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What’s New

Now that the holidays are past, it is time to look ahead to the new year.  As happens every year, 2018 brings legal changes, including new statutory rules and court decisions that affect what we do going forward.  We explore some of them here.

New Rules Regarding Utilization Review. Effective January, 1, 2018, there are new rules regarding availability of utilization review to control medical treatment in the first thirty days after a claim is made.  While this forum does not allow for a complete discussion of all the nuances of the new law, we provide here a summary of the main points.

Generally stated, Labor Code §4610 provides that, for dates of injury on or after January 1, 2018, in the first thirty days after a claim is made, utilization review is not permitted for treatment rendered by an authorized treating physician. However, there are limitations and conditions to this rule. The treating physician must submit a doctor’s first report (5021 report) and request for authorization within five days of the employee’s first visit.  Treatment must be consistent with the medical treatment utilization schedule (MTUS). Prospective utilization review is permitted for certain categories of treatment, including pharmaceuticals (under certain circumstances), non-emergency surgery and related services, psychological treatment, home health care, durable medical equipment costing more than $250.00, and all forms of electrodiagnostic testing, imaging and radiology except x-rays.

Doctors who provide treatment in the first 30 days are required to submit their bills within 30 days of the date the service was provided.  Also, although prospective utilization review is not permitted, retrospective utilization review of the treatment is permitted for the purpose of ensuring that treatment was provided consistent with the MTUS and the drug formulary.

The statute also provides that if the doctor fails to timely submit the 5021 report and request for authorization, the employer “may remove the physician’s ability” to provide further treatment exempt from utilization review.  If the retrospective review shows a pattern and practice of failing to render treatment consistent with the MTUS, the employer “may remove the ability of the . . . physician . . . to provide further medical treatment to any employee that is exempt from prospective utilization review.”  This also may constitute good cause to allow a change of treating physician, or removal of a doctor from the MPN.

The new law also contains provisions regarding accreditation of a utilization review process, and distinguishes between requests for authorization for medications, and requests for authorization for other forms of treatment, in establishing the deadline for completing utilization review.  While prospective review must be completed within five working days of receipt of the request for all forms of treatment, the rule that review must be completed within 14 days of the doctor’s recommendation does not apply to medications.

As we all learn to adapt to these new rules, we anticipate there will be many questions about how they apply to specific situations.  If you have questions, we recommend contacting your favorite Mullen & Filippi attorney for advice and assistance.

New Mileage Rate.  As happens every year at this time, the DWC has evaluated the medical mileage rate to determine whether an adjustment is necessary.  This year, they raised the rate to 54.5 cents per mile.  While this applies to all active claims, it only applies to medical treatment, and medical-legal evaluations, which take place on or after January 1, 2018.  For all prior dates, the mileage rate which was in effect on the date of service applies.

New Ideas About Obtaining Testimony from Distant Witnesses. A recent Lexis article discussed two panel decisions in which the issue was whether an adjuster who lived and worked far away from the Board where the claim was being adjudicated would have to travel and appear in person to testify about the claim.  In the first case, a panel decision issued in 2016, the adjuster lived in Southern California and was ordered to appear for a deposition in Northern California.  The defendant argued hardship and sought removal. The Board denied removal.  The adjuster was required to travel.

In the second case, decided in January, 2017, the applicant sought to have an adjuster who lived in Illinois appear in person to testify at a trial in California.  As in the first case, the trial judge ordered the adjuster to appear in person.  However, in this case, the defendant pointed out that there are alternative means for obtaining the testimony, such as video conferencing or Court Call, which would achieve the applicant’s goal of getting the testimony without imposing undue hardship on the defendant.  When the defendant sought removal this time, the Board granted removal and ruled that the testimony could be obtained by other means, and the adjuster did not need to travel from Illinois to California to testify.

We know that it is not uncommon for adjusters to administer claims for applicants located far away from where the adjuster is located, and sometimes there is a need for the adjuster to testify about an issue in the case. The 2017 case points out that, when that happens, there are alternatives.  While taking testimony by video conference is not all that new, the Lexis article, and the cases it cites, remind us that sometimes we need to think outside the box to find solutions that minimize costs.

New Court of Appeal Decision to Remind Us That It Is Always Important To Tell The Truth.  On December 19, 2017, the Court of Appeal issued a decision which reminds us that, just as there are consequences for an applicant who is not truthful about the facts of a claim, there are also consequences for an employer who provides false information that causes a claim to be denied.

The case is The People ex rel. Mahmoud Alzayat v. Gerald Hebb.  The applicant, Mr. Alzayat, filed a qui tam action (a sort of private attorney general claim) alleging that his employer and supervisor made false statements in response to his workers’ compensation claim which caused his claim to be denied.  He alleged that this was a violation of the Insurance Frauds Prevention Act (IFPA). The employer sought to have the case dismissed, asserting that the statements were protected by the litigation privilege and the workers’ compensation exclusive remedy.

After a prolonged discussion, the court found that the purpose of the IFPA was to prevent workers’ compensation insurance fraud.  Allowing an employer’s false statements about the claim to be protected by the litigation privilege would “render the IFPA significantly inoperable.”  As a result, the litigation privilege does not apply.  The court also found that the exclusive remedy does not apply because, in filing the IFPA action, Mr. Alzayat was an “interested person” acting on behalf of the People, and was seeking civil penalties on behalf of the People, rather than claiming personal harm.  In fact, his workers’ compensation claim was ultimately accepted and he received all the benefits to which he was entitled.  Since this was not a claim for workers’ compensation benefits, the exclusive remedy did not apply.

As discussed in the case, potential penalties for violation of the IFPA and related Penal Code statutes are substantial.  They include a civil penalty of between $5,000.00 and $10,000.00, plus an assessment of up to three times the value of the workers’ compensation claim, as well as other equitable relief.  The “interested person” who prosecutes the case can also receive a bounty of 40 to 50 percent of the recovered proceeds, plus costs and attorney fees. We can envision a situation where a disgruntled applicant would be motivated to pursue such a claim if the applicant thought there was a possibility of prevailing.  Just the cost of defending such a lawsuit could be significant, even if the ultimate decision is in the defendant’s favor.

This case reminds us that, no matter how aggressive we want to be in defending a claim, we need to be careful to stick to the truth.  Doing otherwise could be very costly.

Need Assistance? Are you interested in having M&F attorneys design a customized training or claim review round-table meeting for your office? We’d be happy to provide on-site assistance as required to help you meet the challenges of today’s claims administration issues, and to assist you in complying with all regulatory guidelines. Contact us today at education@mulfil.com for further details or to schedule a seminar!

DISCLAIMER — The purpose of this is to review the latest developments in workers’ compensation law and related issues which may be of particular interest to the workers’ compensation community. The information contained herein has been abridged from various sources and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.