BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1244 (Gray) - Workers' compensation: providers: suspension ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 1, 2016 |Policy Vote: L. & I.R. 5 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 8, 2016 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- 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 AB 1244 (Gray) Page 1 of ? 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 AB 1244 (Gray) Page 2 of ? 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 AB 1244 (Gray) Page 3 of ? 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 AB 1244 (Gray) Page 4 of ? 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. AB 1244 (Gray) Page 5 of ? 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. -- END --