In response to our recently published article, http://medmetrics.blogspot.com/2012_03_01_archive.html">Survey: Employers Want WC Cost Control. Really? a reader commented:

"The biggest problem I have is finding the right doctors. If all of my employees were in one location, this would be a piece of cake, but we are a trucking company with drivers who live and work all over the U.S."

She continued, "I just had a conversation with a doctor's office this morning about a claimant at the other side of the country. This employee, the claimant, has been off work 6 weeks with a knee injury. X-rays and MRI show nothing acute, the ligaments and cartilage are fine, but the claimant still reports pain. The doctor admits he has no explanation for claimant's pain complaints. However, instead of releasing claimant back to work or declaring MMI (Maximum Medical Improvement), the doctor referred him to a specialist."

Nice Guy, But ...
The frustration experienced by this claim manager is palpable. Yet, the treating physician is probably not fraudulent or abusive of the Workers' Comp system. He is probably unaware of the impact of his decision to refer. Moreover, he is probably also oblivious to the fact that the longer the patient is off work, the chances of returning decidedly decrease. The doctor is simply treating the patient as he would his neighbor. But that is not the best care from a Workers' Comp viewpoint.

That Obvious
The obvious solution is to prevent such dilemmas by selecting only excellent treating providers who understand the Workers' Comp system. But how can they be found? Most provider networks still contract with anyone and everyone, regardless of performance, thereby leaving employers like this one marooned. Yet that tradition is changing and changing fast.

Enlightenment
The enlightened movement in the industry quickly gaining traction is outcome-based networks. Many are structured as carve-outs of existing networks suited to individual locations and needs.

Analysis of individual performance as evidenced in data indicators can be based on industry research. Among the indicators are frequency and duration of medical treatment, return to work rates, indemnity costs, litigation, direct medical costs, and many other factors specific to Workers' Comp. Comparative provider performance must be state-specific and quality of care is considered.

Medical Quality

Medical quality in Workers' Compensation is as important as it is in general health. Injured Workers deserve the best medical care available. However, in Workers' Comp there is another layer of quality measurement superimposed on what is considered in general health. In general health quality is measured in terms of accepted treatment patterns followed and return to health. However, in Workers' Comp, measures of administrative factors, such as return to work, are quality indicators integrated into provider performance evaluation.

Monitoring To Maintain Excellence
Once best-in-class providers are selected in a region, continued monitoring is important, lest their performance slide. Moreover, letting them know they are being monitored, comparing them to other providers like them in their state, can be an extremely effective means of managing provider performance.

What To Do
Industry enlightenment will drive the solution. People now realize they need better information about which doctors to choose, information based on objective data, not vast lists of doctors' names and locations. Moreover, you help make that happen — now.

Data monitoring means applying technology and analytics to gain real-time intelligence and decision support in claims management. Moreover, data monitoring is the way to link analytics to operations, thereby making them actionable.

Nearly everyone in Workers' Comp is trying their hand at analytics now. The problem is that organizations that have implemented analytics do not seem to know what to do with them. Analytics are great for reporting activity and corporate status to boards of directors and shareholders. Analytics uncover cost drivers and are impressive when graphically presented in annual reports. But analytics must be taken to the next level to actually impact costs or improve claim outcomes. To be truly effective, analytics must be linked to operations, thereby making them actionable. One way to achieve that is through concurrent data monitoring.

Unified And Concurrent Data Platform
Claim data must be gathered from all relevant sources and integrated in a single platform. In Workers' Compensation, organizations still find their data spread across multiple silos. Bill review, pharmacy, claims adjudication, and medical case management are all important deposits of data. However, claims cannot be adequately analyzed unless the full scope of data is gathered, integrated, and available for comprehensive assessment concurrently.

Some say bill review data alone is adequate for medical analysis. Yet, bill review data cannot reveal work status or return to work, indemnity costs, or final disability rating. These data, derived from the claims adjudication system, must be considered in combination with billing data in order to draw reasonable conclusions. Claims should be evaluated holistically, not in fragments by assorted participants.

Computerized Data Monitoring
Manual data monitoring is humanly challenging, if not impossible. The detail in claims, including many events over a period of months and years, cannot be absorbed or retained even by the most astute claims adjusters. Moreover, new information is added to claims continually that must be combined with historic information within a claim. Only a well-designed computerized system can handle the job.

For data monitoring to be valuable, it must be consistent and never random. A computerized data monitoring system can scrutinize all the data once it is integrated at no greater effort or cost than to monitor just a few items. It is a matter of thoroughness in system design and development. The computer can do it all, and do it accurately and consistently.

Computer-Aided Medical Management
Computerized medical data management is always on and always alert. Rules-based conditions and data combinations in the broad scope of a claim trigger automatic alerts to the appropriate persons. The burden of watching every claim and remembering its historic facts, then combining the history with current conditions is impossible without computerized assistance. When claims adjusters and medical case managers receive alerts, they focus on claims that need the most attention, thereby optimizing efficiency and outcomes.

Standardized Processes
Traditional claims management and medical management processes rely on individual ingenuity, knowledge, and skill. As a result, processes are rarely standardized within an organization. Individual performance and outcomes are rarely measured. However, with computerized, real-time data monitoring the organization's quality output is monitored, individual performance is audited, and results are reportable.

The Early Discovery Advantage
Importantly, computerized data monitoring insures early concurrent discovery of calamitous conditions in claims such as creeping claim severity, repeated opioid prescriptions, and comorbidities, to name a few. Uncovering such situations as they occur can save millions and prevent disastrous outcomes.

Analytics must be made actionable by leveraging the technology and pushing it into operations through computerized concurrent data monitoring. Data becomes a work-in-process tool, thereby achieving measureable efficiency and cost savings.

As the current business culture evolves into one riddled with legal battles and threats of lawsuits coming from discharged employees, many managers and supervisors feel cornered when addressing employee performance evaluations. Even those employers who follow stringent documentation guidelines often feel pressured into keeping unproductive employees in their positions or giving ambiguous performance feedback, due to their fear of employees taking legal action against the company.

Lawsuits charging discrimination typically are a result of negative evaluations or adverse employment actions. Much to their leaders' dismay, the employees they fired for valid reasons can win such cases thanks in part to their very own performance evaluation procedures. Using subjective performance standards, failing to effectively address performance problems and not clearly warning employees about the consequences of unsatisfactory performance are the three most common reasons why jurors award damages and appeals courts uphold those judgments. While employers do have the right to insist on quality and productivity from every employee, they must also make legally defensible decisions when it's time to reprimand or terminate an employee.

For any viable evaluation and disciplinary system to work fairly, evaluators must have proper qualifications and training. The more specific their evaluation procedure, the less likely supervisors are to make a costly legal error. Therefore, employers should supply managers with specific guidelines for acceptable supervisory actions. Additionally, companies should build in a level of higher authority for senior management when they must make close judgment calls, analyze unique problems, or terminate an employee for which the prior documentation is less complete.

Good documentation of evaluations and disciplinary action is critically important, as it provides credible evidence to help verify whether an employee has received prior notice concerning a particular rule or deviation from acceptable job performance. It also provides a record of whether an employee has previously been disciplined and, if so, the appropriate form of discipline for subsequent misconduct. In addition, it creates a vehicle for examining precedents when one employee engages in the same or similar conduct that has resulted in discipline of other employees.

When designing a performance appraisal process, managers must be careful to appraise employees based on job-related criteria and maintain adequate documentation. Develop a consistent appraisal process for all company employees. Any deviation from these objectives could result in costly legal battles.

Managers and supervisors can take several concrete steps to ensure consistency, objectivity, accuracy, and fairness throughout the performance appraisal process. Use the following guidelines to manage employees within legal limits, without paralysis.

1. Clearly Communicate Expectations. Managers must consistently communicate standards or expectations to employees and clearly identify each aspect of the required performance. If an employee fails to meet expectations, address the deficiency immediately (or as soon as reasonably practical) and specify where the employee's performance requires improvement. When employees don't know their assessment criteria, they can win a legal battle by simply stating, "I didn't know what was expected of me." Be sure to specify objectively measurable performance, such as quality, quantity, and timeliness of work, as well as important soft skills, such as teamwork, initiative, judgment, integrity, and leadership.

2. Perform Candid Appraisals. Rather than let a fear of lawsuits affect your ability to conduct performance ratings, address performance issues consistently for all employees on a timely basis. Be accurate and objective in your performance ratings, and remember to always rate poor performance as well as good performance. When you fail to point out poor performance, the problem continues, as employees cannot correct problems they are unaware of. Additionally, failure to document poor performance is legally risky should the employee later be discharged and sue for wrongful (or retaliatory) termination. Consistently addressing issues of concern with employees defends against the "I didn't know I wasn't meeting performance expectations" claim.

3. Maintain Objectivity At All Times. Focus the performance evaluations on objective job-related criteria. Examples of objective criteria that courts have upheld include quantity, quality, or timeliness of work and specifically articulated expectations for interpersonal skills, teamwork, exercise of judgment, and displays of initiative. You can establish objective expectations even with subjective standards when you articulate what you consider acceptable behavior. For example, you may say, "You will exercise better judgment if you come to me early and let me know you can't meet a deadline so that I can help you prioritize your workload."

4. Stick To Job-Based Criteria. Always relate the appraisal to the employee's particular job. If an item on the evaluation form is not relevant to an employee, indicate "not applicable" in the appropriate space. Also be sure to consider the full rating period. Avoid the tendency to let recent performance events cloud what may have happened months earlier. Finally, compare the employee's performance to a norm or performance standard rather than the performance of other employees.

5. Record And Memorialize. Put all evaluations in writing and document any verbal feedback made during the meeting. Keep the language in written proposals simple and as easy to understand as possible.

6. Be Specific. Review appraisals to ensure that both high and low ratings have sufficient documentation and anecdotal information that details what the employee did or did not do to earn the rating. Avoid vague or descriptive personal criteria that others could misinterpret.

7. Address Performance Problems Promptly. Discuss and/or deal with performance problems at the time they occur. If the employee's performance is unsatisfactory, immediately counsel the employee on deficiencies and suggest concrete ways to improve performance. The courts may question your motive in a poor performance discharge if the incident prompting the discharge occurred substantially prior to the time of the discharge.

8. Specify the Consequences Of Non-Performance. Clearly specify a final warning on the performance appraisal if the employee's performance is so poor that a demotion, change in assignment, or discharge may occur. This will help defend against the single most common legal deficiency in the performance management process: the employee's truthful claim that "I didn't know this adverse action would occur if I didn't improve or correct my performance." Employees routinely win lawsuits with such a claim because supervisors often don't like to give negative feedback due to concerns about defensive confrontations, a desire not to hurt a likeable employee's feelings, or worst of all, the fear of drawing a lawsuit that alleges discrimination or harassment.

9. Maintain Consistency. Be consistent with performance appraisals and any corresponding pay adjustments. Document poor performance if it is a basis to delay or deny a pay adjustment just as you would document good performance to substantiate a pay raise. Inconsistency will reflect poorly in any subsequent legal proceeding, especially when the employee claims that he or she was singled out for negative action. Consistency further enhances your ability to defend against discrimination claims, as it demonstrates that the needs of the particular job consistently required adherence to concrete, well-articulated performance expectations, and that all similarly situated employees are held to the same standards.

10. Plan Your Documentation. Contrary to popular belief, poor documentation techniques actually increase your chances of liability in a lawsuit. Avoid making any notes on appraisal forms that the courts could view as discriminatory or that reflect a "mixed motive." Avoid contrived or pre-textual statements such as "the chemistry isn't right." Also, minimize your use of labels, such as "self starter," unless you tie it to a measurable performance standard, in this case "initiative." When in doubt, have a jury who doesn't know you or the employee review the appraisal. Can they misinterpret it? Above all else, never backdate appraisals and never attempt to document something that did not occur. Always document events as they occur to assure that your memory is fresh and your examples are relevant.

11. Be Careful When Referring To Job Protected Leave In Performance Evaluations. Front-line leaders often don't realize that comments they make on performance evaluations can come back to haunt them. That's especially true when those comments relate to absences that are covered by job-protected leave, such as the Family & Medical Leave Act (FMLA). Several recent FMLA cases have concluded that commenting upon an employee's absence due to authorized FMLA leave is the legal equivalent of interfering with the right to take such leave, giving rise to substantial damages against the employers.

In Goelzer v. Sheboygan County, An Administrative Assistant got consistently good performance evaluations for 20 years. She took FMLA leave for her own serious health condition and to care for her ill mother. On her performance appraisal, her supervisor wrote, "[Y]ou were out of the office having eye surgery. In the past two years, using sick leave and vacation, you were out of the office 113 days. As the only support person in the office, this has presented challenges in the functionality and duties associated with the office." When she was terminated on performance grounds, she sued. A Federal Appeals Court concluded that Goelzer presented compelling evidence for a jury to believe that she was fired for taking FMLA leave. The Court emphasized the supervisor's evaluation language, which expressed frustration with her use of FMLA leave, the total absence of documentation supporting any concern with her deficient skill set, and her consistent good performance ratings prior to her FMLA leave.

Employers cannot interfere with or discriminate against an employee who exercises FMLA rights. Taking FMLA or other job-protected leave does not insulate an employee from performance-based adverse actions. But, in order to effectively establish that the adverse action is due to performance deficiencies and not the exercise of FMLA rights, the facts must support and document an appropriate, job-related and non-discriminatory explanation.

When you know, understand, and implement the criteria for lawful performance management, you enable your company to operate at peak efficiency while you stay within specific legal parameters. The more proactive steps you take to reduce your chances of a wrongful termination lawsuit, the more successful and lawful your company becomes.

Let me begin by saying: There are no rules for dealing with this. That is, there is no firm set of steps to take, no one size fits all plan.

Sometime over the last few years, the baby boomers started to retire. This has created a complex double-edged sword for professionals. While these people are typically in need of legal and financial help, they are also more likely to suffer from some type of dementia. This problem is compounded by the fact that people typically wait until later in their life to perform complex transactions.

As an attorney who practices in the area of asset protection, captive insurance and estate planning, it's a situation I run into with more and more regularity. In addition, I have a parent who has Alzheimer's, so I'm familiar with this situation from the other side of the equation.

Below are some tips for dealing with this situation. In my next piece, I'll discuss my situation in general to give you an idea of the solution that has worked for my family.

Let me begin by saying: There are no rules for dealing with this. That is, there is no firm set of steps to take, no one size fits all plan. For all of us, this is a matter of figuring it out as we go; every fact pattern is a different situation. So, if you've run into this situation and you're looking for a plan, realize there isn't one.

All professionals who deal with older clients are struggling with this just as much as you are. I realize this offers little comfort, but that's more or less where we are.

That being said, consider these points:

Don't be willfully blind.

The older people get, the more likely they are to suffer from some type of dementia. When you meet someone who is 60 years or older, be vigilant.

Assume there's a problem.

And look for reason to prove there isn't a problem. Look for the following signs:

• repetition of conversation topics
• inability to understand simple concepts
• reaching for words they should know
• overall general confusion

You don't have to be a doctor to let common sense inform your observations on these points. If it seems like there is something wrong, there probably is.

Meet older clients multiple times.

People who suffer from Alzheimer's and dementia can have good and bad days. On a good day, everything may seem fine over a short period of time, but problems will present themselves over a longer period of time. On bad days, they have pronounced problems.

Commit to see older prospects at least three times and for longer than a few minutes — meet with them for at least an hour.

In addition, meet with them at different times throughout the day. There is a condition called sundowning, meaning that as the day progresses, people get worse. Meeting someone later in the day can highlight a developing problem.

The older the client, the more conservative the recommendation.

There are a number of cases involving family limited partnerships that were sold to the deceased within years — if not weeks — of death. The various courts overturned the deductions claimed because the partnerships were obviously formed purely for tax reasons. In short, none of these plans should have been sold to the parties in the first place.

The same is true in all fields, be it legal, accounting or financial. Put more directly, don't sell Grammy junk bonds.

Document everything.

For an older existing client, have an agenda for each meeting and send it to them beforehand, asking them to add their own topics of discussion. Document the meeting as soon as they leave. For prospects, develop a set of detailed questions that not only allow you to comply with "know your customer" rules, but also help to gain some insight into their respective mental condition.

It's important to ask prospects for an explanation of their previous service providers.

For example, if a 65 year old who is financially well off comes into your office and says, "I want to create an estate plan," begin by asking them if they already have a will written. The point is, a prosperous older person probably has existing relationships with various professionals. Why are they looking to change?

And again, keep the above points to look out for in mind: repetition, confusion, reaching for words etc...

Don't be afraid to turn away business.

Here's a real life example from my practice. An older gentleman (roughly late 60s) wanted to write a new estate plan. We met for lunch and toward the end of the meal, he just seemed a little "off." I scheduled another meeting about one week later in the late afternoon (4 pm) and he was definitely worse off. More importantly, he already had an estate plan drawn by another attorney (who's very good).

After the meeting, I sent him a letter thanking him for considering me, but stating I didn't think he would benefit from my services. My suspicions (completely unproven by the facts) were that he and the other attorney had an argument or falling out and that I'd be walking into a powder keg if I took him on as a client.

Please share your own ideas, experiences and observations in the comments section below so that others may benefit from your experience.

No doubt you have seen the ad for Angie's List. A good-looking male doctor is pictured with the caption, "He has been nothing but focused, dedicated and concerned about my health and well-being." If searching for a contractor or hair dresser, this might be a good start. But searching this way for doctors? Absurd!

Finding doctors for injured workers through Angie's List is a recipe for disaster. Subjective rating of medical treatment is not valid. Few patients understand enough about the science of medicine to venture a worthwhile opinion.

Yet, the methodology behind Angie's List is a relatively common practice in the Workers' Comp industry. Employers and payers sometimes survey their claimants in an effort to evaluate doctors. Unfortunately, most claimants report whether the doctor's office has snacks, magazines they like, and the doctor was nice. The information is hardly a basis for utilizing the doctor and is about as helpful as that found in Angie's List.

Measuring Provider Performance
Finding the right physicians for injured workers requires objective analysis of actual past performance, not patient opinions. Medical proficiency can be measured in terms of outcome, with the most positive outcomes evidenced by return to full work and reasonable medical costs. However, in Workers' Compensation even more focus should be placed on the course of the claim from the non-medical standpoint.

Industry Research
Workers' Comp industry research has clearly identified the attributes of good and bad medical performance. For instance, Dr. Ed Bernacki of Johns Hopkins lists characteristics of "cost intensive" physicians. The study¹, using data from the Louisiana Workers' Compensation Corporation, found that 3.8% of physicians accounted for 72% of the costs. In other words, a small number of physicians have a profound impact on Workers' Compensation costs. Bernacki's study identified the characteristics of these cost intensive physicians. They are elements that can be found in the data and used to monitor and score provider performance.

MedMetrics uses the results of industry research studies to design its algorithms that evaluate and score provider performance. The research identifies provider characteristics and claim events under the influence of providers that should be measured. Using those indicators, providers can be compared in their jurisdictions with others in the same specialty to identify the best-in-class.

Medicine Is A Cottage Industry
Medicine in the US is a cottage industry, with services delivered by individuals to individuals. Consequently, it is difficult for any one organization to gather enough individual provider data to create a critical mass for measurement. The problem is complicated by the fact that in Workers' Comp states vary in fee schedules and other legal requirements so it is not valid to compare data across jurisdictions. Nevertheless, provider performance is more accurate and fairer when evaluated across many claims.

The industry needs an independent organization to collect and analyze the data across multiple organizations so that provider performance can be measured more accurately.

Master Provider Index
MedMetrics is offering Master Provider Index. Data is collected from multiple participating organizations, then validated, and integrated. Provider performance is measured across multiple entities' claims in a state, thereby creating a richer data resource. The combined data is analyzed and provider performance is scored. Finally, a quick-search is offered online so that best-in-class providers can be found in specific geo-zip regions on demand, on-the-fly.

Not Angie's List
Master Provider Index is not Angie's List by any means. Provider performance analytics are based on intelligence gained through industry research and performed on data from multiple organizations by state. Based on Bernacki's study, one can assume saving up to 72% of costs by avoiding cost intensive physicians!

¹Bernacki, et.al. "Impact of Cost Intensive Physicians on Workers' Compensation" JOEM. Vol. 52. No. 1. January, 2010.

According to the medical dictionary, Repetitive Stress Injury (RSI) is defined as an injury that occurs as a result of over or improper use. According to the U.S. Bureau of Labor Statistics, nearly two-thirds of all occupational illnesses reported were caused by exposure to repeated trauma to workers' upper body (the wrist, elbow or shoulder). While one common example of such an injury is carpal tunnel syndrome, in the workers' compensation area RSI can also be claimed for shoulder, and back injuries. According to the Occupational Safety and Health Administration (OSHA), repetitive strain injuries are the nation's most common and costly occupational health problem, affecting hundreds of thousands of American workers and costing more than $20 billion a year in workers' compensation costs.

In the past, if an injury didn't result from an accident, there was no workers' compensation claim. Those days are gone and now it is understood that cumulative trauma injuries and occupational injuries that develop over time are eligible for workers' compensation. Even if an injury cannot be tied to a single event, workers' compensation benefits can be claimed.

According to the January 2012 joint publication by WCIR and IAIABC, every state allows workers' compensation claims for cumulative trauma with the following limited exceptions:

Arkansas — limited to rapid repetitive motion for back or neck and hearing

Hawaii — not in the statue but handling like any other claim

Louisiana — only when considered an occupational disease

Tennessee — with limits to carpal tunnel only if it is arising out of the scope of employment

Virginia — only cumulative hearing loss and carpal tunnel are covered as "ordinary diseases of life" and subject to higher "clear and convincing" evidentiary standards as opposed to the "preponderance of the evidence."

This widespread acceptance of RSI claims is becoming traumatic in in itself for employers, especially when one considers the requirements by CMS that were established to protect Medicare from future medical expenses for workers' compensation and general liability claims. With these new mandatory requirements that all workers' compensation and general liability claims be reported in electronic format, CMS has the mechanism to look back and identify workers' compensation-related medical care payments made by Medicare. When CMS/Medicare learns (and they will) that it has been paying for workers' compensation-related medical care it will seek repayment. The insured or employer could pay the future medical cost twice; once to the claimant at settlement and later when Medicare seeks reimbursement of the medical care they paid on behalf of the claimant, i.e. the cumulative effect.

Let's focus on a key state, California, where this has become a pressing issue. Under California Labor Code Section 5412, the date of injury in cases of occupational diseases or cumulative injuries is that date upon which the employee first suffered disability therefrom and either knew, or in the exercise of reasonable diligence should have known, that such disability was caused by his present or prior employment.

The wording of this statute is proving to be very problematic for employers, as there is no clear-cut timeframe to hold an injured worker accountable to report said injuries. Even more so since cumulative trauma disorders are difficult to diagnose and treat and causation plays an important factor in determining AOE/COE. The magic bullet would be to determine if the injury is AOE/COE or to be able to age the injury. One of the only tools that has been proven effective is the Electrodiagnostic Function Assessment. The EFA is the only FDA-registered device that can age and diagnose this type of injury and its definitive registration allows the monitoring of the necessary frequency response that characterizes a repetitive stress injury. Additionally, it is the only device of its kind that has changed the face of RSI litigation.*

* U.S. District Court, 980 F. Supp, 640, 64-48 (E.D.N.Y., 1997): Geressy v. Digital Equipment Corporation. The EFA changed the face of repetitive stress injury litigation when Judge Weinstein overturned what, at that time, was the largest product liability verdict ever for RSI because of the EFA.

August 1 marked the effective date of yet another Patient Protection & Affordable Care Act (Affordable Care Act) mandate: the controversial contraceptive coverage and other women's health preventive coverage benefits mandates.

Although many new Affordable Care Act and other federal health benefit requirements have taken effect over the past two years, few employer plans are updated adequately. In some cases, businesses made deliberate decisions to delay updates pending the Supreme Court's ruling on the validity of the law. More commonly, however, many businesses continue to risk excise tax and other liability for noncompliant health plans because the management incorrectly assumes that health insurer, self-insured health plan vendors or other health plan service providers adequately address these issues.

Regardless of the reason, the Supreme Court's June 28, 2012 National Federation of Independent Business v. Sebelius ruling upholding the individual mandates of the Affordable Care Act means that employers need to get moving to update their health plans to comply with current federal requirements, as well as begin preparing to cope with radical changes in their health plan related responsibilities scheduled to take effect in 2014.

While anticipating and preparing to cope with these future changes health plan sponsors, fiduciaries, administrators and advisors need to manage the substantial and growing health plan related costs and liabilities that the sponsorship or administration of an employee health plan between now and 2014 is likely to create for their company and its management. Consequently, while planning for 2014, employers sponsoring health plans and their management, insurers, administrators and vendors must act now to update and administer their group health plans timely to comply with the requirements of the Affordable Care Act and other federal rules that have, or in coming months will, take effect pending the law's full rollout in 2014.

For most health plans, these steps should include the following:

1. Know The Cast Of Characters & What Hat(s) (Including You) They Wear & Prudently Select, Contract With & Monitor Them To Manage Risks

Employers and their management rely upon many vendors and advisors and assumptions when making plan design and risk management decisions. Many times, employer and members of their management unknowingly assume significant risk because of misperceptions about these allocations of duties and operational and legal accountability. A correct understanding of these roles and responsibilities is the foundation for knowing where the risks come from, who and to what extent a business or its management can rely upon a vendor or advisor to properly design and administer a health plan or carry out related obligations, what risks cannot be delegated, and how to manage these risks.

Under the Employee Retirement Income Security Act (ERISA), party or parties that exercise discretion or control over health plan administration, funds or certain other matters are generally called "fiduciaries." Fiduciaries generally are personally liable for prudently and appropriately administering their health plan related responsibilities prudently in accordance with ERISA and other applicable laws and the plan terms. Knowing who is acting as a fiduciary and understanding those duties and liabilities and how to manage these risks significantly affects the exposure that an employer or member of its management risks as a result of an employer's sponsorship in a group health plan or other employee benefit program. Also, knowing what duties come first and how to prove that the fiduciary did the right thing is critical to managing risks when an individual who has fiduciary responsibilities under ERISA also has other responsibilities in the management of the sponsoring employer, a vendor or elsewhere that carries duties or interests that conflict with his health plan related fiduciary duties.

The plan sponsor or members of its leadership, a service provider or members of their staff generally may be a fiduciary for purposes of ERISA if it either is named as the fiduciary, it functionally exercises the discretion to be considered a fiduciary, or it otherwise has discretionary power over plan administration or other fiduciary matters. Many plan sponsors and their management unwittingly take on liability that they assume rests with an insurer or service provider because the company or members of its management are named as the plan administrator or named fiduciary with regard to duties that the company has hired an insurer or service provider to provide or allowed that service provider to disclaim fiduciary or discretionary status with regard to those responsibilities. Also, by not knowing who the fiduciaries are, plans and their fiduciaries often fail to confirm the eligibility of all parties serving as fiduciaries, to arrange for bonding of service providers or fiduciaries as required to comply with Title I of ERISA. Failing to properly understand when the plan sponsor, member of its management or another party is or could be a fiduciary can create unnecessary and unexpected risks and lead to reliance upon vendors who provide advice but leave the employer holding the bag for resulting liability.

In addition to fiduciary status, employer and other plan sponsors also need to understand the additional responsibilities and exposures that the employer bears as a plan sponsor. Beyond contractual and fiduciary liabilities, federal law increasingly imposes excise tax or other liability for failing to maintain legally compliant plans, file required reports, provide required notifications or fulfill other requirements. The Affordable Care Act, the Internal Revenue Code, the Social Security Act, the Privacy, Security, and Administrative Simplification For instance, the Health Insurance Portability & Accountability Act (HIPAA) and various other federal laws also impose certain health plan related obligations and liabilities on employer or other health plan sponsors and other parties. The Internal Revenue Service interprets Internal Revenue Code § 6039D as obligating employers sponsoring health plans that violate these and certain other federal health plan rules to self-identify, self-report, and self-assess and pay excise and other taxes due under the Internal Revenue Code as a result of this non-compliance. Knowing what everyone's roles and responsibilities are is a critical first step to properly understanding and managing health plan responsibilities and related risks.

An accurate understanding of the risks and who bears them is critical to understand the risks, opportunities to mitigate risk through effective contracting or other outsourcing, when outsourcing does not effectively transfer risks, where to invest resources for contract, plan or process review and changes or other risk management, and where to expect costs and risks and implement processes and procedures to deal with risks that cannot be outsourced or managed.

2. Know What Rules Apply To Your Plan, The Sponsoring Employer, The Plan Its Fiduciaries & Plan Related Vendors & How This Impacts You & Your Group Health Plan

The requirements and rules impacting health plans and their liabilities have undergone continuous changes. Amid these changing requirements, health plans, their sponsors, fiduciaries, insurers, and service providers often may not have kept their knowledge, much less their plan documents, summary plan descriptions and other communications, administrative forms and procedures and other materials and practices up to date. These requirements and their compliance and risk management significance may vary depending upon whether the reviewing or regulated party is the plan, its sponsor, fiduciary, insurer or services in some other rules; how the plans are arranged and documented, the risk and indemnification allocations negotiated among the parties, the risk tolerance of the party, and other factors. Proper understanding of these rules and their implications is critical to understand and manage the applicable risks and exposures.

3. Review & Update Health Plan Documents, SPDs & Other Communications, Administrative Forms & Procedures, Contracts & Processes To Meet Requirements & Manage Exposures

Timely updating written plan documents, communications and administration forms, administrative practices, contracts and other health plan related materials processes and procedures has never been more critical.

Federal law generally requires that health plans be established, maintained and administered in accordance with legally compliant, written plan documents and impose a growing list of standards and requirements governing the design and administration of these programs. In addition, ERISA, the Internal Revenue Code, the Social Security Act, federal eligibility and coverage continuation mandates of laws like the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Health Insurance Portability & Accountability Act, the Family & Medical Leave Act, Michelle's Law and others require that health plan administrators or sponsors communicate plan terms and other relevant information to participants and beneficiaries.

Failing to update documents, communications, administrative forms and processes and other materials and practices can unleash a host of exposures. Among other things, noncompliant plans, communications and practices can trigger unanticipated costs and liabilities by undermining the ability to administer plan terms and conditions. They also may expose the plan, plan fiduciaries and others to lawsuits, administrative enforcement and sanctions and other enforcement liabilities.

Beyond these exposures, employers who sponsor group health plans that violate certain federal group health plan mandates have a duty to self-report certain regulatory plan failures and pay excise taxes where such failures are not corrected in a timely fashion once discovered, or are due to willful neglect. Internal Revenue Code Section 6039D imposes excise taxes for failure to comply with health care continuation (COBRA) , health plan portability (HIPAA), genetic nondiscrimination (GINA), mental health parity (MHPAEA) , minimum hospital stays for newborns and mothers (Newborns' and Mothers' Health Protection Act), coverage of dependent students on medically necessary leaves of absence (Michelle's Law), health savings account (HSA) and Archer medical savings account (Archer MSA) contribution comparability and various other federal requirements incorporated into the Internal Revenue Code. Since 2010, Internal Revenue Service regulations have required employers sponsoring group health plans not complying with mandates covered by Internal Revenue Code Section 6039D to self-report violations and pay related excise taxes. Under these regulations, the sponsoring employer (or in some cases, the insurer, HMO or third-party administrator) must report health plan compliance failures annually on IRS Form 8928 ("Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code") and self-assess and pay resulting excise taxes. The potential excise tax liability that can result under these provisions can be significant. For example, COBRA, HIPAA, and GINA violations typically carry excise tax liability of $100 per day per individual affected. Compliance with applicable federal group health plan mandates is critical to avoid these excise taxes as well as other federal group health plan liabilities.

For the purpose of deciding what and how much to do, it is critical to keep in mind the devil is in the details. Not only must the documentation meet all technical mandates, the language, its clarity and specificity, and getting the plan document to match the actual processes that will be used to administer the plan and ensuring that the plan documents and processes match the summary plan description, summary of benefits and coverage, administrative forms and documentation and other plan communications and documentation in a legally compliant way significantly impacts the defensibility of the plan terms and the cost that the plan, its sponsor and fiduciaries can expect to incur to defend it.

4. Update & Tighten Claims and Appeals Plan & SPD Language, EOBs & Other Notifications, Processes, Contracts & Other Practices For Changing Compliance Requirements & Enhanced Defensibility

Proper health plan claims and appeals plan and summary plan description language, procedures, processing, notification and documentation is critical to maintain defensible claims and appeals decisions required to enforce plan terms and manage claims denial related liabilities and defense costs. Noncompliance with these requirements may prevent health plans from defending their claims or appeals denials, expose the plan administrator and plan fiduciaries involved or responsible for these activities to penalties, prompt unnecessary lawsuits, Labor Department enforcement or both; and drive up plan administration costs.

Unfortunately, most group health plans, their insurers and administrators need to substantially strengthen their plan documentation; handling; timeliness; notifications and other claims denials; and other claims and other appeals processes and documentation to meet existing regulations and otherwise strengthen their defensibility. Among other things, existing court decisions document that many plans existing plan documents, summary plan descriptions and explanations of benefits, claims and appeals investigations and documentation and notifications often need improvement to meet the basic plan document, summary plan description and reasonable claims rules of the plan document, summary plan description, fiduciary responsibility, reasonable claims and appeals procedures of ERISA and its implementing regulations. Court precedent shows that inadequate drafting of these provisions, as well as specific provisions coverage and benefit provisions frequently undermines the defensibility of claims and appeals determinations. In addition to requiring that claims be processed and paid prudently in accordance with the terms of written plan documents, ERISA also requirements that plan fiduciaries decide and administer claims and appeals in accordance with reasonable claims procedures. Although the Labor Department updated its regulations implementing this reasonable claims and appeals procedure requirement more than 10 years ago, the Department of Labor updated its ERISA claims and appeals regulations to include detailed health plan claims and appeals requirements, many group health plans, their administrators and insurers still have not updated their health plans, summary plan descriptions, claims and appeals notification, and claims and appeals procedures to comply with these requirements. The external review and other detailed additional requirements that the Affordable Care Act dictates that group health plans not grandfathered from its provisions and its provisions holding these non-grandfathered plans strictly liable for deficiencies in their claims and appeals procedures makes the need to address inadequacies even more imperative for those non-grandfathered group health plans. Inadequate attention to these concerns can force a plan to pay benefits for claims otherwise not covered as well as other defense costs and penalties.

5. Consistency Matters: Build Good Plan Design, Documentation & Processes, Then Follow Them.

Defensible health plan administration starts with the building and adopting strong, legally compliant plan terms and processes that are carefully documented and communicated in a prudent, legally compliant way. The next key is to actually use this investment by conducting plan administration and related operations consistent with the terms and allocated responsibilities to administer the plan in a documented, legally compliant and prudent manner. Good documentation and design on the front end should minimize ambiguities in the meaning of the plan and who is responsible for doing what when. With these tools in place, delays and other hiccups that result from confusion about plan terms, how they apply to a particular circumstance or who is responsible for doing what, when should be minimized and much more easily resolved by timely, appropriate action by the proper responsible party. This facilitation of administration and its consistency can do much to enhance the defensibility of the plan and minimize other plan related risks and costs.

6. Ensure Correct Party Carefully Communicates About Coverage and Claims in Compliant, Timely, Prudent, Provable Manner

Having the proper party respond to claims and inquiries in a compliant, timely, prudent manner is another key element to managing health plan risk and promoting enforceability. Ideally, the party appointed to act as the named fiduciary for purposes of carrying out a particular function also should conduct all plan communications regarding that function in terms that makes clear its role and negates responsibility or authority of others. When an employer or other plan sponsor goes to the trouble to appoint a committee, service provider or other party to serve as the named fiduciary then chooses to communicate about the plan anyway, the Supreme Court in FMC v. Halliday made clear it runs the risk that the plan related communications may be considered discretionary fiduciary conduct for which it may be liable as a functional fiduciary. Meanwhile, these communications by non-fiduciaries also may create binding obligations upon the plan and its named fiduciaries to the extent made by a plan sponsor or conducted by a staff member or service provider performing responsibilities delegated by the plan fiduciary. Beyond expanding the scope of potential fiduciaries, communications conducted by nonfiduciaries also tend to create defensibility for many other reasons. For instance, allowing unauthorized parties to perform plan functions may not comport with the plan terms, and are less likely to create and preserve required documentation and follow procedures necessary to promote enforceability. Also, the communications, decisions and other actions by these non-fiduciary actors also are unlikely to qualify for discretionary review by the courts because grants of discretionary authority, if any in the written plan document to qualify the decisions of the named fiduciary for deferential review by courts typically will not extend to actions by these non-fiduciary parties. Furthermore, the likelihood that the communication or other activity conducted will not comply with the fiduciary responsibility or other requirements governing the performance of the plan related functions is significantly increased when a plan sponsor, service provider, member of management, or other party not who has not been appointed or accepted the appointment act as a named fiduciary undertakes to speak or act because that party very likely does not accept or fully appreciate the potential nature of its actions, the fiduciary and other legal rules applicable to the conduct, and the potential implications for the non-fiduciary actor, the plan and its fiduciaries.

7. Design and Implement Updated, Properly Secured Payroll, Enrollment, Eligibility and Other Data Collection Features To Meet New Requirements and Prepare For Added Affordable Care Act Data Gathering and Reporting Requirements.

Existing and impending Affordable Care Act mandates require that group health plans, their sponsors collect, maintain and administer is exploding. Existing eligibility mandates, for example, already require that plans have access to a broad range of personal indentifying, personal health and a broad range of other sensitive information about employees and dependents who are or may be eligible for coverage under the plan. While employers and their health plans historically have collected and retained the names, place of residence, family relationships, social security number, and other similar information about employees and their dependents, these data collection, retention and reporting requirements have and will continued to expand dramatically in response to evolving legal requirements. Already, health plans also from time to time need employee earnings, company ownership, employment status, family income, family, medical, military, and school leave information, divorce and child custody, enrollment in Medicare, Medicaid and other coverage and a broad range of other additional information. Under the Affordable Care Act, these data needs will explode to include a whole new range of information about total family income, availability and enrollment in other coverage, cultural and language affiliations, and many other items. Collecting, retaining and deploying this information will be critical to meeting existing and new plan administration and reporting requirements. How this data collection is conducted, shared, safeguarded against misuse or other legally sensitive contact by the employer, service providers, the plan and others will be essential to mitigate exposures to federal employment and other nondiscrimination, HIPAA and other privacy, fiduciary responsibility and other legal risks and obligations. To the extent that payroll providers, third party administrators or other outside service providers will participate in the collection, retention, or use of this data, time also should be set aside both to conduct due diligence about their suitability, as well as to negotiate the necessary contractual arrangements and safeguards to make their involvement appropriate. Finally, given the highly sensitive nature of this data, employers, health plans and others that will collect and use this data will need to implement appropriate safeguards to prevent and monitor for improper use, access or disclosure and to conduct the necessary training to suitably protect this data.

8. Monitor, Assess Implications & Provide Relevant Input to Regulators About Emerging Requirements & Interpretive Guidance Implementing 2014 Affordable Care Act & Other Mandates.

While the Supreme Court's decision upholds the constitutionality of the Affordable Care Act's individual mandates, many opportunities to impact its mandates remain. Beyond the highly visible, continuing and often heated debates ranging in Congress and the court of public opinion concerning whether Congress should modify or repeal its provisions, a plethora of regulatory interpretations issued or impending release by the implementing agencies, the Internal Revenue Service, Department of Health & Human Services, Department of Labor and state insurance regulators will significantly impact what requirements and costs employers, insurers, individuals and governments will bear when the law takes effect. Businesses sponsoring health plans should carefully scrutinize this regulatory guidance and provide meaningful, timely input to Congress, the regulators or both as appropriate to help influence the direction of regulatory or Congressional actions that would materially impact these burdens.

9. Help Employees & Their Families Build Their Health Care Coping Skills With Training & Supportive Tools

Whether or not your company plans to continue to sponsor employee health coverage after 2014, providing training and tools to help employees and their families strengthen their ability to understand and manage their health, health care needs and benefits can pay big dividends. Beyond the financial costs to employees and employers of paying to care for a serious illness or injury, productivity also suffers while employees dealing with their own or a family member's chronic or serious health care condition. Wellness programs that encourage and support the efforts of employees and their families to stay healthy may be one valuable part of these efforts. Beyond trying to prevent the need to cope with illness behind wellness programs, however, opportunities to realize big financial, productivity and benefit value recognition rewards also exist in the too often overlooked opportunity to provide training, education and tools that employees and their families need to better understand and self-manage care, benefits, finances and life challenges that commonly arise when dealing with their own or a family member's illness. Providing education, tools and other resources that can help employees access, organize and effectively use health care and benefit information to manage care and the consequences of illness, their benefits and how to use them, to take part more effectively in care and care decisions, to recognize and self-manage financial, lost-time and other challenges associated with the illness not addressable or covered by health benefit programs, and other practical skills can help reduce lost time and other productivity impacts while helping employees and their families get the most out of the health care dollars spent.

10. Pack Your Parachute & Locate The Nearest Exit Doors

With the parade of expenses and liabilities associated with health plans, businesses sponsoring health plans and the management, service providers and others involved in their establishment, continuation, maintenance or administration are well advised to pack their survival kit and develop their exit strategies to position to soften the landing in case their health plan experiences a legal or operational disaster.

Employers and other health plan sponsors and fiduciaries typically hire and rely upon a host of vendors and advisors to design and administer their health plans. When selecting and hiring these service providers, health plan sponsors and fiduciaries are well-advised to investigate carefully their credentials as well as require the vendors to provide written commitments to stand behind their advice and services. Too often, while these service providers and advisors encourage plan sponsors and fiduciaries to allow the vendor to lead them or even handle on an ongoing basis plan administration services by touting their services, experience, expert systems and process and commitment to stand behind the customer when making the sale or encouraging reliance upon their advice when tough decisions are made, they rush to stand behind exculpatory and on-sided indemnification provisions in their service contracts to limit or avoid liability, demand indemnification from their customer or both when things go wrong. While ERISA may offer some relief from certain of these exculpatory provisions under some circumstances, plan sponsors and fiduciaries should work to credential service providers and require service providers to commit to being accountable for their services by requiring contracts acknowledge all promised services and standards of quality, require vendors to commit to provide legally compliant and prudently designed and administered services that meet or exceed applicable legal requirements, to provide liability-backed indemnification or other protection for damages and costs resulting from vendor imprudence or malfeasance, to allow for contract termination if the vendor becomes unsuitable for continued use due to changing law or other circumstances and requiring the vendor to return data and other documentation critical to defend past decisions and provide for ongoing administration. Keep documentation about advice, assurances and other relevant evidence received from vendors which could be useful in showing your company's or plan's efforts to make prudent efforts to provide for the proper administration of the plan. When concerns arise, use care to investigate and redress concerns in a timely, measured fashion which both shows the prudent response to the concern and reflects sensitivity to the fiduciary and other roles and responsibilities of the employer sponsor and other parties involved.

11. Get Moving Now On Your Compliance & Risk Management Issues.

Since many compliance deadlines already have past and the impending deadlines allow plan sponsors and fiduciaries limited time to finish arrangements, businesses, fiduciaries and their service providers need to get moving immediately to update their health plans to meet existing and impending compliance and risk management risks under the Affordable Care Act and other federal laws, decisions and regulations.

12. Monitor, Assess Implications & Provide Relevant Input to Regulators About Emerging Requirements & Interpretive Guidance Implementing 2014 Affordable Care Act & Other Mandates.

While the Supreme Court upheld the individual mandate, employer and other health plan sponsors, Congress continues to debate changes to the Affordable Care Act and other federal health plan rules. Meanwhile, significant opportunity still exists to provide input to federal and state regulators on many key aspects of the Affordable Care Act and its relationship to other applicable laws even as court challenges to contraceptive coverage and other specific requirements are emerging. Businesses and other health plan sponsors, plan fiduciaries, insurers and administrators, and other vendors must stay involved and alert. Zealously monitor new developments and share timely input with Congress and regulators about existing and emerging rules that present concerns and other opportunities for improvement even as you position to respond to these rules before they become fully implemented.

The overwhelming passage of Senate Bill 863 (De La Torre) in the waning moments of the end of the California legislative session set the workers' compensation community abuzz with the thoughts that this major overhaul will reduce insurance rates, put more money into the pockets of injured workers, and make the system work more efficiently and effectively for labor and employers.

While it should be noted that workers' compensation reform always has these goals in mind, the breadth of the changes in this legislation, addressing key issues that have been on the forefront of commentary for several years, should be roundly commended. There were clearly defined problems in the system that this legislation addresses head on. For that, the proponents, and the Governor and legislative leadership, deserve much credit.

The response to these changes from the Workers' Compensation Insurance Rating Bureau (WCIRB), regarded as tepid by many commentators, should be looked at in the context of what the Bureau can and cannot do when evaluating legislation — especially on legislation that hasn't even become effective.

Benefit increases are called "hard dollar" costs. Their impact can be reasonably and immediately calculated and added to the mix when determining the pure premium rates for the coming year. Similarly, several of the changes to workers' compensation medical fee schedules can be priced with reasonable certainty. Schedules for interpreters and for copying services, however, cannot be priced prospectively because there is no reference point upon which to base savings or cost increases that may arise from how these fee schedules are developed.

Three major reforms: changes to permanent disability, creation of independent medical review (IMR), and the many changes in the area of liens have each had a degree of cost savings assigned to them as well. When all elements in this bill are combined, the cost of the $700M plus in benefit increases is offset by system improvements.

All in all, this is set up to be a bill that should benefit employers, insurers, and workers. The fact that not every change that could result in savings has been assigned savings today underscores the difficulty in evaluating reforms that are dependent on regulatory implementation or upon everyone in the system affected by the reforms behaving as expected by those who advanced the reforms.

Recent history shows us that expectations run high upon enactment of reform legislation and usually are diminished if not dashed within three years thereafter. Whether that will be the case this time remains to be seen. This is in no way a criticism of the bill that Governor Brown signed. It is, however, a cautionary note that there is more than one of these reforms that will be shaped by the courts. For each opportunity for savings and creating efficiency in SB 863 there is also a trap that litigation may or may not spring open. No one involved with the last major reforms would have expected Almaraz/Guzman or Ogilvie. While litigation is inevitable when major reforms occur, it can also be fairly said that SB 863 invites it in several key areas.

All of us in the system are tasked to make our best efforts to assure the original bargain between labor and employers is protected. SB 863 is the latest iteration of that effort. As it becomes operative, and the various regulatory agencies adopt necessary rules to implement its provisions, and as disputes arise that the Courts are asked to resolve, let us all remember that reforms, and the expectations they generate, require constant scrutiny and protection. Without it, we'll be back in Sacramento sooner than expected.

As you may already know, the Second District Court of Appeal recently issued their decision on this case which involves in part, the admissibility of non-Medical Provider Network doctor's reports. This was initially an unpublished decision. However, plaintiff's counsel petitioned the court which did in fact publish the opinion giving it precedential status. In other words, it could be cited in other cases with the same or similar issues.

In its simplest terms, it says in part that an injured employee may be treated by his/her own non-Medical Provider Network physician pursuant to Labor Code (L/C) 4605 for diagnosis, treatment and attendant reports. The case goes on to acknowledge that the employee is responsible for the payment of these services and that any reports generated by the non-Medical Provider Network doctor are admissible. However, the case was remanded to the trial court to deal with the admissibility as well as other issues left unsettled by the Workers' Compensation Judge at the time of trial.

However, as you will see below, I am pleased to report that the defense strategy we developed allowing employers to use the current Medical Provider Network system to its fullest advantage was adopted by the Legislature in the recently passed SB 863. This was due to the amendment to Labor Code 4605 as discussed below.

Background
The current Labor Code 4605 was first enacted in 1917 as a part of the then Insurance and Safety Act. Sec. 9(a) of that act is most interesting from a historical perspective in that it reads:

Such medical, surgical and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches and apparatus, including artificial members, as may reasonably be required to cure and relieve from the effects of the injury, the same to be provided by the employer, and in case of his neglect or refusal seasonably to do so, the employer to be liable for the reasonable expense incurred by or on behalf of the employee in providing the same: provided, that if the employee so requests, the employer shall tender him one change of physicians and shall nominate at least three additional practicing physicians competent to treat the particular case, or as many as may be available if three cannot reasonably be named, from whom the employee may choose: the employee shall also be entitled, in any serious case, upon request, to the services of a consulting physician to be provided by the employer: all of said treatment to be at the expense of the employer. If the employee so requests, the employer must procure certification by the commission or the commissioner of the competency for the particular case of the consulting or additional physicians; provided, further, that the foregoing provisions regarding a change of physicians shall not apply to those cases where the employer maintains, for his own employees, a hospital and hospital staff, the adequacy and competency of which have been approved by the commission. Nothing contained in this section shall be construed to limit the right of the employee to provide, in any case, at his own expense, a consulting physician or any attending physicians whom he may desire (my emphasis). The same general language as to responsibilities is now found in L/C 4600(a); 4601 and 4605.

The reason this section is important is that Section 9(a) pre-dates Labor Code 4616, the Medical Provider Network statute. As such, any attempt prior to SB 863 to harmonize the rights of the employee to seek their own doctor at their own expense against the later-enacted Medical Provider Network statute would have to give precedent to the later-enacted labor code section (L/C 4616).

Labor Code 4605 Amended By SB 863
However, all of that was changed with SB 863 which amends Labor Code 4605 in such a way that makes clear the admissibility and subsequent value of any non-Medical Provider Network generated reports:

"Section 4605 of the Labor Code is amended to read:

4605. Nothing contained in this chapter shall limit the right of the employee to provide, at his or her own expense, a consulting physician or attending physicians whom he or she desires. Any report prepared by consulting or attending physicians pursuant to this section shall not be the sole basis of an award of compensation. A qualified medical evaluator (QME) or authorized treating physician shall address any report procured pursuant to this section and shall indicate whether he or she agrees or disagrees with the findings or opinions stated in the report, and shall identify the bases for this opinion."

Strategy For The Use Of Labor Code 4605 And Medical Provider Networks Going Forward
Employers and their claims administrators (carrier or Third Party Administrator) must aggressively assert and maintain their medical control over any new claim reported under their Medical Provider Network to make this strategy work.

First, employers need to be sure that the required Medical Provider Network notice to each employee and the Labor Code required general postings are complete and well documented.

It is important to note that SB 863 also made significant changes to 4616, the Medical Provider Network statute. However, even with these changes, an employer's best defense will continue to be quality documentation regarding policies and procedures on their handling of the Medical Provider Network notification and enforcement process which will block applicant attorneys' (A/A) attempt to seize medical control for failure to comply with the statute.

Consulting And Attending Physicians
The important question raised by Valdez dealing with the use of Labor Code 4605 by applicant attorneys as a means to get their non-Medical Provider Network doctors reports admitted has been resolved. Labor Code 4605, as amended, has clarified clearly and concisely to who and how the non-Medical Provider Network doctor(s) reports are to be submitted and used.

As noted above, "A qualified medical evaluator or authorized treating physician shall address any report procured pursuant to this section and shall indicate whether he or she (my emphasis) agrees or disagrees with the findings or opinions..." You will note that only a qualified medical evaluator in a non-Medical Provider Network claims environment or the "authorized treating physician" which in the case of a Medical Provider Network is the Primary Treating Physician (PTP) have control over the use of such pro-offered reports.

Recommended Procedure Under Labor Code 4605 As Amended

1. As a first step, I recommend that the injured employee be informed, as part of the employer's or claims professional's acknowledgment of the claim, that a valid Medical Provider Network is in place and that the employee's cooperation is expected.
2. The same initial notice should also state "that the employee is free under Labor Code 4605 to seek their own consulting or attending physician, at their own expense." They will be told at that time that if they do avail themselves of this option under Labor Code 4605, their consulting or attending physician's medical reports will be tendered to the Primary Treating Physician (PTP) for this injury who, under the Medical Provider Network statute, is the controlling doctor (Labor Code 4061.5). Under this scenario, the consulting or attending physician's report will be submitted to either the qualified medical evaluator or Primary Treating Physician to be used as he/she deems appropriate.
3. At the same time, the normal Medical Provider Network process will be enforced as is current policy. Demand will be made that the employee continues to be seen for diagnosis and treatment by a Medical Provider Network doctor. If there is a dispute as to diagnosis or treatment by either the applicant's attorney or the L/C 4605-obtained consulting report, that dispute will be handled under the Medical Provider Network's 2nd, 3rd and if necessary, the Independent Medical Review process and NOT through a Panel Qualified Medical Evaluator.
4. We will also be requesting from the employee an acknowledgement, under penalty of perjury that the employee has already paid or understands that he/she is the ultimate responsible party for paying their L/C 4605-obtained physicians as well as any other related bills for treatment, testing and other costs.
5. We will object to any liens from the consulting physician and will recommend they bill the injured employee directly.
6. Should the employee continue to refuse to be seen by our Medical Provider Network doctors and treat with the non-Medical Provider Network physician, then a Notice of Suspension of Benefits will be sent to the injured employee, his attorney (if there is one), and the non-treating physician. The notice will inform all of the above that all benefits including both Temporary Total Disability and medical treatment are suspended under Labor Code 4053 for failure to comply with a written demand. It will go on to say that the suspension can be lifted by the injured employee simply showing up at our Medical Provider Network doctor for diagnosis and if necessary, treatment.
7. Under this scenario, employers and their carriers or Third Party Administrators will be able to use the full weight of the Medical Provider Network process while, at the same time, dealing with non-Medical Provider Network procured medical diagnosis and treatment. This will help keep the employee within the Medical Provider Network and, if handled in a swift and judicious manner, help hasten a timely closure of the claim.