BILL NUMBER: SB 228 CHAPTERED
BILL TEXT
CHAPTER 639
FILED WITH SECRETARY OF STATE OCTOBER 1, 2003
APPROVED BY GOVERNOR SEPTEMBER 30, 2003
PASSED THE SENATE SEPTEMBER 12, 2003
PASSED THE ASSEMBLY SEPTEMBER 12, 2003
CONFERENCE REPORT NO. 1
PROPOSED IN CONFERENCE SEPTEMBER 9, 2003
AMENDED IN ASSEMBLY JULY 14, 2003
AMENDED IN SENATE JUNE 3, 2003
AMENDED IN SENATE MAY 12, 2003
AMENDED IN SENATE APRIL 29, 2003
AMENDED IN SENATE APRIL 3, 2003
INTRODUCED BY Senator Alarcon
(Coauthor: Senator Burton)
FEBRUARY 13, 2003
An act to amend Section 12813 of the Government Code, and to amend
Sections 29, 110, 122, 124, 127.6, 138.1, 139.2, 139.3, 139.31,
139.4, 139.45, 4061, 4062.5, 4062.9, 4068, 4603.2, 4603.4, 4628,
5307.3, 5703, and 6401.7 of, to add Sections 77.5, 3823, 4062.01,
4604.5, 4610, 4903.05, and 5307.27 to, to repeal Sections 139, 139.1,
and 5307.21 of, to repeal and add Sections 3201.7, 4600.1, 5307.1,
5307.2, and 5318 of, and to repeal, add, and repeal Section 4062 of,
the Labor Code, relating to workers' compensation.
LEGISLATIVE COUNSEL'S DIGEST
SB 228, Alarcon. Workers' compensation.
(1) Existing law establishes a workers' compensation system to
compensate an employee for injuries sustained in the course of his or
her employment. Existing law establishes, in the Department of
Industrial Relations, the Commission on Health and Safety and Workers'
Compensation, to conduct a continuing examination of the workers'
compensation system and of the state's activities to prevent
industrial injuries and occupational diseases.
This bill would require the commission, on or before July 1, 2004,
to conduct a survey and evaluation of nationally recognized
standards of care, including existing medical treatment utilization
standards, including independent medical review, as used in other
states, at the national level, and in other medical benefit systems,
and to issue a report of its findings and recommendations to the
Administrative Director of the Division of Workers' Compensation, on
or before October 1, 2004, for purposes of the adoption of a medical
treatment utilization schedule.
(2) Existing law provides that the court administrator shall hold
office at the pleasure of the administrative director.
This bill, instead, would provide that the court administrator
hold office for a term of 5 years.
(3) Existing law establishes the Industrial Medical Council,
consisting of various types of medical practitioners, and requires
the council to perform various functions and duties in connection
with the provision of medical services under the workers'
compensation program.
This bill would eliminate the council and would transfer many of
its functions and duties to the administrative director. It would
also transfer all assets and liabilities of the council, as well as
funds appropriated for the support of the council in the annual
Budget Act, to the Workers' Compensation Administration Revolving
Fund, and would make conforming changes.
(4) Existing law provides that it is unlawful for a physician to
refer a person for specified medical goods or services whether for
treatment or medical-legal purposes if the physician or his or her
immediate family has a financial interest with the person or in the
entity that receives the referral, except in prescribed
circumstances. A violation of this provision is a misdemeanor.
This bill would add outpatient surgery, as defined, to the list of
medical goods or services for which it is unlawful for a physician
to refer a person under this provision. By creating a new crime,
this bill would impose a state-mandated local program.
(5) Existing law makes it a crime for any person to make false or
fraudulent statements, or take certain other actions, with respect to
any claim under the workers' compensation system.
This bill would require the administrative director, in
coordination with specified entities, to adopt specified protocols,
if applicable, concerning medical billing and provider fraud. It
would require certain parties to report claims believed to be
fraudulent to the administrative director in accordance with these
procedures.
(6) Existing law authorizes collective bargaining agreements
between a private employer or groups of employers engaged in the
aerospace and timber industries and a recognized or certified
exclusive bargaining representative that establishes a dispute
resolution process for workers' compensation instead of the hearing
before the Workers' Compensation Appeals Board and its workers'
compensation administrative law judges, or that provides for
specified other alternative workers' compensation programs.
This bill would delete this authorization for employers engaged in
the aerospace and timber industries, and instead would authorize
labor-management agreements meeting prescribed criteria for any
employer or groups of employers that meet certain requirements. By
requiring certain information in connection with these provisions to
be submitted by an employer or collective bargaining representative
under penalty of perjury, this bill would expand the definition of
the crime of perjury, thereby imposing a state-mandated local
program.
(7) Existing law requires a pharmacy that provides medicines and
medical supplies that are required to cure or relieve effects of an
injury covered by workers' compensation to provide the generic drug
equivalent, if available, unless the prescribing physician provides
otherwise in writing.
This bill would instead provide that this requirement applies to
any person or entity that dispenses medicines and medical supplies to
a worker to cure or relieve the effects of an injury covered by
workers' compensation, but would provide that compliance with this
provision is not required under specified circumstances.
(8) Existing law requires an employer to provide payment to a
physician who has provided medical treatment to an injured employee
as part of his or her workers' compensation benefits within 60 days
after the employer receives a billing statement and other
documentation, except as prescribed.
This bill would reduce this period to 45 days, except for
employers that are governmental entities.
Existing law provides that any properly documented amount not paid
by the employer within this 60-day period shall be increased by 10%
plus interest, unless the employer takes prescribed actions.
This bill would increase the amount of this penalty from 10% to
15%, and would establish filing fees for liens filed by providers in
connection with the collection of unpaid amounts.
(9) Existing law requires the administrative director to adopt
rules and regulations to, among other things, require acceptance by
employers of electronic claims for payment of medical services.
This bill would require that these rules and regulations relating
to electronic claims for payment of medical services be adopted on or
before January 1, 2005, and would also require that these rules and
regulations require all employers to accept these electronic claims
for payment on or before July 1, 2006.
The bill would also require that payment for medical treatment
provided or authorized by the treating physician selected by the
employee or designated by the employer shall be made by the employer
within 15 working days after electronic receipt of an itemized
electronic billing for services at or below the maximum fees provided
in the official medical fee schedule.
(10) Existing law establishes procedures with respect to disputes
between employers and employees regarding the compensability of the
injury and the extent and scope of medical treatment for that injury.
Existing law creates a presumption in certain circumstances that
the treating physician of an employee, who has been predesignated by
the employee, is correct.
This bill, until January 1, 2007, would establish procedures to be
followed when an employer objects to a treating physician's
recommendation for spinal surgery, and would revise the above
presumption for treating physicians, as specified. It would also
require the Commission on Health and Safety and Workers' Compensation
to conduct a study of the spinal surgery second opinion procedure by
June 30, 2006, and to issue a report on its findings.
(11) Existing law requires the administrative director to adopt an
official medical fee schedule, which shall establish reasonable
maximum fees paid for medical services provided under the workers'
compensation laws. Existing law requires the administrative director
to adopt by July 1, 2003, and revise no less frequently than
biennially, an official pharmaceutical fee schedule. Existing law
additionally provides that the administrative director has the sole
authority to develop an outpatient surgery facility fee schedule for
services not performed under contract.
This bill would, instead, require the administrative director to
adopt and revise periodically a medical fee schedule for various
services, drugs, fees, and goods, as specified, other than physician
services. This bill would require that, within the limits
established by the bill, the rates or fees established by the medical
fee schedule be adequate to ensure a reasonable standard of services
and care for injured employees, and would make conforming changes.
This bill would require the Commission on Health and Safety
Workers' Compensation to contract with an independent consulting
firm, to the extent permitted by state law, to perform an annual
study of access to medical treatment for injured workers, and would
authorize the commission to recommend to the administrative director
appropriate adjustments to the official medical fee schedule.
This bill would also require the administrative director, on or
before December 1, 2004, to adopt, after public hearings, a medical
treatment utilization schedule, as specified.
The bill would provide that this schedule would create a
rebuttable presumption that the schedule is correct on the issue of
extent and scope of medical treatment of a worker's injuries. It
would also provide that certain guidelines shall be presumptively
correct on the issue of extent and scope of medical treatment of a
worker's injuries for a specified period of time. The bill,
notwithstanding the medical treatment utilization schedule and
specified guidelines, would limit the number of chiropractic and
physical therapy visits by an employee per industrial injury, as
specified.
This bill would also require every employer to establish a
utilization review process, either directly or through its insurer or
entity with which an employer or insurer contracts for these
services, in accordance with specified criteria, and would authorize
the administrative director to assess administrative penalties for
failure to meet certain requirements.
(12) Existing law authorizes the appeals board to receive
specified types of information in addition to sworn testimony
presented in open hearings.
This bill would include relevant portions of medical treatment
protocols published by medical specialty societies among the
information authorized to be received by the appeals board.
(13) Existing law requires every employer to establish, implement,
and maintain an effective injury prevention program. Existing law
also authorizes an employer to adopt the Model Injury and Illness
Prevention Program for Non-High-Hazard Employment and the Model
Injury and Illness Prevention Program for Employers in Industries
with Intermittent Employment, developed by the Division of
Occupational Safety and Health.
This bill would require every workers' compensation insurer to
conduct a review of these injury and illness prevention programs of
each of its insureds within 4 months of the commencement of the
initial insurance policy term.
(14) This bill would declare that its provisions are severable.
(15) This bill would declare that its provisions would become
operative only if AB 227 of the 2003-04 Regular Session is enacted
and becomes operative.
(16) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12813 of the Government Code is amended to
read:
12813. The Labor and Workforce Development Agency consists of the
following:
(a) Office of the Secretary of Labor and Workforce Development.
(b) Agricultural Labor Relations Board.
(c) California Workforce Investment Board.
(d) Department of Industrial Relations, including the California
Apprenticeship Council, California Occupational Safety and Health
Appeals Board, California Occupational Safety and Health Standards
Board, Commission on Health and Safety and Workers' Compensation,
Industrial Welfare Commission, State Compensation Insurance Fund, and
Workers' Compensation Appeals Board.
(e) Employment Development Department, including the California
Unemployment Insurance Appeals Board, and the Employment Training
Panel.
SEC. 2. Section 29 of the Labor Code is amended to read:
29. "Medical director" means the physician appointed by the
administrative director pursuant to Section 122.
SEC. 3. Section 77.5 is added to the Labor Code, to read:
77.5. (a) On or before July 1, 2004, the commission shall conduct
a survey and evaluation of evidence-based, peer-reviewed, nationally
recognized standards of care, including existing medical treatment
utilization standards, including independent medical review, as used
in other states, at the national level, and in other medical benefit
systems. The survey shall be updated periodically.
(b) On or before October 1, 2004, the commission shall issue a
report of its findings and recommendations to the administrative
director for purposes of the adoption of a medical treatment
utilization schedule.
SEC. 4. Section 110 of the Labor Code is amended to read:
110. As used in this chapter:
(a) "Appeals board" means the Workers' Compensation Appeals Board.
The title of a member of the board is "commissioner."
(b) "Administrative director" means the Administrative Director of
the Division of Workers' Compensation.
(c) "Division" means the Division of Workers' Compensation.
(d) "Medical director" means the physician appointed by the
administrative director pursuant to Section 122.
(e) "Qualified medical evaluator" means physicians appointed by
the administrative director pursuant to Section 139.2.
(f) "Court administrator" means the administrator of the workers'
compensation adjudicatory process at the trial level.
SEC. 5. Section 122 of the Labor Code is amended to read:
122. The administrative director shall appoint a medical director
who shall possess a physician's and surgeon's certificate granted
under Chapter 5 (commencing with Section 2000) of Division 2 of the
Business and Professions Code. The medical director shall employ
medical assistants who shall also possess physicians' and surgeons'
certificates and other staff necessary to the performance of his or
her duties. The salaries for the medical director and his or her
assistants shall be fixed by the Department of Personnel
Administration, commensurate with the salaries paid by private
industry to medical directors and assistant medical directors.
SEC. 6. Section 124 of the Labor Code is amended to read:
124. (a) In administering and enforcing this division and
Division 4 (commencing with Section 3200), the division shall protect
the interests of injured workers who are entitled to the timely
provision of compensation.
(b) Forms and notices required to be given to employees by the
division shall be in English and Spanish.
SEC. 7. Section 127.6 of the Labor Code is amended to read:
127.6. (a) The administrative director shall, in consultation
with the Commission on Health and Safety and Workers' Compensation,
other state agencies, and researchers and research institutions with
expertise in health care delivery and occupational health care
service, conduct a study of medical treatment provided to workers who
have sustained industrial injuries and illnesses. The study shall
focus on, but not be limited to, all of the following:
(1) Factors contributing to the rising costs and utilization of
medical treatment and case management in the workers' compensation
system.
(2) An evaluation of case management procedures that contribute to
or achieve early and sustained return to work within the employee's
temporary and permanent work restrictions.
(3) Performance measures for medical services that reflect patient
outcomes.
(4) Physician utilization, quality of care, and outcome
measurement data.
(5) Patient satisfaction.
(b) The administrative director shall begin the study on or before
July 1, 2003, and shall report and make recommendations to the
Legislature based on the results of the study on or before July 1,
2004.
(c) In implementing this section, the administrative director
shall ensure the confidentiality and protection of patient-specific
data.
SEC. 7.5. Section 138.1 of the Labor Code is amended to read:
138.1. (a) The administrative director shall be appointed by the
Governor with the advice and consent of the Senate and shall hold
office at the pleasure of the Governor. He or she shall receive the
salary provided for by Chapter 6 (commencing with Section 11550) of
Part 1 of Division 3 of Title 2 of the Government Code.
(b) The court administrator shall be appointed by the Governor
with the advice and consent of the Senate. The court administrator
shall hold office for a term of five years. The court administrator
shall receive the salary provided for by Chapter 6 (commencing with
Section 11550) of Part 1 of Division 3 of Title 2 of the Government
Code.
SEC. 8. Section 139 of the Labor Code is repealed.
SEC. 9. Section 139.1 of the Labor Code is repealed.
SEC. 10. Section 139.2 of the Labor Code is amended to read:
139.2. (a) The administrative director shall appoint qualified
medical evaluators in each of the respective specialties as required
for the evaluation of medical-legal issues. The appointments shall
be for two-year terms.
(b) The administrative director shall appoint or reappoint as a
qualified medical evaluator a physician, as defined in Section
3209.3, who is licensed to practice in this state and who
demonstrates that he or she meets the requirements in paragraphs (1),
(2), (6), and (7), and, if the physician is a medical doctor, doctor
of osteopathy, doctor of chiropractic, or a psychologist, that he or
she also meets the applicable requirements in paragraph (3), (4), or
(5).
(1) Prior to his or her appointment as a qualified medical
evaluator, passes an examination written and administered by the
administrative director for the purpose of demonstrating competence
in evaluating medical-legal issues in the workers' compensation
system. Physicians shall not be required to pass an additional
examination as a condition of reappointment. A physician seeking
appointment as a qualified medical evaluator on or after January 1,
2001, shall also complete prior to appointment, a course on
disability evaluation report writing approved by the administrative
director. The administrative director shall specify the curriculum
to be covered by disability evaluation report writing courses, which
shall include, but is not limited to, 12 or more hours of
instruction.
(2) Devotes at least one-third of total practice time to providing
direct medical treatment, or has served as an agreed medical
evaluator on eight or more occasions in the 12 months prior to
applying to be appointed as a qualified medical evaluator.
(3) Is a medical doctor or doctor of osteopathy and meets one of
the following requirements:
(A) Is board certified in a specialty by a board recognized by the
administrative director and either the Medical Board of California
or the Osteopathic Medical Board of California.
(B) Has successfully completed a residency training program
accredited by the American College of Graduate Medical Education or
the osteopathic equivalent.
(C) Was an active qualified medical evaluator on June 30, 2000.
(D) Has qualifications that the administrative director and either
the Medical Board of California or the Osteopathic Medical Board of
California, as appropriate, both deem to be equivalent to board
certification in a specialty.
(4) Is a doctor of chiropractic and meets either of the following
requirements:
(A) Has completed a chiropractic postgraduate specialty program of
a minimum of 300 hours taught by a school or college recognized by
the administrative director, the Board of Chiropractic Examiners and
the Council on Chiropractic Education.
(B) Has been certified in California workers' compensation
evaluation by a provider recognized by the administrative director.
The certification program shall include instruction on disability
evaluation report writing that meets the standards set forth in
paragraph (1).
(5) Is a psychologist and meets one of the following requirements:
(A) Is board certified in clinical psychology by a board
recognized by the administrative director.
(B) Holds a doctoral degree in psychology, or a doctoral degree
deemed equivalent for licensure by the Board of Psychology pursuant
to Section 2914 of the Business and Professions Code, from a
university or professional school recognized by the administrative
director and has not less than five years' postdoctoral experience in
the diagnosis and treatment of emotional and mental disorders.
(C) Has not less than five years' postdoctoral experience in the
diagnosis and treatment of emotional and mental disorders, and has
served as an agreed medical evaluator on eight or more occasions
prior to January 1, 1990.
(6) Does not have a conflict of interest as determined under the
regulations adopted by the administrative director pursuant to
subdivision (o).
(7) Meets any additional medical or professional standards adopted
pursuant to paragraph (6) of subdivision (j).
(c) The administrative director shall adopt standards for
appointment of physicians who are retired or who hold teaching
positions who are exceptionally well qualified to serve as a
qualified medical evaluator even though they do not otherwise qualify
under paragraph (2) of subdivision (b). In no event shall a
physician whose full-time practice is limited to the forensic
evaluation of disability be appointed as a qualified medical
evaluator under this subdivision.
(d) The qualified medical evaluator, upon request, shall be
reappointed if he or she meets the qualifications of subdivision (b)
and meets all of the following criteria:
(1) Is in compliance with all applicable regulations and
evaluation guidelines adopted by the administrative director.
(2) Has not had more than five of his or her evaluations that were
considered by a workers' compensation administrative law judge at a
contested hearing rejected by the workers' compensation
administrative law judge or the appeals board pursuant to this
section during the most recent two-year period during which the
physician served as a qualified medical evaluator. If the workers'
compensation administrative law judge or the appeals board rejects
the qualified medical evaluator's report on the basis that it fails
to meet the minimum standards for those reports established by the
administrative director or the appeals board, the workers'
compensation administrative law judge or the appeals board, as the
case may be, shall make a specific finding to that effect, and shall
give notice to the medical evaluator and to the administrative
director. Any rejection shall not be counted as one of the five
qualifying rejections until the specific finding has become final and
time for appeal has expired.
(3) Has completed within the previous 24 months at least 12 hours
of continuing education in impairment evaluation or workers'
compensation-related medical dispute evaluation approved by the
administrative director.
(4) Has not been terminated, suspended, placed on probation, or
otherwise disciplined by the administrative director during his or
her most recent term as a qualified medical evaluator.
If the evaluator does not meet any one of these criteria, the
administrative director may in his or her discretion reappoint or
deny reappointment according to regulations adopted by the
administrative director. In no event may a physician who does not
currently meet the requirements for initial appointment or who has
been terminated under subdivision (e) because his or her license has
been revoked or terminated by the licensing authority be reappointed.
(e) The administrative director may, in his or her discretion,
suspend or terminate a qualified medical evaluator during his or her
term of appointment without a hearing as provided under subdivision
(k) or (l) whenever either of the following conditions occurs:
(1) The evaluator's license to practice in California has been
suspended by the relevant licensing authority so as to preclude
practice, or has been revoked or terminated by the licensing
authority.
(2) The evaluator has failed to timely pay the fee required by the
administrative director pursuant to subdivision (n).
(f) The administrative director shall furnish a physician, upon
request, with a written statement of its reasons for termination of,
or for denying appointment or reappointment as, a qualified medical
evaluator. Upon receipt of a specific response to the statement of
reasons, the administrative director shall review his or her decision
not to appoint or reappoint the physician or to terminate the
physician and shall notify the physician of its final decision within
60 days after receipt of the physician's response.
(g) The administrative director shall establish agreements with
qualified medical evaluators to assure the expeditious evaluation of
cases assigned to them for comprehensive medical evaluations.
(h) (1) When the injured worker is not represented by an attorney,
the medical director appointed pursuant to Section 122, shall assign
three-member panels of qualified medical evaluators within five
working days after receiving a request for a panel. If a panel is
not assigned within 15 working days, the employee shall have the
right to obtain a medical evaluation from any qualified medical
evaluator of his or her choice. The medical director shall use a
random selection method for assigning panels of qualified medical
evaluators. The medical director shall select evaluators who are
specialists of the type selected by the employee. The medical
director shall advise the employee that he or she should consult with
his or her treating physician prior to deciding which type of
specialist to request.
(2) The administrative director shall promulgate a form that shall
notify the employee of the physicians selected for his or her panel.
The form shall include, for each physician on the panel, the
physician's name, address, telephone number, specialty, number of
years in practice, and a brief description of his or her education
and training, and shall advise the employee that he or she is
entitled to receive transportation expenses and temporary disability
for each day necessary for the examination. The form shall also
state in a clear and conspicuous location and type: "You have the
right to consult with an information and assistance officer at no
cost to you prior to selecting the doctor to prepare your evaluation,
or you may consult with an attorney. If your claim eventually goes
to court, the workers' compensation administrative law judge will
consider the evaluation prepared by the doctor you select to decide
your claim."
(3) When compiling the list of evaluators from which to select
randomly, the medical director shall include all qualified medical
evaluators who meet all of the following criteria:
(A) He or she does not have a conflict of interest in the case, as
defined by regulations adopted pursuant to subdivision (o).
(B) He or she is certified by the administrative director to
evaluate in an appropriate specialty and at locations within the
general geographic area of the employee's residence.
(C) He or she has not been suspended or terminated as a qualified
medical evaluator for failure to pay the fee required by the
administrative director pursuant to subdivision (n) or for any other
reason.
(4) When the medical director determines that an employee has
requested an evaluation by a type of specialist that is appropriate
for the employee's injury, but there are not enough qualified medical
evaluators of that type within the general geographic area of the
employee's residence to establish a three-member panel, the medical
director shall include sufficient qualified medical evaluators from
other geographic areas and the employer shall pay all necessary
travel costs incurred in the event the employee selects an evaluator
from another geographic area.
(i) The medical director appointed pursuant to Section 122, shall
continuously review the quality of comprehensive medical evaluations
and reports prepared by agreed and qualified medical evaluators and
the timeliness with which evaluation reports are prepared and
submitted. The review shall include, but not be limited to, a review
of a random sample of reports submitted to the division, and a
review of all reports alleged to be inaccurate or incomplete by a
party to a case for which the evaluation was prepared. The medical
director shall submit to the administrative director an annual report
summarizing the results of the continuous review of medical
evaluations and reports prepared by agreed and qualified medical
evaluators and make recommendations for the improvement of the system
of medical evaluations and determinations.
(j) After public hearing pursuant to Section 5307.3, the
administrative director shall adopt regulations concerning the
following issues:
(1) Standards governing the timeframes within which medical
evaluations shall be prepared and submitted by agreed and qualified
medical evaluators. Except as provided in this subdivision, the
timeframe for initial medical evaluations to be prepared and
submitted shall be no more than 30 days after the evaluator has seen
the employee or otherwise commenced the medical evaluation procedure.
The administrative director shall develop regulations governing the
provision of extensions of the 30-day period in cases: (A) where
the evaluator has not received test results or consulting physician's
evaluations in time to meet the 30-day deadline; and, (B) to extend
the 30-day period by not more than 15 days when the failure to meet
the 30-day deadline was for good cause. For purposes of this
subdivision, "good cause" means: (i) medical emergencies of the
evaluator or evaluator's family; (ii) death in the evaluator's
family; or, (iii) natural disasters or other community catastrophes
that interrupt the operation of the evaluator's business. The
administrative director shall develop timeframes governing
availability of qualified medical evaluators for unrepresented
employees under Sections 4061 and 4062. These timeframes shall give
the employee the right to the addition of a new evaluator to his or
her panel, selected at random, for each evaluator not available to
see the employee within a specified period of time, but shall also
permit the employee to waive this right for a specified period of
time thereafter.
(2) Procedures to be followed by all physicians in evaluating the
existence and extent of permanent impairment and limitations
resulting from an injury. In order to produce complete, accurate,
uniform, and replicable evaluations, the procedures shall require
that an evaluation of anatomical loss, functional loss, and the
presence of physical complaints be supported, to the extent feasible,
by medical findings based on standardized examinations and testing
techniques generally accepted by the medical community.
(3) Procedures governing the determination of any disputed medical
issues.
(4) Procedures to be used in determining the compensability of
psychiatric injury. The procedures shall be in accordance with
Section 3208.3 and shall require that the diagnosis of a mental
disorder be expressed using the terminology and criteria of the
American Psychiatric Association's Diagnostic and Statistical Manual
of Mental Disorders, Third Edition-Revised, or the terminology and
diagnostic criteria of other psychiatric diagnostic manuals generally
approved and accepted nationally by practitioners in the field of
psychiatric medicine.
(5) Guidelines for the range of time normally required to perform
the following:
(A) A medical-legal evaluation that has not been defined and
valued pursuant to Section 5307.6. The guidelines shall establish
minimum times for patient contact in the conduct of the evaluations,
and shall be consistent with regulations adopted pursuant to Section
5307.6.
(B) Any treatment procedures that have not been defined and valued
pursuant to Section 5307.1.
(C) Any other evaluation procedure requested by the Insurance
Commissioner, or deemed appropriate by the administrative director.
(6) Any additional medical or professional standards that a
medical evaluator shall meet as a condition of appointment,
reappointment, or maintenance in the status of a medical evaluator.
(k) Except as provided in this subdivision, the administrative
director may, in his or her discretion, suspend or terminate the
privilege of a physician to serve as a qualified medical evaluator if
the administrative director, after hearing pursuant to subdivision
(l), determines, based on substantial evidence, that a qualified
medical evaluator:
(1) Has violated any material statutory or administrative duty.
(2) Has failed to follow the medical procedures or qualifications
established pursuant to paragraph (2), (3), (4), or (5) of
subdivision (j).
(3) Has failed to comply with the timeframe standards established
pursuant to subdivision (j).
(4) Has failed to meet the requirements of subdivision (b) or (c).
(5) Has prepared medical-legal evaluations that fail to meet the
minimum standards for those reports established by the administrative
director or the appeals board.
(6) Has made material misrepresentations or false statements in an
application for appointment or reappointment as a qualified medical
evaluator.
No hearing shall be required prior to the suspension or
termination of a physician's privilege to serve as a qualified
medical evaluator when the physician has done either of the
following:
(A) Failed to timely pay the fee required pursuant to subdivision
(n).
(B) Had his or her license to practice in California suspended by
the relevant licensing authority so as to preclude practice, or had
the license revoked or terminated by the licensing authority.
(l) The administrative director shall cite the qualified medical
evaluator for a violation listed in subdivision (k) and shall set a
hearing on the alleged violation within 30 days of service of the
citation on the qualified medical evaluator. In addition to the
authority to terminate or suspend the qualified medical evaluator
upon finding a violation listed in subdivision (k), the
administrative director may, in his or her discretion, place a
qualified medical evaluator on probation subject to appropriate
conditions, including ordering continuing education or training. The
administrative director shall report to the appropriate licensing
board the name of any qualified medical evaluator who is disciplined
pursuant to this subdivision.
(m) The administrative director shall terminate from the list of
medical evaluators any physician where licensure has been terminated
by the relevant licensing board, or who has been convicted of a
misdemeanor or felony related to the conduct of his or her medical
practice, or of a crime of moral turpitude. The administrative
director shall suspend or terminate as a medical evaluator any
physician who has been suspended or placed on probation by the
relevant licensing board. If a physician is suspended or terminated
as a qualified medical evaluator under this subdivision, a report
prepared by the physician that is not complete, signed, and furnished
to one or more of the parties prior to the date of conviction or
action of the licensing board, whichever is earlier, shall not be
admissible in any proceeding before the appeals board nor shall there
be any liability for payment for the report and any expense incurred
by the physician in connection with the report.
(n) Each qualified medical evaluator shall pay a fee, as
determined by the administrative director, for appointment or
reappointment. These fees shall be based on a sliding scale as
established by the administrative director. All revenues from fees
paid under this subdivision shall be deposited into the Workers'
Compensation Administration Revolving Fund and are available for
expenditure upon appropriation by the Legislature, and shall not be
used by any other department or agency or for any purpose other than
administration of the programs the Division of Workers' Compensation
related to the provision of medical treatment to injured employees.
(o) An evaluator may not request or accept any compensation or
other thing of value from any source that does or could create a
conflict with his or her duties as an evaluator under this code. The
administrative director, after consultation with the Commission on
Health and Safety and Workers' Compensation, shall adopt regulations
to implement this subdivision.
SEC. 11. Section 139.3 of the Labor Code is amended to read:
139.3. (a) Notwithstanding any other provision of law, to the
extent those services are paid pursuant to Division 4 (commencing
with Section 3200), it is unlawful for a physician to refer a person
for clinical laboratory, diagnostic nuclear medicine, radiation
oncology, physical therapy, physical rehabilitation, psychometric
testing, home infusion therapy, outpatient surgery, or diagnostic
imaging goods or services whether for treatment or medical-legal
purposes if the physician or his or her immediate family, has a
financial interest with the person or in the entity that receives the
referral.
(b) For purposes of this section and Section 139.31, the following
shall apply:
(1) "Diagnostic imaging" includes, but is not limited to, all
X-ray, computed axial tomography magnetic resonance imaging, nuclear
medicine, positron emission tomography, mammography, and ultrasound
goods and services.
(2) "Immediate family" includes the spouse and children of the
physician, the parents of the physician, and the spouses of the
children of the physician.
(3) "Physician" means a physician as defined in Section 3209.3.
(4) A "financial interest" includes, but is not limited to, any
type of ownership, interest, debt, loan, lease, compensation,
remuneration, discount, rebate, refund, dividend, distribution,
subsidy, or other form of direct or indirect payment, whether in
money or otherwise, between a licensee and a person or entity to whom
the physician refers a person for a good or service specified in
subdivision (a). A financial interest also exists if there is an
indirect relationship between a physician and the referral recipient,
including, but not limited to, an arrangement whereby a physician
has an ownership interest in any entity that leases property to the
referral recipient. Any financial interest transferred by a
physician to, or otherwise established in, any person or entity for
the purpose of avoiding the prohibition of this section shall be
deemed a financial interest of the physician.
(5) A "physician's office" is either of the following:
(A) An office of a physician in solo practice.
(B) An office in which the services or goods are personally
provided by the physician or by employees in that office, or
personally by independent contractors in that office, in accordance
with other provisions of law. Employees and independent contractors
shall be licensed or certified when that licensure or certification
is required by law.
(6) The "office of a group practice" is an office or offices in
which two or more physicians are legally organized as a partnership,
professional corporation, or not-for-profit corporation licensed
according to subdivision (a) of Section 1204 of the Health and Safety
Code for which all of the following are applicable:
(A) Each physician who is a member of the group provides
substantially the full range of services that the physician routinely
provides, including medical care, consultation, diagnosis, or
treatment, through the joint use of shared office space, facilities,
equipment, and personnel.
(B) Substantially all of the services of the physicians who are
members of the group are provided through the group and are billed in
the name of the group and amounts so received are treated as
receipts of the group, and except that in the case of multispecialty
clinics, as defined in subdivision (l) of Section 1206 of the Health
and Safety Code, physician services are billed in the name of the
multispecialty clinic and amounts so received are treated as receipts
of the multispecialty clinic.
(C) The overhead expenses of, and the income from, the practice
are distributed in accordance with methods previously determined by
members of the group.
(7) Outpatient surgery includes both of the following:
(A) Any procedure performed on an outpatient basis in the
operating rooms, ambulatory surgery rooms, endoscopy units, cardiac
catheterization laboratories, or other sections of a freestanding
ambulatory surgery clinic, whether or not licensed under paragraph
(1) of subdivision (b) of Section 1204 of the Health and Safety Code.
(B) The ambulatory surgery itself.
(c) (1) It is unlawful for a licensee to enter into an arrangement
or scheme, such as a cross-referral arrangement, that the licensee
knows, or should know, has a principal purpose of ensuring referrals
by the licensee to a particular entity that, if the licensee directly
made referrals to that entity, would be in violation of this
section.
(2) It shall be unlawful for a physician to offer, deliver,
receive, or accept any rebate, refund, commission, preference,
patronage dividend, discount, or other consideration, whether in the
form of money or otherwise, as compensation or inducement for a
referred evaluation or consultation.
(d) No claim for payment shall be presented by an entity to any
individual, third-party payor, or other entity for any goods or
services furnished pursuant to a referral prohibited under this
section.
(e) A physician who refers to or seeks consultation from an
organization in which the physician has a financial interest shall
disclose this interest to the patient or if the patient is a minor,
to the patient's parents or legal guardian in writing at the time of
the referral.
(f) No insurer, self-insurer, or other payor shall pay a charge or
lien for any goods or services resulting from a referral in
violation of this section.
(g) A violation of subdivision (a) shall be a misdemeanor. The
appropriate licensing board shall review the facts and circumstances
of any conviction pursuant to subdivision (a) and take appropriate
disciplinary action if the licensee has committed unprofessional
conduct. Violations of this section may also be subject to civil
penalties of up to five thousand dollars ($5,000) for each offense,
which may be enforced by the Insurance Commissioner, Attorney
General, or a district attorney. A violation of subdivision (c),
(d), (e), or (f) is a public offense and is punishable upon
conviction by a fine not exceeding fifteen thousand dollars ($15,000)
for each violation and appropriate disciplinary action, including
revocation of professional licensure, by the Medical Board of
California or other appropriate governmental agency.
SEC. 12. Section 139.31 of the Labor Code is amended to read:
139.31. The prohibition of Section 139.3 shall not apply to or
restrict any of the following:
(a) A physician may refer a patient for a good or service
otherwise prohibited by subdivision (a) of Section 139.3 if the
physician's regular practice is where there is no alternative
provider of the service within either 25 miles or 40 minutes
traveling time, via the shortest route on a paved road. A physician
who refers to, or seeks consultation from, an organization in which
the physician has a financial interest under this subdivision shall
disclose this interest to the patient or the patient's parents or
legal guardian in writing at the time of referral.
(b) A physician who has one or more of the following arrangements
with another physician, a person, or an entity, is not prohibited
from referring a patient to the physician, person, or entity because
of the arrangement:
(1) A loan between a physician and the recipient of the referral,
if the loan has commercially reasonable terms, bears interest at the
prime rate or a higher rate that does not constitute usury, is
adequately secured, and the loan terms are not affected by either
party's referral of any person or the volume of services provided by
either party.
(2) A lease of space or equipment between a physician and the
recipient of the referral, if the lease is written, has commercially
reasonable terms, has a fixed periodic rent payment, has a term of
one year or more, and the lease payments are not affected by either
party's referral of any person or the volume of services provided by
either party.
(3) A physician's ownership of corporate investment securities,
including shares, bonds, or other debt instruments that were
purchased on terms that are available to the general public through a
licensed securities exchange or NASDAQ, do not base profit
distributions or other transfers of value on the physician's referral
of persons to the corporation, do not have a separate class or
accounting for any persons or for any physicians who may refer
persons to the corporation, and are in a corporation that had, at the
end of the corporation's most recent fiscal year, total gross assets
exceeding one hundred million dollars ($100,000,000).
(4) A personal services arrangement between a physician or an
immediate family member of the physician and the recipient of the
referral if the arrangement meets all of the following requirements:
(A) It is set out in writing and is signed by the parties.
(B) It specifies all of the services to be provided by the
physician or an immediate family member of the physician.
(C) The aggregate services contracted for do not exceed those that
are reasonable and necessary for the legitimate business purposes of
the arrangement.
(D) A written notice disclosing the existence of the personal
services arrangement and including information on where a person may
go to file a complaint against the licensee or the immediate family
member of the licensee, is provided to the following persons at the
time any services pursuant to the arrangement are first provided:
(i) An injured worker who is referred by a licensee or an
immediate family member of the licensee.
(ii) The injured worker's employer, if self-insured.
(iii) The injured worker's employer's insurer, if insured.
(iv) If the injured worker is known by the licensee or the
recipient of the referral to be represented, the injured worker's
attorney.
(E) The term of the arrangement is for at least one year.
(F) The compensation to be paid over the term of the arrangement
is set in advance, does not exceed fair market value, and is not
determined in a manner that takes into account the volume or value of
any referrals or other business generated between the parties,
except that if the services provided pursuant to the arrangement
include medical services provided under Division 4, compensation paid
for the services shall be subject to the official medical fee
schedule promulgated pursuant to Section 5307.1 or subject to any
contract authorized by Section 5307.11.
(G) The services to be performed under the arrangement do not
involve the counseling or promotion of a business arrangement or
other activity that violates any state or federal law.
(c) (1) A physician may refer a person to a health facility as
defined in Section 1250 of the Health and Safety Code, to any
facility owned or leased by a health facility, or to an outpatient
surgical center, if the recipient of the referral does not compensate
the physician for the patient referral, and any equipment lease
arrangement between the physician and the referral recipient complies
with the requirements of paragraph (2) of subdivision (b).
(2) Nothing shall preclude this subdivision from applying to a
physician solely because the physician has an ownership or leasehold
interest in an entire health facility or an entity that owns or
leases an entire health facility.
(3) A physician may refer a person to a health facility for any
service classified as an emergency under subdivision (a) or (b) of
Section 1317.1 of the Health and Safety Code. For nonemergency
outpatient diagnostic imaging services performed with equipment for
which, when new, has a commercial retail price of four hundred
thousand dollars ($400,000) or more, the referring physician shall
obtain a service preauthorization from the insurer, or self-insured
employer. Any oral authorization shall be memorialized in writing
within five business days.
(d) A physician compensated or employed by a university may refer
a person to any facility owned or operated by the university, or for
a physician service, to another physician employed by the university,
provided that the facility or university does not compensate the
referring physician for the patient referral. For nonemergency
diagnostic imaging services performed with equipment that, when new,
has a commercial retail price of four hundred thousand dollars
($400,000) or more, the referring physician shall obtain a service
preauthorization from the insurer or self-insured employer. An oral
authorization shall be memorialized in writing within five business
days. In the case of a facility which is totally or partially owned
by an entity other than the university, but which is staffed by
university physicians, those physicians may not refer patients to the
facility if the facility compensates the referring physician for
those referrals.
(e) The prohibition of Section 139.3 shall not apply to any
service for a specific patient that is performed within, or goods
that are supplied by, a physician's office, or the office of a group
practice. Further, the provisions of Section 139.3 shall not alter,
limit, or expand a physician's ability to deliver, or to direct or
supervise the delivery of, in-office goods or services according to
the laws, rules, and regulations governing his or her scope of
practice. With respect to diagnostic imaging services performed with
equipment that, when new, had a commercial retail price of four
hundred thousand dollars ($400,000) or more, or for physical therapy
services, or for psychometric testing that exceeds the routine
screening battery protocols, with a time limit of two to five hours,
established by the administrative director, the referring physician
obtains a service preauthorization from the insurer or self-insured
employer. Any oral authorization shall be memorialized in writing
within five business days.
(f) The prohibition of Section 139.3 shall not apply where the
physician is in a group practice as defined in Section 139.3 and
refers a person for services specified in Section 139.3 to a
multispecialty clinic, as defined in subdivision (l) of Section 1206
of the Health and Safety Code. For diagnostic imaging services
performed with equipment that, when new, had a commercial retail
price of four hundred thousand dollars ($400,000) or more, or
physical therapy services, or psychometric testing that exceeds the
routine screening battery protocols, with a time limit of two to five
hours, established by the administrative director, performed at the
multispecialty facility, the referring physician shall obtain a
service preauthorization from the insurer or self-insured employer.
Any oral authorization shall be memorialized in writing within five
business days.
(g) The requirement for preauthorization in Sections (c), (e), and
(f) shall not apply to a patient for whom the physician or group
accepts payment on a capitated risk basis.
(h) The prohibition of Section 139.3 shall not apply to any
facility when used to provide health care services to an enrollee of
a health care service plan licensed pursuant to the Knox-Keene Health
Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code).
(i) The prohibition of Section 139.3 shall not apply to an
outpatient surgical center, as defined in paragraph (7) of
subdivision (b) of Section 139.3, where the referring physician
obtains a service preauthorization from the insurer or self-insured
employer after disclosure of the financial relationship.
SEC. 13. Section 139.4 of the Labor Code is amended to read:
139.4. (a) The administrative director may review advertising
copy to ensure compliance with Section 651 of the Business and
Professions Code and may require qualified medical evaluators to
maintain a file of all advertising copy for a period of 90 days from
the date of its use. Any file so required to be maintained shall be
available to the administrative director upon the administrative
director's request for review.
(b) No advertising copy shall be used after its use has been
disapproved by the administrative director and the qualified medical
evaluator has been notified in writing of the disapproval.
(c) A qualified medical evaluator who is found by the
administrative director to have violated any provision of this
section may be terminated, suspended, or placed on probation.
(d) Proceedings to determine whether a violation of this section
has occurred shall be conducted pursuant to Chapter 4 (commencing
with Section 11370) of Part 1 of Division 3 of Title 2 of the
Government Code.
(e) The administrative director shall adopt regulations governing
advertising by physicians with respect to industrial injuries or
illnesses.
(f) Subdivision (a) shall not be construed to alter the
application of Section 651 of the Business and Professions Code.
SEC. 14. Section 139.45 of the Labor Code is amended to read:
139.45. (a) In promulgating regulations pursuant to Sections
139.4 and 139.43, the administrative director shall take particular
care to preclude any advertisements with respect to industrial
injuries or illnesses that are false or mislead the public with
respect to workers' compensation. In promulgating rules with respect
to advertising, the State Bar and physician licensing boards shall
also take particular care to achieve the same goal.
(b) For purposes of subdivision (a), false or misleading
advertisements shall include advertisements that do any of the
following:
(1) Contain an untrue statement.
(2) Contain any matter, or present or arrange any matter in a
manner or format that is false, deceptive, or that tends to confuse,
deceive, or mislead.
(3) Omit any fact necessary to make the statement made, in the
light of the circumstances under which the statement is made, not
misleading.
(4) Are transmitted in any manner that involves coercion, duress,
compulsion, intimidation, threats, or vexatious or harassing conduct.
(5) Entice a person to respond by the offering of any
consideration, including a good or service but excluding free medical
evaluations or treatment, that would be provided either at no charge
or for less than market value. No free medical evaluation or
treatment shall be offered for the purpose of defrauding any entity.
SEC. 14.3. Section 3201.7 of the Labor Code, as added by Chapter 6
of the Statutes of 2002, is repealed.
SEC. 14.5. Section 3201.7 of the Labor Code, as added by Chapter
866 of the Statutes of 2002, is repealed.
SEC. 14.7. Section 3201.7 is added to the Labor Code, to read:
3201.7. (a) Except as provided in subdivision (b), the Department
of Industrial Relations and the courts of this state shall recognize
as valid and binding any labor-management agreement that meets all
of the following requirements:
(1) The labor-management agreement has been negotiated separate
and apart from any collective bargaining agreement covering affected
employees.
(2) The labor-management agreement is restricted to the
establishment of the terms and conditions necessary to implement this
section.
(3) The labor-management agreement has been negotiated in
accordance with the authorization of the administrative director
pursuant to subdivision (d), between an employer or groups of
employers and a union that is the recognized or certified exclusive
bargaining representative that establishes any of the following:
(A) An alternative dispute resolution system governing disputes
between employees and employers or their insurers that supplements or
replaces all or part of those dispute resolution processes contained
in this division, including, but not limited to, mediation and
arbitration. Any system of arbitration shall provide that the
decision of the arbiter or board of arbitration is subject to review
by the appeals board in the same manner as provided for
reconsideration of a final order, decision, or award made and filed
by a workers' compensation administrative law judge pursuant to the
procedures set forth in Article 1 (commencing with Section 5900) of
Chapter 7 of Part 4 of Division 4, and the court of appeals pursuant
to the procedures set forth in Article 2 (commencing with Section
5950) of Chapter 7 of Part 4 of Division 4, governing orders,
decisions, or awards of the appeals board. The findings of fact,
award, order, or decision of the arbitrator shall have the same force
and effect as an award, order, or decision of a workers'
compensation administrative law judge. Any provision for arbitration
established pursuant to this section shall not be subject to
Sections 5270, 5270.5, 5271, 5272, 5273, 5275, and 5277.
(B) The use of an agreed list of providers of medical treatment
that may be the exclusive source of all medical treatment provided
under this division.
(C) The use of an agreed, limited list of qualified medical
evaluators and agreed medical evaluators that may be the exclusive
source of qualified medical evaluators and agreed medical evaluators
under this division.
(D) Joint labor management safety committees.
(E) A light-duty, modified job, or return-to-work program.
(F) A vocational rehabilitation or retraining program utilizing an
agreed list of providers of rehabilitation services that may be the
exclusive source of providers of rehabilitation services under this
division.
(b) Nothing in this section shall allow a labor-management
agreement that diminishes the entitlement of an employee to
compensation payments for total or partial disability, temporary
disability, vocational rehabilitation, or medical treatment fully
paid by the employer as otherwise provided in this division; nor
shall any agreement authorized by this section deny to any employee
the right to representation by counsel at all stages during the
alternative dispute resolution process. The portion of any agreement
that violates this subdivision shall be declared null and void.
(c) Subdivision (a) shall apply only to the following:
(1) An employer developing or projecting an annual workers'
compensation insurance premium, in California, of fifty thousand
dollars ($50,000) or more, and employing at least 50 employees, or
any employer that paid an annual workers' compensation insurance
premium, in California, of fifty thousand dollars ($50,000), and
employing at least 50 employees in at least one of the previous three
years.
(2) Groups of employers engaged in a workers' compensation safety
group complying with Sections 11656.6 and 11656.7 of the Insurance
Code, and established pursuant to a joint labor management safety
committee or committees, that develops or projects annual workers'
compensation insurance premiums of five hundred thousand dollars
($500,000) or more.
(3) Employers or groups of employers, including cities and
counties, that are self-insured in compliance with Section 3700 that
would have projected annual workers' compensation costs that meet the
requirements of, and that meet the other requirements of, paragraph
(1) in the case of employers, or paragraph (2) in the case of groups
of employers.
(d) Any recognized or certified exclusive bargaining
representative in an industry not covered by Section 3201.5, may file
a petition with the administrative director seeking permission to
negotiate with an employer or group of employers to enter into a
labor-management agreement pursuant to this section. The petition
shall specify the bargaining unit or units to be included, the names
of the employers or groups of employers, and shall be accompanied by
proof of the labor union's status as the exclusive bargaining
representative. The current collective bargaining agreement or
agreements shall be attached to the petition. The petition shall be
in the form designated by the administrative director. Upon receipt
of the petition, the administrative director shall promptly verify
the petitioner's status as the exclusive bargaining representative.
If the petition satisfies the requirements set forth in this
subdivision, the administrative director shall issue a letter
advising each employer and labor representative of their eligibility
to enter into negotiations, for a period not to exceed one year, for
the purpose of reaching agreement on a labor-management agreement
pursuant to this section. The parties may jointly request, and shall
be granted, by the administrative director, an additional one-year
period to negotiate an agreement.
(e) No employer may establish or continue a program established
under this section until it has provided the administrative director
with all of the following:
(1) Upon its original application and whenever it is renegotiated
thereafter, a copy of the labor-management agreement and the
approximate number of employees who will be covered thereby.
(2) Upon its original application and annually thereafter, a
statement signed under penalty of perjury, that no action has been
taken by any administrative agency or court of the United States to
invalidate the labor-management agreement.
(3) The name, address, and telephone number of the contact person
of the employer.
(4) Any other information that the administrative director deems
necessary to further the purposes of this section.
(f) No collective bargaining representative may establish or
continue to participate in a program established under this section
unless all of the following requirements are met:
(1) Upon its original application and annually thereafter, it has
provided to the administrative director a copy of its most recent
LM-2 or LM-3 filing with the United States Department of Labor, where
such filing is required by law, along with a statement, signed under
penalty of perjury, that the document is a true and correct copy.
(2) It has provided to the administrative director the name,
address, and telephone number of the contact person or persons of the
collective bargaining representative or representatives.
(g) Commencing July 1, 2005, and annually thereafter, the Division
of Workers' Compensation shall report to the Director of Industrial
Relations the number of labor-management agreements received and the
number of employees covered by these agreements.
(h) By June 30, 2006, and annually thereafter, the administrative
director shall prepare and notify Members of the Legislature that a
report authorized by this section is available upon request. The
report based upon aggregate data shall include the following:
(1) Person hours and payroll covered by agreements filed.
(2) The number of claims filed.
(3) The average cost per claim shall be reported by cost
components whenever practicable.
(4) The number of litigated claims, including the number of claims
submitted to mediation, the appeals board, or the court of appeal.
(5) The number of contested claims resolved prior to arbitration.
(6) The projected incurred costs and actual costs of claims.
(7) Safety history.
(8) The number of workers participating in vocational
rehabilitation.
(9) The number of workers participating in light-duty programs.
(10) Overall worker satisfaction.
The division shall have the authority to require employers and
groups of employers participating in labor-management agreements
pursuant to this section to provide the data listed above.
(i) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state. However, the Division of
Workers' Compensation shall create derivative works
pursuant to subdivisions (f) and (g) based on
the labor-management agreements and data. Those derivative works
shall not be confidential, but shall be public. On a monthly basis,
the administrative director shall make available an updated list of
employers and unions entering into labor-management agreements
authorized by this section.
SEC. 15. Section 3823 is added to the Labor Code, to read:
3823. (a) The administrative director shall, in coordination with
the Bureau of Fraudulent Claims of the Department of Insurance, the
Medi-Cal Fraud Task Force, and the Bureau of Medi-Cal Fraud and Elder
Abuse of the Department of Justice, adopt protocols, to the extent
that these protocols are applicable to achieve the purpose of
subdivision (b), similar to those adopted by the Department of
Insurance concerning medical billing and provider fraud.
(b) Any insurer, self-insured employer, third-party administrator,
workers' compensation administrative law judge, audit unit,
attorney, or other person that believes that a fraudulent claim has
been made by any person or entity providing medical care, as
described in Section 4600, shall report the apparent fraudulent claim
in the manner prescribed by subdivision (a).
SEC. 16. Section 4061 of the Labor Code is amended to read:
4061. (a) Together with the last payment of temporary disability
indemnity, the employer shall, in a form prescribed by the
administrative director pursuant to Section 138.4, provide the
employee one of the following:
(1) Notice either that no permanent disability indemnity will be
paid because the employer alleges the employee has no permanent
impairment or limitations resulting from the injury or notice of the
amount of permanent disability indemnity determined by the employer
to be payable. The notice shall include information concerning how
the employee may obtain a formal medical evaluation pursuant to
subdivision (c) if he or she disagrees with the position taken by the
employer. The notice shall be accompanied by the form prescribed by
the administrative director for requesting assignment of a panel of
qualified medical evaluators, unless the employee is represented by
an attorney. If the employer determines permanent disability
indemnity is payable, the employer shall advise the employee of the
amount determined payable and the basis on which the determination
was made and whether there is need for continuing medical care.
(2) Notice that permanent disability indemnity may be or is
payable, but that the amount cannot be determined because the
employee's medical condition is not yet permanent and stationary.
The notice shall advise the employee that his or her medical
condition will be monitored until it is permanent and stationary, at
which time the necessary evaluation will be performed to determine
the existence and extent of permanent impairment and limitations for
the purpose of rating permanent disability and to determine the need
for continuing medical care, or at which time the employer will
advise the employee of the amount of permanent disability indemnity
the employer has determined to be payable. If an employee is
provided notice pursuant to this paragraph and the employer later
takes the position that the employee has no permanent impairment or
limitations resulting from the injury, or later determines permanent
disability indemnity is payable, the employer shall in either event,
within 14 days of the determination to take either position, provide
the employee with the notice specified in paragraph (1).
(b) Each notice required by subdivision (a) shall describe the
administrative procedures available to the injured employee and
advise the employee of his or her right to consult an information and
assistance officer or an attorney. It shall contain the following
language:
"Should you decide to be represented by an attorney, you may or
may not receive a larger award, but, unless you are determined to be
ineligible for an award, the attorney's fee will be deducted from any
award you might receive for disability benefits. The decision to be
represented by an attorney is yours to make, but it is voluntary and
may not be necessary for you to receive your benefits."
(c) If the parties do not agree to a permanent disability rating
based on the treating physician's evaluation or the assessment of
need for continuing medical care, and the employee is represented by
an attorney, the employer shall seek agreement with the employee on a
physician to prepare a comprehensive medical evaluation of the
employee's permanent impairment and limitations and any need for
continuing medical care resulting from the injury. If no agreement
is reached within 10 days, or any additional time not to exceed 20
days agreed to by the parties, the parties may not later select an
agreed medical evaluator. Evaluations of an employee's permanent
impairment and limitations obtained prior to the period to reach
agreement shall not be admissible in any proceeding before the
appeals board. After the period to reach agreement has expired,
either party may select a qualified medical evaluator to conduct the
comprehensive medical evaluation. Neither party may obtain more than
one comprehensive medical-legal report, provided, however, that any
party may obtain additional reports at their own expense.
(d) If the parties do not agree to a permanent disability rating
based on the treating physician's evaluation, and if the employee is
not represented by an attorney, the employer shall not seek agreement
with the employee on a physician to prepare an additional medical
evaluation. The employer shall immediately provide the employee with
a form prescribed by the medical director with which to request
assignment of a panel of three qualified medical evaluators. The
employee shall select a physician from the panel to prepare a medical
evaluation of the employee's permanent impairment and limitations
and any need for continuing medical care resulting from the injury.
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.
(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.
(f) The represented employee shall be responsible for making an
appointment with an agreed medical evaluator.
(g) The unrepresented employee shall be responsible for making an
appointment with a qualified medical evaluator selected from a panel
of three qualified medical evaluators. The evaluator shall give the
employee, at the appointment, a brief opportunity to ask questions
concerning the evaluation process and the evaluator's background.
The unrepresented employee shall then participate in the evaluation
as requested by the evaluator unless the employee has good cause to
discontinue the evaluation. For purposes of this subdivision, "good
cause" shall include evidence that the evaluator is biased against
the employee because of his or her race, sex, national origin,
religion, or sexual preference or evidence that the evaluator has
requested the employee to submit to an unnecessary medical
examination or procedure. If the unrepresented employee declines to
proceed with the evaluation, he or she shall have the right to a new
panel of three qualified medical evaluators from which to select one
to prepare a comprehensive medical evaluation. If the appeals board
subsequently determines that the employee did not have good cause to
not proceed with the evaluation, the cost of the evaluation shall be
deducted from any award the employee obtains.
(h) Upon selection or assignment pursuant to subdivision (c) or
(d), the medical evaluator shall perform a comprehensive medical
evaluation according to the procedures promulgated by the
administrative director under paragraphs (2) and (3) of subdivision
(j) of Section 139.2 and summarize the medical findings on a form
prescribed by the administrative director. The comprehensive medical
evaluation shall address all contested medical issues arising from
all injuries reported on one or more claim forms prior to the date of
the employee's initial appointment with the medical evaluator. If,
after a comprehensive medical evaluation is prepared, the employer or
the employee subsequently objects to any new medical issue, the
parties, to the extent possible, shall utilize the same medical
evaluator who prepared the previous evaluation to resolve the medical
dispute.
(i) Except as provided in Section 139.3, the medical evaluator may
obtain consultations from other physicians who have treated the
employee for the injury whose expertise is necessary to provide a
complete and accurate evaluation.
(j) The qualified medical evaluator who has evaluated an
unrepresented employee shall serve the comprehensive medical
evaluation and the summary form on the employee, employer, and the
administrative director. The unrepresented employee or the employer
may submit the treating physician's evaluation for the calculation of
a permanent disability rating. Within 20 days of receipt of the
comprehensive medical evaluation, the administrative director shall
calculate the permanent disability rating according to Section 4660
and serve the rating on the employee and employer.
(k) Any comprehensive medical evaluation concerning an
unrepresented employee which indicates that part or all of an
employee's permanent impairment or limitations may be subject to
apportionment pursuant to Sections 4663 or 4750 shall first be
submitted by the administrative director to a workers' compensation
judge who may refer the report back to the qualified medical
evaluator for correction or clarification if the judge determines the
proposed apportionment is inconsistent with the law.
(l) Within 30 days of receipt of the rating, if the employee is
unrepresented, the employee or employer may request that the
administrative director reconsider the recommended rating or obtain
additional information from the treating physician or medical
evaluator to address issues not addressed or not completely addressed
in the original comprehensive medical evaluation or not prepared in
accord with the procedures promulgated under paragraph (2) or (3) of
subdivision (j) of Section 139.2. This request shall be in writing,
shall specify the reasons the rating should be reconsidered, and
shall be served on the other party. If the administrative director
finds the comprehensive medical evaluation is not complete or not in
compliance with the required procedures, the administrative director
shall return the report to the treating physician or qualified
medical evaluator for appropriate action as the administrative
director instructs. Upon receipt of the treating physician's or
qualified medical evaluator's final comprehensive medical evaluation
and summary form, the administrative director shall recalculate the
permanent disability rating according to Section 4660 and serve the
rating, the comprehensive medical evaluation, and the summary form on
the employee and employer.
(m) If a comprehensive medical evaluation from the treating
physician or an agreed medical evaluator or a qualified medical
evaluator selected from a three-member panel resolves any issue so as
to require an employer to provide compensation, the employer shall
commence the payment of compensation or promptly commence proceedings
before the appeals board to resolve the dispute. If the employee
and employer agree to a stipulated findings and award as provided
under Section 5702 or to compromise and release the claim under
Chapter 2 (commencing with Section 5000) of Part 3, or if the
employee wishes to commute the award under Chapter 3 (commencing with
Section 5100) of Part 3, the appeals board shall first determine
whether the agreement or commutation is in the best interests of the
employee and whether the proper procedures have been followed in
determining the permanent disability rating. The administrative
director shall promulgate a form to notify the employee, at the time
of service of any rating under this section, of the options specified
in this subdivision, the potential advantages and disadvantages of
each option, and the procedure for disputing the rating.
(n) No issue relating to the existence or extent of permanent
impairment and limitations or the need for continuing medical care
resulting from the injury may be the subject of a declaration of
readiness to proceed unless there has first been a medical evaluation
by a treating physician or an agreed or qualified medical evaluator.
With the exception of an evaluation or evaluations prepared by the
treating physician or physicians, no evaluation of permanent
impairment and limitations or need for continuing medical care
resulting from the injury shall be obtained prior to service of the
comprehensive medical evaluation on the employee and employer if the
employee is unrepresented, or prior to the attempt to select an
agreed medical evaluator if the employee is represented. Evaluations
obtained in violation of this prohibition shall not be admissible in
any proceeding before the appeals board. However, the testimony,
records, and reports offered by the treating physician or physicians
who treated the employee for the injury and comprehensive medical
evaluations prepared by a qualified medical evaluator selected by an
unrepresented employee from a three-member panel shall be admissible.
SEC. 16.5. Section 4062 of the Labor Code is repealed.
SEC. 17. Section 4062 is added to the Labor Code, to read:
4062. (a) If either the employee or employer objects to a medical
determination made by the treating physician concerning the
permanent and stationary status of the employee's medical condition,
the employee's preclusion or likely preclusion to engage in his or
her usual occupation, the extent and scope of medical treatment, the
existence of new and further disability, or any other medical issues
not covered by Section 4060 or 4061, the objecting party shall notify
the other party in writing of the objection within 20 days of
receipt of the report if the employee is represented by an attorney
or within 30 days of receipt of the report if the employee is not
represented by an attorney. Employer objections to the treating
physician's recommendation for spinal surgery shall be subject to
subdivision (b), and after denial of the physician's recommendation,
in accordance with Section 4610. These time limits may be extended
for good cause or by mutual agreement. If the employee is
represented by an attorney, the parties shall seek agreement with the
other party on a physician, who need not be a qualified medical
evaluator, to prepare a report resolving the disputed issue. If no
agreement is reached within 10 days, or any additional time not to
exceed 20 days agreed upon by the parties, the parties may not later
select an agreed medical evaluator. Evaluations obtained prior to
the period to reach agreement shall not be admissible in any
proceeding before the appeals board. After the period to reach
agreement has expired, the objecting party may select a qualified
medical evaluator to conduct the comprehensive medical evaluation.
Neither party may obtain more than one comprehensive medical-legal
report, provided, however, that any party may obtain additional
reports at their own expense. The nonobjecting party may continue to
rely on the treating physician's report or may select a qualified
medical evaluator to conduct an additional evaluation.
(b) The employer may object to a report of the treating physician
recommending that spinal surgery be performed within 10 days of the
receipt of the report. If the employee is represented by an
attorney, the parties shall seek agreement with the other party on a
California licensed board-certified or board-eligible orthopedic
surgeon or neurosurgeon to prepare a second opinion report resolving
the disputed surgical recommendation. If no agreement is reached
within 10 days, or if the employee is not represented by an attorney,
an orthopedic surgeon or neurosurgeon shall be randomly selected by
the administrative director to prepare a second opinion report
resolving the disputed surgical recommendation. Examinations shall
be scheduled on an expedited basis. The second opinion report shall
be served on the parties within 45 days of receipt of the treating
physician's report. If the second opinion report recommends surgery,
the employer shall authorize the surgery. If the second opinion
report does not recommend surgery, the employer shall file a
declaration of readiness to proceed. The employer shall not be
liable for medical treatment costs for the disputed surgical
procedure, whether through a lien filed with the appeals board or as
a self-procured medical expense, or for periods of temporary
disability resulting from the surgery, if the disputed surgical
procedure is performed prior to the completion of the second opinion
process required by this subdivision.
(c) The second opinion physician shall not have any material
professional, familial, or financial affiliation, as determined by
the administrative director, with any of the following:
(1) The employer, his or her workers' compensation insurer,
third-party claims administrator, or other entity contracted to
provide utilization review services pursuant to Section 4610.
(2) Any officer, director, or employee of the employer's health
care provider, workers' compensation insurer, or third-party claims
administrator.
(3) A physician, the physician's medical group, or the independent
practice association involved in the health care service in dispute.
(4) The facility or institution at which either the proposed
health care service, or the alternative service, if any, recommended
by the employer's health care provider, workers' compensation
insurer, or third-party claims administrator, would be provided.
(5) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed by the employee or his or her
treating physician whose treatment is under review, or the
alternative therapy, if any, recommended by the employer or other
entity.
(6) The employee or the employee's immediate family.
(d) If the employee is not represented by an attorney, the
employer shall not seek agreement with the employee on a physician to
prepare the comprehensive medical evaluation. Except in cases where
the treating physician's recommendation that spinal surgery be
performed pursuant to subdivision (b), the employer shall immediately
provide the employee with a form prescribed by the medical director
with which to request assignment of a panel of three qualified
medical evaluators. The employee shall select a physician from the
panel to prepare a comprehensive medical evaluation. For injuries
occurring on or after January 1, 2003, except as provided in
subdivision (b) of Section 4064, the evaluation of the qualified
medical evaluator selected from a panel of three 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
employer on issues subject to this section in a case involving an
unrepresented employee.
(e) Upon completing a determination of the disputed medical issue,
the physician selected under subdivision (a) or (d) to perform the
medical evaluation shall summarize the medical findings on a form
prescribed by the administrative director and shall serve the formal
medical evaluation and the summary form on the employee and the
employer. The medical evaluation shall address all contested medical
issues arising from all injuries reported on one or more claim forms
prior to the date of the employee's initial appointment with the
medical evaluator. If, after a medical evaluation is prepared, the
employer or the employee subsequently objects to any new medical
issue, the parties, to the extent possible, shall utilize the same
medical evaluator who prepared the previous evaluation to resolve the
medical dispute.
(f) No disputed medical issue specified in subdivision (a) may be
the subject of a declaration of readiness to proceed unless there has
first been an evaluation by the treating physician or an agreed or
qualified medical evaluator.
(g) With the exception of a report or reports prepared by the
treating physician or physicians, no report determining disputed
medical issues set forth in subdivision (a) shall be obtained prior
to the expiration of the period to reach agreement on the selection
of an agreed medical evaluator under subdivision (a). Reports
obtained in violation of this prohibition shall not be admissible in
any proceeding before the appeals board. However, the testimony,
records, and reports offered by the treating physician or physicians
who treated the employee for the injury shall be admissible.
(h) This section shall remain in effect only until January 1,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2007, deletes or extends
that date.
SEC. 18. Section 4062.01 is added to the Labor Code, to read:
4062.01. (a) If either the employee or employer objects to a
medical determination made by the treating physician concerning the
permanent and stationary status of the employee's medical condition,
the employee's preclusion or likely preclusion to engage in his or
her usual occupation, the extent and scope of medical treatment, the
existence of new and further disability, or any other medical issues
not covered by Section 4060 or 4061, the objecting party shall notify
the other party in writing of the objection within 20 days of
receipt of the report if the employee is represented by an attorney
or within 30 days of receipt of the report if the employee is not
represented by an attorney. These time limits may be extended for
good cause or by mutual agreement. If the employee is represented by
an attorney, the parties shall seek agreement with the other party
on a physician, who need not be a qualified medical evaluator, to
prepare a report resolving the disputed issue. If no agreement is
reached within 10 days, or any additional time not to exceed 20 days
agreed upon by the parties, the parties may not later select an
agreed medical evaluator. Evaluations obtained prior to the period
to reach agreement shall not be admissible in any proceeding before
the appeals board. After the period to reach agreement has expired,
the objecting party may select a qualified medical evaluator to
conduct the comprehensive medical evaluation. Neither party may
obtain more than one comprehensive medical-legal report, provided,
however, that any party may obtain additional reports at their own
expense. The nonobjecting party may continue to rely on the treating
physician's report or may select a qualified medical evaluator to
conduct an additional evaluation.
(b) If the employee is not represented by an attorney, the
employer shall not seek agreement with the employee on a physician to
prepare the comprehensive medical evaluation. The employer shall
immediately provide the employee with a form prescribed by the
medical director with which to request assignment of a panel of three
qualified medical evaluators. The employee shall select a physician
from the panel to prepare a comprehensive medical evaluation. The
evaluation of the qualified medical evaluator selected from a panel
of three 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 employer on issues subject to this
section in a case involving an unrepresented employee.
(c) Upon completing a determination of the disputed medical issue,
the physician selected under subdivision (a) or (b) to perform the
medical evaluation shall summarize the medical findings on a form
prescribed by the administrative director and shall serve the formal
medical evaluation and the summary form on the employee and the
employer. The medical evaluation shall address all contested medical
issues arising from all injuries reported on one or more claim forms
prior to the date of the employee's initial appointment with the
medical evaluator. If, after a medical evaluation is prepared, the
employer or the employee subsequently objects to any new medical
issue, the parties, to the extent possible, shall utilize the same
medical evaluator who prepared the previous evaluation to resolve the
medical dispute.
(d) No disputed medical issue specified in subdivision (a) may be
the subject of a declaration of readiness to proceed unless there has
first been an evaluation by the treating physician or an agreed or
qualified medical evaluator.
(e) With the exception of a report or reports prepared by the
treating physician or physicians, no report determining disputed
medical issues set forth in subdivision (a) shall be obtained prior
to the expiration of the period to reach agreement on the selection
of an agreed medical evaluator under subdivision (a). Reports
obtained in violation of this prohibition shall not be admissible in
any proceeding before the appeals board. However, the testimony,
records, and reports offered by the treating physician or physicians
who treated the employee for the injury shall be admissible.
(f) This section shall become operative on January 1, 2007.
SEC. 19. Section 4062.5 of the Labor Code is amended to read:
4062.5. If a qualified medical evaluator selected by an
unrepresented employee from a three-member panel fails to complete
the formal medical evaluation within the timeframes established by
the administrative director pursuant to paragraph (1) of subdivision
(j) of Section 139.2, the employee shall have the right to a new
panel of three qualified medical evaluators from which to select one
to prepare a formal medical evaluation. Neither the employee nor the
employer shall have any liability for payment for the formal medical
evaluation which was not completed within the required timeframes
unless the employee, on a form prescribed by the administrative
director, waives his or her right to a new evaluation
and elects to accept the original
evaluation even though it was not completed within the required
timeframes.
SEC. 20. Section 4062.9 of the Labor Code is amended to read:
4062.9. (a) In cases where an additional comprehensive medical
evaluation is obtained under Section 4061 or 4062, if the employee
has been treated by his or her personal physician, or by his or her
personal chiropractor, as defined in Section 4601, who was
predesignated prior to the date of injury as provided under Section
4600, the findings of the personal physician or personal chiropractor
are presumed to be correct. This presumption is rebuttable and may
be controverted by a preponderance of medical opinion indicating a
different level of disability. However, the presumption shall not
apply where both parties select qualified medical examiners.
(b) In all cases other than those specified in subdivision (a),
regardless of the date of injury, no presumption shall apply to the
opinion of any physician on the issue of extent and scope of medical
treatment, either prior or subsequent to the issuance of an award.
(c) The administrative director shall develop, not later than
January 1, 2004, and periodically revise as necessary thereafter,
educational materials to be used to provide treating physicians and
chiropractors with information and training in basic concepts of
workers' compensation, the role of the treating physician, the
conduct of permanent and stationary evaluations, and report writing.
(d) The amendment made to this section by SB 228 of the 2003-04
Regular Session shall not constitute good cause to reopen or rescind,
alter, or amend any order, decision, or award of the appeals board.
SEC. 22. Section 4068 of the Labor Code is amended to read:
4068. (a) Upon determining that a treating physician's report
contains opinions that are the result of conjecture, are not
supported by adequate evidence, or that indicate bias, the appeals
board shall so notify the administrative director in writing in a
manner he or she has specified.
(b) If the administrative director believes that any treating
physician's reports show a pattern of unsupported opinions, he or she
shall notify in writing the physician's applicable licensing body of
his or her findings.
SEC. 23. Section 4600.1 of the Labor Code is repealed.
SEC. 24. Section 4600.1 is added to the Labor Code, to read:
4600.1. (a) Subject to subdivision (b), any person or entity that
dispenses medicines and medical supplies, as required by Section
4600, shall dispense the generic drug equivalent.
(b) A person or entity shall not be required to dispense a generic
drug equivalent under either of the following circumstances:
(1) When a generic drug equivalent is unavailable.
(2) When the prescribing physician specifically provides in
writing that a nongeneric drug must be dispensed.
(c) For purposes of this section, "dispense" has the same meaning
as the definition contained in Section 4024 of the Business and
Professions Code.
(d) Nothing in this section shall be construed to preclude a
prescribing physician, who is also the dispensing physician, from
dispensing a generic drug equivalent.
SEC. 25. Section 4603.2 of the Labor Code is amended to read:
4603.2. (a) Upon selecting a physician pursuant to Section 4600,
the employee or physician shall forthwith notify the employer of the
name and address of the physician. The physician shall submit a
report to the employer within five working days from the date of the
initial examination and shall submit periodic reports at intervals
that may be prescribed by rules and regulations adopted by the
administrative director.
(b) (1) Except as provided in subdivision (d) of Section 4603.4,
payment for medical treatment provided or authorized by the treating
physician selected by the employee or designated by the employer
shall be made by the employer within 45 working days after receipt of
each separate, itemized billing, together with any required reports
and any written authorization for services that may have been
received by the physician. If the billing or a portion thereof is
contested, denied, or considered incomplete, the physician shall be
notified, in writing, that the billing is contested, denied, or
considered incomplete, within 30 working days after receipt of the
billing by the employer. A notice that a billing is incomplete shall
state all additional information required to make a decision. Any
properly documented amount not paid within the 45-working-day period
shall be increased by 15 percent, together with interest at the same
rate as judgments in civil actions retroactive to the date of receipt
of the bill, unless the employer does both of the following:
(A) Pays the uncontested amount within the 45-working-day period.
(B) Advises, in the manner prescribed by the administrative
director, the physician, or another provider of the items being
contested, the reasons for contesting these items, and the remedies
available to the physician or the other provider if he or she
disagrees. In the case of a bill which includes charges from a
hospital, outpatient surgery center, or independent diagnostic
facility, advice that a request has been made for an audit of the
bill shall satisfy the requirements of this paragraph.
If an employer contests all or part of a billing, any amount
determined payable by the appeals board shall carry interest from the
date the amount was due until it is paid. If any contested amount
is determined payable by the appeals board, the defendant shall be
ordered to reimburse the provider for any filing fees paid pursuant
to Section 4903.05.
An employer's liability to a physician or another provider under
this section for delayed payments shall not affect its liability to
an employee under Section 5814 or any other provision of this
division.
(2) Notwithstanding paragraph (1), if the employer is a
governmental entity, payment for medical treatment provided or
authorized by the treating physician selected by the employee or
designated by the employer shall be made within 60 working days after
receipt of each separate, itemized billing, together with any
required reports and any written authorization for services that may
have been received by the physician.
(c) Any interest or increase in compensation paid by an insurer
pursuant to this section shall be treated in the same manner as an
increase in compensation under subdivision (d) of Section 4650 for
the purposes of any classification of risks and premium rates, and
any system of merit rating approved or issued pursuant to Article 2
(commencing with Section 11730) of Chapter 3 of Part 3 of Division 2
of the Insurance Code.
(d) (1) Whenever an employer or insurer employs an individual or
contracts with an entity to conduct a review of a billing submitted
by a physician or medical provider, the employer or insurer shall
make available to that individual or entity all documentation
submitted together with that billing by the physician or medical
provider. When an individual or entity conducting a bill review
determines that additional information or documentation is necessary
to review the billing, the individual or entity shall contact the
claims administrator or insurer to obtain the necessary information
or documentation that was submitted by the physician or medical
provider pursuant to subdivision (b).
(2) An individual or entity reviewing a bill submitted by a
physician or medical provider shall not alter the procedure codes
billed or recommend reduction of the amount of the bill unless the
documentation submitted by the physician or medical provider with the
bill has been reviewed by that individual or entity. If the
reviewer does not recommend payment as billed by the physician or
medical provider, the explanation of review shall provide the
physician or medical provider with a specific explanation as to why
the reviewer altered the procedure code or amount billed and the
specific deficiency in the billing or documentation that caused the
reviewer to conclude that the altered procedure code or amount
recommended for payment more accurately represents the service
performed.
(3) The appeals board shall have jurisdiction over disputes
arising out of this subdivision pursuant to Section 5304.
SEC. 26. Section 4603.4 of the Labor Code is amended to read:
4603.4. (a) The administrative director shall adopt rules and
regulations to do all of the following:
(1) Ensure that all health care providers and facilities submit
medical bills for payment on standardized forms.
(2) Require acceptance by employers of electronic claims for
payment of medical services.
(3) Ensure confidentiality of medical information submitted on
electronic claims for payment of medical services.
(b) To the extent feasible, standards adopted pursuant to
subdivision (a) shall be consistent with existing standards under the
federal Health Insurance Portability and Accountability Act of 1996.
(c) The rules and regulations requiring employers to accept
electronic claims for payment of medical services shall be adopted on
or before January 1, 2005, and shall require all employers to accept
electronic claims for payment of medical services on or before July
1, 2006.
(d) Payment for medical treatment provided or authorized by the
treating physician selected by the employee or designated by the
employer shall be made by the employer within 15 working days after
electronic receipt of an itemized electronic billing for services at
or below the maximum fees provided in the official medical fee
schedule adopted pursuant to Section 5307.1. If the billing is
contested, denied, or incomplete, payment shall be made in accordance
with Section 4603.2.
SEC. 27. Section 4604.5 is added to the Labor Code, to read:
4604.5. (a) Upon adoption by the administrative director of a
medical treatment utilization schedule pursuant to Section 5307.27,
the recommended guidelines set forth in the schedule shall be
presumptively correct on the issue of extent and scope of medical
treatment. The presumption is rebuttable and may be controverted by
a preponderance of the evidence establishing that a variance from the
guidelines is reasonably required to cure and relieve the employee
from the effects of his or her injury.
(b) The recommended guidelines set forth in the schedule adopted
pursuant to subdivision (a) shall reflect practices as generally
accepted by the health care community, and shall apply the current
standards of care, including, but not limited to, appropriate and
inappropriate diagnostic techniques, treatment modalities, adjustive
modalities, length of treatment, and appropriate specialty referrals.
These guidelines shall be educational and designed to assist
providers by offering an analytical framework for the evaluation and
treatment of the more common problems of injured workers, and shall
assure appropriate and necessary care for all injured workers
diagnosed with industrial conditions.
(c) Three months after the publication date of the updated
American College of Occupational and Environmental Medicine
Occupational Medical Practice Guidelines, and continuing until the
effective date of a medical treatment utilization schedule, pursuant
to Section 5307.27, the recommended guidelines set forth in the
American College of Occupational and Environmental Medical Practice
Guidelines shall be presumptively correct on the issue of extent and
scope of medical treatment. The presumption is rebuttable and may be
controverted by a preponderance of the evidence establishing that a
variance from the guidelines is reasonably required to cure and
relieve the employee from the effects of his or her injury.
(d) Notwithstanding the medical treatment utilization schedule or
the guidelines set forth in the American College of Occupational and
Environmental Medical Practice Guidelines, for injuries occurring on
and after January 1, 2004, an employee shall be entitled to no more
than 24 chiropractic and 24 physical therapy visits per industrial
injury.
(e) The presumption afforded to the treating physician in Section
4062.9 shall not be applicable to cases arising under this section.
(f) This section shall not apply when an insurance carrier
authorizes, in writing, additional visits to a health care
practitioner for physical medicine services.
(g) For all injuries not covered by the American College of
Occupational and Environmental Medicine Occupational Medicine
Practice Guidelines or official utilization schedule after adoption
pursuant to Section 5307.27, authorized treatment shall be in
accordance with other evidence based medical treatment guidelines
generally recognized by the medical community.
SEC. 28. Section 4610 is added to the Labor Code, to read:
4610. (a) For purposes of this section, "utilization review"
means utilization review or utilization management functions that
prospectively, retrospectively, or concurrently review and approve,
modify, delay, or deny, based in whole or in part on medical
necessity to cure and relieve, treatment recommendations by
physicians, as defined in Section 3209.3, prior to, retrospectively,
or concurrent with the provision of medical treatment services
pursuant to Section 4600.
(b) Every employer shall establish a utilization review process in
compliance with this section, either directly or through its insurer
or an entity with which an employer or insurer contracts for these
services.
(c) Each utilization review process shall be governed by written
policies and procedures. These policies and procedures shall ensure
that decisions based on the medical necessity to cure and relieve of
proposed medical treatment services are consistent with the schedule
for medical treatment utilization adopted pursuant to Section
5307.27. Prior to adoption of the schedule, these policies and
procedures shall be consistent with the recommended standards set
forth in the American College of Occupational and Environmental
Medicine Occupational Medical Practice Guidelines. These policies
and procedures, and a description of the utilization process, shall
be filed with the administrative director and shall be disclosed by
the employer to employees, physicians, and the public upon request.
(d) If an employer, insurer, or other entity subject to this
section requests medical information from a physician in order to
determine whether to approve, modify, delay, or deny requests for
authorization, the employer shall request only the information
reasonably necessary to make the determination. The employer,
insurer, or other entity shall employ or designate a medical director
who holds an unrestricted license to practice medicine in this state
issued pursuant to Section 2050 or Section 2450 of the Business and
Professions Code. The medical director shall ensure that the process
by which the employer or other entity reviews and approves,
modifies, delays, or denies requests by physicians prior to,
retrospectively, or concurrent with the provision of medical
treatment services, complies with the requirements of this section.
Nothing in this section shall be construed as restricting the
existing authority of the Medical Board of California.
(e) No person other than a licensed physician who is competent to
evaluate the specific clinical issues involved in the medical
treatment services, and where these services are within the scope of
the physician's practice, requested by the physician may modify,
delay, or deny requests for authorization of medical treatment for
reasons of medical necessity to cure and relieve.
(f) The criteria or guidelines used in the utilization review
process to determine whether to approve, modify, delay, or deny
medical treatment services shall be all of the following:
(1) Developed with involvement from actively practicing
physicians.
(2) Consistent with the schedule for medical treatment utilization
adopted pursuant to Section 5307.27. Prior to adoption of the
schedule, these policies and procedures shall be consistent with the
recommended standards set forth in the American College of
Occupational and Environmental Medicine Occupational Medical Practice
Guidelines.
(3) Evaluated at least annually, and updated if necessary.
(4) Disclosed to the physician and the employee, if used as the
basis of a decision to modify, delay, or deny services in a specified
case under review.
(5) Available to the public upon request. An employer shall only
be required to disclose the criteria or guidelines for the specific
procedures or conditions requested. An employer may charge members
of the public reasonable copying and postage expenses related to
disclosing criteria or guidelines pursuant to this paragraph.
Criteria or guidelines may also be made available through electronic
means. No charge shall be required for an employee whose physician's
request for medical treatment services is under review.
(g) In determining whether to approve, modify, delay, or deny
requests by physicians prior to, retrospectively, or concurrent with
the provisions of medical treatment services to employees all of the
following requirements must be met:
(1) Prospective or concurrent decisions shall be made in a timely
fashion that is appropriate for the nature of the employee's
condition, not to exceed five working days from the receipt of the
information reasonably necessary to make the determination, but in no
event more than 14 days from the date of the medical treatment
recommendation by the physician. In cases where the review is
retrospective, the decision shall be communicated to the individual
who received services, or to the individual's designee, within 30
days of receipt of information that is reasonably necessary to make
this determination.
(2) When the employee's condition is such that the employee faces
an imminent and serious threat to his or her health, including, but
not limited to, the potential loss of life, limb, or other major
bodily function, or the normal timeframe for the decisionmaking
process, as described in paragraph (1), would be detrimental to the
employee's life or health or could jeopardize the employee's ability
to regain maximum function, decisions to approve, modify, delay, or
deny requests by physicians prior to, or concurrent with, the
provision of medical treatment services to employees shall be made in
a timely fashion that is appropriate for the nature of the employee'
s condition, but not to exceed 72 hours after the receipt of the
information reasonably necessary to make the determination.
(3) (A) Decisions to approve, modify, delay, or deny requests by
physicians for authorization prior to, or concurrent with, the
provision of medical treatment services to employees shall be
communicated to the requesting physician within 24 hours of the
decision. Decisions resulting in modification, delay, or denial of
all or part of the requested health care service shall be
communicated to physicians initially by telephone or facsimile, and
to the physician and employee in writing within 24 hours for
concurrent review, or within two business days of the decision for
prospective review, as prescribed by the administrative director. If
the request is not approved in full, disputes shall be resolved in
accordance with Section 4062. If a request to perform spinal surgery
is denied, disputes shall be resolved in accordance with subdivision
(b) of Section 4062.
(B) In the case of concurrent review, medical care shall not be
discontinued until the employee's physician has been notified of the
decision and a care plan has been agreed upon by the physician that
is appropriate for the medical needs of the employee. Medical care
provided during a concurrent review shall be care that is medically
necessary to cure and relieve, and an insurer or self-insured
employer shall only be liable for those services determined medically
necessary to cure and relieve. If the insurer or self-insured
employer disputes whether or not one or more services offered
concurrently with a utilization review were medically necessary to
cure and relieve, the dispute shall be resolved pursuant to Section
4062, except in cases involving recommendations for the performance
of spinal surgery, which shall be governed by the provisions of
subdivision (b) of Section 4062. Any compromise between the parties
that an insurer or self-insured employer believes may result in
payment for services that were not medically necessary to cure and
relieve shall be reported by the insurer or the self-insured employer
to the licensing board of the provider or providers who received the
payments, in a manner set forth by the respective board and in such
a way as to minimize reporting costs both to the board and to the
insurer or self-insured employer, for evaluation as to possible
violations of the statutes governing appropriate professional
practices. No fees shall be levied upon insurers or self-insured
employers making reports required by this section.
(4) Communications regarding decisions to approve requests by
physicians shall specify the specific medical treatment service
approved. Responses regarding decisions to modify, delay, or deny
medical treatment services requested by physicians shall include a
clear and concise explanation of the reasons for the employer's
decision, a description of the criteria or guidelines used, and the
clinical reasons for the decisions regarding medical necessity.
(5) If the employer, insurer, or other entity cannot make a
decision within the timeframes specified in paragraph (1) or (2)
because the employer or other entity is not in receipt of all of the
information reasonably necessary and requested, because the employer
requires consultation by an expert reviewer, or because the employer
has asked that an additional examination or test be performed upon
the employee that is reasonable and consistent with good medical
practice, the employer shall immediately notify the physician and the
employee, in writing, that the employer cannot make a decision
within the required timeframe, and specify the information requested
but not received, the expert reviewer to be consulted, or the
additional examinations or tests required. The employer shall also
notify the physician and employee of the anticipated date on which a
decision may be rendered. Upon receipt of all information reasonably
necessary and requested by the employer, the employer shall approve,
modify, or deny the request for authorization within the timeframes
specified in paragraph (1) or (2).
(h) Every employer, insurer, or other entity subject to this
section shall maintain telephone access for physicians to request
authorization for health care services.
(i) If the administrative director determines that the employer,
insurer, or other entity subject to this section has failed to meet
any of the timeframes in this section, or has failed to meet any
other requirement of this section, the administrative director may
assess, by order, administrative penalties for each failure. A
proceeding for the issuance of an order assessing administrative
penalties shall be subject to appropriate notice to, and an
opportunity for a hearing with regard to, the person affected. The
administrative penalties shall not be deemed to be an exclusive
remedy for the administrative director. These penalties shall be
deposited in the Workers' Compensation Administration Revolving Fund.
SEC. 29. Section 4628 of the Labor Code is amended to read:
4628. (a) Except as provided in subdivision (c), no person, other
than the physician who signs the medical-legal report, except a
nurse performing those functions routinely performed by a nurse, such
as taking blood pressure, shall examine the injured employee or
participate in the nonclerical preparation of the report, including
all of the following:
(1) Taking a complete history.
(2) Reviewing and summarizing prior medical records.
(3) Composing and drafting the conclusions of the report.
(b) The report shall disclose the date when and location where the
evaluation was performed; that the physician or physicians signing
the report actually performed the evaluation; whether the evaluation
performed and the time spent performing the evaluation was in
compliance with the guidelines established by the administrative
director pursuant to paragraph (5) of subdivision (j) of Section
139.2 or Section 5307.6 and shall disclose the name and
qualifications of each person who performed any services in
connection with the report, including diagnostic studies, other than
its clerical preparation. If the report discloses that the
evaluation performed or the time spent performing the evaluation was
not in compliance with the guidelines established by the
administrative director, the report shall explain, in detail, any
variance and the reason or reasons therefor.
(c) If the initial outline of a patient's history or excerpting of
prior medical records is not done by the physician, the physician
shall review the excerpts and the entire outline and shall make
additional inquiries and examinations as are necessary and
appropriate to identify and determine the relevant medical issues.
(d) No amount may be charged in excess of the direct charges for
the physician's professional services and the reasonable costs of
laboratory examinations, diagnostic studies, and other medical tests,
and reasonable costs of clerical expense necessary to producing the
report. Direct charges for the physician's professional services
shall include reasonable overhead expense.
(e) Failure to comply with the requirements of this section shall
make the report inadmissible as evidence and shall eliminate any
liability for payment of any medical-legal expense incurred in
connection with the report.
(f) Knowing failure to comply with the requirements of this
section shall subject the physician to a civil penalty of up to one
thousand dollars ($1,000) for each violation to be assessed by a
workers' compensation judge or the appeals board. All civil
penalties collected under this section shall be deposited in the
Workers' Compensation Administration Revolving Fund.
(g) A physician who is assessed a civil penalty under this section
may be terminated, suspended, or placed on probation as a qualified
medical evaluator pursuant to subdivisions (k) and (l) of Section
139.2.
(h) Knowing failure to comply with the requirements of this
section shall subject the physician to contempt pursuant to the
judicial powers vested in the appeals board.
(i) Any person billing for medical-legal evaluations, diagnostic
procedures, or diagnostic services performed by persons other than
those employed by the reporting physician or physicians, or a medical
corporation owned by the reporting physician or physicians shall
specify the amount paid or to be paid to those persons for the
evaluations, procedures, or services. This subdivision shall not
apply to any procedure or service defined or valued pursuant to
Section 5307.1.
(j) The report shall contain a declaration by the physician
signing the report, under penalty of perjury, stating:
"I declare under penalty of perjury that the information contained
in this report and its attachments, if any, is true and correct to
the best of my knowledge and belief, except as to information that I
have indicated I received from others. As to that information, I
declare under penalty of perjury that the information accurately
describes the information provided to me and, except as noted herein,
that I believe it to be true."
The foregoing declaration shall be dated and signed by the
reporting physician and shall indicate the county wherein it was
signed.
(k) The physician shall provide a curriculum vitae upon request by
a party and include a statement concerning the percent of the
physician's total practice time that is annually devoted to medical
treatment.
SEC. 33. Section 4903.05 is added to the Labor Code, to read:
4903.05. (a) A filing fee of one hundred dollars ($100) shall be
charged for each initial lien filed by providers pursuant to
subdivision (b) of Section 4903.
(b) No filing fee shall be required for liens filed by the
Veterans Administration, the Medi-Cal program, or public hospitals.
(c) The filing fee shall be collected by the court administrator.
All fees shall be deposited in the Workers' Compensation
Administration Revolving Fund. Any fees collected from providers
that have not been redistributed to providers pursuant to paragraph
(2) of subdivision (b) of Section 4603.2, shall be used to offset the
amount of fees assessed on employers under Section 62.5.
(d) The court administrator shall adopt reasonable rules and
regulations governing the procedures for the collection of the filing
fee.
SEC. 34. Section 5307.1 of the Labor Code is repealed.
SEC. 35. Section 5307.1 is added to the Labor Code, to read:
5307.1. (a) The administrative director, after public hearings,
shall adopt and revise periodically an official medical fee schedule
that shall establish reasonable maximum fees paid for medical
services other than physician services, drugs and pharmacy services,
health care facility fees, home health care, and all other treatment,
care, services, and goods described in Section 4600 and provided
pursuant to this section. Except for physician services, all fees
shall be in accordance with the fee-related structure and rules of
the relevant Medicare and Medi-Cal payment systems, provided that
employer liability for medical treatment, including issues of
reasonableness, necessity, frequency, and duration, shall be
determined in accordance with Section 4600. Commencing January 1,
2004, and continuing until the time the administrative director has
adopted an official medical fee schedule in accordance with the
fee-related structure and rules of the relevant Medicare payment
systems, except for the components listed in subdivisions (k) and
(l), maximum reasonable fees shall be 120 percent of the estimated
aggregate fees prescribed in the relevant Medicare payment system for
the same class of services before application of the inflation
factors provided in subdivision (e), except that for pharmacy
services and drugs that are not otherwise covered by a Medicare fee
schedule payment for facility services, the maximum reasonable fees
shall be 100 percent of fees prescribed in the relevant Medi-Cal
payment system. Upon adoption by the administrative director of an
official medical fee schedule pursuant to this section, the maximum
reasonable fees paid shall not exceed 120 percent of estimated
aggregate fees prescribed in the Medicare payment system for the same
class of services before application of the inflation factors
provided in subdivision (e). Pharmacy services and drugs shall be
subject to the requirements of this section, whether furnished
through a pharmacy or dispensed directly by the practitioner pursuant
to subdivision (b) of Section 4024 of the Business and Professions
Code.
(b) In order to comply with the standards specified in subdivision
(f), the administrative director may adopt different conversion
factors, diagnostic related group weights, and other factors
affecting payment amounts from those used in the Medicare payment
system, provided estimated aggregate fees do not exceed 120 percent
of the estimated aggregate fees paid for the same class of services
in the relevant Medicare payment system.
(c) Notwithstanding subdivisions (a) and (d), the maximum facility
fee for services performed in an ambulatory surgical center, or in a
hospital outpatient department, may not exceed 120 percent of the
fee paid by Medicare for the same services performed in a hospital
outpatient department.
(d) If the administrative director determines that a medical
treatment, facility use, product, or service is not covered by a
Medicare payment system, the administrative director shall establish
maximum fees for that item, provided that the maximum fee paid shall
not exceed 120 percent of the fees paid by Medicare for services that
require comparable resources. If the administrative director
determines that a pharmacy service or drug is not covered by a
Medi-Cal payment system, the administrative director shall establish
maximum fees for that item, provided, however, that the maximum fee
paid shall not exceed 100 percent of the fees paid by Medi-Cal for
pharmacy services or drugs that require comparable resources.
(e) Prior to the adoption by the administrative director of a
medical fee schedule pursuant to this section, for any treatment,
facility use, product, or service not covered by a Medicare payment
system, including acupuncture services, or, with regard to pharmacy
services and drugs, for a pharmacy service or drug that is not
covered by a Medi-Cal payment system, the maximum reasonable fee paid
shall not exceed the fee specified in the official medical fee
schedule in effect on December 31, 2003.
(f) Within the limits provided by this section, the rates or fees
established shall be adequate to ensure a reasonable standard of
services and care for injured employees.
(g) (1) (A) Notwithstanding any other provision of law, the
official medical fee schedule shall be adjusted to conform to any
relevant changes in the Medicare and Medi-Cal payment systems no
later than 60 days after the effective date of those changes,
provided that both of the following conditions are met:
(i) The annual inflation adjustment for facility fees for
inpatient hospital services provided by acute care hospitals and for
hospital outpatient services shall be determined solely by the
estimated increase in the hospital market basket for the 12 months
beginning October 1 of the preceding calendar year.
(ii) The annual update in the operating standardized amount and
capital standard rate for inpatient hospital services provided by
hospitals excluded from the Medicare prospective payment system for
acute care hospitals and the conversion factor for hospital
outpatient services shall be determined solely by the estimated
increase in the hospital market basket for excluded hospitals for the
12 months beginning October 1 of the preceding calendar year.
(B) The update factors contained in clauses (i) and (ii) of
subparagraph (A) shall be applied beginning with the first update in
the Medicare fee schedule payment amounts after December 31, 2003.
(2) The administrative director shall determine the effective date
of the changes, and shall issue an order, exempt from Sections
5307.3 and 5307.4 and the rulemaking provisions of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11370) of Part 1
of Division 3 of Title 2 of the Government Code), informing the
public of the changes and their effective date. All orders issued
pursuant to this paragraph shall be published on the Internet Web
site of the division of Workers' Compensation.
(3) For the purposes of this subdivision, the following
definitions apply:
(A) "Medicare Economic Index" means the input price index used by
the federal Centers for Medicare and Medicaid Services to measure
changes in the costs of a providing physician and other services paid
under the resource-based relative value scale.
(B) "Hospital market basket" means the input price index used by
the federal Centers for Medicare and Medicaid Services to measure
changes in the costs of providing inpatient hospital services
provided by acute care hospitals that are included in the Medicare
prospective payment system.
(C) "Hospital market basket for excluded hospitals" means the
input price index used by the federal Centers for Medicare and
Medicaid Services to measure changes in the costs of providing
inpatient services by hospitals that are excluded from the Medicare
prospective payment system.
(h) Nothing in this section shall prohibit an employer or insurer
from contracting with a medical provider for reimbursement rates
different from those prescribed in the official medical fee schedule.
(i) Except as provided in Section 4626, the official medical fee
schedule shall not apply to medical-legal expenses, as that term is
defined by Section 4620.
(j) The following Medicare payment system components may not
become part of the official medical fee schedule until January 1,
2005:
(1) Inpatient skilled nursing facility care.
(2) Home health agency services.
(3) Inpatient services furnished by hospitals that are exempt from
the prospective payment system for general acute care hospitals.
(4) Outpatient renal dialysis services.
(k) Notwithstanding subdivision (a), for the calendar years 2004
and 2005, the existing official medical fee schedule rates for
physician services shall remain in effect, but these rates shall be
reduced by 5 percent. The administrative director may reduce fees of
individual procedures by different amounts, but in no event shall
the administrative director reduce the fee for a procedure that is
currently reimbursed at a rate at or below the Medicare rate for the
same procedure.
(l) Notwithstanding subdivision (a), the administrative director,
commencing January 1, 2006, shall have the authority, after public
hearings, to adopt and revise, no less frequently than biennially, an
official medical fee schedule for physician services. If the
administrative director fails to adopt an official medical fee
schedule for physician services by January 1, 2006, the existing
official medical fee schedule rates for physician services shall
remain in effect until a new schedule is adopted or the existing
schedule is revised.
SEC. 36. Section 5307.2 of the Labor Code is repealed.
SEC. 37. Section 5307.2 is added to the Labor Code, to read:
5307.2. The administrative director shall contract with an
independent consulting firm, to the extent permitted by state law, to
perform an annual study of access to medical treatment for injured
workers. The study shall analyze whether there is adequate access to
quality health care and products for injured workers and make
recommendations to ensure continued access. If the administrative
director determines, based on this study, that there is insufficient
access to quality health care or products for injured workers, the
administrative director may make appropriate adjustments to medical
and facilities' fees. When there has been a determination that
substantial access problems exist, the administrative director may,
in accordance with the notification and hearing requirements of
Section 5307.1, adopt fees in excess of 120 percent of the applicable
Medicare payment system fee for the applicable services or products.
SEC. 38. Section 5307.21 of the Labor Code, as added by Section 74
of Chapter 6 of the Statutes of 2002, is repealed.
SEC. 39. Section 5307.21 of the Labor Code, as added by Section 13
of Chapter 866 of the Statutes of 2002, is repealed.
SEC. 41. Section 5307.27 is added to the Labor Code, to read:
5307.27. On or before December 1, 2004, the administrative
director, in consultation with the Commission on Health and Safety
and Workers' Compensation, shall adopt, after public hearings, a
medical treatment utilization schedule, that shall incorporate the
evidence-based, peer-reviewed, nationally recognized standards of
care recommended by the commission pursuant to Section 77.5, and that
shall address, at a minimum, the frequency, duration, intensity, and
appropriateness of all treatment procedures and modalities commonly
performed in workers' compensation cases.
SEC. 42. Section 5307.3 of the Labor Code is amended to read:
5307.3. The administrative director may adopt, amend, or repeal
any rules and regulations that are reasonably necessary to enforce
this division, except where this power is specifically reserved to
the appeals board or the court administrator.
No rule or regulation of the administrative director pursuant to
this section shall be adopted, amended, or rescinded without public
hearings. Any written request filed with the administrative director
seeking a change in its rules or regulations shall be deemed to be
denied if not set by the administrative director for public hearing
to be held within six months of the date on which the request is
received by the administrative director.
SEC. 43. Section 5318 of the Labor Code is repealed.
SEC. 44. Section 5318 is added to the Labor Code, to read:
5318. (a) Implantable medical devices, hardware, and
instrumentation for Diagnostic Related Groups (DRGs) 004, 496, 497,
498, 519, and 520 shall be separately reimbursed at the provider's
documented paid cost, plus an additional 10 percent of the provider's
documented paid cost, not to exceed a maximum of two hundred fifty
dollars ($250), plus any sales tax and shipping and handling charges
actually paid.
(b) This section shall be operative only until the administrative
director adopts a regulation specifying separate reimbursement, if
any, for implantable medical hardware or instrumentation for complex
spinal surgeries.
SEC. 45. Section 5703 of the Labor Code is amended to read:
5703. The appeals board may receive as evidence either at or
subsequent to a hearing, and use as proof of any fact in dispute, the
following matters, in addition to sworn testimony presented in open
hearing:
(a) Reports of attending or examining physicians.
(1) Statements concerning any bill for services are admissible
only if made under penalty of perjury that they are true and correct
to the best knowledge of the physician.
(2) In addition, reports are admissible under this subdivision
only if the physician has further stated in the body of the report
that there has not been a violation of Section 139.3 and that the
contents of the report are true and correct to the best knowledge of
the physician. The statement shall be made under penalty of perjury.
(b) Reports of special investigators appointed by the appeals
board or a workers' compensation judge to investigate and report upon
any scientific or medical question.
(c) Reports of employers, containing copies of timesheets, book
accounts, reports, and other records properly authenticated.
(d) Properly authenticated copies of hospital records of the case
of the injured employee.
(e) All publications of the Division of Workers' Compensation.
(f) All official publications of the State of California and
United States governments.
(g) Excerpts from expert testimony received by the appeals board
upon similar issues of scientific fact in other cases and the prior
decisions of the appeals board upon similar issues.
(h) Relevant portions of medical treatment protocols published by
medical specialty societies. To be admissible, the party offering
such a protocol or portion of a protocol shall concurrently enter
into evidence information regarding how the protocol was developed,
and to what extent the protocol is evidence-based, peer-reviewed, and
nationally recognized, as required by regulations adopted by the
appeals board. If a party offers into evidence a portion of a
treatment protocol, any other party may offer into evidence
additional portions of the protocol. The party offering a protocol,
or portion thereof, into evidence shall either make a printed copy of
the full protocol available for review and copying, or shall provide
an Internet address at which the entire protocol may be accessed
without charge.
SEC. 47. Section 6401.7 of the Labor Code is amended to read:
6401.7. (a) Every employer shall establish, implement, and
maintain an effective injury prevention program. The program shall
be written, except as provided in subdivision (e), and shall include,
but not be limited to, the following elements:
(1) Identification of the person or persons responsible for
implementing the program.
(2) The employer's system for identifying and evaluating workplace
hazards, including scheduled periodic inspections to identify unsafe
conditions and work practices.
(3) The employer's methods and procedures for correcting unsafe or
unhealthy conditions and work practices in a timely manner.
(4) An occupational health and safety training program designed to
instruct employees in general safe and healthy work practices and to
provide specific instruction with respect to hazards specific to
each employee's job assignment.
(5) The employer's system for communicating with employees on
occupational health and safety matters, including provisions designed
to encourage employees to inform the employer of hazards at the
worksite without fear of reprisal.
(6) The employer's system for ensuring that employees comply with
safe and healthy work practices, which may include disciplinary
action.
(b) The employer shall correct unsafe and unhealthy conditions and
work practices in a timely manner based on the severity of the
hazard.
(c) The employer shall train all employees when the training
program is first established, all new employees, and all employees
given a new job assignment, and shall train employees whenever new
substances, processes, procedures, or equipment are introduced to the
workplace and represent a new hazard, and whenever the employer
receives notification of a new or previously unrecognized hazard.
Beginning January 1, 1994, an employer in the construction industry
who is required to be licensed under Chapter 9 (commencing with
Section 7000) of Division 3 of the Business and Professions Code may
use employee training provided to the employer's employees under a
construction industry occupational safety and health training program
approved by the division to comply with the requirements of
subdivision (a) relating to employee training, and shall only be
required to provide training on hazards specific to an employee's job
duties.
(d) The employer shall keep appropriate records of steps taken to
implement and maintain the program. Beginning January 1, 1994, an
employer in the construction industry who is required to be licensed
under Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code may use records relating to employee
training provided to the employer in connection with an occupational
safety and health training program approved by the division to comply
with the requirements of this subdivision, and shall only be
required to keep records of those steps taken to implement and
maintain the program with respect to hazards specific to an employee'
s job duties.
(e) (1) The standards board shall adopt a standard setting forth
the employer's duties under this section, on or before January 1,
1991, consistent with the requirements specified in subdivisions (a),
(b), (c), and (d). The standards board, in adopting the standard,
shall include substantial compliance criteria for use in evaluating
an employer's injury prevention program. The board may adopt less
stringent criteria for employers with few employees and for employers
in industries with insignificant occupational safety or health
hazards.
(2) Notwithstanding subdivision (a), for employers with fewer than
20 employees who are in industries that are not on a designated list
of high hazard industries and who have a workers' compensation
experience modification rate of 1.1 or less, and for any employers
with fewer than 20 employees who are in industries that are on a
designated list of low hazard industries, the board shall adopt a
standard setting forth the employer's duties under this section
consistent with the requirements specified in subdivisions (a), (b),
and (c), except that the standard shall only require written
documentation to the extent of documenting the person or persons
responsible for implementing the program pursuant to paragraph (1) of
subdivision (a), keeping a record of periodic inspections pursuant
to paragraph (2) of subdivision (a), and keeping a record of employee
training pursuant to paragraph (4) of subdivision (a). To any
extent beyond the specifications of this subdivision, the standard
shall not require the employer to keep the records specified in
subdivision (d).
(3) The division shall establish a list of high hazard industries
using the methods prescribed in Section 6314.1 for identifying and
targeting employers in high hazard industries. For purposes of this
subdivision, the "designated list of high hazard industries" shall be
the list established pursuant to this paragraph.
For the purpose of implementing this subdivision, the Department
of Industrial Relations shall periodically review, and as necessary
revise, the list.
(4) For the purpose of implementing this subdivision, the
Department of Industrial Relations shall also establish a list of low
hazard industries, and shall periodically review, and as necessary
revise, that list.
(f) The standard adopted pursuant to subdivision (e) shall
specifically permit employer and employee occupational safety and
health committees to be included in the employer's injury prevention
program. The board shall establish criteria for use in evaluating
employer and employee occupational safety and health committees. The
criteria shall include minimum duties, including the following:
(1) Review of the employer's (A) periodic, scheduled worksite
inspections, (B) investigation of causes of incidents resulting in
injury, illness, or exposure to hazardous substances, and (C)
investigation of any alleged hazardous condition brought to the
attention of any committee member. When determined necessary by the
committee, the committee may conduct its own inspections and
investigations.
(2) Upon request from the division, verification of abatement
action taken by the employer as specified in division citations.
If an employer's occupational safety and health committee meets
the criteria established by the board, it shall be presumed to be in
substantial compliance with paragraph (5) of subdivision (a).
(g) The division shall adopt regulations specifying the procedures
for selecting employee representatives for employer-employee
occupational health and safety committees when these procedures are
not specified in an applicable collective bargaining agreement. No
employee or employee organization shall be held liable for any act or
omission in connection with a health and safety committee.
(h) The employer's injury prevention program, as required by this
section, shall cover all of the employer's employees and all other
workers who the employer controls or directs and directly supervises
on the job to the extent these workers are exposed to worksite and
job assignment specific hazards. Nothing in this subdivision shall
affect the obligations of a contractor or other employer which
controls or directs and directly supervises its own employees on the
job.
(i) Where a contractor supplies its employee to a state agency
employer on a temporary basis, the state agency employer may assess a
fee upon the contractor to reimburse the state agency for the
additional costs, if any, of including the contract employee within
the state agency's injury prevention program.
(j) (1) The division shall prepare a Model Injury and Illness
Prevention Program for Non-High-Hazard Employment, and shall make
copies of the model program prepared pursuant to this subdivision
available to employers, upon request, for posting in the workplace.
An employer who adopts and implements the model program prepared by
the division pursuant to this paragraph in good faith shall not be
assessed a civil penalty for the first citation for a violation of
this section issued after the employer's adoption and implementation
of the model program.
(2) For purposes of this subdivision, the division shall establish
a list of non-high-hazard industries in California, that may include
the industries that, pursuant to Section 14316 of Title 8 of the
California Code of Regulations, are not currently required to keep
records of occupational injuries and illnesses under Article 2
(commencing with Section 14301) of Subchapter 1 of Chapter 7 of
Division 1 of Title 8 of the California Code of Regulations. These
industries, identified by their Standard Industrial Classification
Codes, as published by the United States Office of Management and
Budget in the Manual of Standard Industrial Classification Codes,
1987 Edition, are apparel and accessory stores (Code 56), eating and
drinking places (Code 58), miscellaneous retail (Code 59), finance,
insurance, and real estate (Codes 60-67), personal services (Code
72), business services (Code 73), motion pictures (Code 78) except
motion picture production and allied services (Code 781), legal
services (Code 81), educational services (Code 82), social services
(Code 83), museums, art galleries, and botanical and zoological
gardens (Code 84), membership organizations (Code 86), engineering,
accounting, research, management, and related services (Code 87),
private households (Code 88), and miscellaneous services (Code 89).
To further identify industries that may be included on the list, the
division shall also consider data from a rating organization, as
defined in Section 11750.1 of the Insurance Code, the
Division of Labor Statistics and Research,
including the logs of occupational injuries and illnesses maintained
by employers on Form CAL/OSHA No. 200, or its equivalent, as required
by Section 14301 of Title 8 of the California Code of Regulations,
and all other appropriate information. The list shall be established
by June 30, 1994, and shall be reviewed, and as necessary revised,
biennially.
(3) The division shall prepare a Model Injury and Illness
Prevention Program for Employers in Industries with Intermittent
Employment, and shall determine which industries have historically
utilized seasonal or intermittent employees. An employer in an
industry determined by the division to have historically utilized
seasonal or intermittent employees shall be deemed to have complied
with the requirements of subdivision (a) with respect to a written
injury prevention program if the employer adopts the model program
prepared by the division pursuant to this paragraph and complies with
any instructions relating thereto.
(k) With respect to any county, city, city and county, or
district, or any public or quasi-public corporation or public agency
therein, including any public entity, other than a state agency, that
is a member of, or created by, a joint powers agreement, subdivision
(d) shall not apply.
(l) Every workers' compensation insurer shall conduct a review,
including a written report as specified below, of the injury and
illness prevention program (IIPP) of each of its insureds within four
months of the commencement of the initial insurance policy term.
The review shall determine whether the insured has implemented all of
the required components of the IIPP, and evaluate their
effectiveness. The training component of the IIPP shall be evaluated
to determine whether training is provided to line employees,
supervisors, and upper level management, and effectively imparts the
information and skills each of these groups needs to ensure that all
of the insured's specific health and safety issues are fully
addressed by the insured. The reviewer shall prepare a detailed
written report specifying the findings of the review and all
recommended changes deemed necessary to make the IIPP effective. The
reviewer shall be an independent licensed California professional
engineer, certified safety professional, or a certified industrial
hygienist.
SEC. 48. The Commission on Health and Safety and Workers'
Compensation shall conduct a study of the spinal surgery second
opinion procedure established in subdivision (b) of Section 4062 of
the Labor Code. The study shall be completed by June 30, 2006. The
commission shall issue a report concerning the findings of the study
and recommendations for further legislation.
SEC. 49. Section 9792.6 of Title 8 of the California Code of
Regulations is repealed effective January 1, 2004.
SEC. 50. Article 7 (commencing with Section 70) of Chapter 1 of
Division 1 of the California Code of Regulations is repealed
effective January 1, 2004.
SEC. 51. On January 1, 2004, all assets and liabilities of the
Industrial Medical Council, the Industrial Medicine Fund, and any
unencumbered funds available pursuant to Schedule (4) of Item
7350-001-0001 and Items 7350-015-0223 and 7350-001-0079 of the Budget
Act of 2003 shall be transferred to the Workers' Compensation
Administration Revolving Fund established in Section 62.5 of the
Labor Code.
SEC. 52. The regulations adopted by the Industrial Medical Council
contained in Chapter 1 (commencing with Section 1) of Division 1 of
Title 8 of the California Code of Regulations, except for those
regulations repealed in Section 50 of this act, shall remain in
effect and shall be deemed to be regulations adopted by the
Administrative Director of the Division of Workers' Compensation.
The terms of all qualified medical examiners appointed by the
Industrial Medical Council shall be unaffected by the changes made by
this act. All qualified medical examiners appointed by the
Industrial Medical Council shall be deemed to be appointments made by
the Administrative Director of the Division of Workers'
Compensation. Any pending disciplinary actions against qualified
medical examiners shall not be affected by the changes made by this
act.
SEC. 52.5. (a) The Legislature finds and declares all of the
following:
(1) The State Compensation Insurance Fund is the workers'
compensation insurer of last resort insuring most of the small
employers in the state, and employers that cannot find insurance
elsewhere.
(2) Today, the State Compensation Insurance Fund covers over 50
percent of the market and its financial health is essential to the
economic well-being of the state.
(3) Employers in this state need reasonably priced workers'
compensation insurance.
(b) It is the intent of the Legislature that the Insurance
Commissioner review and analyze the financial condition, underwriting
practices, and rate structure of the State Compensation Insurance
Fund and report to the Legislature and the Governor on the potential
of reducing rates by July 1, 2004, and every July 1 thereafter.
SEC. 53. The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
SEC. 54. This act shall become operative only if Assembly Bill 227
of the 2003-04 Regular Session is enacted and becomes operative.
SEC. 55. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.