BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1687|
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THIRD READING
Bill No: AB 1687
Author: Fong (D)
Amended: 6/18/12 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 6-0, 6/13/12
AYES: Lieu, Wyland, DeSaulnier, Leno, Padilla, Yee
NO VOTE RECORDED: Runner
SENATE JUDICIARY COMMITTEE : 4-0, 6/26/12
AYES: Evans, Harman, Corbett, Leno
NO VOTE RECORDED: Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 47-24, 5/17/12 - See last page for vote
SUBJECT : Workers compensation
SOURCE : California Professional Firefighters
DIGEST : This bill requires notice to an employee of the
options available to object to a decision made pursuant to
a workers compensation utilization review process that
would modify, delay, or deny medical treatment. This bill
also authorizes an award of attorney's fees to an injured
employee, who successfully challenges an employer's
workers' compensation utilization review determination.
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ANALYSIS : Existing law establishes a workers'
compensation system that provides benefits to an employee
who suffers from an injury or illness that arises out of
and in the course of employment, irrespective of fault.
This system requires all employers to secure payment of
benefits by either securing the consent of the Department
of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
Existing law defines "utilization review" as utilization
review or utilization management functions that
prospectively, retrospectively, or concurrently review and
approve, modify, delay, or deny treatment recommendations
by physicians, based on medical treatment guidelines.
(Labor Code (LAB) Section 4610)
Existing law requires every employer to establish a medical
treatment utilization review process, in compliance with
specified requirements, either directly or through its
insurer or an entity with which the employer or insurer
contracts for these services. Those requirements include:
1. 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 regulations from the Administrative
Director;
2. These written policies must be reviewed annually by
actively practicing physicians and disclosed to a
physician or injured worker if used as the basis of a
decision to modify, delay, or deny services in a
specified case under review;
3. No person other than a licensed physician who is
competent to evaluate the specific clinical issues
involved in the medical treatment services may modify,
delay, or deny requests for authorization of medical
treatment;
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4. Utilization review processes must follow certain
specified timelines as provided in law, which are
generally 5 to 14 days for prospective review, 30 days
for retrospective review, or 72 hours in the event of
emergency medical circumstances for an injured worker;
and
5. The Administrative Director may assess, by order,
administrative penalties in the event of an employer,
insurer, or other entity fails to meet any of the
utilization review timeframes or fails to meet any other
utilization review requirements.
(LAB Section 4610)
Existing law provides that, when the payment of
compensation, which includes medical treatment, is
unreasonably delayed or refused, the amount delayed or
refused shall be increased by up to 25% or $10,000,
whichever is less. (LAB Section 5814)
Existing law provides that, in the event of an unreasonable
delay or refusal of payment of compensation, reasonable
attorney's fees incurred for enforcing the payment of
compensation may be awarded. (LAB Section 5814.5)
Existing law requires that the Administrative Director of
the Division of Workers' Compensation (DWC), in
consultation with the Commission on Health and Safety and
Workers' Compensation, must prescribe reasonable rules and
regulations for serving the employee or the employees
dependents certain specified notices. These notices
include:
1. Notice of the right to consult with an attorney;
2. Notices of any change in the amount or type of benefits
being provided, the termination of benefits, the
rejection of any liability for compensation, and an
accounting of benefits paid; and
3. Notices of rights to select the primary treating
physician, written continuity of care policies, requests
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for comprehensive medical evaluation, and offers of
regular modified, or alternative work.
(LAB Section 138.4)
This bill requires notice to an employee of the options
available to object to a decision made pursuant to a
workers' compensation utilization review process that would
modify, delay, or deny medical treatment. This bill also
authorizes an award of attorney's fees to an injured
employee, who successfully challenges an employer's
workers' compensation utilization review determination.
Comments
The requirement for insurers and employers to utilize
utilization review in the workers' compensation setting was
first created by SB 228 (Alarcon, Chapter 639, Statutes of
2003). The idea was to create a mechanism to transparently
address questions on if a request for medical treatment in
the workers' compensation system followed the medical
utilization guidelines set by the DWC. This bill focuses
primarily on an unusual facet of the utilization review
process: what happens when future medical treatment that
has already been stipulated to by the employer or insurer
gets modified, delayed, or denied by utilization review.
In the workers' compensation system, it is somewhat common
for cases for a settlement to require that the employer or
insurer continue to provide the injured worker future
medical treatment through the workers' compensation system
for his/her occupational injury. Since the case in the
main has been settled, generally speaking, the applicant
attorney would receive his or her fees (which is usually a
percentage of the monetary award) and move on to other
cases. In the event of the agreed-upon medical care
getting modified, delayed, or denied by utilization review,
the injured worker would be limited in his or her ability
to enforce the award of future medical benefits.
This bill seeks to address this by allowing the Workers'
Compensation Appeals Board, in the event of a dispute
arising from utilization review, to award reasonably
incurred attorney's fees in the enforcement of an award
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that specified future medical treatment. Additionally,
this bill includes a notice requirement for an injured
worker in the event of a modification, delay, or denial of
treatment pursuant to the utilization review process.
AB 1687 and Utilization Review Data
According to the Senate Labor and Industrial Relations
Committee, while this bill was moving through the Assembly,
several stakeholders questioned the numbers used by
Assembly Appropriations Committee in estimating the number
of utilization review requests that are denied. While the
Assembly Appropriations Committee estimated that between 6%
and 20% of all utilization review requests are denied,
citing data from the DWC, other stakeholders put the number
at closer to 80% to 90%. For the purposes of clarity, this
issue will be addressed, as well as put in the context of
this bill.
LAB Section 129 requires the DWC to audit insurers,
self-insured employers, and third-party administrators.
Each audit subject is audited every five years. As a part
of this audit, a random sample of requests for utilization
review authorization from an insurer, self-insured
employers, or third-party administrators are reviewed. The
findings from this portion of the audit are available on
the DWC Web site.
When looking at the samples from 2010 and 2011, the denial
rate for utilization review authorization is 23% and 27%,
respectively. For 2012, the audits are ongoing, but the
current denial rate is 17%. Additionally, this aggregation
is somewhat complicated by the fact that the utilization
review denial rates vary greatly from firm to firm; in some
cases, no utilization review requests were denied, while in
others virtually every utilization review request was
either delayed, modified, or denied.
In the context of this bill, this gives us some sense of
the pool of utilization review denials that would require a
notice. Additionally, this is the probable source of
claims that may trigger legal assistance, assuming the
above-samples are reflective of the workers' compensation
system as a whole. However, it is currently unknown how
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many of those denials involve workers with settled claims
that include future medical treatment. Additionally, it is
not known how many of those individuals would retain an
attorney to pursue an action in from of the Workers'
Compensation Appeals Board.
Finally, as it is unknown what kind of notice the
Administrative Director of the DWC would prescribe, as well
as the circumstances that such a notice would go out, it is
unknown how many notices would go out, as well as their
impact.
Prior Legislation
AB 584 (Fong, 2011) would have required a physician
conducting utilization review in the workers' compensation
system to be licensed in California. The bill was vetoed
by Governor Brown whose veto message read:
This bill would require that the physician conducting
utilization review of requests for medical treatment in
Workers Compensation claims be licensed in California.
This requirement of using only California-licensed
physicians to conduct utilization review in Workers
Compensation cases would be an abrupt change and
inconsistent with the manner in which utilization review
is conducted by health care service plans under the
Knox-Keene Act and by those regulated by the California
Department of Insurance.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, unknown,
likely significant increase annually in state workers'
compensation costs; generally 55% from the General Fund and
45% from special funds. Minor absorbable cost in 2012-13
from the Workers' Compensation Administration Revolving
Fund to the Department of Industrial Relations to revise
regulations.
SUPPORT : (Verified 8/16/12)
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California Professional Firefighters (source)
California Chiropractic Association
California Labor Federation
California Neurology Association
California School Employees Association
California Society of Industrial Medicine and Surgery
California Society of Physical Medicine and Rehabilitation
Glendale City Employees Association
Organization of SMUD Employees
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
Union of American Physicians and Dentists/AFSCME-Local 206
Voters Injured at Work
OPPOSITION : (Verified 8/16/12)
Acclamation Insurance Management Services
Allied Managed Care
Alpha Fund
American Insurance Association
California Association of Joint Powers Authorities
California Chamber of Commerce
California Coalition on Workers' Compensation
California Special Districts Association
California State Association of Counties
Kern County Superintendent of Schools
League of California Cities
Regional Council of Rural Counties
ARGUMENTS IN SUPPORT : Proponents note that existing law
protects injured workers in the workers' compensation
system by providing notices and ensuring that their
appellate rights can be utilized. However, proponents note
that existing notice requirements do not provide injured
workers information on how to object to utilization review
decision to modify, delay, or deny medical treatment.
Additionally, proponents note that for injured workers who
have settled their workers' compensation but continue to
receive future medical treatment through the workers'
compensation system, a utilization review dispute is
particularly difficult, as they would need to address the
delay, modification, or denial of medical treatment without
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representation.
Proponents believe that this bill addresses both these
issues by requiring that the injured worker receives a
notice of the options available to him/her to object to a
utilization review decision as well as allow the Workers'
Compensation Appeals Board to award attorney's fees in the
event of a successful objection to a utilization review
delay, modification, or denial of medical care.
ARGUMENTS IN OPPOSITION : Opponents argue that the
additional notification requirements are unduly
complicating and costly additions to a utilization review
system that is performing a valuable function of preventing
inappropriate treatment that is not evidence-based, and
which forces treating physicians to practice evidence-based
medicine because the failure to provide proper
documentation for treatment requests will result in delays
due simply to inadequate medical information. Opponents
also argue that there are already enforcement provisions
for unreasonable delays, denials or modifications, but that
good faith use of the utilization review system should not
be made more costly. Finally, opponents argue that this
bill creates more frictional costs which are currently
trying to be eliminated from the system.
Opponents also argue that giving the ability to the
Workers' Compensation Appeals Board to award attorney's
fees as provided in this bill will add costs to the system,
and that the DWC already has an Information and Assistance
Unit located in 24 places throughout California to help
injured workers in these sorts of cases.
ASSEMBLY FLOOR : 47-24, 5/17/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Butler, Charles
Calderon, Campos, Carter, Cedillo, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani,
Gatto, Gordon, Hall, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Lara, Ma, Mendoza, Mitchell,
Monning, Pan, V. Manuel P�rez, Portantino, Solorio,
Swanson, Torres, Wieckowski, Williams, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Donnelly, Beth
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Gaines, Garrick, Grove, Hagman, Halderman, Harkey,
Jeffries, Jones, Knight, Logue, Mansoor, Morrell,
Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao,
Wagner
NO VOTE RECORDED: Buchanan, Cook, Fletcher, Gorell, Bonnie
Lowenthal, Miller, Perea, Skinner, Yamada
PQ:m 8/20/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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