Employment Law Alert: Board Rules That the WCAB, Not IMR, Must Decide On Medical Treatment

In a major interpretation of the utilization review scheme put into place by SB 893 2012, the WCAB in Jose Dubon v. World Restoration, Inc.; and State Compensation Insurance Fund, February 27, 2014, determined that the Board, not IMR, must decide the reasonableness of requested medical treatment when the utilization review report (hereafter “UR”) is defective. In this matter the UR report was prepared in response to a request for authorization for back surgery. Prior to the UR evaluation, the applicant had been evaluated by the primary treating physician, a secondary treating orthopedic surgeon, an AME, and had undergone an MRI, EMG, NCV and physical therapy. The defendant carrier submitted to the UR physician only the report of the orthopedic surgeon and the MRI along with other records that were not identified in the UR report. The UR report concluded that in the absence of imaging showing nerve compression or that conservative treatment had been ineffective, surgery was not reasonably necessary.

Reacting to the denial of treatment, the applicant requested independent medical review (hereafter “IMR”) and filed a request for expedited trial. After trial the WCJ ruled that the defendant’s UR was procedurally defective due to its failure to review all the available medical reports and failure to list all the reports reviewed. Nevertheless, the WCJ held that the procedural defect could only be resolved through the IMR process and the WCJ could not order the treatment. The applicant sought reconsideration and the WCAB determined that the matter was of sufficient importance to warrant an en banc review.

In its analysis the appeals board determined that a UR report is invalid if it “suffers from material procedural defects that undermine the integrity of the UR decision.” “Minor technical or immaterial defects” will not invalidate a UR report. To have not provided the UR physician with the AME reports or the reports describing the imaging and conservative treatment, whose absence was integral to the UR decision, constituted a material procedural defect that invalidated the UR report. The Board also noted that the California Supreme Court determined in Sandhagen that failure to comply with the time constraints on UR is a material procedural defect. The Board did not speculate about what defects might be minor or immaterial.

In the most dramatic step in its analysis, the WCAB ruled that once the UR report is determined to be invalid, then the WCAB must decide the medical necessity of the requested treatment. Noting that the scheme for determining medical necessity is governed by several subsections within CA Labor Code §§ 4610 and 4610.5 (all code references below are to the CA Labor Code), the WCAB found that the IMR process for review of UR decisions depends on the existence of a valid UR. In the absence of a valid UR, §4610.5 does not apply and the process is subject to §4604, which vests in the appeals board the jurisdiction to determine controversies, “except as otherwise provided by Section 4610.5.” Though §4062(b) requires that an employee’s objection to denial of medical treatment “shall be resolved only in accordance with the independent review process,” the WCAB ruled that it is the WCJ who must make the decision if the UR process is determined to be defective. The appeals board warns, however, that if the alleged defect is held to be insubstantial then the treatment decision must be made by IMR. So, to ensure a timely objection, the applicant must concurrently challenge the process before the WCAB and request an IMR review.

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March 4, 2014