W.C.A.B. Jurisdiction over OMFS Disputes: When is it Proper to File a Lien?

Before SB863, the W.C.A.B. had jurisdiction over all bill review disputes, including those over the Official Medical Fee Schedule (OMFS). Labor Code section 4603.2 now provides the procedure by which carriers and providers resolve OMFS disputes using internal appeal and Independent Bill Review (IBR). Ideally, the rules state that once a provider has performed an authorized service, it submits a bill with supporting documentation to defendant. Defendant then has 30 days to object or 45 days to pay (and possibly object to the remainder of the bill). Whether defendant objects or pays, it must serve an explanation of review (EOR) outlining the reasons for any deductions. If the provider disagrees with the amount paid, it has 90 days to send a request for 2nd review to the defendant. The defendant then has 14 days to issue another EOR providing the reasons for any reductions and 21 days to pay. If the provider still disputes the amount paid by defendant, it must submit a request for IBR within 30 days.

Experience has shown that defendants routinely underpay providers in the hope that they are not sophisticated enough to navigate the appeals process or they will trip up on a technical requirement. Providers often neglect timelines, use incorrect forms, or neglect to submit the statutorily required information. This is a hostile process where defendants hire bill review companies who, either deliberately or due to incompetence, use tactics to delay the production of an EOR (such as claiming they never received a bill or request for 2nd review), and produce inaccurate calculations of fee schedule and contractual rates. Providers should hire outside vendors who are skilled and knowledgeable to optimize the recovery of providers and protect their rights.

This internal appeal and IBR procedure was intended to take OMFS disputes outside of the W.C.A.B. and put them squarely in the jurisdiction of IBR. But where does jurisdiction lie (or “rest”) when the underlying dispute is over OMFS reimbursement, but where defendant has served a non-compliant EOR?  Labor Code sections 4603.2 or 4603.3 and the related Rules of the Administrative Director establish the duties defendant owes to medical treatment providers. These include a duty to provide an EOR within 30 days for any itemization or a portion thereof that is contested, denied, or considered incomplete and state all additional information required to make a decision (Lab. Code § 4603.2(b)(2)). The EOR shall be provided in the manner prescribed by the administrative director that shall include the basis for any adjustment, change, or denial of the item or procedure billed and information on whom to contact on behalf of the employer if a dispute arises over the payment of billing (Lab. Code § 4603.3). The Rules of the Administrative Director further require the EOR to include a clear and concise explanation of the basis for the objection to each contested procedure and charge using the DWC Bill Adjustment Reason codes and DWC Explanatory Messages contained in Appendix B, and the telephone number of the person or office to contact for additional information concerning the objection. The paper EOR must include all of the data elements indicated as “R” (Required) in Appendix B, including the DRG used by defendant, the Payment Status Code, and the Date Bill Received.

In many cases, defendants will throw the entire kitchen sink into the EOR. They will assert contractual deductions when no contract exists, falsely state that a procedure was not certified or was not medically necessary, and allege that the provider used the wrong DRG. The defendant is statutorily obligated to provide a telephone number to call for questions regarding the EOR, but most often, the customer service representative has no additional information to provide.

If the provider disputes the amount paid, the provider may request a second review within 90 days (Lab. Code § 4603.2(e)(1)). Labor Code section 4603.6 requires that a second review be received by the provider before that provider may request IBR. If the reasons stated by defendant in the EOR are not valid and the telephone number provided is to a customer service representative who cannot provide additional information, the provider may not have the necessary information to file a request for second review or IBR.  Also, if defendant delays in issuing a second EOR, then defendant has stalled the appeal process by effectively preventing the provider from filing for IBR. In an all too common example, the provider submitted a request for second review and each time the provider follows up after 14 days, 30 days, 60 days, etc., defendant’s representative says they don’t know why the request hasn’t been reviewed but that they “will escalate this to the supervisor and someone will contact you.” In each of these situations, defendant has breached a duty to the provider.

An assertion by the medical treatment provider that defendant has waived any objection to the amount of the bill because defendant allegedly breached a duty prescribed by Labor Code sections 4603.2 or 4603.3 or by the related Rules of the Administrative Director is within the jurisdiction of the W.C.A.B. (Title 8 CCR §10451.2). If the initial review is noncompliant, and the carrier never issues a second review, then the provider’s only recourse is to file a lien before the W.C.A.B. All too often, defendants refuse to honor these state mandated bill review procedures and tell providers that they will not pay unless the provider files a lien. This acts as a barrier to recovery for treatment where the amount in dispute is less than the cost of filing and litigating a lien. In these cases, providers should file a complaint with the Audit Unit of the Division of Worker’s Compensation to prompt an investigation into such unfair business practices as a violation of defendant’s duty to medical providers under Labor Code sections 4603.2 or 4603.3 and the related Rules of the Administrative Director. The Audit Unit audits insurance companies, self-insured employers, and third-party administrators to ensure that they have met their obligations under the Labor Code and the administrative director’s regulations by assessing penalties and ordering that unpaid compensation be paid.


For more information on how to file a complaint with the Audit Unit, please visit: http://www.dir.ca.gov/dwc/Audcomp.pdf

Providers can obtain an Audit Referral Form by following this link: http://www.dir.ca.gov/dwc/Auditref.pdf