As part of the omnibus legislation embodied by SB 1160, which was signed into law in September 2016, Labor Code Section 4610 was enacted. Labor Code Section 4610(g)(4) mandates:
A utilization process that modifies or denies requests for authorization of medical treatment shall be accredited on or before July 1, 2018 and shall retain active accreditation while providing utilization review services, by an independent, nonprofit organization to certify that the utilization review process meets specified criteria, including, but not limited to, timeliness in issuing a utilization review decision, the scope of medical material used in issuing a utilization review decision, peer to peer consultation, internal appeal procedure, and requiring a policy preventing financial incentives to doctors and other providers based on the utilization review decision. The administrative director shall adopt rules to implement the selection if an independent, nonprofit organization for those accreditation purposes. Until those rules are adopted, the administrative director shall adopt URAC [Utilization Review Accreditation Commission] as the accreditation organization.
URAC is a non-profit healthcare accreditation organization based in Washington DC. Last week, it was reported that approximately 30% of the UR firms operating in California are not yet accredited despite the accreditation requirement. URAC maintains a directory of accredited UR companies that can be used to conduct a search and to ascertain accreditation status of a UR firm.
The administrative director has advised that the regulations authorized by Labor Code Section 4610(g)(4) have been drafted by the DWC but are still under review.
In August 2018, in King v. CompPartners, (5 Cal. 5th 1039), the California Supreme Court held that an injured worker’s exclusive remedy was solely within the workers’ compensation system—and that the worker’s tort claim was barred—for alleged medical malpractice by a UR physician in denying authorization for medication that the patient had routinely been taking for his work injury and failing to warn of the potentially harmful effects of sudden withdrawal or to recommend a plan for weaning the patient off the medication.
Although Labor Code section 3600 and 3602 provide the “sole and exclusive remedy of the employee,” members of the Court were concerned with regard to the UR process as it was currently operating and suggested that the Legislature evaluate action that might be taken to make UR a safe and efficient system.
Justice Liu observed in his concurring opinion, “the undisputed facts in this case suggest that the workers’ compensation system, and the utilization review process in particular may not be working as the Legislature intended.” He concluded his opinion by suggesting, “The Legislature may wish to examine whether the existing safeguards provide sufficient incentives for competent and careful utilization review.”
Justice Cuellar also observed, “Even now, those safeguards and remedies may not be set at optimal levels, and the Legislature may find it makes sense to change them.”
Currently, Labor Code Section 4610 provides no penalty or other consequence for a UR company continuing to operate and to issue UR determinations without the mandatory accreditation.
In light of the 30% rate of unaccredited UR companies operating in the California workers’ compensation system despite Labor Code Section 4610’s mandate for accreditation by July 1, 2018, perhaps the Legislature should evaluate potential penalties and safeguards with regard to UR firm accreditation in conjunction with its examination of the UR system overall, as suggested by members of the California Supreme Court.