4th DCA Ruling Removes Ambiguity about which Disputes are Subject to IBR By Sherri Okamoto

"..he sees all this litigation as an example of why 'changing the rules in the middle of the game' is never a good idea, 'in sports or in law.'"    Alan Gurvey

Medical providers say Tuesday's ruling by the California 4th District Court of Appeal that the Workers' Compensation Appeals Board has the authority to decide medical billing disputes that were pending prior to the passage of SB 863 averted a catastrophe for doctors who treat injured workers.

Insurers, on the other hand, are disappointed. They had hoped unsettled disputes would instead be directed to the independent medical bill review process established by the 2012 reform bill.

Reid L. Steinfeld, general counsel for the Grant & Weber collections company, said Wednesday that he thought the "appellate court got it right," based on his read of Tuesday's opinion.

"It was a well-reasoned decision," he reflected, "and I'm glad the court looked at the totality of the circumstances and said we're not going to go back in time and undo things."

In passing SB 863 in 2012, the Legislature expressly noted that existing law at the time did not provide for medical billing and payment experts to resolve billing disputes. Such disputes were being submitted to workers’ compensation judges "without the benefit of independent and unbiased findings on these issues."

The Legislature said it felt that the resolution of billing disputes required "technical and specialized expertise," and so it created an administrative procedure for the state to retain the services of an independent bill review organization to make these decisions. The Department of Industrial Relations contracted with Maximus Federal Services to conduct IBR. Maximus also conducts independent medical review – the corollary process established by the Legislature to resolve treatment disputes.

SB 863 went into effect on Jan. 1, 2013, providing that its amendments to the Labor Code would apply to "all pending matters, regardless of date of injury, unless otherwise specified."

This language formed the heart of the dispute between Elite and the California Insurance Guaranty Association at the 4th DCA, in a case titled CIGA v. WCAB (Elite Surgical Care Centers).

The California Insurance Guarantee Association and other carriers took the position that the language of the bill – contained in Section 84 – meant that all billing disputes in existence as of Jan. 1, 2013, had to go through IBR.

The 4th DCA disagreed, finding the WCAB retained jurisdiction to decide the billing dispute between Elite and CIGA, despite the passage of SB 863 while the dispute was still pending.

As the court noted, "SB 863 sets forth a number of conditions precedent that must be met, as well as strict time limits within which those conditions must be met, before a provider may seek access to the IBR process to resolve a billing dispute."

But, the court said it considered the language of the act to be "ambiguous" as to whether IBR was only supposed to apply to disputes that arose with respect to injuries that occurred after the effective date of the legislation.

In light of this ambiguity, and the fact that the deadlines for Elite to initiate the IBR process had passed years before SB 863 was enacted, the court reasoned that it would essentially be left without any means to get its liens adjudicated if the WCAB could not rule on them.

Such an outcome, the court said, could not have been what the Legislature had intended, and so the WCAB had to have jurisdiction to resolve the dispute between Elite and CIGA.

Carl Brakensiek, executive director of the California Society of Industrial Medicine, contended that had the court agreed with the arguments presented by CIGA, this would have been a "terrible outcome" that "would have created an unreasonable burden on virtually all lien claimants and a huge windfall to the payer community."

CSIMS had filed an amicus brief in the matter, supporting the WCAB's opinion that the independent bill review process established by SB 863 didn't apply retroactively.

Michael McClain, general counsel for the California Workers' Compensation Institution, said the group was "disappointed that the court found the discord between the language of Section 84 of SB 863 and the practical implementation of the IBR process to be ambiguous."

The CWCI had joined the dispute in support of CIGA. McClain pointed out that "we argued in our brief, the creation of the IMR process could have been developed by regulation" to resolve the ambiguity.

But the WCAB had dodged the chance to specify whether bills for services from before 2013 had to go through IBR when it put out its final practice and procedure rules on the matter last October. The board said it was going to let case law develop on this issue instead.

Now the 4th DCA has weighed in, but whether its decision will be the last word on the matter remains to be seen.

Both CIGA and its attorneys from Heggeness, Sweet, Simington & Patrico said Wednesday that they were reviewing the court's ruling and had no immediate comment on how they will proceed.

Anthony J. Dain and Brian J. Kennedy of Procopio, Cory, Hargreaves & Savitch represented Elite before the 4th DCA.

Kennedy said that they too had no immediate comment on the court's ruling.

Defense attorney Richard "Jake" Jacobsmeyer of Shaw, Jacobsmeyer Crain & Claffey said he thought that the 4th DCA "pointed out some very logical reasons that application of IBR to cases, before the process became available to implement IBR, effectively precluded application of the process to prior cases."

Although SB 863 did not clearly set out an implementation date for IBR, he noted, "it did set out an implementation process that simply did not exist prior to the effective date of the statute or the regulations."

As the implementation process was clearly set out by statute, Jacobsmeyer said it seemed to him that "one would have to torture the language of the implementing statute" to make IBR apply to treatment rendered before 2013.

Jacobsmeyer went on to point out that the 4th DCA found the Legislature had been "far less ambiguous with respect to the prospective application of the newly created IMR process" than with IMR.

IMR expressly applies to any dispute over a utilization review decision regarding treatment for an injury occurring on or after Jan. 1, 2013 and any dispute over a utilization review decision if the decision is communicated to the requesting physician on or after July 1, 2013, regardless of the date of injury.

"Because of the legislature's more specific language in the application of IMR, the same issue regarding application to disputes pending at the time of passage simply does not come up in IMR," Jacobsmeyer opined.

IBR and IMR were two of the biggest changes to the comp system from SB 863, but Dr. Rupali Das, the executive medical director for the DWC, has reported that IBR is not being used as much as IMR.

Maximus got more than 200,000 IMR applications since SB 863 created an administrative process for resolving disputes when a medical treatment request is denied by utilization review, Das said in September.

As of mid-November 2014, 2,670 IBR applications had been filed. Of the 1,113 which had decisions as of that date, 743, or 67%, were overturned and 370 (33%) were upheld, said Division of Workers' Compensation spokesman Peter Melton.

The question of whether SB 863 took away the WCAB's ability to continue to resolve medical disputes after IMR came into existence has also been hotly litigated, yielding two en banc board decisions and one significant panel decision so far this year.

The WCAB shook up the comp community in February with the first of its two en banc decisions in Dubon v. World Restoration. In this first decision, the board asserted its authority to decide issues of medical necessity for utilization-review decisions that are untimely or suffering from "material procedural defects." 

After the decision came down, the composition of the board changed. Commissioner Alfonso Moresi stepped down and former Department of Industrial Relations Chief Counsel Kathy Zalewski came on to the board.

The board issued a new en banc decision in October, retreating from its earlier stance. This time, the board said that issues of medical necessity would come to it instead of going to IMR only if the UR decision was untimely.

This decision is being appealed to the 4th DCA.

Last month, a WCAB panel comprised of Chairwoman Ronnie Caplane, Commissioner Frank Brass and Deputy Commissioner Neil Sullivan put out a decision in Bodam v. San Bernardino County which held that utilization-review decisions that are not timely communicated to a worker and treating doctor are invalid. This means that workers' compensation judge can look at the medical evidence and decide what treatment the worker should get.

The full board deemed this panel decision "significant," meaning it is citable but not binding precedent.

Applicant attorney Alan Gurvey of Rowen, Gurvey & Win said Wednesday that he sees all this litigation as an example of why "changing the rules in the middle of the game" is never a good idea, "in sports or in law."

While he said he remains convinced that the WCAB is "the proper venue to be making determinations," he acknowledged, "once the law changed, that's something the courts have to defer to."

Gurvey said he had seen SB 863 as an effort by employers and insurance carriers to wrest much of the board's decision-making authority away, but as Dubon, Bodam and the Elite decisions show, "some issues will still be relegated to the WCAB because of procedural problems," so payers are simply "not going to have it all in all cases."

Published on 12/18/14 by WorkCompCentral