The Practical Effects of Sandhagen and Willette

Saturday, December 4, 2004 | 0

This if the first part of a two part series by York McGavin examining the effects of the recent Workers' Compensation Appeals Board En Banc decisions in Brice Sandhagen vs. Cox & Cox Construction, Inc. (69 CCC (2004); En Banc, WCC 30652004 CA) and Michael A. Willette vs. AU Electric Corporation; and State Compensation Insurance Fund (68 CCC 1298 (2004); En Banc, WCC 30322004 CA) on lien claimant rights, and the practical effect on provider billing issues.

by York McGavin

Willette teaches us that when a proposed course of treatment is denied by a Utilization Review (UR), the Injured Worker (IW) is to timely initiate the Panel Qualified Medical Examination (PQME) process outlined in LC 4062. In Willette, Mr. Willette was given a "one-time free-pass" by the en banc panel and allowed to initiate the PQME process despite the fact that the request would be untimely.

Sandhagen teaches us that when the UR denial is untimely, the PQME will be forbidden from even seeing it. In addition, the WCJ is prohibited from allowing the untimely UR denial to be introduced into evidence.

However, just like the IW in Willette, SCIF was given a one-time free-pass by the en banc panel and allowed to untimely initiate an Agreed Medical Evaluator (AME) or PQME evaluation, albeit without the AME or PQME reviewing the untimely UR denial.

In the future, both the IW and the payor will have to comply with the various specific time-frames that are applicable to initiate the 4062 process, regardless of whether the IW is represented or not.

A common scenario, I have encountered thousands of times as a lien claimant, is as follows:

1. A physician makes a request for authorization for treatment/diagnostics/DME in the treatment plan section of either a DFR or a PR-2, and submits it to the payor;
2. The request for authorization is completely ignored by the payor until after receipt of a bill for the treatment/diagnostics/DME; and,
3. The payor, after receipt of the bill for treatment/diagnostics/DME, untimely issues a retroactive UR denial to refuse reimbursement to the provider.

Now, per Sandhagen, not only is the payor forbidden from providing a copy of the untimely UR denial to an AME or PQME, but in addition the payor cannot introduce the untimely UR denial as evidence at a lien trial.

SANDHAGEN FINDINGS, SUBFINDINGS, & IMPLICATIONS

FINDINGS

(1) The utilization review time deadlines of section 4610(g)(1) are mandatory and, if a defendant fails to meet these mandatory deadlines, it is precluded from using the utilization review procedure for the particular medical treatment dispute in question;

(2) If a defendant undertakes an untimely utilization review procedure, any utilization review report obtained as to the particular treatment in dispute is not admissible in evidence, and any utilization review report obtained cannot be forwarded to an AME or QME if section 4062(a) procedures are timely pursued; and,

(3) When a defendant does not meet the section 4610(g)(1) deadlines, it may use the procedure established by section 4062(a) to dispute the treating physician's treatment recommendation; however, the defendant (not the applicant) is then the "objecting party" and the defendant must meet the section 4062(a) deadlines, unless those deadlines are extended for good cause or by mutual agreement.

IMPLICATIONS

(A) An AME or QME report that considers or relies upon an untimely UR denial is inadmissible before the WCAB. To allow an AME or QME report that considers or relies upon an untimely UR denial, to be entered into evidence, would allow an impermissible "back door" introduction of the untimely UR denial (See Sandhagen at pages 8-9);

(B) Failure by a payor to timely notify the applicant of the UR denial within the mandated time frames precludes the payor from obtaining a QME (See Sandhagen at page 11);

(C) An untimely UR denial opens the door to a LC 5814 Petition pursuant to LC 4610.1 (See Sandhagen at page 9);

(D) The time frame for a UR physician to issue a delay letter requesting additional further "necessary information" to make a determination to authorize, modify, or deny, after receipt of a DFR or a PR-2 containing a request for authorization, is five (5) working days (See Sandhagen at page 10); and,

(E) The 4610(g) time frame to respond to a request for authorization is a 'bright-line' rule.

PRACTICAL IMPLICATIONS FOR THE PROVIDER
STRATEGY AND TACTICS

STRATEGY - DFR / PR-2
Initially, it is imperative that the provider seek authorization for the proposed course of treatment, diagnostics, or DME in the "Treatment Plan" section of either a DFR or a PR-2. The 'treatment plan' must be supported by either ACOEM, or if ACOEM is inapplicable, another peer-reviewed nationally recognized EBM guideline specifically referenced in the DFR or PR-2.

TACTICS
Always mail the DFR or PR-2 to the payor, or designated recipient of the payor, via certified, return-receipt mail with a proof of service (POS).

If the payor, or designee, has only provided you with a fax number to submit the request for authorization, obtain the mailing address and mail the DFR or PR-2 via certified, return-receipt mail. Retain a copy of the POS, photocopies of the certified proof of mailing, and the proof of delivery (the green card) delineating the date received.

RESULTS
Usually, the UR physician will not timely request additional information necessary to make a decision within 5 working days after receipt of the DFR or PR-2. This is because the "bottleneck" in the mailroom will probably cause delivery to the actual physician to be delayed more than five (5) working days.

If the UR physician timely (5 working days) issues a plea for additional information, the requesting physician should immediately fax the requested information to the UR physician on an expedited basis. A timely request for additional information by the UR physician (5 working days after receipt of the DFR or PR-2) does toll the 14-day clock.

However, the plea by the UR physician for additional information, "shall request only the information reasonably necessary to make the determination." (See LC 4610(d)) If the requesting physician has properly submitted all information necessary for the UR physician to make a determination, along with an ACOEM or other peer reviewed nationally recognized EBM treatment guideline supporting the requested treatment/diagnostics/DME, then any request for additional information by the UR physician is an inappropriate bad-faith delay tactic.

In the uncommon event that a timely (fourteen [14] calendar days) UR denial is issued, the physician may choose to initiate the internal UR appeals process with the UR physician. However, initiating an internal appeal or review of the UR physician's denial does not toll the LC 4062 clock. If the internal UR appeal process is not completed prior to expiration of the LC 4062 time frame (20 days from receipt of the UR denial), and no timely request is made for a PQME, then the IW has waived the PQME process.

If, as is usually the case, the UR denial is untimely, then the IW can immediately trigger the LC 4062 PQME process.

SUGGESTIONS
There will be times when the requesting physician has submitted a deficient DFR or PR-2 that lacks supporting documentation, and/or lacks a valid EBM foundation for the request.

As indicated previously, if the UR physician has timely pleaded for additional information within 5 working days, in response to a deficient DFR or PR-2, fax the necessary requested additional information immediately to the UR physician.

If the UR physician has timely requested "only the information reasonably necessary to make the determination" from the requesting physician, and the requesting physician has immediately furnished the additional information, the clock is only tolled from the date the UR plea issued until the date the pleaded for information is furnished.

Regardless of whether there was a request for additional information that was immediately furnished, or if there was no request for additional information, if the UR physician fails to timely deny the requested treatment/diagnostics/DME within 14 calendar days from receipt of the DFR or PR-2, the UR denial is untimely. As such, the untimely UR denial cannot be furnished an AME or PQME, nor can it be introduced as evidence before the WCAB.

At this point in time, the IW should timely seek a PQME from the AD, requesting a specialty of their choice that is appropriate.

There is a second bite at the apple for those physicians who submitted a deficient DFR or PR-2 that was denied by the UR physician without a timely (5 working day) plea for "the information reasonably necessary to make the determination."

Once the PQME request has been made by the IW and submitted to the AD, and the AD has issued a 3 physician panel list, the PQME must be selected by the IW within 10 days. The IW must make an appointment with the PQME within that 10-day period and immediately notify the payor of the date and time of the appointment in writing. Upon written notification of the PQME appointment, the payor must furnish the IW with estimated travel expenses prior to the PQME appointment.

The requesting physician now has an opportunity for that second bite at the apple in the form of a supplemental medical record/report pursuant to LC 4062.3; as long as the supplemental medical record/report from the requesting physician is furnished to the payor, as well as to the PQME, no later than 20 days before the scheduled PQME examination.

LC 4062.3(a)(2) allows the PQME to be provided with supplemental "medical and nonmedical records relevant to determination of the medical issue." However, LC 4062.(3)(b) is clear that, "If the opposing party objects to consideration of nonmedical records within 10 days thereafter, the records shall not be provided to the evaluator."

According to a strict reading of LC 4062.3, the IW has a slight advantage:

"LC 4062.3 (a) Any party may provide to the qualified medical evaluator selected from a panel any of the following information:

(1) Records prepared or maintained by the employee's treating physician or physicians.

(2) Medical and nonmedical records relevant to determination of the medical issue.

(b) Information that a party proposes to provide to the qualified medical evaluator selected from a panel shall be served on the opposing party 20 days before the information is provided to the evaluator. If the opposing party objects to consideration of nonmedical records within 10 days thereafter, the records shall not be provided to the evaluator. Either party may use discovery to establish the accuracy or authenticity of nonmedical records prior to the evaluation."

Consequently, either party may submit medical and nonmedical information to the PQME. The payor cannot object to the PQME being furnished the supplemental medical record/report by the IW's treating physician(s). The payor can object to nonmedical records, and if objected to timely, the nonmedical records shall not be provided to the PQME.

The payor can have their UR physician write a supplemental report, but as a practical matter, the UR physician, who is already swamped, will generally not have the time and resources to submit a timely response for review by the PQME.

INSURER PENALTIES

Taking into consideration the en banc panel's findings in both Willette and Sandhagen, if the payor has issued an untimely retroactive UR denial, the AME or PQME will be prohibited from reviewing, or commenting on this untimely UR denial for any reason.

Now, LC 5814 comes into play, pursuant to the last sentence of LC 4610.1:
"4610.1. Increase in compensation under section5814--Inapplicable for unreasonable delay in medical treatment for periods of time necessary to complete utilization review process; exception. An employee shall not be entitled to an increase in compensation under Section 5814 for unreasonable delay in the provision of medical treatment for periods of time necessary to complete the utilization review process in compliance with Section 4610. A determination by the appeals board that medical treatment is appropriate shall not be conclusive evidence that medical treatment was unreasonably delayed or denied for purposes of penalties under Section 5814. In no case shall this section preclude an employee from entitlement to an increase in compensation under Section 5814 when an employer has unreasonably delayed or denied medical treatment due to an unreasonable delay in completion of the utilization review process set forth in Section 4610. Leg.H. 2003 ch. 638 (AB 1557)."

Multiple LC 5814 awards now raises the definition of a LC 5814.6 General Business Practice (GBP) as defined in proposed CCR 10100.2(w)(3), (4), or (5):
"(3) Two or more Labor Code section5814 awards for any compensation benefit issued to an insurer or employer within a two year period if the insurer or employer's number of indemnity claims reported for the same two year period is 750 claims or less.
(4) Three or more Labor Code section5814 awards for any compensation benefit issued to an insurer or employer within a two year period if the insurer or employer's number of indemnity claims reported for the same two year period is 751 claims to 3000 claims.
(5) A general business practice as used in Labor Code section5814.6 means four or more Labor Code section5814 awards for any compensation benefit issued to an insurer or employer within a two year period if the insurer or employer's number of indemnity claims reported for the same two year period is 3001 claims or more."

In turn, a finding of a GBP, as defined in proposed CCR 10100.2(w)(3), (4), or (5), can result in the wrath of the Audit Unit in punishing the offending payor pursuant to proposed CCR 10111.40:

10111.40 Penalty Schedule for Labor Code section5814.6
(1) Pursuant Labor Code section5814.6, administrative penalties may be assessed against an employer or insurer that knowingly violates Labor Code section5814 with a frequency that indicates a general business practice as follows:
(a) Twenty times the total payment of compensation that was unreasonably refused or $25,000, whichever is less, for each Labor Code section5814 Award up to the maximum of $400,000 on the first finding under Labor Code section5814.6;
(b) Forty times the total payment of compensation that was unreasonably refused or $50,000, whichever is less, for each Labor Code section5814 Award up to the maximum of $400,000 on the second or other repeated findings under Labor Code section5814.6.

If an insurer fails to timely issue a UR response to a request for authorization (DFR or PR-2), this can lead to a LC 5814 award pursuant to LC 4610.1. If the insurer is penalized with multiple LC 5814 awards pursuant to LC 4610.1, this opens the door to a finding of a LC 5814.6 GBP by the Audit Unit pursuant to proposed CCR 10100.2(w)(3), (4), or (5), and exposes the insurer to significant financial punishment pursuant to proposed CCR 10111.40(1)(a) or (b), which the insurer cannot pass on to the insured employer in the form of an increased x-mod.

CONCLUSION

Willette teaches us that if there is a dispute about an adverse UR determination, the aggrieved unrepresented IW is to timely initiate the LC 4062 PQME process.

Sandhagen teaches us that there is a 'bright-line' time frame to issue a UR denial; If the UR denial is untimely, the AME, PQME, or WCJ is prohibited from considering, or relying upon, the untimely UR denial; and, A LC 5814 petition can be triggered by a late UR response pursuant to LC 4610.1.

Multiple LC 5814 Awards may result in a finding of a GBP as outlined in proposed CCR 10100.2(w)(3), (4), or (5).

A finding of a GBP, as defined in proposed CCR 10100.2(w)(3), (4), or (5), may result in significant penalty assessments by the DWC Audit Unit pursuant to proposed CCR 10111.40.

The employer/payor community spent millions of dollars lobbying to obtain complete employer/payor control. It will be interesting to see if the employer/payor community will be able to shoulder the burden of complying with the very laws for which they spent so much money, and lobbied so hard to obtain.

by York McGavin. York can be contacted at ymcgavin@socal.rr.com.

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