November 17, 2006
Sandhagen UR Decision Upholds WCAB
The Third District Court of Appeals finally issued its decision in State Compensation Insurance Fund v. WCAB (Sandhagen) addressing a series of issues involving admissibility of reports and procedural aspects of utilization review. In a case that took over two years to finalize the court has, in effect, simply adopted and incorporated the WCAB decision en toto.
The court endorsed the WCAB's holdings that include the following:
1. Utilization review reports not obtained in a timely fashion are not admissible before the WCAB.
2. An employer has the option of utilizing either Utilization Review under Labor Code § 4610 or objecting under Labor Code Section 4062 to contest the opinion of a treating physician.
3. Utilization review is not mandatory in every circumstance and the defendant has the option of deciding whether to utilize that evaluation process on an individual case-by-case basis.
Along the way the court did give us a number of other interesting pieces of commentary. First of all, the court noted that the purpose of imposing utilization review and the amendments to Labor Code Section 4600 to add the medical treatment guidelines into the mix were intended to improve the quality of medical care for injured workers and that the use of evidence-based guidelines should be viewed in that light.
"In order to protect the injured employee's right to prompt appropriate treatment and to reduce costs, in 2003 the Legislature directed the Administrative Director (Director) of the Division of Workers' Compensation to establish a medical treatment utilization schedule incorporating evidence-based, peer-reviewed, nationally recognized standards of care..
."Utilization review" (UR) is the process by which an employer reviews the recommendations of a treating physician and then decides whether to approve, modify, delay, or deny authorization for treatment based on medical necessity. In acting on treatment recommendations submitted under UR procedures, the employer is bound by section 4600, subdivision (b), which defines medical treatment that is reasonably required to cure or relieve the injured worker as treatment that is based upon guidelines adopted by the Director.."
Secondly, the court appears to adopt the WCAB's language in Sandhagen holding that where utilization review is timely performed the procedure for challenging utilization review is mandatory and cannot be circumvented. The procedures involved in Labor Code Sections 4610 require that the employee object within 20 days of the receipt of the utilization review report and engage the AME/QME process of Labor Code Section 4062. It is only after engaging in the 4062 process and the receipt of the medical report that a Declaration of Readiness to Proceed to resolve the issue can be filed.
"If the employee objects to a decision made pursuant to Section 4610 to modify, delay, or deny a treatment recommendation," recourse is provided under section 4062. Recourse is also provided under section 4062 "[i]f either the employee or employer objects to a medical determination made by the treating physician concerning any medical issues not covered by Section 4060 or 4061 and not subject to Section 4610 . . . ." (§ 4062, subd. (a).) Objections must be timely filed and are followed by a medical review..
Once the AME/QME process is completed, either party may bring the decision before a WCJ for review" (Italics added by author)
It is a common practice for applicant attorneys to immediately, upon receipt of a utilization review report denying authorization for a specific medical treatment, to file a Request for Expedited Hearing And Decision seeking WCAB action on the requested medical care. Under the provisions of Labor Code Section 4610 and the holdings in Sandhagen and Willete v AU Electric & SCIF, 69 Cal. Comp. Cases 1298 this is an inappropriate procedure as the employee is required to utilize the challenge process under Labor Code § 4062 before they are entitled to litigate the issue. This was the subject of a series of cases in Barr v. WCAB (writ denied), 71 Cal. Comp. Cas 411, wherein the Appeals Board outlined the process for challenging utilization review. In Barr, which is the lead case of a series of five identical cases, the trial judge had issued awards for enforcement of medical treatment recommended by the treating physician and imposed penalties and sanctions for defendant's delay in authorizing those benefits where utilization review was timely performed. The Board reversed the awards of medical care, penalties and sanctions noting that the applicant had not completed the mandatory process under Labor Code Section 4610 to obtain a rebuttal to the utilization review report.
The language from the Court regarding the intent of Labor Code Section 4610 to improve the quality of medical care should be useful language to cite in arguments over whether utilization review guidelines, which incorporate to the moment the ACOEM medical treatment guidelines, are appropriate for providing direction in ongoing medical care. Further, request for expedited hearing based solely upon the report of a treating physician where there has been a valid timely utilization review denial, delay or modification of treatment should be contested using the authority of both the decision in Sandhagen and also the WCAB decisions in Barr v. WCAB.
It is also important to note that in determining whether utilization review is performed on a timely basis that the criteria for when utilization review is to be activated is contained in Administrative Director Regulation 9792.6(o). In that section the administrative director has specifically defined a "Request for Authorization". The definition specifies a Request for Authorization is limited to a request to authorize treatment that is made in a Doctor's First Report of Work Injury, a PR‑2 or a narrative report in a PR-2 format which indicates at the top in clear language that it is a "Request For Authorization". Anything else received from a treating physician does not meet the administrative director's definition of a request for authorization and does not trigger a Labor Code § 4610 response for authorization of medical treatment.
In support of that concept, a defendant should point out that an employer has only five days to identify the Request For Authorization, put it through the utilization review process and generate a response. It is therefore important that a request for authorization when it comes from a physician is clearly identified and readily recognizable by an employer as being requiring a response. Every scrap of paper that gets faxed to an insurance company should not be deemed a request for authorization even if the doctor is making such a request. It would simply be too burdensome upon employers and carriers given the very short timeframes imposed on utilization review to require them to respond to every single piece of paper that is forwarded to them by a medical provider. It is for this reason that the administrative director has created a definition for requests for authorizations and there is certainly no reason why physicians cannot since the reporting format are mandatory in any event comply with the regulation.
A copy of the Sandhagen decision can be located at: SCIF v W.C.A.B. (Sandhagen)
 Section 4610, subdivision (g)(3)(A) states, in part: "If the [treating physician's] request [for authorization of medical treatment] is not approved in full, disputes shall be resolved in accordance with Section 4062." Section 4610, subdivision (g)(3)(B) states, in part: "If the insurer or self-insured employer disputes whether or not one or more services offered concurrently with a [UR] were medically necessary to cure and relieve, the dispute shall be resolved pursuant to section 4062 . . . ."
Richard M. Jacobsmeyer
Certified Specialist, Workers' Compensation Law
The State Bar of California Board of Legal Specialization
SHAW, JACOBSMEYER, CRAIN & CLAFFEY
475 – 14th Street, Suite 850
Tel: (510) 645-7172
Fax: (866) 563-0092