The Sandhagen Briefs - CAAA

Saturday, August 27, 2005 | 0

The California Applicant's Attorneys Association (CAAA) has filed an amicus curaie brief in the pending appeal of the Sandhagen decisions. Attorney Charles Rondeau was kind enough to provide WorkCompCentral with a copy of the brief. The editors felt that the arguments raised in the brief were of great interest to the California workers' compensation legal community, so we have, below, published the legal argument portion of the brief. The facts and earlier opinions in the Sandhagen decisions can be accessed by clicking on the appropriate links in the side bar at right.

ARGUMENT

A.

THIS COURT SHOULD UPHOLD THE WCAB'S DECISION IN SANDHAGEN I TO INSURE THAT UTILIZATION REVIEW IS EMPLOYED TO EXPEDITE MEDICAL TREATMENT DECISIONS

1. Prompt and Appropriate Medical Treatment is the Most Crucial Aspect of the Workers' Compensation System

The right to receive prompt and appropriate medical treatment is the most important benefit available to the injured worker in the California workers' compensation system. Timely receipt of necessary medical treatment is an "essential element" of the workers' compensation system because it supports the primary goal of the system, i.e., that of aiding the injured worker in returning to work. The statutory guidelines that appear in the form of the California Labor Code thus reflect a specific, overarching legislative intent. As has been explicitly set forth in the California Constitution, that intent is to guarantee the provision of prompt and appropriate medical care to the injured worker (see Cal. Const., art. XIV, section 4), with the ultimate goal of returning the injured worker to gainful employment. See, e.g., Avalon Bay Foods v. WCAB, 18 Cal 4th 1165 (1998); Davidson v. I.A.C. , 241 Cal. App. 2d 15 (1966) ("[t]he broad purpose of workmen's compensation is to secure an injured worker seasonable cure or relief from industrially caused injuries in order to return him to the work force at the earliest possible time"). As the Workers' Compensation Appeals Board recently reaffirmed in Grom v. Shasta Wood Products, 69 Cal. Comp. Cas. 1567, 1570 (2005) (en banc), in the event of a work-related injury, an employee is entitled to receive all medical treatment that is reasonably necessary to "cure or relieve" of the effects of that injury.

2. Utilization Review Was Introduced Into the Workers' Compensation System to Expedite Decisions Regarding Medical Treatment

As is true of medical care generally, the matter of cost containment has increasingly become an issue in the realm of workers' compensation. Utilization review developed as a point along a continuum that represents the evolutionary development of managed care in the workers' compensation system.

The California Constitution vests the Legislature with the power to create a system to provide injured workers with prompt and adequate care and medical benefits:

The Legislature is hereby expressly vested with the plenary power...to create and enforce a complete system of workers' compensation, by appropriate legislation...A complete system of workers' compensation includes ... full provision for such medical, surgical, hospital and other remedial treatment as is requisite to cure and relieve from the effects of such injury . . . with all the requisite governmental functions to determine any dispute or matter arising under such legislation, to the end that the administration of such legislation shall accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character . . . Cal. Const., art. XIV, section 4, (emphasis added).

Labor Code section 4600(a) implements this policy through its requirement that the employer provide the injured worker with all medical care "reasonably required to cure or relieve the injured worker from the effects of [the] injury." Understandably, disputes often arise as to what constitutes "reasonably required" medical care. These disputes reflect, and are the direct result of, the tension between, the injured worker's need for prompt and appropriate medical treatment and the employer's need to have access to some affirmative method of cost containment.

Prior to the legislative reforms of 2003, in cases involving an admitted industrial injury the only mechanism available for the resolution of disputes between employers and employees regarding medical treatment recommendations was provided under Labor Code sections 4061 and 4062. The dispute resolution process pursuant to Sections 4061 and 4062 requires the parties to initiate what has come to be known as "the AME/QME dance."[ ] The "dance" occurs where one party objected to a medical determination by the treating physician pursuant to either Section 4061 or 4062 (whichever is applicable to the type of medical determination at issue), at which time the objecting party is required to offer to refer the matter to an Agreed Medical Examiner [hereinafter AME]. Following this offer, the non-objecting party has a specified period of time in which to respond. If the parties selected an AME, then the AME would perform an evaluation of the injured worker and issue a report which would, hopefully, provide the parties with a basis to resolve the dispute. If the non-objecting party refuses to refer the matter to an AME, or fails to respond within the proper time-frame, then each party separately has the right to procure the services of a Qualified Medical Examiner [hereinafter QME][ ]. If any dispute remains after the parties have obtained an AME report or separate QME reports, either party may request a hearing before a WCALJ. The results of this hearing are subject to review by the WCAB, the Courts of Appeal, and the Supreme Court. The practical effects of the AME/QME process were that, although the process was sometimes beneficial to the injured worker, there were times when delays in medical care (pending resolution of disputes via this process) involved unfortunate results for the injured worker.

In an effort to streamline the dispute resolution process, and as part of the last comprehensive reform of the workers' compensation system in 1993, the Legislature enacted provision Labor Code section 4062.9, which created a statutory presumption that a treating physician's recommendations were medically correct. In 1995, the Department of Industrial Relations gave employers the option of implementing voluntary utilization review, through which a physician's treatment recommendation would be compared against a set of standards of care pre-determined by the employer. See former Cal. Code Regs., tit. 8, section 9792.6 (c)(2)-(3)[ ]. The recommendation could then be approved, denied, delayed, or modified depending upon whether the recommended treatment complied with or differed from those standards of care. Employers rarely made use of this optional protocol, however, due to its unwieldy nature and limited potential for actually resolving controversies regarding appropriate medical treatment. In fact, this option served instead to give rise to more, rather than less litigation: [T]he system which was created to avoid costly and time consuming litigation, has given rise through its complex makeup to litigation regarding appropriateness and adequacy of care." Assem. Com. on Ins., Hearing on SB 228 (July 9, 2003) p. 6.

In 2003, the Legislature once again undertook major workers' compensation reform by enacting AB 227 and SB 228. Among many other changes, the Legislature repealed Section 4062.9 and with it the "treating physician's presumption" , and defined "reasonably required" medical care as that treatment which comported with the treatment guidelines set forth by the American College of Occupational and Environmental Medicine [hereinafter ACOEM]. See Cal. Lab. Code section 4600(b). The Legislature also required employers to implement mandatory utilization review, now with the ACOEM treatment guidelines[ ] as the reference point rather than allowing employers to adopt treatment standards. The move toward managed care in the workers' compensation system, through mandatory utilization review and incorporation of treatment guidelines, has occurred as a result of the Legislature's continuing effort to strike the appropriate balance between the right of injured workers to receive medical treatment and the right of employers to control the cost of that treatment.

3. Despite the Institution of Mandatory Utilization Review, Injured Workers Are Being Denied Prompt and Appropriate Medical Treatment

Mandatory utilization review now has been in effect for an adequate amount of time within which to assess its impact. Unfortunately, however, as with many well-intentioned attempts at positive change, utilization review is susceptible to abuse. Evidence has begun to accumulate that, contrary to its intended purpose of expediting medical treatment decisions, utilization review is being undertaken in a manner which is actually delaying the delivery of medical treatment. Amicus requests that this Court take judicial notice of the present state of affairs within the workers' compensation system to better understand the effects that utilization review is having and, thus, the importance of the issues at hand. Amicus submits that Cal. Evid. Code sections 452(h) and 459 confer upon this Court the authority to do so. Cal. Evid. Code section 459 provides, in pertinent part:

(a) The reviewing court shall take judicial notice of (1) each matter properly noticed by the trial court and (2) each matter that the trial court was required to notice...[and]...any matter specified in Section 452. The reviewing Court may take judicial notice of a matter in a tenor different form that noticed by the trial court.

(b) In determining the propriety of taking judicial notice of a matter, or the tenor thereof, the reviewing court has the same power as the trial court under Section 454.

(c) When taking judicial notice under this section of a matter specified in Section 452 or in subdivision (f) of Section 451 that is of substantial consequence to the determination of the action, the reviewing court shall comply with the provisions of subdivision (a) of Section 455 if the matter was not theretofore judicially noticed in the action.

In turn, Cal. Evid. Code section 452(h) states, in relevant part: "[Judicial notice may be taken of the following matters to the extent that they are not embraced within Section 451]: [f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." See, e.g., McKelvey v. Boeing North American, Inc. , 74 Cal. App. 4th 151, 162 (1999) (propriety of the taking of judicial notice of newspaper articles assumed by the Court of Appeals).

Accordingly, Amicus submits that this Court may rightfully take judicial notice of the following new stories and items regarding the widespread delays and denials of medical treatment in the workers' compensation system. See In re Peeler, 266 Cal. App. 2d 483, 492 (1968)(judicial notice taken of the narcotics problem as "one of the most serious facing society today").

In an article in The Los Angeles Times, dated March 27, 2005, L.A. Times staff writer Marc Lifsher noted that "an estimated 100,000 workers' comp cases have been stalled as doctors re-write medical evaluations to meet the new, more stringent standards mandated by the law...sparring over what now constitutes appropriate medical treatment and who should pay for it has forced injured workers to wait a year or more for their cases to be reviewed by independent medical specialists." Marc Lifsher, From Injury to Insult, http://www.latimes.com/business/la-fi-comp (3/28/05) (emphasis added). According to Lifsher, "[t]hroughout the state, trial postponements rose 21% last year...it now takes 93 days to get a case into court in Santa Monica, 55% longer than a year ago and almost twice as long as in 2003." Id. Lifsher's article quotes prominent defense attorney Douglas Felchlin (who represents large educational entities within the Los Angeles area), as saying, "[t]he cases are going to trial and not being settled...[the workers] are getting screwed (sic) and not getting benefits." Id.

Evidence of abuse has begun to draw the attention of officials charged with monitoring the system. In the April 25, 2005 edition of the online journal, Workcompcentral, Insurance Commissioner John Garamendi is quoted as saying, "[r]eports have circulated statewide describing the plight of injured workers who claim that they have been unfairly denied treatment or benefits." Jim Sams, Garamendi Eyeing Unlawful Denials' (April 25, 2005), at http://www.workcompcentral.com/1/general/news. According to Susan Gard, a spokeswoman for the California Division of Workers' Compensation, "[o]ne of the things we're hearing anecdotally is that there are a lot of workers who are being denied treatment based on the fact that it is not in the...guidelines." See Richard Halstead, Workers' Comp Patients in Limbo: New Laws Lead to Frequent Denial of Insurance Claims, The Marin Independent Journal, June 28, 2005, at C-2. Thus, there is evidence of substantial reason for concern on the part of governmental officials overseeing the workers' compensation system that the utilization review process is being mis-used to deny medical care.

Physicians who practice within the workers' compensation system have also begun to make their voices heard on the subject of denial of medical care. In the June 10, 2005 edition of Workcompcentral, Dr. Phyllis Cullen, of Chico, California, is quoted as saying that insurance carriers are "routinely denying" her patients necessary pain-control medications. Jim Sams, CAAA Briefing Features Disillusioned Docs (June 10, 2005), at http://www.workcompcentral.com/1/general/news. According to Dr. Cullen, the sudden cut-off of anti-seizure drugs (used in the treatment of nerve damage) by insurance carriers has imposed potentially life-threatening conditions upon her patients. See id. Dr. Cullen says she is withdrawing from the practice of workers' compensation medicine, citing concerns over unavoidable violations of the Hippocratic oath associated with a medical practice which is substantially controlled by the insurance industry. See id.

In a letter to her patients, regarding her decision to cease treating workers' compensation claimants, Dr. Cullen explains that changes in the workers' compensation system in the wake of mandatory utilization review "have proved significantly and negatively to impact the medical community's capacity to care for [workers' compensation] patients appropriately." Id. Dr. Cullen's letter goes on to place the onus upon the Legislature itself as having implemented unacceptable policies that serve to limit available treatment options in workers' compensation cases.

Dr. Cullen is not alone in her decision to stop practicing medicine within the workers' compensation system. According to Dr. Douglas Robinson, of Campbell, California, "[s]tate mandated changes to the insurance side...have made treatment authorizations very difficult...This situation has made it impossible to continue providing quality care for [work-related injuries]." Id. Citing safety concerns, and describing situations in which his patients have been medically compromised due to delays in receiving treatment authorization, surgeon Edward Littlejohn, M.D., of Los Gatos, California., says, "[s]ince the advent of [mandatory utilization review]...insurance carriers are ever more proactive in denials and tying the hands of treating physicians....I can no longer treat workers' compensation patients." Id.

Dr. James Sylvain, of Aptos, California, described the insurance carriers' use of the utilization review process as one in which "[t]hey use a tactic that the utilization review doctor quite removed from the scene is given a two-line description of the patient...[t]hey say, based on inadequate evidence we are denying the treatment.'" Id.

In The Marin Independent Journal article discussed supra, the reporter, Mr. Halstead, discusses the plight of an injured worker named Sharon Ravoni. Ms. Rivoni is required to use a cane to assist her in walking, due to the fact that she has no feeling in her right leg and increasing numbness in her left leg. See id. Additionally, Ms. Rivoni relies upon a morphine patch in order to cope with the pain of her injury. See id. Despite her obvious need, according to the article's author, Richard Halstead, "Ravoni's request for treatment has been rejected three times by her insurer." Id. In discussing the guidelines under which the insurance company has rejected Ms. Ravoni's treatment, Ms. Rivoni's surgeon, Dr. Ernest Sponzelli, said the guidelines are "[a] total joke. They have nothing to do with what evidence is available or the standard of practice." Id.

Amicus calls the above information to the attention of this Court to illustrate a disturbing trend within the workers' compensation system - one wherein insurance carriers make use of the utilization review process to shield themselves from their responsibility to provide the injured worker with medical treatment, rather than to expedite prompt medical care. This defensive application of the utilization review process is contrary to the intent of the Legislature. The consolidated cases here before the Court represent an instance in which an insurance carrier is likewise attempting to circumvent the intention of the Legislature by seeking to create a loophole in what has been set forth as a clearly mandatory set of timeframes for the completion of utilization review.

4. The Language of Labor Code section 4610 Leaves No Doubt That the Timeframes for Completion of Utilization Review Are Mandatory

The amount of time allotted to a defendant in a workers' compensation case to complete the mandatory utilization review process is clearly specified in the language of Labor Code section 4610(g)(1), which states, in relevant part:

Prospective or concurrent decisions shall be made in a timely fashion that is appropriate for the nature of the employee's condition, not to exceed five working days from the receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician ...

(emphasis added). The emphasized language reflects the legislative intent that such decisions be made in a manner consistent with the goal of providing the injured worker with prompt and appropriate medical treatment.

Where a statute employs the use of the word "shall," the meaning is to be construed as implicating a "presumptively mandatory" duty. Conservatorship of Kevin M. 49 Cal. App. 4th 79, 87 (1996). The California Labor Code expressly states that the use of the word "shall" connotes a mandatory duty, whereas the use of the word "may" connotes a permissive duty. See Cal. Lab. Code section 15.

Even SCIF does not argue that the time provision under Labor Code section 4610 is anything but mandatory. See SCIF's Reply to WCAB's Answer to Petition for Review at 4. SCIF argues, however, that the penalty for failure to adhere to the timeframes set forth in Section 4610 exists solely in the form of an administrative remedy. Under SCIF's interpretation, an employer that fails to meet the deadline under section 4610 should, nevertheless, be allowed to proceed with utilization review, albeit at either the risk of incurring a monetary penalty under Labor Code section 4610(i), or of being obligated to pay additional compensation under Labor Code section 5814[ ]. SCIF's analysis is incorrect.

SCIF's reasoning is based upon its contention that "[n]owhere in section 4610 has the Legislature authorized the WCAB to void [utilization review]...simply because the required timeframes were not met." Petition for Review at 9. Amicus agrees that Section 4610 does not adequately provides for the consequences of an employer's failure to comply with these timeframes. It is, therefore, the duty of this Court to determine what those consequences are. See Pulcifer v. Alameda County, 29 Cal. 2d 258, 262 (1946). Where the Legislature has not prescribed "in every particular" the consequences that follow upon failure to comply with a statutory requirement, "courts must judicially determine them. Frances v. Superior Court, 3 Cal. 2d 19, 29 (1935). In determining the consequences of a party's non-compliance with the utilization review timeframes set forth in Section 4610, the Court should be guided by principle that where, as here, the Legislature has expressly described exceptions to the requirements under a statute, courts may not (as SCIF would have the Court do here) imply others in the absence of clear legislative intent. See Sierra Club v. State Bd. of Forestry, 7 Cal. 4th 1215, 1230 (1994).

In asking that it be allowed to proceed under utilization review even after having missed the deadline for that procedure, SCIF requests, in effect, that the Court impart a judicially-determined exception to the timeframes set forth in Section 4610. The statute itself provides for exceptions in three specific circumstances; these are: where insufficient information has been provided, where expert consultation is desired, or where additional tests are requested by the employer. See Cal. Lab. Code section 4610(g)(5). These exceptions thus stand as the Legislature's sole contemplated circumstances under which an employer might not be obligated to render a utilization review decision, "not to exceed five working days from the receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician..." Cal. Lab. Code section 4610(g)(1).

Moreover, SCIF argues that the administrative penalty set forth under Labor Code section 4610(i) for failure timely to comply with the requirements of the statute is (together with the potential increase in compensation called for in the event of unreasonable delay under Labor Code section 5814) the sole penalty to be imposed upon an employer as a consequence for such failure to comply. SCIF argues, in effect, that the timeframes are merely directory, and that failure to adhere to them merely exposes an employer to the risk that it might incur a monetary penalty, but that the employer would nevertheless not be barred from engaging in utilization review after it has transgressed those timeframes. Thus, SCIF seeks effectively to secure for itself, at the price of this monetary penalty, a "get out of jail free card"- one that would operate prospectively whenever it fails to meet its primary statutory obligations regarding completion of utilization review.

SCIF would have the Court overlook the fact that the true intent of the Legislature (that a compulsory interpretation of the timeframes is attendant upon the application of section 4610) is clear from the statutory language. This clarity of intent is particularly evident when the statute is juxtaposed against other statutes evincing alternative legislative intents. In fact, when the Legislature has intended to provide flexibility in other dispute resolutions mechanisms in the Labor Code, it has stated as much. For example, although Labor Code section 4062 requires employees to object to an employer's utilization review decision within 20 days, it also allows that, "[t]hese time limits may be extended for good cause or by mutual agreement." Cal. Lab. Code section 4062(a). By contrast, Section 4610 provides no such "good cause or mutual agreement" exception for employers who fail to adhere to the time limits set forth thereunder. Only the three circumstances described (supra ) provide justification for an extension of the timeframes that are mandated under the language of Labor Code section 4610. None of these apply in this case.

In addition to examining the language of a statute, courts take into consideration the underlying purpose of a procedural requirement, such as that which is set forth under section 4610. Where a statute serves "some public purpose," it is interpreted as mandatory. Pulcifer, 29 Cal. 2d at 262. Similarly, where a statute is designed to protect the individual, it will be interpreted as mandatory where a failure to comply would harm the individual. See People v. McGee, 19 Cal. 3d 948, 965-966 (1977)(requirement that the state seek restitution prior to bringing a criminal action for welfare fraud is mandatory because it protects those needy individuals who commit fraud "simply to obtain foodstuffs and...items which are viewed as necessities..."); see also Erikson v. Weiner, 48 Cal. App. 4th 1663, 1672-1673 (1996) (interpreting Cal. Civ. Proc. Code section 659a deadline for filing of affidavits as mandatory, in the interests protecting opposing litigants)).

In short, there is no support whatsoever for SCIF's suggested interpretation that the timeframes contained in Section 4610 are merely "directory" and that an employer is free to disregard them with the potential of a monetary sanction as the only consequence. The express language of the statute is susceptible to only one interpretation: the timeframes are mandatory, and the failure to timely complete the utilization review renders any later determination inadmissible.

5. By Upholding the WCAB's Decision in Sandhagen I, This Court Will Prevent Utilization Review From Continuing to Be Used an Instrument of Delay

With the present dispute over the nature of the timeframes associated with mandatory utilization review and over the precise scope of the consequence of an employer's failure timely to adhere to those timeframes, the workers' compensation system is once again beset with chaos. The anecdotal effects of disputes and denials of treatment that have been discussed by Amicus supra for the benefit of the Court are merely the tip of a growing iceberg. For each "horror story" published in the newspaper, there are more that go unnoticed. For each incremental increase in the delay-time in receiving appropriate medical care (as insurance carriers increasingly take advantage of the utilization review process in order to delay or deny recommended treatments), there are increasing numbers of injured workers affected.

Here, the WCALJ identified the relevant public policy rationale underlying the Legislature's implementation of mandatory utilization review and the inflexible deadlines associated with it:

While failure to timely provide medical treatment, or justifiable denial, may also lead to penalty pursuant to section 5410 (sic), this...avoids the issue. The whole purpose, and one of the public policy/political tradeoffs, of the new legislation for provision of medical care, was that treatment, while potentially severely cut back, would be authorized or denied within the short but proscribed (sic) time frames. This intent is clear not only from the history but also by the provisions requiring (limited) treatment even where cases have not yet been denied. This [WCALJ] did not define these time frames...the legislature did;...to allow only an administrative fine effectively obviates this policy.

Report and Recommendation on Defendant's Petition for Reconsideration, August 19, 2004. This Court should give great weight to the findings of the WCALJ, who hears and determines issues such as those here presented on a daily basis. The WCALJ held, and Amicus agrees, that the policy considerations underlying the deadline provisions of section 4610 would not be served, were it to be determined that the only consequence for failure to comply with the statutory time limit is the application of an administrative penalty. Amicus respectfully submits that the failure to comply with the timeframes set forth under section 4610 is properly to be considered as a complete forfeit of the opportunity to make use of the utilization review process. By upholding the WCAB's decision, this Court will take an affirmative step toward setting the workers' compensation system in California back on track, by insuring the most basic right of the injured worker, that of access to prompt and appropriate medical treatment. Not only will such a holding set the workers' compensation system on track toward fulfilling this goal, it will also assist in setting the injured worker on track toward returning to his or her employment. These are the core principles of the workers' compensation system itself-principles that the Court should act to uphold. Amicus therefore respectfully requests that the Court affirm the decision of the WCAB in Sandhahen I.

B.

THIS COURT SHOULD REVERSE THE WCAB'S DECISION IN SANDHAGEN II SO THAT THE INTENDED GOAL OF UTILIZATION REVIEW IS NOT THWARTED

1. The Express Language of Labor Code section 4062 Prohibits Its Use To Dispute Treatment Recommendations That Are Subject to Utilization Review

The first sentence of Labor Code section 4062 limits its application to include only certain types of medical determinations. Section 4062(a) sates, in relevant part:

[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, the objecting party shall notify the other party in writing of the objection within 20 days of receipt of the report if the employee is represented by an attorney or within 30 days of receipt of the report if the employee is not represented by an attorney.

(emphasis added). By definition, then, a medical determination that is "subject to Section 4610" is not one which may disputed pursuant to Section 4062. Subject to" means "to be governed or affected by". Black's Law Dictionary 1278 (5th ed. 1979). Labor Code section 4610(a) states, in relevant part: "[f]or purposes of this section, "utilization review" means utilization review or utilization management functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure an relieve, treatment recommendations by physicians" (emphasis added). The language, "utilization review or utilization management functions," refers to medical determinations and decisions regarding treatment. Accordingly, all medical treatment recommendations are "subject to" (i.e., governed by) Section 4610 and, therefore, may not be disputed pursuant to Section 4062(a).

Where, as here, a medical determination is subject to the utilization review process, Amicus respectfully submits that it is only the employee who retains the option of invoking Section 4062 and thereby initiating the AME/QME process. Labor Code section 4062(a) states, in relevant part:

If the employee objects to a decision made pursuant to Section 4610 to modify, delay, or deny a treatment recommendation, the employee shall notify the employer of the objection in writing, within 20 days of receipt of that decision.

(emphasis added). Section 4062(a) provides no similar remedy to employers. Thus, the position maintained by SCIF and held by the WCAB in Sandhagen II, namely, that employers enjoy the option to object to medical treatment recommendations pursuant to Labor Code section 4062(a), is contrary to the express language of the statute.

2. The 2004 Amendment of Labor Code section 4062 Unequivocally Demonstrates the Legislature's Intent to Preclude Its Use as an Alternative to Utilization Review

Where a statute previously in effect is subsequently amended by the Legislature, changes in the language of the statute are presumptively deliberate. "We presume the Legislature intends to change the meaning of a law when it alters the statutory language (citation) as for example when it deletes express provisions of the prior version." Dix v. Superior Court, 53 Cal. 3d 442, 461 (1991) (citations omitted); see also Royal Co. Auctioneers, Inc. v. Coast Printing Equipment Co, 193 Cal. App. 3d 868, 873 (1987) ("[w]hen the Legislature deletes an express provision of a statute, it is presumed that it intended to effect a substantial change in the law" (citation omitted)). A court that is called upon to interpret an amended statute must give effect to the new language, since that language is a deliberate reflection of the Legislature's intent to address a particular issue affected by that statute. Where "the Legislature specifically [has] prescribed by an amendment" a change in a statute, a court "cannot ignore that plain statutory language." Honeywell v. WCAB, 35 Cal. 4th 24, 33 (2005).

Labor Code section 4062 was amended by the Legislature as part of the 2004 workers' compensation reform bill. The amendments take two forms: a) the deletion of specific language and its replacement with alternate language in the limitation language of Section 4062(a), and (b) the inclusion of a new provision expressly vesting the injured worker only with the right to invoke Section 4062(a) dispute resolution where a treatment recommendation has been modified, delayed or denied through utilization review. These changes can best be seen when the present and former versions of the statute are subjected to a "side by side" comparison.

Labor Code section 4062(a) as in effect as of January 1, 2004, stated, in relevant part:

If either the employee or employer objects to a medical determination made by the treating physician concerning the permanent and stationary status of the employee's medical condition, the employee's preclusion or likely preclusion to engage in his or her usual occupation, the extent and scope of medical treatment, the existence of new and further disability, or any other medical issues not covered by Section 4060 or 4061, the objecting party shall notify the other party in writing ....

(emphasis added).

As of January 1, 2005, however, Labor Code section 4062(a) states, in relevant part:

If 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, the objecting party shall notify the other party in writing... [i]f the employee objects to a decision made pursuant to section 4610 to modify, delay, or deny a treatment recommendation, the employee shall notify the employer of the objection in writing within 20 days of receipt of that decision.

(emphasis added). The deletion of the specific phrase, "[concerning]...the extent and scope of medical treatment," (in the 2004 version of the statute) and its replacement by the language, "and not subject to Section 4610" (in the 2005 version of the statute) is of critical importance. Under the former version of the statute, an employer could object to "a medical determination made by a treating physician concerning...the extent and scope of medical treatment," whereas, under the new version, the employer can object only to that which "is not covered by Section 4060 or 4061 and not subject to Section 4610 ...." As Amicus has pointed out supra , determinations regarding "the extent and scope of medical treatment" are determinations which are subject to Section 4610, i.e., utilization review.

Furthermore, by its 2004 amendment to Section 4062, the Legislature expressly create a right available to the injured worker only to object "to a decision made pursuant to section 4610 to modify, delay, or deny a treatment recommendation." By contrast, no such recourse is afforded to the employer. In construing the present version of the statute, the Court should be mindful of the principle of statutory construction, " expressio unius est exclusio alterius-the expression of one thing in a statute implies the exclusion of the other." See, e.g., Collins v. Superior Court of Ventura County, 89 Cal App 4th 1244 (2001). That the option exists for the employee (and for the employee alone) to object to a decision regarding medical treatment made "pursuant to Section 4610" is clear from the deliberate addition of language to that effect in the new version of the statute. Thus, the 2004 amendment to Labor Code section 4062 clearly demonstrates that the Legislature did not intend that this statute be invoked by defendants as an alternative to utilization review.

3. The WCAB's Interpretation of Labor Code section 4062 In Sandhagen II Is Flawed and Its Reasoning Circular

The WCAB, in its Opinion and Order Dismissing Petition for Reconsideration, goes to considerable lengths to indicate its disinclination to write language into a statute where it finds none to exist. See Opinion and Order Dismissing Petition for Reconsideration, February 7, 2005, at 7:4-5. Unfortunately, with its holding that, "if a defendant timely elects to follow the utilization review process but does not fully authorize the proposed treatment after utilization review is completed, then any remaining disputes regarding the particular proposed treatment must be resolved using the procedure established by section 4062(a)" (id. at 7:16-19), the WCAB fails to adhere to its own self-imposed proscription against writing language into a statute where none exists. As discussed supra, Section 4062(a) offers the employer no such option.

Moreover, even if such construction as the WCAB erroneously chooses to infer from the language of section 4062(a) were proper, the application of this interpretation to the present case would be flawed for two reasons: a) here the defendant did not "timely elect to follow the utilization review process," (having missed the utilization review deadline by fourteen days under the statute's most liberal timeframe - one that is contemplated only where the employer requires additional information; under the general provision of the statute, here, SCIF actually failed the deadline by twenty-eight days), and b) the concept of resolving disputes arising where treatment proposals have not been "fully authorize[d]" implies that such treatment proposals were partially authorized; here, such was not the case. Here, SCIF sought to deny the recommended MRI, and then, having failed the utilization review deadline, sought to introduce into evidence its untimely utilization review report denying the treatment.

The WCAB states in its opinion the proposition that, "if a defendant elected to exercise its right not to undertake utilization review, but then were entirely precluded from using the AME/QME process to resolve the medical treatment dispute, the defendant would be worse off than it would have been had section 4610 never been enacted." Opinion and Order Dismissing Petition for Reconsideration, February 7, 2005, at 9:16-19. The WCAB characterizes such a result as "absurd." Id. at 9:13. Amicus respectfully submits that what is even more absurd is the notion that a defendant should be permitted to disregard the requirements of Labor Code section 4610, and then "fall back" upon the Section 4062 dispute resolution process when the very language of that statute confers that right upon the injured worker alone in cases such as these.

Essentially, the WCAB raises what amounts to a procedural due process argument on behalf of SCIF. Amicus submits, however, that utilization review provides employers and insurance carriers with expedited and cost-effective due process. Rather than requiring them to expend the substantial time and expense associated with having a full physical examination of the injured worker performed and a report prepared (as would be required, for instance, under the Section 4062 AME/QME procedure) each time a treatment recommendation is received, the utilization review process permits defendants to make decisions regarding medical treatment requests by simply comparing them against a pre-established set of medical treatment guidelines, presently the ACOEM guidelines.

To try to avoid the clear prohibition in Section 4062(a), as discussed supra, against application of the statute to medical treatment recommendations, the WCAB, unfortunately, misconstrued the plain meaning of the statute. The WCAB correctly identified the issue to be the meaning of the words "not subject to Section 4610" in Section 4062(a). In order to justify its pre-determined conclusion - namely, that defendants must be afforded the opportunity to utilize Section 4062(a) even if they have failed to timely complete utilization review - the WCAB misinterpreted the phrase "not subject to" to mean "not contingent upon."[ ] Id. at 9:7-8. The WCAB then extrapolated from this the notion that, "[a] medical treatment dispute is not dependent upon or contingent on section 4610 if the utilization review process was never used, or if it was not timely used and, therefore, was invalid." Id. at 9:9-10. This reasoning, however, is utterly circular. What the WCAB is saying is that the employer's lack of diligence in either not undertaking or not timely completing the utilization review process is that which provides the employer with the right to invoke Section 4062. Amicus respectfully submits that it is the WCAB's reasoning which is absurd, for under it dilatory employers, not diligent ones, are rewarded.

4. To Allow an Employer to Object Under Labor Code section 4062 to Medical Treatment Recommendations Would Frustrate the Injured Worker's Right to Obtain a Speedy Judicial Decision Pursuant to the Expedited Hearing Procedure Provided For In Labor Code section 5502(b)

The dispute resolution process associated with Labor Code section 4062 involves certain unavoidable delays. This is so because "the AME/QME dance" involves numerous steps before a final outcome may be reached. Initially, a period of between twenty (20) and thirty (30) days (depending upon whether the injured worker is represented by counsel) is allowed for either party to object to a medical determination by the treating physician. Cal. Lab. Code section 4062(a). If an objection has properly been made, a period of between ten (10) and twenty (20) additional days is allowed for the parties to select an AME. If no agreement is reached within that period, the parties must either: a) select their own QME and obtain a medical evaluation from that physician (for injuries occurring before January 1, 2005); or b) request that the Department of Industrial Relations provide a panel of QME's and then follow the further procedures set forth in Labor Code section 4062.2 (for injuries occurring on or after January 1, 2005). Only after this process has been completed and all of the further medical evaluation reports have been obtained may either party request a hearing before the WCAB to resolve any remaining disputes. No great degree of imagination is required to realize that the Section 4062 process can take months to complete, even in the best of circumstances.

This sort of delay is totally inconsistent with the expedited hearing procedure set forth in Labor Code section 5502(b). Amicus would point out that the 2003 and 2004 legislative reforms to the workers' compensation system, left the language of Labor Code section 5502(b) entirely undisturbed.

Section 5502(b) states, in relevant part:

The court administrator shall establish a priority calendar for issues requiring an expedited hearing and decision. A hearing shall be held and a determination as to the rights of the parties shall be made and filed within 30 days after [a] declaration of readiness to proceed is filed if the issues in dispute are any of the following:

(1) The employee's entitlement to medical treatment pursuant to Section 4600. ....

Where a dispute arises regarding an injured worker's right to receive medical treatment recommended their treating physician, the worker is entitled by law to request and proceed with an expedited hearing to resolve the dispute pursuant to Section 5502. See Rohr Industries, Inc. , v. WCAB, 61 Cal. Comp. Cas. 132, 134 (1996)(writ denied). The expedited hearing procedure exists so that limited issues of substantial urgency, such as disputes regarding medical treatment, may be decided on an expedited basis and on limited evidence. Herman v. WCAB, 61 Cal. Comp. Cas. 396, 398 (1996)(writ denied). Section 5502(b) provides for both a hearing and a decision by the WCAB regarding the disputed issue within thirty (30) days of the request for hearing.

In contrast to the expedited hearing timeframe, the AME/QME dance that is undertaken pursuant to Labor Code section 4062 is considerably more lengthy. The delay that an employee would face, were an employer to be allowed to utilize Section 4062(a) following its failure to submit a utilization review denial within the statutorily prescribed time, is substantial. The following a representative "timeline" of the delays typically associated with the Section 4062 dispute resolution process[ ]:

* time from Section 4062 objection to scheduling QME examination: 20 days

* time from scheduling QME examination to time of the QME examination: 60 days

* time from the QME examination to receipt of the QME examination report: 30 days

* time from receipt of QME examination report to filing for an WCAB hearing: 20 days

* time from filing for hearing to actual hearing date: 45 days

* time from hearing to the issuance of Findings and Award by the WCJ: 30 days

* time from Findings and Award to receipt of treatment: 5 days

Thus, there is the potential for a delay of, at a minimum, two hundred and ten (210) days. An injured worker might, therefore, wait for seven (7) months (in an typical case) for the Section 4062 dispute resolution process to be completed, all the while suffering as the result of the denial of needed medication or medical treatment, often under conditions of continuously deteriorating health.

In construing a statute such as Section 4062, this Court must not only enforce the plain meaning of the statute (to the extent possible) but must also try to harmonize it with the larger statutory system of which it is a part, DuBois v. WCAB, 5 Cal. 4th 382, 387-388 (1993), so that all provisions of that system are given effect. Select Base Materials, Inc. v. Board of Equalization, 51 Cal. 2d 640, 645 (1959). Permitting employers and insurance carriers to utilize the Section 4062 procedure (with all of the attendant delays described above), rather than the utilization review process, to contest medical treatment recommendations would render the Section 5502(b) expedited hearing procedure a legal nullity.

6. To Prevent Further Abuse of the Utilization Review Process, the Court Should Uphold the WCAB's Decision in Sandhagen II

Prior to the legislative implementation of mandatory utilization review, it had become apparent that medical treatment in the workers' compensation system was beset with inordinate delays in the receipt of medical treatment and unreasonable costs associated with the delivery of that treatment. Mandatory utilization review was the Legislature's response to this set of circumstances. Were this Court now to provide employers with a safety-valve by permitting them to resort to the Section 4062 dispute resolution process after they have not timely complied with mandatory utilization review would frustrate that which the Legislature had intended and would perpetuate the present pattern of unreasonable delays and denials of medical treatment. Amicus therefore respectfully requests that the Court should reverse the WCAB's decision in Sandhagen II.

VI.

CONCLUSION

For the reasons set forth above, Amicus respectfully requests that its brief be accepted for filing by this Honorable Court and, further, that the Court render its decision in these consolidated cases in favor of the injured worker, Brice Sandhagen.

Dated: August 27, 2005

Respectfully submitted,
HINDEN, GRUESKIN, RONDEAU & BRESLAVSKY
By:
Charles R. Rondeau
Attorneys for Amicus Curiae CALIFORNIA APPLICANTS ATTORNEYS ASSOCIATION

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FOOTNOTES

1. "The AME/QME dance" is a term of art within the workers' compensation system.

2. As discussed infra , the AME/QME procedure was significantly changed in 2004. For injuries occurring on or after January 1, 2005, if the parties are unable to agree on an AME, in most instances they will not be permitted to select separate QME's but will, instead, be provided a panel of QME's by the Department of Industrial Relations and the QME will ultimately be one of the physicians on that panel. See Labor Code sections 4061, 4062, 4062.2.

3. These regulations were repealed in 2004 and replaced with new regulations consistent with the new mandatory utilization review system. 4. The WCAB has held that this repeal applies to all pending cases regardless of the date of the injury involved. Martinez v. California Building Systems, 70 Cal.Comp.Cas. 202 (2005)(en banc).

5. The ACOEM guidelines were originally intended by the Legislature as interim treatment guidelines, and the Administrative Director has been charged with the task of adopting a schedule of comprehensive treatment guidelines to replace them. See Cal. Lab. Code