DWC Working on Rules for Provider Suspensions, Lien Reviews

Monday, October 10, 2016 | 2

The Division of Workers’ Compensation is drafting rules that could lead to the dismissal of thousands of liens with a claimed value of hundreds of millions of dollars.

Assemblyman Adam Gray

Gov. Jerry Brown on Sept. 30 signed into law AB 1244, requiring the division to suspend providers who are convicted of billing fraud or harming patients. And it prohibits suspended providers from pursuing payment for any services that are related to the conviction.

To determine whether suspended providers are allowed to continue pursuing lien claims, the bill requires the DWC to create a special process to consolidate and review those liens.

“Currently, we are in the process of identifying where regulations are necessary to implement the new statute and also creating the IT protocols to expedite the administrative procedures,” DWC Acting Administrative Director George Parisotto said in an email on Friday. “Specific timelines are premature now, but we believe all required rules and forms will be in place on Jan. 1, 2017.”

Parisotto said "lien consolidation court" is a term the division is using in the absence of a more formal designation for the provider suspensions and lien-consolidation proceedings required by AB 1244.

The bill, by Assemblyman Adam Gray, D-Merced, requires the DWC to suspend any provider from participating in the workers’ compensation system if that person has been convicted of a felony or misdemeanor that involves fraud or abuse of the Medi-Cal, Medicare or the workers’ compensation system, or improper patient care. It also requires the division to suspend from the comp system providers who have been suspended from the federal Medicare or state Medi-Cal program because of fraud or abuse.

Before the division could suspend anyone for the violations specified in AB 1244, it must first provide the person with written notice of the right to request a hearing, and the procedure to request a hearing. A provider would have 10 days “from the date the notice is sent by the administrative director” to request a hearing. And the DWC would be required to suspend the provider “after 30 days from the date the notice is mailed” unless a hearing is requested.

If the hearing leads to a determination that a suspension is warranted, it would go into effect immediately.

Once a provider is suspended, the bill requires the DWC to take steps to notify judges and the public, and to start a process to evaluate liens filed by the provider.

The DWC must post a notification of suspensions on its website. It must notify its chief judge of any suspension, and the chief judge would be charged with informing all other work comp judges in the state that a provider has been kicked out of the comp system. 

A staff attorney would be required to identify any liens filed by or on behalf of a suspended physician, as well as those filed by any clinic, group or corporation in which the suspended provider has an ownership interest, to be consolidated for a special proceeding to determine whether dismissal is warranted.

The bill creates a presumption that “all underlying bills for services and claims for compensation asserted therein, arise from the conduct subjecting the physician, practitioner or provider to suspension, and that payment is not due and should not be made on those liens because they arise from, or are connected to, criminal, fraudulent, or abusive conduct or activity.”

A provider must rebut the presumption by a preponderance of the evidence standard to have a right to collect payment on any of the consolidated liens.

If the provider does rebut the presumption, the judge presiding over the proceeding would have the option to adjudicate the lien or send it back to the district office where the lien was filed. 

The lien consolidation and review process was added to the bill through a late amendment made by Assemblyman Gray on Aug. 19, less than two weeks before the session ended. The earlier version of the bill simply prohibited suspended providers from pursuing any claim for payment that had not already been reduced to a final judgment.

Lobbyists for the California Society of Industrial Medicine and Surgery argued that could unfairly prevent doctors from recovering payment for legitimate services. Steve Cattolica, director of government relations for CSIMS, said the final version of Gray’s bill was a more balanced approach to ferreting out fraud in the comp system.

The DWC estimates that between 2011 and 2015, providers who have been convicted or criminally indicted filed $600 million in liens.

An analysis of AB 1244 written by Mark Rakich, chief consultant to the Assembly Insurance Committee, notes the irony created by allowing providers convicted of fraud to continue filing or collecting on liens.

Rakich points out that Dr. Philip Sobol continued to file liens after pleading guilty in November 2015 to federal conspiracy charges and admitting to accepting kickbacks for referring patients to Pacific Hospital of Long Beach.

“In theory, these workers’ compensation liens could go toward paying his $5.2 million in restitution due to his fraudulent activities,” Rakich said in the analysis.