Court Crushes Constitutional Challenge To Independent Medical Review

In Frances Stevens v. Workers’ Compensation Appeals Board, Outspoken Enterprises, Case: A143043 1st District, Division 1, the California Court of Appeal upheld the constitutionality of California Labor Code Section 4610.6 which mandates utilization review (UR) and independent medical review (IMR). Together these processes are the cornerstone of savings implemented by workers’ compensation reform legislation SB 899 and SB 863. IMR has also been the target of multiple attacks due to the limitations it imposes on challenges to decisions made under its authority.

Ms. Stevens fractured her right foot in October 1997, and by 1999 she was diagnosed with complex regional pain syndrome. By 2013 she was using a wheelchair, became depressed and was determined to be permanently totally disabled by the WCAB. In July 2013 her treating physician prescribed four medications and approval for “a home health aide for eight hours a day, five days a week to help with bathing and dressing, moving about her home, preparing meals and picking up medications from the pharmacy.” The State Compensation Insurance Fund denied all treatments after the UR determined that the drugs were not appropriate and the home health aide was not warranted, in part because the proposed tasks for the aide were not medical in nature. Ms. Stevens appealed the UR decision to IMR. The IMR physician, whose name was withheld in accordance with statute, also denied the prescribed medication and home aide, noting that medical treatment does not include services like shopping, cleaning or laundry.

Ms. Stevens sought reversal of the IMR decision by the WCAB and claimed: (1) that the Labor Code Section 4610.6 violated the California Constitution’s separation of powers clause, (2) workers’ compensation decisions are subject to appellate review, (3) the workers’ compensation system is to accomplish substantial justice, and (4) the IMR system violated principles of due process. The WCJ and the WCAB both held that the Board has no “authority to determine the constitutionality of the IMR statutes,” and Ms. Stevens had failed to prove by clear and convincing evidence any of the five grounds set forth in the statute as reviewable by the courts. Ms. Stevens sought review of the WCAB decision by the California Court of Appeal.

The Court found that the California Constitution plainly gives the Legislature plenary power over design of the workers’ compensation system, meaning that the Legislature can devise a system that “modified the reach of the state Constitution’s due process clause.” This power to legislate within workers’ compensation is limited only by federal law.

The Court of Appeal also found that the IMR process does not violate the Constitution’s Section 4 requirement that the decisions of the WCAB must be reviewable by the appellate courts and that the system provide substantial justice. The Court noted that not only may the courts still review the decision of the WCAB (albeit within limits imposed by the legislature), the courts never had the power to make a decision on medical necessity. Rather, the Court of Appeal only had the power to determine if the decision of the WCAB was supported by the evidence. Since the IMR process requires the agreement of two medical reviewers, “the conclusions of at least two physicians would have virtually always constituted substantial evidence” in the past.

Addressing Ms. Steven’s argument that the IMR statute violated federal due process by shielding the name of the reviewing physician and limiting the right to cross examine that reviewer, the Court held that the statute contains ample protection of an applicant’s due process rights. It reached this conclusion by noting that workers’ compensation IMR compares favorably to IMR available to a consumer under the Knox-Keene Health Care Service Plan. The court noted that the workers’ compensation program contains protections not found in the Knox-Keene system, a system held to meet constitutional standards by California Court of Appeal.

Finally, the Court found that the WCAB failed to properly exercise its one power of review of Ms. Steven’s claim for a home aide. Section 4610.6 permits the courts to determine if the IMR review was “based on a plainly erroneous fact that is not a matter of expert opinion.” The Court provided an illustrative hypothetical in which “treatment was not suitable for a person weighing less than 140 pounds, but the information submitted for review showed the applicant weighed 180 pounds.” From this the Court concluded that the WCAB failed to determine if a factual error was made when the IMR reviewer denied home aide assistance because medical treatment does not include personal care. The Court concluded “[I]f the Board were to conclude that the IMR determination incorrectly affirmed the denial of these services by wrongly interpreting the MTUS, and it were to find there are no other reasons supporting the denial, it would have the power to conclude that the determination was adopted without authority.”

Haight Brown & Bonesteel is proud to have represented the California Chamber of Commerce and to have drafted the Chamber’s amicus briefs in Stevens. Further litigation on the issues raised in the case is anticipated because the Applicant has the right to seek review of the constitutional issues by the California Supreme Court. We further expect that Ms. Stevens and other applicants will make use of the determination in Stevens that the WCAB may judge whether the MTUS was properly interpreted in the denial of a prescribed treatment.

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October 30, 2015