The Supreme Court of California held in its published opinion filed on August 23, 2018 that “We conclude that the workers’ compensation law provides the exclusive remedy for the employee’s injuries and thus preempts the employee’s tort claims” in a case where a utilization reviewer denied a treating physician’s request to continue prescribing certain medication for an injured employee and the injured employee subsequently alleged that the utilization reviewer caused him additional injuries by denying the request without authorizing a weaning regimen or warning him of the possible side effects of abruptly ceasing the medication, causing him to suffer a series of four seizures.
California’s Workers’ Compensation Act (“WCA”)
The WCA is a comprehensive statutory scheme governing compensation given to California employees for injuries incurred in the course and scope of their employment. Under what is referred to as the “compensation bargain,” the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort.
Under the WCA, an employer must provide an injured worker with all medical treatment reasonably required to cure or relieve the effects of his or her injury. (Lab. Code, § 4600.) When an injured employee suffers an industrial injury, the employee reports the injury to his or her employer and then seeks medical care from a treating physician. After examining the worker, the treating physician recommends any medical treatment he or she believes is necessary and the employer is given a treatment request to approve or deny.
If an employer challenges a treating physician’s recommendation, a process of mandatory utilization review requires a reviewer to assess a treating physician’s recommendation according to a schedule that establishes uniform guidelines for evaluating treatment requests. Every employer is required to establish a utilization review process, either directly or through its insurer or an entity with which an employer or insurer contracts for these services. (Lab. Code, § 4610, former subd. (b), now subd. (g).) The utilization review process is “comprehensive,” covering “any and all” treatment requests.
An employer can unilaterally approve a treatment request but only a licensed physician competent to evaluate the “specific clinical issues” can modify, delay, or deny a treatment request. (Lab. Code, § 4610, former subd. (e), now subd. (g)(3)(A).) The central issue for the utilization reviewer is whether the requested treatment is medically necessary. (Lab. Code, § 4610, subd. (a).) This medical necessity determination is to be made after consulting the schedule for medical treatment utilization (Lab. Code, § 4610, former subds. (c), (f), now subds. (g)(1), (h)), which is presumed to be “correct on the issue of extent and scope of medical treatment.”
Disputes concerning utilization review determinations are subject to a system of “independent medical review” (“IMR”). The IMR process is the exclusive mechanism for review of a utilization review decision. The independent reviewer is tasked with determining whether the requested treatment is “medically necessary based on the specific medical needs of the employee and the standards of medical necessity as defined in subdivision (c) of Section 4610.5.” If an employee disputes an adverse decision on independent medical review, he or she may appeal that decision to the Workers’ Compensation Appeals Board. Decisions of the Board may in turn be appealed to a Court of Appeal.
California Supreme Court Opinion
The California Supreme Court stated that it is by now well established that the WCA’s exclusivity provisions preempt not only those causes of action premised on a compensable workplace injury, but also those causes of action premised on injuries ‘collateral to or derivative of’ such an injury, and such collateral or derivative injuries include injuries stemming from conduct occurring in the workers’ compensation claims process.
The California Supreme Court stated that “[t]he [plaintiffs] seek to recover for injuries that arose during the treatment of [the plaintiff’s] industrial injury and in the course of the workers’ compensation claims process. Because the [plaintiffs] allege injuries that are derivative of a compensable workplace injury, their claims fall within the scope of the workers’ compensation bargain and are therefore compensable within the workers’ compensation system … [the plaintiff’s] injury arose out of and in the course of utilization review—a statutorily required part of the workers’ compensation claims process, to which he would not have been subject had he not suffered a work-related back injury. The injury is thus compensable under the WCA … [the plaintiff’s] injuries occurred within the scope of the employment relationship: [the plaintiff] alleges the injuries resulted from errors in the utilization review process—a process that [the plaintiff’s] employer, in its capacity as an employer, was required to establish for the review of the treatment recommended for [the plaintiff’s] prior industrial injury.”
The California Supreme Court held that the utilization review provisions of the WCA govern not only the substance of a utilization review decision, whether based on medical necessity or otherwise, but also the content of the responses communicating the decision. “Both [the utilization reviewer’s] decision to decertify Klonopin and the manner in which [the utilization reviewer] communicated that decision fall within the scope of the statutory process set up by [the plaintiff’s] employer to review recommendations concerning the treatment of [the plaintiff’s] industrial injury. The harm the [plaintiffs] allege is therefore collateral to and derivative of that industrial injury and arose within the scope of [the plaintiff’s] employment for purposes of the workers’ compensation exclusive remedy.”
The California Supreme Court stated “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. Indeed, as the statute acknowledges, the utilization review function can be performed by the employer itself, as well as by the insurer or by an independent entity with which the employer or insurer contracts. (Lab. Code, § 4610, former subd. (b), now subd. (g).) … the Legislature regards utilization review organizations, like claims administrators, as acting on behalf of the employers that contracted for their services.”
Source King v. CompPartners, Inc., S232197.
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