The California Supreme Court, on August 23, 2018, issued its opinion affirming a Court of Appeal’s judgment dealing with the concept of Utilization Review and Independent Medical Review and the limitations placed on employee remedies for work-related injuries as set forth specifically in the Labor Code. Labor Code §3600 sets forth that the remedy for recovery under the Work Comp system differs substantially from tort reme­dies which exist.  The rationale for this is that the Workers’ Com­pen­­sa­tion lia­bility pro­vided is without regard to negligence of the employer for the sustained injury.


The existing system preempts the ability of injured workers to seek remedies in many cases because, effective January 2017, legislation expanded the definition of “em­ployer” in the Labor Code to include the “em­ployer, the insurer of an insured employer, a claims adminis­trator, or a Utili­zation Review organi­zation, or other entity acting on behalf of any of them” (Labor Code §4610.5(a)).  Especially significant is the inclusion of Utilization Review within the definition of “employer”, removing UR doctors from real responsibility for their determi­nations as to whether recommended medical care is rea­sonable and necessary.


The denial of a cause of action for a judgment against a Utilization Review doctor who made a wrongful denial of an injured worker’s needed medication was made because of the specific language of in Labor Code §4610.5(a), which was modified in 2017 to add Utilization Review under the definition of “employer”. This language essentially exempts UR doctors from their responsibility for wrongful conduct, despite the fact that they deter­­mine what other doctors can or cannot provide as treatment to cure or relieve the injured worker.


Some telling comments have been made by members of the Supreme Court regarding the Wor­kers’ Com­pensation system and Utilization Review, but before we review those com­ments, it must be acknowledged that Labor Code §4610.5(a) was specifically de­signed to protect Utilization Review doctors. This specific protection is for doctors who work for the


employer. The employer has a con­tract with either a group of doctors or a company which does Utilization Review, and in the case of King v. CompPartners, Inc., the allegations were


that the doctor who stopped a worker’s needed medication should be held to the same level of accountability as the treating physician.


Also of note is the fact that even though the limitations as to the monetary amount against the Utiliza­tion Review doctor are substantial — i.e., no medical malpractice — yet the Labor Code acknowledges “[the] physician who makes unsound professional judg­ments in this capacity is subject to professional disci­pline, which may include the loss of his or her license”.  But yet the doctor is not subject to eco­nomic sanctions.



The Court of Appeal, again supported by the California Supreme Court, stated that the laws of Wor­kers’ Compensation limit and set forth the exclusive remedy employees have, and therefore the wrongs done by the UR doctor could not be pursued:


The Court concluded that the workers’ compensation law provided the exclu­sive remedy for the employee’s injuries and that preempted plaintiffs’ tort claims. The harm plaintiffs alleged was collateral to and derivative of the in­dus­trial injury and arose within the scope of employment for purposes of the workers’ compensation exclusive remedy.  Because the acts alleged did not suggest that defendants stepped outside of the Utilization Review role contem­plated by statute, plaintiffs’ claims were preempted.



In other words, the worker suffering damage done by the UR doctor could not pursue medi­cal mal­practice. As readers are aware, Utilization Review doctors are a group of doctors who work for the employer and review the treatment recommendations made by a treater who has seen the worker numerous times and then, without ever seeing the worker, the UR doctor makes a binding decision as to whether the treater’s recommendations are neces­sary and appropriate.  In the event of a denial by a UR doctor, the worker’s only recourse is to appeal the denial through Inde­pen­dent Medi­cal Review, which supports the denial by the UR doctor more than 80% of the time.


The Court also acknowledged that claims administrators “stand in the shoes of employers” and there­fore have the same protection from prosecution for wrongful conduct related to injured workers’ medi­cal care as do UR doctors, pursuant to Labor Code §4610.5(a).


The Court further noted in another case that a utilization reviewer, unlike a treating physi­cian, “does not physi­cally examine the applicant, does not obtain a full history of the injury or a full medical history, and might not review all pertinent medical records”. The Court stated that “to permit plaintiffs to bring tort suits against utilization reviewers, in the same manner as they might bring tort suits against treating physicians, would subject utilization reviewers to a second — and perhaps competing — set of obligations rooted in tort rather than statute.”  What this ignores is that UR doctors indeed make medical determinations, and they are paid for by the employer.  This also ignores the outcome to the worker when UR doctors are not held accountable and can work in a vacuum.


One of the Supreme Court Justices, after reviewing this subject in great depth, made this find­ing: “But the undisputed facts in this case suggest that the workers’ compensation sys­tem, and the utilization review process in particular, may not be working as the Legislature intended.”  The Justice further reflected:  “The Legislature may wish to examine whether the existing safeguards provide suffi­cient incentives for competent and careful Utilization Review.”

The Supreme Court followed the legislation which was embraced and enacted to expedite medical care supposedly, but yet the Justice is acknowledging that the Legislature “may wish to examine whether the existing safeguards provide suffi­cient incentives for compe­tent and careful Utilization Review”.


This is a recurrent theme which continues to be in place, and the recognition by the Justice should provide some direction with respect to the errors made in the enactment of Utiliza­tion Review and Independent Medical Review.


Ultimately, Justice Grover also opined regarding the failure of UR and IMR, stating: “Even now those safeguards and remedies may not be set at optimal levels, and the Legislature may find it makes sense to change them.”


The Court, speaking regarding Labor Code §4610, stated that “even if defendants fully com­plied with the relevant requirements, it is questionable whether those requirements are enough to prevent similar injuries from occurring in the future. . . . But the balance that bargain strikes between employers’ interests and workers’ interests presumes that Utiliza­tion Review — which is conducted either by the worker’s employer or by an entity ‘stand[ing] in the shoes of [the] employer[]’ — will be performed ‘with appropriate competence and care’.  The limited record here raises doubts as to whether King’s Utilization Review was handled properly.  The Legislature may wish to examine whether the existing safeguards pro­vide sufficient incentives for competent and careful Utiliza­tion Review.”


The changes as set forth in Newsletter 2019 Issue #3 will remedy the prob­lems the Justices have identified.

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NOTICE: Making a false or fraudulent Workers’ Compensation claim is a felony subject to up to 5 years in prison or a fine of up to $50,000 or double the value of the fraud, whichever is greater, or by both imprisonment and fine.