In January, Sedgwick Claims Management Services, Inc. admitted to shortchanging a California orthopedic practice by hundreds of thousands of dollars—thanks to bogus Preferred Provider Organization (PPO) reimbursement discounts Sedgwick took from the surgeons.

Six months later, payment records indicate Sedgwick has coughed up a mere $12,957 of reimbursement owed the doctors and $1,035 in penalties. That’s less than 2.5% of the $574,350 the Third-Party Administrator (TPA) owes.

This isn’t just foot-dragging. It’s an example of the impunity with which claims administrators can abuse California doctors who treat the state’s injured workers.

The California Division of Workers’ Compensation (CA DWC) should act as a firewall protecting providers from this kind of PPO payment abuse. Instead, the agency refuses to intervene when providers are hit with illegitimate PPO reductions.

In this regulatory void, Sedgwick can slap unsubstantiated PPO discounts on any doctor’s bill, withhold proper reimbursement, and face no meaningful oversight. Doctors are powerless to stop this payment abuse—which is exactly what’s driving them away from workers’ compensation.

Sacramento lawmakers must take notice. Unless the legislature acts to protect the few remaining doctors still willing to treat California’s injured workers, this PPO payment abuse threatens to collapse the system.

Sedgwick’s Stunning Lack of Urgency

When Sedgwick finally agreed to reprocess the orthopedists' bills in January 2025, the facts were clear:

• Sedgwick had consistently reimbursed the orthopedic group at rates far below the 90% Official Medical Fee Schedule (OMFS) rates stipulated in its Coventry PPO contract.
• Instead, Sedgwick cited contracts that didn’t apply or exist—including one that the practice had terminated years earlier.

daisyBill, alongside the California Orthopaedic Association (COA), backed Sedgwick into a corner with data and documentation until the TPA agreed to reprocess the bills. By May 2025, Sedgwick had sent just $12,806 in additional reimbursement and $90 in penalties.

As of this writing, those figures are still only a paltry $12,957 in reimbursement and $1,035 in penalties. By daisyBill's calculations, Sedgwick has yet to pay $560,358.

It’s been nearly half a year since Sedgwick agreed to pay the correct amount for bills, some with dates of service as early as May 2023.

CA Doctors Need Protection

California Labor Code Section 4609 is unambiguous. When a claims administrator reduces a doctor’s reimbursement based on a PPO agreement, the Explanation of Review (EOR) must identify the PPO or entity with which the payer and the provider have a valid contract allowing discounted payments. 

Yet, in this case, Sedgwick cited a series of entities, including Coventry and Multiplan—none of which had contracts with the orthopedists that justified the discounts in question. It took months of work, multiple emails, and an assist from COA just to back Sedgwick into a tight enough corner to arrive at the truth.

Still, Sedgwick hasn’t paid up. And why would it?

Participating in workers' compensation becomes financially indefensible if providers can’t rely on timely, accurate reimbursement. This is how access to care collapses, and the state’s failure to protect providers has serious consequences for employers and their injured workers.

The cost of inaction is too high to continue doing nothing. Doctors need protection from this systemic and systematic PPO payment abuse.

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