The Insurance Dept.'s Confusing and Unprecedented Memo

Tuesday, January 8, 2013 | 0

You have to love this nutty state. A source sent us a Dec. 20, 2012, edict issued by Andrew Boron, director of the Illinois Department of Insurance. It appears to indicate you can’t conduct utilization review or run a third party administrator or third-party administrator outside our state boundaries. That would be a seminal change in the Illinois workers' compensation system. When we received it, we started our research and also sent it to a number of confidential contacts for their thoughts.
 
From what we could tell in a simple reading, the director of the Illinois Department of Insurance was suddenly requiring all TPAs and UR providers to move their offices/operations into Illinois or be barred from doing business here. This unusual memo can be reviewed on the Illinois Workers' Compensation Commission's website’s news section.
 
To clarify, the memo speaks to both UR and TPA services and their licensure. We did diligent research and reviewed the statutes listed in the memo. As veteran defense lawyers, we don’t agree at all with Director Boron’s legal position on what the managed care reform and Patient Rights Act says and how the Insurance Department now appears to want to enforce it. That said, for a number of reasons, we don’t want UR and TPAs to be “offshored” or situated in foreign countries. On the opposite side of the same debate, we don’t think of URs or TPAs in Indiana, Tennessee or California to be “offshored” work. One also has to wonder about what the Insurance Department will do if you have an Illinois office with UR reviewers or claims adjusters “remoting in” from across the U.S.
 
We then sent an email inquiry to Boron and asked for the specific language in the Managed Care Reform and Patient Rights Act to which he referred. We are confident our various sources/contacts also sent similar inquiries. At the time you read this article, we assure our readers he hasn’t officially replied directly to our inquiry. The whole thing was then reported to the entire country in http://www.workcompcentral.com and their intrepid Central Bureau Chief, Bill Kidd. He quoted your editor on our thoughts and he also quoted one of the top plaintiff/petitioner attorneys in Illinois workers' compensation, David Menchetti, who indicated he felt UR providers should practice in the state where they are performing reviews. Mr. Menchetti was quoted as comparing UR and medicine in Indiana to India − with respect to this solid lawyer and advocate, we are fairly sure there may be some distinct differences between the practice of medicine in those disparate and distant venues.
 
We later got a “semi-official” response from the Department of Insurance sent to one of our contacts. The response is from an analyst with the Insurance Department, but we don’t have her permission to use her name, so we aren’t going to publish it. To the extent her reply is from a state official in response to an official inquiry from whatever source, here is what it says (in pertinent part):
 
After receiving several calls and emails from your contracted companies this morning, I felt it would be beneficial for me to intervene and attempt to clarify the intent of the company bulletin. At this time, the above referenced bulletin does not include worker’s compensation or independent review organizations registered with this department. All URO’s providing health utilization reviews will be required to have an Illinois office and hold contracts with Illinois licensed physician reviewers. Going forward all companies registered to perform UR (health) will have at a minimum of one year to comply with this bulletin. Our staff is currently working on a Q&A reference page to address all of the questions/concerns we have received.
 
We have no idea why or how this distinction can or should be made by our state administrators. We point out it is almost impossible to tell when medical care is going to be “workers’ comp” versus non-work-related health care; that status may change or morph on a minute-by-minute basis.
 
From the perspective of the workers’ comp industry, we assume from the official response above, the Department of Insurance isn’t coming after you for either out-of-state workers' comp UR or TPA services now or in the future. To our readers in the health care industry apart from workers’ comp, this memo will clearly affect your operations. If would appear you have a decision to make − if the DOI is going to require an Illinois office/presence, you can add one, if you don’t have one. If you don’t have one and don’t want to get one, you may have to sue the Department to block enforcement of this concept. Again, it is our strong perspective they don’t have a strong legal basis for what they are doing.

Eugene Keefe is a founding partner of Keefe, Campbell, Biery & Associates, a Chicago worker's compensation defense firm. This column was reprinted with his permission from the firm's client newsletter.