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Appellate Court Rules on IMR Timeframes

The 2nd Appellate District has issued the first of what should prove to be several appellate decisions on the timeliness of independent medical review (IMR) decisions. The court was considering the assertion by a W.C.A.B. panel that IMR timelines are mandatory and that late IMR means the W.C.A.B. — and not doctors — will determine whether treatment is medically necessary.

In SCIF v W.C.A.B. (Margaris), the court annulled the W.C.A.B. decision and remanded with instructions to issue a new decision. The court’s reason for accepting this case was set out early in the decision:

“…We issued a writ of review because this case presents an important issue of first impression regarding the interpretation of section 4610.6, and because it relates to an issue upon which the appeals board has rendered conflicting decisions.”

In its analysis, the court provided an extensive discussion of the history of authorization for medical treatment, the implementation of utilization review (UR) for treatment requests and the enactment of the statutory scheme for IMR.  As noted by the court in SB 228 and 899, the legislature changed both the standards and process used by an employer to evaluate a request for medical treatment. The legislature adopted the medical treatment utilization schedule (MTUS). The legislature then removed the existing process for resolving medical disputes using dueling doctors and required the use of utilization review, which required review of treatment requests in light of the MTUS.

In 2012, the legislature enacted another set of reforms to address disputes over UR determinations. As noted by the court, a UR determination authorizing medical treatment was binding on the employer but became subject to further review through IMR — but only for the employee. The court further observed that even where an IMR determination is ultimately reversed by the W.C.A.B., the issue of medical appropriateness was to be returned to IMR for further review, not decided by the W.C.A.B.

See also: IMR Practices May Be Legal, Yet…  

Turning to the specific issue before it, the court determined the use of “shall” in Labor Code 4610.6 was directive, not mandatory:

“…The appeals board concluded that section 4610.6, subdivision (d), is clear and unambiguous.  According to the appeals board, “shall” is mandatory, and any IMR determination issued after the 30-day time frame is necessarily invalid. In support of this interpretation, the appeals board cited section 15, which provides “‘[s]hall’ is mandatory and ‘may’ is permissive” (§ 15.). Thus, the appeals board concluded that construing “shall” as mandatory, such that an untimely IMR determination is invalid, comports with both the ordinary meaning and the statutory definition of “shall.” As we explain, however, the issue is more nuanced than the appeals board recognized.

We note that section 15, upon which the appeals board relied in this case to support its interpretation of section 4610.6, subdivision (d), juxtaposes “mandatory” against “permissive,” which arguably suggests the legislature used “shall” in the obligatory permissive sense rather than in the mandatory-directory sense, as the appeals board concluded. (See McGee, supra, 19 Cal.3d at p. 960 [discussing section 15 and concluding that “on its face, the statutory language suggests that the legislature intended the present provision to be mandatory (i.e., obligatory), rather than permissive.”]) However, given the difference in meaning given to “shall” in the statutory context, we conclude section 4610.6, subdivision (d), is ambiguous. Accordingly, we move beyond the plain language of that section and consider its meaning with reference to the rest of the statutory scheme and the intent of the legislature.”

The court commented further on this issue:

“Generally, time limits applicable to government action are deemed to be directory, unless the legislature clearly expresses a contrary intent.  (Edwards, supra, 25 Cal.3d at p. 410.) “‘In ascertaining probable intent, California courts have expressed a variety of tests. In some cases, focus has been directed at the likely consequences of holding a particular time limitation mandatory, in an attempt to ascertain whether those consequences would defeat or promote the purpose of the enactment.  [Citations.] Other cases have suggested that a time limitation is deemed merely directory ‘unless a consequence or penalty is provided for failure to do the act within the time commanded.’”

The court also found the lack of a penalty or consequence for noncompliance to be significant. Citing similar language in actions by the state personnel board, which had been held to be directive rather than mandatory, the court suggested a failure to meet the statutory time frame did not result in a loss of jurisdiction. The court also indicates in its review of the mandatory vs. directory dichotomy that statutes that set time frames for government actions that do not include a self-executing consequence are almost universally construed as directory.

The court also noted that construing the 30-day time frame as directory furthers the legislative objective of SB 863.

“We conclude from these findings that the legislature intended to remove the authority to make decisions about medical necessity of proposed treatment for injured workers from the appeals board and place it in the hands of independent, unbiased medical professionals. Construing section 4610.6, subdivision (d), as directory best furthers the legislature’s intent in this regard. The appeals board’s conclusion in this case — that an untimely IMR determination terminates the IMR process and vests jurisdiction in the appeals board to determine medical necessity — is wholly inconsistent with the legislature’s stated goals and their evident intent.

Finally, and perhaps most tellingly, the legislature provided that, “[i]n no event shall a workers’ compensation administrative law judge, the appeals board, or any higher court make a determination of medical necessity contrary to the determination of the independent medical review organization” (Stats. 2012, ch. 363, § 45, codified at § 4610.6, subd. (i)). We find this portion of the statute — particularly the use of the phrase “in no event” — to be a frank expression of the legislature’s desire to remove the issue of medical necessity of proposed treatment from the jurisdiction of the appeals board in all cases subject to IMR. The legislature’s intent would be defeated by giving section 4610.6, subdivision (d), mandatory effect, as the appeals board did in the present case.”

See also: 20 Work Comp Issues to Watch in 2016

Additionally, the applicant attorney argued that the W.C.A.B.’s holding in the Dubon case (Dubon 2) supported the W.C.A.B’s usurpation of authority to decide medical treatment. The court noted the holding in Dubon 2 is supported by the AD’s regulations providing that IMR applies solely to timely and procedurally proper UR but that no similar regulation existed for IMR. The court declined to comment on the W.C.A.B.’s decision in Dubon 2 as the issue was not before it.

Comments and Conclusions:

There are currently two other cases pending in the appellate courts, both in the 3rd appellate district — on this same issue and, interestingly, this case was not the first grant on the issue. However, the court set a very aggressive briefing schedule and, even with multiple amicus briefs it heard, considered and decided this case in, what is by appellate standards, a very short time (less than six months). Clearly the court was very interested in this issue, which had multiple W.C.A.B. panel decisions with conflicting holdings.

The court, in its decision, also rejected arguments offered by both the applicant and the W.C.A.B. that untimely IMR resulted in unnecessary delays — a rationale offered by the majority panel in both Dubon and Margaris. The court, very astutely, noted this argument made no sense given the time frame for obtaining QME opinions or litigating medical treatment issues before the W.C.A.B.  The court pointed out that, even with the delays in completing IMR, the W.C.A.B. decision was more than 13 months after the initial decision in UR and more than 10 months after Maximus rendered its decision. The court was clearly, and properly, skeptical of the argument that letting the W.C.A.B. decide medical issues would result in a more prompt disposition.

The court did offer an option to applicants to challenge untimely UR through the ability to file a petition for writ of mandate to compel a decision. While a statutorily viable option, this is impractical, especially in light of the current timeliness of most IMR determinations. Further, the issue here has never really been the timeliness of IMR. The goal for the applicant attorney bar, and apparently some of the commissioners, has been to usurp the medical decision making process from being medically driven to being litigation-based.

The decision does not provide a lot of nourishment for those who are waiting for some sliver of light on the Dubon 2 issue. The court, in its footnote, declined to really comment on Dubon 2, but it did note there was some basis for the W.C.A.B.’s decision. However, the very strong language of the court emphasizing the public and legislative policy behind having medical decisions made by physicians, and the much greater speed and certainty of the UR/IMR process over the legislatively disfavored litigation process, may provide some hope that, given a chance, the appellate court would also reject the W.C.A.B.’s arguments in support of Dubon 2.

WCAB Limits Review of UR Decisions

A divided Workers’ Compensation Appeals Board has issued its long-awaited en banc decision to the defendant’s appeal in Dubon v. World Restoration and substantially modified its prior en banc holding to limit the ability of the WCAB to decide medical issues only in cases where utilization review (UR) is untimely. In doing so, the WCAB completely retracted its prior holding that UR decisions that were “procedurally deficient” were subject to WCAB jurisdiction to address medical issues. In reversing itself, the WCAB effectively disagreed with its own rule ADR 10451.2 to the extent it made such procedural issues the subject of WCAB review.

The new holding of the WCAB, decided on a 4-1 vote, with Commissioner Lowe concurring and dissenting and Commissioner Sweeney dissenting, is set out as follows:

1. A utilization review (UR) decision is invalid and not subject to independent medical review (IMR) only if it is untimely.
2. Legal issues regarding the timeliness of a UR decision must be resolved by the Workers’ Compensation Appeals Board (WCAB), not IMR.
3. All other disputes regarding a UR decision must be resolved by IMR.
4. If a UR decision is untimely, the determination of medical necessity may be made by the WCAB based on substantial medical evidence consistent with Labor Code section 4604.5

The decision provides a substantial change from the former broadly worded opinion giving wide discretion to trial judges to find UR defective based on multiple defects beyond timing. Workers’ compensation judges (WCJs) in the interim had a field day finding such perceived “procedural defects” — some of which, based on WCAB panel decisions, appeared to be very minor — a basis to assume jurisdiction over medical care. The WCAB, in removing the ability to review UR-based issues other than untimeliness, emphasized the language in SB 863 that medical issues should be decided in UR and IMR and not by WCJ:

“Commissioner Sweeney suggests that a UR decision that does not comply with the mandatory requirements of section 4610 is not a decision subject to IMR. (See § 4610.5(c)(3).) We disagree. The legislative intent is clear. IMR is the sole mechanism for reviewing a UR physician’s opinion regarding the medical necessity of a proposed treatment. Consistent with this, we hold that where a UR decision is timely, IMR is the sole vehicle for reviewing the UR physician’s expert opinion regarding the medical necessity of a proposed treatment, even if the UR process did not fully comply with section 4610’s requirements….With the exception of timeliness, all other requirements go to the validity of the medical decision or decision-making process. The sufficiency of the medical records provided, expertise of the reviewing physician and compliance with the MTUS are all questions for the medical professional….”

The WCAB, however, has also concluded that IMR is limited to resolving medical disputes and is not authorized to address timeliness issues. Only the WCAB can decide if UR is timely in the absence of some statutory authority for IMR to consider the issue. SB 863 did not specifically address this issue; the board’s decision continues to rely on the decision of the California Supreme Court in Sandhagen v. WCAB, which held the WCAB had authority to resolve medical disputes where UR was timely:

“Sections 4610.5 and 4610.6 limit IMR to disputes over ‘medical necessity.’ Legal disputes over UR timeliness must be resolved by the WCAB. (§ 4604 (‘[c]ontroversies between employer and employee arising under this chapter shall be determined by the appeals board, … except as otherwise provided by Section 4610.5’ (italics added)); § 5300 (providing that ‘except as otherwise provided in Division 4,’ the WCAB has exclusive initial jurisdiction over claims ‘for the recovery of compensation, or concerning any right or liability arising out of or incidental thereto’); see also Cal. Code Regs., tit. 8, § 10451.2(c)(1)(C).)”

The WCAB continued to emphasize that, on those occasions when the WCAB determines UR was untimely and therefore subject to decision of the WCAB, the decision is not automatically to award the disputed medical treatment but to require the decision to be based upon substantial medical evidence, with the applicant having the burden of proof.

Dissenting Opinions

There were two additional opinions in this matter. In a concurring and dissenting opinion by Commission Lowe, she agreed with the majority’s analysis and holding in this matter but would have dismissed the entire appeal as moot because the applicant’s surgery has since been authorized based on further review. Commissioner Lowe noted that while she would “unequivocally concur in the majority holdings, I maintain that it was not necessary to reach the merits here.”

Commissioner Sweeney, however, issued a strongly worded dissent indicating she would uphold the initial decision in Dubon I. Making essentially the same arguments that were outlined in the original decision she argues for WCAB jurisdiction to review medical issues on the much broader scale than the majority opinion.

Comments and Discussion

This decision essentially leaves the state of the law much the same as it had been before the first en banc decision in this case. While some defendants would occasionally raise the issue of WCAB jurisdiction to decide medical issues where UR was untimely, the issue did not come up nearly as often as the “procedural defects” the WCAB identified as a basis for the WCAB to decide medical treatment. Issues that had been raised to the WCAB included completeness of the medical record in UR, adequacy of the UR physician’s discussion, UR physician specialty, signature of UR by a physician (as opposed to the actual decision being made by a physician) and delay notices issued by a nurse rather than a physician. Based on the new WCAB decision, all of those issues are the kind that can be addressed in IMR when the full and more complete review of medical necessity is made.

It will be interesting to see if this case is appealed further. Certainly, there is very little reason for the applicant attorney to take this case up as his client has received the requested treatment, and should he do so the argument for mootness of the decision would probably convince an appellate court that this case is no longer ripe for dispute.

For defendant, the decision must be considered a substantial win. The WCAB has significantly pulled back on the very expansive decision of Dubon I, returning the worker’s compensation community to the status quo before Dubon I. It is probably worthwhile for the employer community to attempt to obtain appellate review of the issue of WCAB jurisdiction over untimely reviews, the urgency of that issue is not as great as the potential chaos that Dubon I caused and was continuing to develop. Whether the commissioners were influenced by the flood of hearings challenging UR on every conceivable issue, real or not, is something only the majority knows. Certainly, the potential for reversal at the next level with the very thin justification for the original decision must, and should have, played a role in the reversal.

The new decision of the WCAB is one that is certainly much easier for the WCAB to defend in the event the case goes up. The argument that the WCAB gets to decide timeliness of UR is probably supportable on the basis of the statutory scheme. The question of whether the WCAB’s remedy for such untimeliness, that a WCJ can then decide the issue, is probably still open to question at the next level but is certainly decided at this level for now.

The takeaway from this decision is clear: UR needs to be timely!