Sedgwick, in cahoots with Mitchell, seems to be setting up some kind of protection racket where, in exchange for providers accepting lower reimbursement, Sedgwick/Mitchell will leave providers alone (from vaguely threatening actions) and pay providers in 10 business days (even as Sedgwick openly flaunts its failure to adhere to the legal deadline for payment).

After laying out the bare facts, we’ll dissect how Sedgwick and Mitchell’s act of brazenly bullying providers into accepting lower reimbursements meets most of the criteria for a protection racket.

As usual for our clients, the provider followed all the laws and regulations imposed by California workers’ compensation.

• 1/22/2021 the provider furnished authorized treatment to an injured worker
• 1/25/2021 the provider electronically submitted a bill to Sedgwick for those services; a bill that was 100% compliant with all California rules and regulations
• On or before 2/16/2021, California law required Sedgwick to send the provider an electronic explanation of review (EOR).

Instead of reimbursing the provider as mandated by California law, Sedgwick blatantly ignored California law and commenced its scheme with Mitchell to take an undeserved chunk of the provider’s reimbursement.  

Barely Disguised Threats

On February 19, 2021 (three days after payment was due) the Sedgwick/Mitchell team faxed the provider a “Resolution Agreement.” The fax cover sheet that accompanies the agreement warns that the provider must sign the Resolution Agreement to receive payment in 10 business days and “to avoid further bill review and any audit reductions.”

The Resolution Agreement demands that the provider accept payment below the amount allowed by the Official Medical Fee Schedule (OMFS). Rather than reimbursing the provider $580.10 that is allowed by the OMFS, Mitchell offers $406.00. The offer of the reduced payment is 30% below the amount allowed by the OMFS. The Resolution Agreement also bars the provider from any appeal and from seeking interest and penalties for late payment.

Sedgwick/Mitchell are demanding that providers sacrifice money immediately in order to avoid the future potential pain that Sedgwick/Mitchell could inflict on the providers.

When broken down in terms of the Cambridge Dictionary definition, this Resolution Agreement just reeks of a protection racket:

• A criminal system -- in this case, probably not actually criminal, just unethical and despicable
• of taking money from people -- getting providers to give up full reimbursement
• in exchange for agreeing not to hurt them or damage their property -- so that Sedgwick/Mitchell will not submit the bill for further review and audit reductions. Of course, the carrot in the Resolution Agreement is that providers will get paid in 10 business days -- but Sedgwick/Mitchell already missed the deadline imposed by law, so this carrot is already past its expiration date.

This Resolution Agreement is a clear and unambiguous manifestation of the dirty play that is rampant in California workers’ comp. With no fear of repercussion, payers (and their sidekicks) are allowed to ignore California laws with impunity. Meanwhile, California law offers providers no protection from these payers that ignore and flaunt California workers’ compensation laws.

This reimbursement abuse of a compliant provider who treated an injured worker should turn the stomach of every lawmaker in California.

Herewith, redacted copies of the fax cover sheet and Resolution Agreement:

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