days.

To: XXXXXXX@dir.ca.gov

Subject: Sedgwick - X12 835 Missing: EDI Non-compliance for 25,970 bills

Below is an Audit Complaint reporting credible data that Sedgwick failed to send 25,970 electronic EORs (X12 835) to California providers as mandated by California law. This Audit Complaint data represents California workers’ comp e-bills submitted to Sedgwick by providers from January 1, 2022 through May 15, 2022.

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 important payment data about the claims administrator that heretofore was hidden in the paper EORs mailed to individual providers.

For 2022 bill submission dates cited above, attached is a CSV list containing 25,970 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 V: EOR (835) Compliance Due Date
• Column W: EOR (835) Receipt Date - This column is BLANK because Sedgwick failed to send the provider an electronic EOR (835).
• Column AN: Patient Name
• Column AO: Claim Number

On 6/15/2022, daisyBill emailed four Sedgwick representatives to report the lack of compliance:

• XXXXXXX, Vice President of Quality
• XXXXXXX, Workers' Compensation Compliance Specialist
• XXXXXXX, IT Software QA Specialist
• XXXXXXX, [Title unknown]

As of 6/22/2022, Sedgwick has failed to respond.

Per Title 8, California Code of Regulations section 10111.2(b)(10),(11), Sedgwick should be subject to audit penalties.

Audit Complaint Details

This Audit Complaint Data submitted to the DWC represents a credible complaint and credible information of claims handling violations.

Bill Transmission: Original Bill / Second Review - 835 EOR Missing

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 the 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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