Today we are focusing on a self-insured employer, the University of California, and its third-party administrator, Sedgwick. Unfortunately, Sedgwick is not complying with California workers’ compensation billing regulations while acting on behalf of the Regents of the University of California.

This tale shows how Sedgwick and the University of California simply reject valid bills transmitted electronically. Why? Because there are no consequences for failing to reimburse providers that treat injured employees of the University of California.  

Employers: when choosing workers’ comp insurers or third party administrators, pay attention to how these companies actually carry out their responsibilities as a reflection of the care given to your injured employees.

University of California: A Self-Insured Employer

According to the Office of the President of the University of California, the University is a self-insured employer that uses a third-party claims administrator, Sedgwick, to coordinate its claims management for all UC locations. Injury treatment for employees of the University of California is paid for by the Regents of the University of California and Sedgwick manages these injury claims on behalf of the Regents of the University of California.

California has the largest workers' compensation self-insurance program in the nation. In California, an employer can either choose to purchase a workers’ compensation insurance policy or can, instead, self-insure its workers' compensation liabilities. To protect employees, such self-insured employers must meet strict California guidelines.

An employer that chooses to self-insure is required to provide the same scope of benefits as an insurance company. These self-insured employers must also comply with all California laws and regulations that govern workers’ compensation, including the laws and regulations governing the processing of medical bills sent by providers who treat injured workers.  

Sedgwick Fails the University of California

Today, we report on how one client gave us the head’s up on Sedgwick’s failure to compliantly carry out the job for which it was hired by the University of California. Specifically, since August, Sedgwick has been incorrectly rejecting valid electronic bills transmitted by providers. Further, Sedgwick has so far been unable to work out a solution with its clearinghouse vendor, WorkCompEDI, to correctly identify and process University of California electronic bills.

On 8/24/2020, via the DaisyBill live chat, a client reported the first incorrect electronic bill rejection for injured employees of the University of California, San Diego. The rejection messages sent by Sedgwick incorrectly indicate “claim not found” for valid claim numbers associated with valid injury claims.

Sedgwick e-Billing Error

Most claims administrators (aka ‘payers’ or ‘carriers or ‘insurers,’ etc) hire a clearinghouse to accept electronic bills sent by workers’ comp providers. However, even when a claims administrator hires a clearinghouse, it is the claims administrator that remains responsible for its electronic billing compliance.

After our client alerted us about the Sedgwick e-billing error, DaisyBill immediately contacted the clearinghouse for Sedgwick, WorkCompEDI, to report that bills with valid claim numbers were being incorrectly rejected as “claim not found.”

WorkCompEDI responded with a statement that while the claim numbers submitted may be valid for the University of California, these claim numbers were not provided to WorkCompEDI by Sedgwick. Because of this error or omission on Sedgwick’s part, this meant that WorkCompEDI could not connect the electronic bills to Sedgwick. WorkCompEDI suggested that DaisyBill contact Sedgwick for resolution of the University of California issue.

While it is never DaisyBill’s role to manage compliant e-billing for Sedgwick on behalf of the University of California, since WorkCompEDI failed at addressing its client’s noncompliance, we contacted Sedgwick to discuss their error and have so far only been able to leave a message.

DaisyBill Faxes University of California Bills

Important: For our DaisyBill clients, this Sedgwick e-billing error does not impact bill payment, as the rejected bills are now being sent to Sedgwick via facsimile for processing. Unfortunately, all other electronic billing providers need to determine how to transmit your bills for payment when treating an injured employee from the University of California.

Until Sedgwick, WorkCompEDI, and the Regents of California become compliant with the laws of California, we will continue to fax these bills. We have also placed an alert on the bills encouraging our clients to file an audit complaint* with the DWC regarding Sedgwick’s noncompliance.

*NOTE: The Audit Complaint form was updated in 2019. Access the updated form here: https://www.dir.ca.gov/dwc/Auditref.pdf

For a short refresher on the relationship between employers, insurers, and third-party administrators, (and the many, many permutations thereof), head over to our free webinar library. Watch this 48-minute video, the first course in our Work Comp 101 micro-university, to learn all about the messy relationships that determine how things actually get done in our industry.

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