Flash Report: UR Physicians – No Malpractice Lawsuits

The California workers’ comp industry let out a collective sigh relief when the California Supreme Court, today, handed down its decision in King v. CompPartners. The ruling upheld the workers’ compensation act’s exclusive remedy provisions. Concerns were that a contrary decision would have had a chilling effect on the utilization review (UR) and independent medical review (IMR) systems putting them under threat of a tort lawsuit.

The decision puts a bit of a damper of the applicant’s attorneys plans to get rid of UR and IMR, two of the major cost-saving elements to come out of the Baker workers’ comp reform.

The critical point in the unanimous decision held that the injuries suffered by the plaintiff following an adverse UR determination were “collateral to or derivative of” the original industrial injury. Therefore, the exclusive remedy was workers’ compensation, not the courts.

The Supreme Court Justices, however, raised questions about the adequacy of the current safeguards around the utilization review and independent medical review processes. Particularly, Justice Goodwin Liu’s comments in a concurring opinion will be fuel for the inevitable legislative battle next year when a new administration is in place.

Workers’ Comp Executive sources are already gearing up to use Justice Liu’s comments.

For the time being, however, exclusive remedy protections extend to utilization review physicians who effectively stand in the shoes of the employer when they perform their duties. Absent egregious behavior that “fall outside the risks encompassed within the compensation bargain,” which the Court said could not be shown in this case, the prohibition against tort claims extends to the utilization review physicians hired by employers and workers’ comp carriers.

“Perhaps most importantly, in performing their statutory functions, utilization reviewers, much like independent claims administrators, effectively stand in the shoes of employers: they perform utilization review on behalf of employers, to discharge the employers’ own responsibilities to their employees,” Justice Leondra Kruger wrote for the court. In addition to Justice Liu’s concurring opinion, Associate Justice Mariano-Florentino Cuéllar also penned a concurring opinion. The court noted that a contrary decision would “undermine the Legislature’s apparent purpose in establishing the independent medical review process as the exclusive mechanism for review of the utilization review decisions of an employer, including a utilization review organization acting on the employer’s behalf.”

The court noted that plaintiffs raised policy concerned about the available safeguards in the system.

Case Background

The opinion stems from a back injury suffered by plaintiff Kirk King at work which left him with chronic back pain. As a result, King suffered from anxiety and depression that resulted in a prescription for the psychotropic medication Klonopin. King was on the medication for two years when a UR physician, Dr. Naresh Sharma, denied authorization due to a lack of medical necessity.

King suffered seizures after he stopped taking the medication, which are a known side effect if the medication is halted abruptly. King never received a warning from any physician involved – including the treating physician – about the necessity to wean off the medications. The King’s sued Dr. Sharma and CompPartners, a managed care organization, for malpractice.

Industry Reactions

Reactions to the Court’s decision across the workers’ comp community were arranged along the usual battle lines. Carrier and employer representatives were relieved, while the applicants’ bar was disappointed but encouraged by the court’s invitation to the Legislature to address the issue of safeguards.

“Obviously, we are very pleased with not only the outcome but also the unanimity of the court’s decision,” says Ellen Langille, general counsel for the California Workers’ Compensation Institute. Calling the King decision the latest in a long line of appellate cases upholding the UR/IMR process, Langille says that they have long maintained that exclusive remedy was the beginning and end of the discussion in this case. “The URO was acting as the “alter ego” of the employer, and the utilization review itself is a statutorily required part of the claims process. That is the very definition of exclusive remedy.”

Langille also noted the court’s comments on the safeguards surrounding UR and IMR and maintained that this might be the decision’s legacy. “The Concurring Opinions have now invited the Legislature to review whether the existing safeguards and remedies are “sufficient incentive,” and it is not a stretch to expect that a new legislative session presided over by a new governor might be invited to look to address any perceived deficiencies in the system.  How these new safeguards might look is anyone’s guess, but my speculation would certainly imagine a proposed requirement for a weaning plan to accompany any decertification of a previously approved medication,” she noted.

The court’s treatment of the safeguards issue was not lost on the California Applicants’ Attorneys Association.

“We’re obviously disappointed with the result, but I think they made an important observation that perhaps the current rules and regulations in place regarding utilization review aren’t working to effectively protect injured workers,” says attorney Jason Marcus, CAAA’s president. “The reality is I don’t think anything is going to happen in the current administration given that our Legislation session ends in a week and a half. We’re going to have a new governor next year so it’s certainly something that we’ll be looking at.”

Sources note that the results could have been much worse if the decision went the other way.

“It is difficult to assess the consequences had the Court of Appeal decision been affirmed. It would seem that the same logic could apply to independent medical reviewers. Then the question becomes whether the goal of providing the highest quality evidenced-based medicine would be frustrated out of fear that the consequences of denial – even if appropriate – could result in tort liability for the UR physician,” notes attorney Mark Webb, president of Prop23Advisors, a consultancy.

“We have seen in the past (spinal surgery implants) that not all treaters have the best interests of their patients in mind when performing expensive procedures or prescribing excessive pain medications. Do we really want an environment where there is more pressure to grant whatever request the treater makes?”

Webb maintains, however, that the court’s analysis is clear, straightforward and grounded in prior case law. He pointed out that the Court also noted the extensive regulation of the UR process, up to and including independent medical review (IMR), and that the process to resolve medical necessity disputes combined with the overall regulatory oversight of UR makes it the exclusive remedy for injuries arising from employment.

In the present case, the UR review is being taken to task for his actions in the case. Sharma is currently facing disciplinary action by the California Medical Board. The board is alleging that his actions constitute gross negligence. Sharma has not yet had a hearing in the matter.

Copies of the Supreme Court’s opinion in King v. CompPartners is available in our Resources section or by clicking here.