UNDERSTANDING & IMPLEMENTING AB 749 - IV

Saturday, March 1, 2003 | 0

This is the fourth in a six part series on the new California laws by attorney Richard Jacobsmeyer. The first part (Temporary Disability Benefits) of this 6 part article series was published in the Attorney segment. The second article discussed the changes in permanent disability and life pension benefits. The third article addressed dependency benefits and changes in penalties.

Medical-Legal Procedural Changes:

While the more significant impact of AB 749/486 is in the multi-staged increases in benefits over the next 4 years including the indexing of TEMPORARY DISABILITY after 1/1/06 and the COLAs that will apply to life pension cases; there are several significant changes in procedural aspects of workers' compensation that are implemented with these statutes. These changes in the law are, for the most part, designed to help offset some of the increased costs that will result from the increasing benefits. As always, in assessing statutory law changes, the most significant law will undoubtedly be the "law of unintended consequences."[1] Until we are able to assess the impact of these changes, we will not know whether any of the intended savings are real or fictitious.

1. Permanent Disability Evaluation Changes:

While the provisions of Labor Code section 4060, &id=4061>4061 & 4062 are substantially the same as when they became effective on 1/1/94, there has been a modification in Labor Code section 4064 providing for additional medical legal reports under certain circumstances and the following language added to both Labor Code section 40614061(d) and 40624062(b):

"...For injuries occurring on or after January 1, 2003, except as provided in subdivision (b) of Section 4064, the report of the qualified medical evaluator and the reports of the treating physician or physicians shall be the only admissible reports and shall be the only reports obtained by the employee or the employer on the issues subject to this section."

Labor Code section 4064(b) has been amended to provide that where an unrepresented injured worker, goes through QME panel process and later obtains an attorney, he or she may obtain additional medical legal reports as if they had never gone to the QME panel physician at the employer's expense. The employee, in effect is given one bite at the QME apple but is not stuck with this choice but may, after obtaining representation, elect to obtain additional evaluations at the employer's expense. Labor Code section 4064 authorizes the expense of such an evaluation and Labor Code section 4061(d) and 4062(b) make the reports admissible before the W.C.A.B.

The option to obtain an additional medial legal report after obtaining representation is given only to the employee, not to the employer. The employer is however, authorized to obtain an additional medical legal evaluation if the employee elects to obtain another exam under Labor Code section 4064. This is authorized by Labor Code section 4061(e):

"If an employee obtains a qualified medical evaluator from a panel pursuant to subdivision (d) or pursuant to subdivision (b) of Section 4062, and thereafter becomes represented by an attorney and obtains an additional qualified medical evaluator, the employer shall have a corresponding right to secure an additional qualified medical evaluator."

Comment:

This procedure for unrepresented workers is similar to "window period" cases from 1/1/01 to 12/31/93 with applicant having the exclusive option to go outside the QME process, but defendants not being allowed to do so unless the injured worker opted to obtain additional evaluations. The extension of this provision is clearly intended to avoid the injured worker from being trapped with an unacceptable QME report. If the PTP report is also not to the applicant's liking, particularly if the PTP has released the injured worker from care and thereby precluding a change of PTP under Labor Code section 4600, there would be no remedy for the injured worker.[2] Under such circumstances applicant's attorneys have declined to accept cases because there was very little that could be done to alter the medical record. Even filing a petition to reopen would not provide any better record as Labor Code section 4061, 4062and 4067required the parties to return to the same QME for reexamination. Needless to say the new ability of an applicant to sidestep the QME system after participating in it, and to do so only if represented, is not likely to result in less litigation.

There is one potential beneficial effect that may be a result of this new found right. There are anecdotal reports of cases where an applicant, not satisfied with PTP or QME reports, reaching agreement on an AME with a defendant. Later, when the AME's report turned out worse than the rest, the applicant has asserted that there was no authority to agree to an AME under the Labor Code and having objections to the admissibility of the AME report sustained. While one might consider this a preposterous result, it clearly will not happen in cases with injuries after 1/1/03.

In all other respects the provisions of Labor Code section 4060 though 4062remain intact. Except for the applicant's sidestepping of the QME process, no other medical reports will be admissible. Only the PTP, Panel QME and represented QME/AME will be allowed into evidence.

2. Presumption of Correctness for PTP Is Modified:

There have been few statutes in workers' compensation that have sparked more gamesmanship than the provisions of Labor Code section 4062.9, the presumption of correctness of the primary treating physician. Conceptually intended to reduce litigation by having the physician with the injured worker's best interests at heart call the medial shots, this statute has generated more litigation over a non-substantial issue that any other Labor Code provision that this author can recall in 28+ years workers' compensation practice. The fairly common practice of applicant attorneys designating their favorite medial legal evaluator as the PTP in order to obtain the most favorable report was countered by increasing defense efforts to argue over validity of change of physicians and to filing petitions to change PTPs with the Administrative Director. Very little of this controversy had to do with quality of medical care or legitimate opinions on disability, the battle was all over control. The argument was over the turn of the phrase or the checked or unchecked box on a preprinted form medical report.[3]

It was hoped by many that this "how many angels can dance on the head of a pin" approach to resolving medical disputes would be eliminated from the labor code as part of the newest benefit increases and changes. Unfortunately, while there are significant changes in the presumption of correctness, it still exists in some form and the system will still have to carry the burden of the additional nonsensical litigation to further refine this new presumption, what it means, when it applies and, of course, how to avoid it.

For injuries after 1/1/03 the presumption of correctness of the PTP will be limited to those physicians and chiropractors who have been predesignated pursuant to Labor Code section 4600 (physicians) and 4601 (chiropractors).[4] The good news is that for the majority of cases, the presumption will likely cease to be a factor in determining medial or disability issues. The bad news is, there will still be a great deal to litigate over the provisions of Labor Code section 4600and 4601now that the stakes are raised and especially as a result of the provisions of Labor Code section 3351 requiring an employer to provide to all new hires an actual form for predesignating a primary treating physician. (Discussed in more depth in Part 5 of this series)

a Pre-Designation Under Labor Code section 4600 - Physician and Surgeon:

Labor Code section 4600 allows an employee to predesignate a treating physician for a work injury by providing the employer with written notice of the designated physician before an industrial injury. In the event of such predesignation, the employee may seek medical treatment from their own physician immediately upon sustaining an injury and an employer does not have control over the provision of medical care for the first 30 days. When all the argument concerned was the first thirty days of control, it was rare that the distinction was meaningful as applicant's could simply wait out the first 30 days and then go to their own doctor. Additionally the percentage of employees who predesignated their physician was relatively small.

By limiting the presumption of correctness to predesignated medial providers, the significance of such predesignation gains increased importance and will undoubtably become one of the focuses of the initial discovery efforts by both the benefits' provider and the applicant attorney. Understanding the predesignation rules therefore takes on added importance.

Labor Code section 4600 allow provides for predesignation as of a personal physician. The term personal physician is specifically defined in that code section as follows:

"...For the purpose of this section, "personal physician" means the employee's regular physician and surgeon, licensed pursuant to Chapter 5 (commencing with Section 2000) of Division 2 of the Business and Professions Code, who has previously directed the medical treatment of the employee, and who retains the employee's medical records, including his or her medical history. ..."

The section clearly indicates that it is limited to a specific kind of physician, i.e., physician and surgeon as described in the Business and Professions Code. The section referred to applies only to medical doctors and osteopaths. It does not include chiropractors, acupuncturists, psychologists or other medical practitioners, only M.D.s and D.O.s. Additionally the section requires that the physician must have previously directed the medical treatment of the employee. In the past the fact that the physician may have seen the injured worker, even as a consultant might have been accepted as adequate direction of medical care. With the presumption at stake, it is anticipated that defendants will scrutinize the degree of prior medical contact that a physician had with an employee to assess if the doctor actually "directed" the employee's medical care. If the only prior contact was a medical legal exam in a prior case, there may be grounds to challenge the predesignation under the statute.

The predesignated physician is also required to have the employee's medical records in his or her possession including a medical history. If the only prior contact is a medial legal evaluation for a worker's compensation injury, particularly if the physician has sent the records back to the applicant attorney, the predesignation of that physician should not qualify under the statute.

It may very well be that one of the unintended consequences of joining the predesignation of physicians with the presumption of correctness is going to be placing a whole new emphasis on the qualification and definition of a PTP. Again the focus will not be on quality or appropriateness of medical treatment. The focus will be on the minutia of details as to whether there has been sufficient "direction" of the employee's medical care, a complete chart with medical history and other marginally relevant details.

b Predesignation Under Labor Code section 4601.5 - Personal Chiropractor

The arguments over predesignated physicians are likely to be tame compared to the same arguments over predesignated chiropractors. All of the same discussion regarding physicians applies to chiropractors. However there is an additional hoop that predesignated chiropractors have to jump through to allow transfer of medical care and attain their status as primary treating physician at least during the first 30 days after an injury in reported.[5]

While Labor Code section 4600allows an injured worker to immediately seek treatment with a predesignated physician and surgeon, Labor Code section 4061requires that an injured worker may request a change of treating physician at any time (including withing the first 30 days of injury) and if the employee has predesignated a chiropractor, the employer is to give them the predesignated chiropractor's name as their new physician[6]. There are many, this writer among them, who believes that the injured worker must actually have seen the employer's physician at least one time in order to request a change of physician to their predesignated chiropractor. If the employee fails to obtain treatment at least one time with the employer's physician, and then make the request to change to their personal chiropractor, the change may not be effective. Under the principles in Ordorica v. Workers' Compensation Appeals Board, 66 Cal. Comp. Cas 333; 87 Cal. App. 4th 103, if the employee frustrates the employer's right to control medical care during the time when the employer retains control, the employer's control may extend until their rights have been effected. If the employee refuses to attend the initial employer controlled medical care, and immediately seeks out his personal chiropractor, the right to control medical care arguably continues with the employer until the employee sees the employer-designated physician, at least one time, and then changes again to the predesignated chiropractor.

c Practical Implications of Presumption for Predesignated Physicians & Chiropractors:

By increasing the significance of the predesignation of a physician, the number of such predesignated physicians will certainly increase. This will be as much a result of the implementation of Labor Code section 3551 as anything else. I foresee the increases in predesignation will occur in three primary areas:

i. Employees who have a personal physician in their medial plan and who continue to use that physician when they change jobs are more likely to take the opportunity to predesignate their own doctor at the time of hire. They may even think they are required to do so. The difficulty with predesignating at the time of hire is for the claims administrator to determine if the predesignated physician actually qualifies (i.e., has directed medical care and has records in possession.) Obviously if you send a copy service out to get the prior records and a certificate of no records comes back, the predesignation is probably not valid. Even if the doctor has treated in the past, he is required to still have a medical chart for the claimant. If the physician indicates on the physician's first report that the employee has not been seen before, the doctor does not qualify for predesignation. Many of these issues will not come up in the early stages of the claim but will arise as one side or the other seeks to benefit from the presumption of correctness.

ii Employees who have previously treated with a physician for an industrial injury may predesignate their current or past doctor. As long as the physician or chiropractor is or was a treating doctor, this would be a valid predesignation. If the physician was simply a prior medical-legal evaluator, the predesignation is arguably not valid and the defendant is entitled to require some validation from the doctor and/or the injured worker to validate the predesignation. Keep in mind that the injured worker may still change to such a prior medical legal evaluator. The question is whether there will be a presumption of correctness that attaches to the physician.

iii The final category that is likely to see more predesignations is those employees who have previously treated with physicians who are involved in marketing themselves. This is seen much more frequently in chiropractors' offices where patients will be asked to predesignate them for treatment of industrial injuries. I have rarely seen orthopedists, neurologists or other medial specialists who do so.

As a practical matter, while it is quite likely that the workers' compensation system will spend a great deal more time arguing over this presumption and its application, the majority of cases for injuries after 1/1/03 will not have a physician who will carry a presumption of correctness. Without such a presumption, each party will be able to obtain medical legal reports without consideration of the tactical effects of giving up the PTP presumption. This should lead to less reluctance on the part of applicants to consider use of AMEs for resolution of medical and disability issues. For the past 8 years, many applicant attorneys have been reluctant to utilize AME's for fear of giving up the presumption of correctness on medical care issues. If the presumption does not exist, the risk of using an AME to resolve issues becomes much less significant. While we will still have many cases with "dueling doctors," the relative merits of the medical reports will be more significant than whether we can cloak the report with an enhanced level of significance through the magical effects of a PTP presumption.

3 "Baseball Arbitration" Provision Deleted. (Formerly Labor Code 4065)

The provisions of Labor Code section 4065 have been repealed in full. This provision required a WCJ to select from one of the parties recommended ratings where both parties obtained medical reports. Never was there a provision, which if widely implemented, would have lead to more gamesmanship than this sections. The undersigned has frequently observed that success under this code sections involved not so much expertise in permanent disability rating as it did Poker.

Fortunately this section was so disliked by almost everyone involved in the litigation process that is was almost universally ignored. No one was ever able to fashion a rational explanation for this procedure and for the most part the system treated it as if the section did not exist. In 8 years the author never litigated a case where this provision was used.

I anticipate that this section will be considered as procedural and that it will be applied by the courts retroactively by holding that elimination of this section applies to both new and old injuries.

III. MEDICAL TREATMENT ISSUE CHANGES

A. Carriers/TPA May Provide More Information to Employers:

One of the ongoing tensions between employers and their claims providing organizations, whether it be carrier or TPA has been access to medical care. Labor Code 3762has limited the information to diagnosis job modification and data that affects premiums. Effective 1/1/03 employers will be entitled to that data plus information regarding treatment for any mental or physical condition related to a work injury.

It is important that employers and their claims handlers understand that this does not allow for blanket provision of all medical reports to the employer. Employers are, of course, still required to protect the privacy of the information they receive and take steps to limit access to the employees medical information through appropriate file handling procedures.

The provisions of Labor Code section 3762relate to provision of information, not to specific dates of injury. This author believes that the ability to share information is effective with the first of the year regardless of the date of injury.

B. Generic Drugs Required:

Labor Code 4600.1 has been added and requires a pharmacy, when filling a prescription for an industrial injury to utilize the generic drug equivalent if it is available and if providing the prescribing physician does not instruct that there shall be no substitution. This provision applies only to pharmacies, not medical offices or hospitals that provide medications. It also makes it clear that the physician has the power to direct the provision of a non-generic medication. There are no guidelines or restrictions in the statute on the ability of a physician to give an instruction not to substitute.

There is certainly nothing which prohibits an employer from asking a physician why the substitution is prohibited and certainly if there are established patterns of physicians giving such instructions with the same pharmacies, further investigation may be warranted.

C: Mandatory Use of Pharmacy PPO

One of the potentially significant savings provisions of AB 749 is the allowance of Pharmacy PPO programs which will be mandatory for injured workers to utilize. Labor Code section 4600.2 (a) provides:

"Notwithstanding Section 4600, when a self-insured employer, group of self-insured employers, insurer of an employer, or group of insurers contracts with a pharmacy, group of pharmacies, or pharmacy benefit network to provide medicines and medical supplies required by this article to be provided to injured employees, those injured employees that are subject to the contract shall be provided medicines and medical supplies in the manner prescribed in the contract for as long as medicines or medical supplies are reasonably required to cure or relieve the injured employee from the effects of the injury." (Emphasis added)

Labor Code section 4600is the section that has been used by applicant's to insist that they can obtain their prescriptions wherever they chose. By specifically limiting the impact of Labor Code section 4600 the free choice selection of pharmacy providers will be eliminated once the pharmacy contract is competed. The mandatory provision of benefits applies to both medications and medical supplies. The provision will also prevent medical providers (physicians and hospitals) from providing medications and medical supplies to patients directly unless they are part of the pharmacy PPO for the claims administrator approves the direct provision by the physician.

Before there can be pharmacy PPOs however subsection (c) requires the Administrative Director to create rules to define such PPOs and identify qualified providers. Unfortunately it will take some time to create the rules to allow use of the Pharmacy PPO programs but once in place will provide a valuable method for controlling medical costs.

Labor Code section 4600.2(b) makes it clear that the mandatory use of a pharmacy PPO shall not affect the obligation of the defendant to provide any medical treatment necessary to cure or relieve from the effects of the injury nor shall it limit the ability of the treating physician to prescribe treatment reasonably required to cure or relieve from the effects of an injury.

D. Change in HCO Provisions:

There are two significant changes in the provisions affecting HCO plans. Labor Code section 4600.3 provides for extended employer control over medial care if the employer contracts with a Health Care Organization and meets other statutory provisions. The section previously provided of graduated control of medical treatment through the HCO for periods of 90, 180 or 365 depending on the employer's contribution to employee health benefits. Under the amended provisions the 365-day provision is eliminated and 180 days is the maximum extension of medical control for injuries after 1/1/03.

One of the limitations in Labor Code section 4600.3 has been the requirement that the employer offer two HCOs to obtain any of the extended medical control benefits. After 1/1/03, the same benefits can be obtained with only 1 HCO.

E. Administrative Director Is to Adopt Rules Uniformity of Medical Billing:

The Administrative Director has been directed by the legislature to adopt rules providing for uniformity of billing procedures including:

1. All bills are to eventually be on standard forms which to the extent possible shall be constant with HIPA standards;

2. Require acceptance by all employers of electronic claims for medical bills; and,

3. Ensure confidentiality of medical information submitted electronically.

There is no timetable for the AD to create these rules and given the financial crunch that the DWC is currently feeling, it is unlikely that this particular set of regulations will be high on the list of things to accomplish.

F. Administrative Director Directed to Adopt a Pharmaceutical Fee Schedule:

The Administrative Director is directed to develop a Pharmaceutical Fee Schedule pursuant to Labor Code section 5307.2, as part of the Official Medical Fee Schedule (OMFS) with a statutorily mandated target date of 7/1/03. Given the State budgetary constraints, the likelihood of actually meeting this date is unlikely. However the AD has indicated that this is one his higher priority items and it is possible that this fee schedule will be implemented before the end of this calendar year.

The fee schedule is to provide for a single dispensing fee and provide for access to pharmacies within a reasonable geographic distance from the employee's residence.

G. AD to adopt Outpatient Facility Fee Schedule:

Labor Code section 5307.21 has been added to the Labor Code to provide for development of an outpatient surgical facility fee schedule by the Administrative Director with no date set for completion.

Don't hold your breath for this one.

Outpatient surgery centers are the "wild, wild west" of medical care in California workers' compensation. There are no controls, no fee schedule application and no rules against self referral. Some physicians are flying patients around the state to wholly owned surgical centers and hiding the travel costs in exorbitant fees for the surgical centers. Surgical care at such centers sometimes runs 3 -4 times the cost of the same procedure in a hospital.

Given the tremendous abuses this is an area ripe for reform. Unfortunately this statute places so many roadblocks into the process of developing a schedule and requires input from so many different players in the process, that the actual development and implementation of such a fee schedule appears at the very least on long way, and more likely will never see the light of day. The statute requires the AD to consider payment and cost data from multiple sources as well as input from " workers' compensation insurance carriers, businesses, organized labor, providers of outpatient surgical services, and patients receiving outpatient surgical services."

The likelihood and timing of this schedule is certainly going to be affected by the severe budget limitations that are occurring in state government in general. The one ray of hope in this area is the recent W.C.A.B. en banc decision in Kunz, Vs. Patterson Floor Coverings, Inc.; and Golden Eagle Insurance Co. (12/5/02) which provides some guidelines for handling disputes over billing by outpatient surgical centers and gives defendants, and judges some guidelines to deal with billing issues.

Footnotes:

1 The law of unintended consequences is an economic principle that observes that actions of people and especially of governments always have effects that are unanticipated or "unintended." In recent worker' compensation an example is the imposition of the presumption in favor of the primary treating physician (PTP). The intent was to have opinion of the physician who provided actual treatment be given special consideration in determining benefits. The consequence was that a large number of claims had benefits determined by physicians who did not understand the workers' compensation system, but were presumed correct, even in their ignorance. Additionally, as a result of the applicant's right to control medical care after 30 days from the date of injury, and therefore control over who carried the presumption of correctness; medical legal gamesmanship became even more important than the actual medical opinion. Instead of attempting to determine which physician's opinion was more medically sound, the argument became one over which opinion could be cloaked the presumption of correctness in order to shove down the throat of the opposition.

2 It would seem fair to point out that our esteemed legislators do not appear to have any concern for the other side of the coin, the poor defendant trapped with unacceptable PTP and QME reports. The only remedy in such circumstances is to try and convince an WCJ to appoint a QME pursuant to LABOR CODE section 5703.5 (a), a difficult proposition at best.

3 Perhaps the height of absurdity is presented by a decision of the Court of Appeals which created a completely artificial distinction between "future" medical treatment and "further" medical treatment thereby generating countless arguments and additional litigation over meaningless distinctions rather than substantive issues, all in pursuit of the holy grail of control of the PTP presumption. Tenet/Centinela Hospital. v. Rushing, 80 C.A.4th 1041, 65 CCC 477. While Tenet/Centinela was a important decision for defendants in that it validated the PTP definitions of ADR 9785, the future/further medical care distinction is viewed by this author is artificial and having generated unnecessary litigation over a non-existent distinction..
The Adm. Dir. has issued proposed changes to ADR 9785 & 9786 to eliminate the restriction on change of PTP where there is an indication of "future" rather than "further" medical care (as referenced in Tenet/Centinela), and also to place additional burdens on defendants in filing Petitions for Change of PTP. The rules have not become final but will likely be adopted with the changed intended to eliminate the Tenet/Centinela distinction in medical care in early 2003.

4 LABOR CODE section 4601 also allows predesignation of acupuncturists as treating physicians however the presumption does not apply to such predesignated practitioners. Acupuncturist, of course cannot comment on disability issues and therefore giving them the presumption of correctness would have little meaning.

5 The 30 day time period after which the injured worker can assume control of medical care is commenced by reporting of the injury, not the occurrence of injury.

6 The same process also applies to predesignated acupuncturist however the presumption of correctness does not extend to this profession.



This is the fourth of a six part series authored by attorney Jake Jacobsmeyer, of the firm Adelson, Testan & Brundo. He can be reached by e-mail at RichardJacobsmeyer@atblaw.net, or by phone at (925) 609-1990.