02 Dec 2011

Does an Employee Have to Obtain a Comprehensive Medical-Legal Evaluation Prior to Disputing a Utilization Review Determination?

In State Compensation Insurance Fund v. Workers' Comp. Appeals Bd. (Sandhagen) (2008) 44 Cal.4th 230 [73 Cal.Comp.Cases 981] (Sandhagen), the California Supreme Court clarified that an employer did not have the option of going through either UR or the QME process in addressing a treatment request, but rather, was required to have the request go through UR. A related, and equally significant question, is whether, once the employer has placed a treatment request through UR, whether the employee must have the UR determination reviewed by a QME pursuant to Labor Code Section 4062 prior to having the UR denial adjudicated before the Workers' Compensation Appeals Board (WCAB).

In Morales v. General Design Concepts, ADJ 3402228, a panel of commissioners from the WCAB addressed this specific question. In Morales, defendant filed a Petition for Removal, requesting that the Appeals Board rescind the Order dated September 22, 2011, wherein the Workers' Compensation Administrative Law Judge (WCJ) ordered this case continued to trial, contending applicant failed to object to a utilization review (UR) decision that she did not require wrist surgery and that she was required to obtain a comprehensive medical-legal evaluation as required by Labor Code sections 4610 and 4062 prior to being able to adjudicate the issue before the WCAB.

Turning first to the procedural issue presented in Morales, the commissioners noted:

As can be seen, the Supreme Court in Sandhagen characterized the obligation of an employer to follow the UR process as mandatory. In doing this, the employee's right to address a UR denial pursuant to section 4062 was described with the word "may," which suggests that the process is optional for an employee. However, the actual holding in Sandhagen is that an employer must follow the UR process. Sandhagen did not hold that an employee could challenge a UR denial by proceeding directly to a hearing without first following the section 4062 process.

The commissioners then proceeded to discuss Justice Kennard's concurring opinion in Sandhagen, in which Justice Kennard noted:

Certain language in the majority's opinion, however, might be misread to suggest that utilization review is a dispute-resolution process that replaces the 'cumbersome, lengthy, and potentially costly' dispute-resolution process that previously applied under former section 4062. As I understand the statutory scheme, utilization review process adds a new step that the employer must take before section 4062 comes into play, but it does not replace the section 4062 process. Section 4062 remains the means for resolving any dispute between the parties regarding medical treatment... [S]ection 4610's utilization review is not to be conflated with the process of dispute resolution. Section 4062 continues to govern medical treatment disputes, as it did before the reforms. The statutory scheme does not create two separate dispute-resolution tracks for employers and for employees. Instead, it sets forth two successive stages of a single-track process: The employer first proceeds with utilization review under section 4610, and then the employee may dispute the employer's conclusion under section 4062. The fact that the 'employee (and only the employee)' initiates the dispute-resolution process set forth in section 4062 is not intended to exclude employers from that process: rather, it merely reflects the circumstance that utilization review has been interposed as a threshold step. The employer who seeks to object to a proposed medical treatment must follow the utilization review process. If that process results in a modification, delay, or denial of the requested treatment, then naturally the employee is the party that invokes the section 4062 dispute-resolution mechanism, because the employee is the aggrieved party (Emphasis in original.)

Based on this, citing the "plain language" of sections 4610 and 4062, the commissioner found that the section 4062 process was not optional, but actually required, if the employee was going to dispute a UR determination. The commissioners in Morales noted:

In this case, it is apparent that applicant objects to the UR determination. But instead of objecting and seeking further evaluation by Dr. Hasday pursuant to section 4067, applicant filed a DOR, apparently relying on the medical reports of Dr. Haronian, the treating physician. As we have seen, this is not allowed by sections 4610 and 4062. We also note that defendant has scheduled an examination by Dr. Hasday on January 11, 2012. Therefore, we grant removal and take this case off calendar pending evaluation by Dr. Hasday. After receipt of Dr. Hasday's report, either party may request further hearing if the pending issues are not resolved.

Thus, the commissioners required applicant to pursue the evaluation with Dr. Hasday rather than proceed directly to the expedited hearing. This ruling carries huge implications for the workers' compensation system. First, repeatedly emphasized in Sandhagen is that the UR process was intended to expedite the resolution of treatment disputes. The holding in Morales will require the applicant to first timely object to the UR determination pursuant to Labor Code Section 4062. If no panel has yet been assigned to the case, the applicant will have to go through the panel "process" so as to obtain a panel QME. Either party would then have the right to depose the panel QME. Once that is done, applicant would then have to file a request for an expedited hearing and would then have to wait for the WCJ's decision. This process could easily, at a minimum, take months to complete.

Additionally, as mentioned above, Labor Code Section 4062 provides that the "objecting party shall notify the other party in writing of the objection within 20 days of receipt of the report if the employee is represented by an attorney or within 30 days of receipt of the report if the employee is not represented by an attorney." What if applicant does not timely object to the UR denial? This point was not emphasized in Morales. What happens where applicant does not timely object to the UR determination pursuant to Labor Code Section 4062, yet the UR determination is clearly defective?

Finally, where the employee feels the treating physician's report is adequate for purposes of supporting an award of treatment, and where the employer feels that the UR determination is adequate for purposes of denying the treatment, from a public policy standpoint, should the employee be forced to engage in further discovery which will delay and possibly undermine the treating physician's recommendation of treatment?

In conclusion, the panel's holding in Morales carries significant implications for the workers' compensation system. It remains to be seen where this issue goes, however, one must seriously question an outcome that is going to significantly delay the resolution of many of these treatment disputes, create significant additional costs for the system, not to mention require numerous additional procedural steps prior to an issue being deemed ready for adjudication.