Since October 2012, California law has required workers’ comp claims administrators to accept electronic bills (e-bills) from providers, and to respond to those e-bills with electronic Explanations of Review (e-EORs).

Eleven years later, at the end of 2023, Third-Party Administrator (TPA) Sedgwick Claims Management Services, Inc. has consistently failed to comply with this requirement.

And why would Sedgwick comply? It is our understanding that the Division of Workers’ Compensation (DWC) has imposed zero consequences for Sedgwick’s non-compliance, despite daisyBill having made the DWC fully and abundantly aware of the problem.

This week, daisyBill, on behalf of our thousands of provider clients throughout California, submitted 11,947 additional Audit Complaints to the DWC to report Sedgwick’s non-compliance. This brings the number of Sedgwick’s violations in 2023 to 62,564 — and the total number of violations since daisyBill began reporting Sedgwick to the DWC to 157,953.

Sedgwick: Too Big to Bother

Providers must comply with e-billing regulations because the DWC allows claims administrators (like Sedgwick) to refuse payment when a provider’s e-bill is not compliant.

Providers have no equivalent power to compel claims administrators (like Sedgwick) into compliance with DWC requirements. Accordingly, the DWC must protect providers from Sedgwick's repeated violations.

Yet Sedgwick’s continued non-compliance demonstrates that the DWC has not protected providers, or done anything to deter the TPA’s misbehavior. 

As reported in our most recent roundup of Sedgwick Audit Complaints, a Sedgwick representative’s excuse for failing to send e-EORs was that the TPA’s operations are too large and complex for providers or the DWC to expect compliance — and the DWC seems to be satisfied with Sedgwick’s reasoning.

e-EORs Help Providers

The remittance of e-EORs is a critical part of e-billing; e-EORs automatically update providers’ e-billing systems with essential e-bill payment information. Without e-EORs, a provider staff must expend time and resources to post each payment from paper EORs manually.

In other words, Sedgwick’s behavior has cost California practices in real and tangible terms, in the absence of real and tangible repercussions. Sedgwick will continue to cost providers, since the DWC refuses to enforce the very e-billing regulations that the DWC enacted.

Sedgwick’s failure to return e-EORs has shifted by only 1% since August of this year, for a total e-EOR missing non-compliance rate in October of 19%.

Sedgwick 2023 e-EOR Non-Compliance

*Sedgwick has remitted some e-EORs initially reported as “missing” in the time since earlier Audit Complaints were filed; these e-EORs are untimely (because, why bother to be timely), and are not reflected in the table above as “missing.”

Audit Complaint

To: XXXXXXXX@dir.ca.gov

Subject: Sedgwick EDI Non-compliance: X12 835 Missing - Count 11,947

Below is an Audit Complaint reporting credible data that Sedgwick Claims Management Services, Inc. failed to send 11,947 electronic EORs (X12 835) to daisyBill providers as mandated by California law.

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

Since June 22, 2022, daisyBill has filed 157,953 Audit Complaints to report Sedgwick for failing to adhere to California EDI.

The 2023 data in the table below demonstrates that Sedgwick has made little effort to comply with California’s EDI requirement that a claims administrator send EORs electronically in response to a provider's e-bills.

Faced with evidence of over 157,000 compliance breaches filed by daisyBill, the DWC continues to fail to enforce California workers’ compensation regulations to the detriment of the providers that treat injured workers.

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.

I've attached a CSV list containing 11,947 e-bills providers submitted where Sedgwick failed to return a mandatory 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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