Three medical providers claim the Division of Workers’ Compensation relied on underground regulations to deny applications for recertification as qualified medical evaluators earlier this year.

The former QMEs say in a complaint filed Tuesday with the Los Angeles County Superior Court that the division adopted a new interpretation of the complexity factors necessary to justify billing code ML 104 without going through the rule-making procedure. They say the division then accused them of not following billing rules as justification for refusing to renew their QME certification.

What’s more, the providers say the DWC also adopted what amounts to an underground regulation in deciding to refuse recertification without first conducting a hearing.

“Respondents have engaged in a scorched earth policy to deny reappointment licenses to qualified medical evaluators without due process of law — including without a hearing to challenge respondents’ mere accusations — through respondents’ imposition of new and different criteria governing such reappointments and the medical-legal fee schedule applicable to QMEs in California,” the complaint says. “This petition and complaint challenges the validity of certain void and illegal policies, internal guidelines and actions consisting of statutes and regulations that have been supplemented with new, different and/or additional criteria that have not been properly adopted through the Administrative Procedures Act.”

The complaint names as defendants the Department of Industrial Relations and its director, Christine Baker; the Division of Workers’ Compensation; DWC Acting Administrative Director George Parisotto; and DWC Executive Medical Director Dr. Raymond Meister.

DIR spokeswoman Erika Monterroza on Wednesday said the agency doesn’t comment on pending litigation.

Nicholas Roxborough, a partner with Roxborough, Pomerance, Nye & Adreani, said denying QME reappointments without a hearing over simple billing disputes is unprecedented and violates his clients’ most fundamental due process rights.

“This is a pretty simple case,” he said. “These qualified doctors must be reappointed as QMEs as long as they meet certain medical standards. Indeed, no disciplinary actions against QMEs can be imposed without a due process hearing. And, Labor Code (Section) 139.2 provides that a hearing must be required in all but two circumstances, none of which apply to these doctors, before a QME can be suspended or not reappointed.”

Roxborough said he tried to raise his concerns with the DWC, and requested an administrative hearing to review the allegations against his clients and the division’s decision to not renew their QME certification but was met with “utter silence or rejection.” As a result, he said, it was necessary to file the complaint in Los Angeles.

Dr. Timothy Howard, an orthopedist in Danville, says in the complaint that he had been certified as a QME since 2005, but his renewal was denied in June. Chiropractor Meera Jani in Rancho Cucamonga had been a QME since 2001 until his renewal was denied in August. And Dr. Benjamin Simon, a cardiologist in Agoura, had been a QME since 2015 until his renewal was also denied in August.

In each case, the providers received what they say appears to be a “boilerplate” denial letter saying, “The apparent violation of 8 CCR 9795 and Labor Code 4628 prevent your reappointment as a qualified medical evaluator.”

The complaint alleges the DWC refused to renew the certification for about 400 QMEs through orders “with identical or nearly identical language.”

Complexity factors and ML 104

At the heart of the dispute are the complexity factors needed for QMEs to bill for ML 104, which is described in California Code of Regulations Section 9795 as a “comprehensive medical-legal evaluation involving extraordinary circumstances.” The billing code is appropriate for an evaluation that requires four or more of the complexity factors listed under ML 103, which is used for a “complex comprehensive medical-legal evaluation.”

QMEs must satisfy four complexity factors to justify ML 104, according to the regulation. Complexity factors include:

• Two or more hours of face-to-face time with the injured worker.
• Two or more hours of record review.
• Two or more hours of medical research.
• Four or more hours spent on a combination of two of the factors for face-to-face time, record review or research counts as two complexity factors.
• Six or more hours spent on any combination of three complexity factors for face-to-face time, record review or research counts as three factors.
• Addressing medical causation upon the request of a party.
• Addressing apportionment when the determination requires the physician to evaluate the claimant’s employment by three or more employers, three or more injuries to the same body part, or two or more injuries involving two or more body parts.
• A psychiatric or psychological evaluation, which is the primary focus of the medical-legal evaluation.
• An evaluation involving prior multiple injuries to the same body part that requires three or more of the complexity factors, including three or more hours of record review.
• A comprehensive medical-legal evaluation for which the physician and parties agree the evaluation involves extraordinary circumstances.

The plaintiffs say that under the adopted regulations, medical causation is a valid complexity billing factor when requested by one of the parties. But the DWC is not allowing them to use a medical causation determination unless it is also a contested claim in which causation is at issue, a claim is denied and a letter from one of the parties specifically states that “medical causation is an issue.”

“None of these three requirements actually exist anywhere under 8 CCR 9795,” the complaint says. “On its face, respondents have materially modified what 8 CCR 9795 subsection (6) means by implementing, adopting and enforcing void and prohibited underground regulations regarding the ‘medical causation’ complexity billing factor.”

For example, the plaintiffs say Howard’s renewal letter accused him of improper billing because, while his report said causation was due to an industrial injury, “there is no indication that this was a contested claim putting causation at issue or that either party requested a causation analysis” as part of the evaluation. Jani says his denial letter accused him of improper billing because “there was no indication that this was a denied claim.”

The plaintiffs further claim that Winslow West, staff counsel for the Division of Workers’ Compensation who specializes in QME discipline and appointments/reappointments, admitted to altering the meaning of the regulations in 9795 during a presentation made to members of the California Society of Industrial Medicine and Surgery earlier this year.

A copy of the West’s presentation, filed as an exhibit with the complaint, reportedly referenced differences between the current interpretation of billing rules and past interpretations.

“The current interpretation of the regulations by the DWC may or may not be a standard interpretation upheld by all the administrative law judges,” West reportedly said. “However, you can be assured that if you follow the current interpretation of the regulations with respect to billing, you will not receive a letter from the discipline unit and you will in all likelihood be reappointed upon submission of your application.”

West’s presentation also notes that when it comes to the complexity factor for medical causation, the question is partly whether the parties specifically told the QME to “please address the issue of medical causation.”

Continuing, West added the caveat that “once a case is accepted by the employer, the issue of medical causation is no longer in dispute.” Regardless of what parties say needs to be determined in the letter requesting a QME panel, “once the employer starts providing benefits for an accepted injury, the issue of medical causation is no longer in dispute,” West reportedly said.

The complaint says West “has thus publicly admitted to changing the meaning of 8 CCR 9795” by adding the new requirement that the QME have a letter specifically saying “please address the issue of medical causation” to use this complexity factor. The complaint also says West added new conditions limiting the use of the medical causation complexity factors to unaccepted cases in which causation is in dispute.

If the DWC wants to implement those requirements, it must revise its regulations through the formal rule-making process, the plaintiffs contend.

They also said that the new criteria don’t work in the real world.

“For example, it is well established that an employer may accept an injury as industrially caused (i.e., medical causation) because the employee complains of back and leg pain after lifting something heavy,” the complaint says. “But when the QME interviews the injured worker and takes a full medical history, the QME may determine that the injured worker actually injured himself a week earlier sliding into home plate during a recreational softball game unrelated to work. The QME may then decide that the back and leg injuries are more consistent with the non-industrial sliding injury than with the industrial lifting injury. Medical causation on an industrial basis may then be refuted.”

The plaintiffs also allege that the DWC has imposed an additional requirement that limits QMEs to citing report preparation as a complexity factor unless the parties agreed prior to the exam that the evaluation involves extraordinary circumstances.

The plaintiffs allege there is a drafting error in the regulations adopted in 1993. The rules the DWC sent to the Office of Administrative Law included a line break that would have made the prior agreement requirement a separate condition that could justify using report preparation as a complexity factor. But the rules were printed without a line break, which had the effect of condensing two criteria into one.

The typo in the rules “should be well known to respondents who drafted 8 CCR 9795 themselves,” the petition says. And the new requirement that report preparation is billable only upon prior agreement “clearly does not reflect the intent of the regulation.”

The plaintiffs also say the DWC is improperly interpreting the regulations to prohibit QMEs from citing medical causation and psychiatric evaluation factors for the same evaluation, despite there being no regulatory authority to do so.

Due process required to revoke QME certification

In addition to alleging the DWC adopted underground rules by changing how it interprets billing regulations, the plaintiffs also accuse the division of engaging in underground rule-making by denying QME reappointments before providing hearings required by the Labor Code and California Code of Regulations.

Labor Code Section 193.2 states that the administrative director “shall appoint or reappoint” as a QME a licensed physician who meets specified requirements.

There is no reference to “misapplication of billing codes” as a reason to deny reappointment, the plaintiffs say. Therefore, so long as they meet certain medical standards, they are “entitled to be reappointed.”

Furthermore, the plaintiffs argue that Labor Code Section 193.2 and 8 CCR 63 require the DWC to hold a due process hearing before taking disciplinary actions against a QME. The only exception to the requirement to hold a hearing is when a QME fails to pay the mandatory fee or has his medical license suspended or revoked.

According to the complaint, the DWC relied on 8 CCR 63 when denying renewal requests from the plaintiffs and other QMEs. The plaintiffs say the regulation derives its authority from Labor Code Section 139.2, which does not allow the DWC to deny reappointment of a QME until after a hearing.

The regulation allows the division to notify the QME of its initial decision to deny reappointment and a final determination to deny reappointment. But the denial can’t be implemented until after a hearing.

“It is beyond frustrating that respondents are required by California law to provide QMEs with a hearing that protects QME rights to due process of law and procedural safeguards, before suspending, terminating or otherwise disciplining a QME for crimes, fraud and all other violations of law, save for a few specifically enumerated circumstances that are irrelevant herein,” the complaint says. “However, through the use of underground regulations, respondents have improperly extended the ‘no due process hearing’ exception to apply specifically to the reappointment process for QMEs, thereby illegally denying reappointment based solely on mere accusations, and thus achieving an end-run around the QMEs’ rights to a due process hearing.”

The providers are asking the court to declare that the DWC has adopted underground regulations, and order the agency to stop relying on the alleged improper rules.

“If not otherwise directed by this court’s issuance of the requested writ of mandate, respondents will continue to violate their clear, present and ministerial duty to comply with the (Administrative Procedures Act) by continuing to utilize, enforce or attempt to enforce the denial order and the denial letters, and other regulations, all of which constitute void and illegal underground regulations,” the complaint says.

The plaintiffs are also seeking a court order directing the DWC to immediately reappoint their certification to serve as QMEs, pending the conclusion of a hearing on the merits of the improper billing allegations. They’re also asking the court to prevent the DWC from relying on the alleged underground rules during the hearings.

Providers and attorneys previously told WorkCompCentral that the problems with QME renewals started in 2016. While the DWC is not commenting on the lawsuit, spokeswoman Monterroza in June told WorkCompCentral that the agency adopted a new procedure to review renewal requests last year after the DWC’s Fraud Unit discovered a QME who was referred to the Discipline Unit with evidence of a regulatory violation and was “mistakenly recertified.”

Monterroza said, “The new protocols were instituted to prevent a similar situation from occurring in the future.”