BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1244 (Gray) - Workers' compensation:  providers:  suspension
          
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          |Version: August 1, 2016         |Policy Vote: L. & I.R. 5 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 8, 2016    |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.


          


          Bill  
          Summary: AB 1244 would make several changes to the workers'  
          compensation system. 


          Fiscal Impact:



           
                 The Department of Industrial Relations (DIR) estimates  
               cost of this bill to be $10.9 million initially and $10.2  
               million ongoing.

                  o         The provisions relating to suspending doctors  
                    from the workers compensation system would require  
                    additional staff to (1) review whether providers  
                    should be removed from the system, and (2) handle any  







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                    due process issues, at a cost of $373,000 annually.

                  o         The provisions requiring filing for attorney  
                    disclosure forms at each local office would require  
                    additional staffing in each office to handle the  
                    filing, at a cost of $1.1 million annually.

                  o         The provisions which would limit liability for  
                    payment by employers for medical treatment for  
                    cumulative trauma, as specified, would likely generate  
                    a significant amount of new liens, requiring  
                    additional staffing to handle the increase in lien  
                    litigation. DIR estimates a cost of $9.4 million for  
                    additional judge teams to accommodate the increased  
                    workload.

                 The Department of Health Care Services (DHCS) would  
               incur minor and absorbable costs.




          Background: Current law establishes a workers' compensation system that  
          provides benefits to an employee who suffers from an injury or  
          illness that occurs during the course of employment,  
          irrespective of fault.  This system requires all employers to  
          secure payment of benefits by either (1) securing the consent of  
          DIR to self-insure, or (2) securing insurance against liability  
          from an insurance company authorized by the State.


          Proposed Law:  
           This bill would, among other things, do the following:
                 Require the administrative director (AD) of DIR's  
               Division of Workers Compensation (DWC) to suspend medical  
               service providers from participating in any capacity in the  
               workers' compensation system if any of the following is  
               applicable:


                  o         Convicted of a felony.


                  o         Convicted of a misdemeanor involving fraud or  








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                    abuse of the Medi-Cal program, Medicare program, or  
                    workers' compensation system.


                  o         Convicted of a misdemeanor involving fraud or  
                    abuse of any patient, or otherwise substantially  
                    related to the qualifications, functions, or duties of  
                    a provider of service.


                  o         Suspended from the federal Medicare or  
                    Medicaid programs due to fraud or abuse.


                  o         Lost or surrendered a license, certificate, or  
                    approval to provide health care.


                 Require the AD to provide written notice to the medical  
               provider who has been identified as eligible for  
               suspension. The notice shall give information on how the  
               medical provider can request a hearing to contest his or  
               her eligibility for suspension. If the medical provider  
               does not respond to the notice within 30 days, he or she is  
               automatically suspended.


                 Require DWC to hold a hearing on the suspension of a  
               medical provider within 30 days of a request. Such a  
               request would stay any suspension of a medical provider.


                 If, during the hearing, the AD finds that the medical  
               provider is eligible for suspension due to the reasons  
               listed above, the AD must suspend the medical provider  
               immediately. Upon suspension, the AD must notify the  
               relevant licensing, certification, or registration board.


                 Prohibit a provider of medical services, whether an  
               individual, clinic, group, corporation, or other  
               association from submitting or pursuing a claim for payment  
               from a payor, unless the claim for payment has been reduced  
               to final judgment or the services or supplies are unrelated  








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               to a violation of the laws governing workers' compensation.


                 Require that the Director of DCHS notify the  
               Administrative Director of DWC if a medical provider is  
               added to the Suspended or Ineligible Provider List.


                 Establish new disclosure requirements and prohibit the  
               payment for any legal services or expenses incurred prior  
               to filing a written disclosure form with the Workers'  
               Compensation Appeals Board.


                 Exclude from existing employer liability limitations  
               claims for occupational disease or cumulative injury filed  
               on or after January 1, 2017, except under specified  
               circumstances, including when the treatment is provided by  
               a physician in a medical provider network established by  
               the employer or when the treatment is provided by the  
               employee's personal physician.







          Staff  
          Comments: This bill's suspension process would reduce workers'  
          compensation fraud by modifying the incentives facing medical  
          providers in the State's workers' compensation system.  
          Specifically, the bill, modeled on a similar process for  
          Medi-Cal, would create a suspension process for medical  
          providers who (1) commit serious crimes, or (2) are involved in  
          fraudulent activity. Currently, the workers' compensation does  
          not contain a suspension process for medical providers beyond  
          removal from the Qualified Medical Examiner (QME) list.
          Thus, the bill would follow the lead of Medi-Cal and require the  
          suspension of a medical provider if the medical provider is  
          convicted of a felony, a misdemeanor connected to fraud, a  
          misdemeanor connected to patient or privilege abuse, or the  
          medical provider's license is suspended or revoked. The bill  
          then would provide for a hearing process where the medical  








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          provider can contest the applicability of suspension - such  
          mistaken identity or a later plea deal that reduces a felony to  
          a non-eligible misdemeanor. If the medical provider does not  
          request a hearing, the suspension would take effect within 30  
          days of notice.


          Similar to Medi-Cal, the bill would require that a suspended  
          medical provider be excluded from the system and denies further  
          payment for services. In the case of Medi-Cal, however, current  
          law allows for a suspension of any and all payments in the case  
          of a medical provider being charged with fraudulent activity.  
          This bill instead would suspend the provider and denies further  
          payment after conviction and the completion of the suspension  
          process, unless the suspension is for non-fraud related reasons  
          or payment was already provided.


          The bill would require DHCS to communicate with DIR when a  
          medical provider is added to the Medi-Cal Suspended or  
          Ineligible Provider List. Depending on the reasons for a medical  
          provider being added to the Medi-Cal list, this could trigger a  
          suspension process by the DWC as well.


          Current law requires an employer to authorize treatment for an  
          alleged injury within one working day after the employee (1)  
          files a specified claim for workers' compensations and (2)  
          requires the continuation of treatment until the date the  
          liability (limited to $10,000) for the claim is accepted or  
          rejected. This bill would exclude claims for occupational  
          disease or cumulative injury filed on or after January 1, 2017  
          (1) unless treatment is provided by the employee's personal  
          physician or a physician in a medical provider network  
          established by the employer, or (2) if the individual is  
          represented by an union that has a trust fund that would be  
          liable for the treatment if the employer as not liable for the  
          payment. The result of these provisions is that cumulative  
          injury costs and potential fraud would likely be curtailed.  
          However, they also could limit the ability for workers with  
          occupational disease and cumulative injury issues to have claims  
          accepted.










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          Any local government costs resulting from the mandate in this  
          measure are not state-reimbursable because the mandate only  
          involves the definition of a crime or the penalty for conviction  
          of a crime.
          




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