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Several third-party administrators and insurers facing fines from California insurance regulators say they're cooperating with the state to resolve complaints of delayed medical record submissions for independent medical reviews.
The California Department of Industrial Relations quietly issued “orders to show cause” last June and August with proposed fines totaling nearly $8.3 million for violating its rules, according to filings provided to Business Insurance last week.
The companies the California regulator proposes fining are Amtrust North America, the California State Compensation Insurance Fund, the County of Los Angeles, CorVel Corp., Gallagher Bassett Services Inc., Sedgwick Claims Management Services Inc. and Zurich North America.
A California Department of Industrial Relations spokeswoman said in an emailed statement last week that prehearing conferences and evidentiary hearings are being set with each company. She also said the TPAs and insurers all have filed responses to the state agency's filings.
Under workers compensation reforms passed in 2012, injured workers in California can request independent medical reviews to dispute treatment that was modified or denied under utilization reviews, which are requested by employers and insurers. Insurers and employers pay for independent medical reviews.
Records show that Broadspire was assessed administrative penalties of $3.53 million for allegedly failing to provide medical records for 705 independent medical reviews within 15 calendar days of receiving notice from Reston, Virginia-based Maximus Federal Services Inc., which conducts independent medical reviews.
The penalties proposed against other TPAs and insurers, according to the filings, are:
Gallagher Bassett, $1.21 million for 242 alleged violations;
Zurich North America, $1.1 million for 220 alleged violations;
Sedgwick, $940,000 for 188 alleged violations;
SCIF, $510,000 for 102 alleged violations;
Los Angeles County, $370,000 for 74 alleged violations;
Amtrust, $340,000 for 68 alleged violations; and
CorVel, $255,000 for 51 alleged violations.
California law allows the state to assess penalties of up to $5,000 per violation for failing to provide information within 15 calendar days for independent medical reviews.
A spokeswoman for SCIF said the workers comp insurer was ordered to provide information concerning independent medical review requests between 2013 and 2015, which Maximus said it failed to receive a timely response from SCIF.
Those requests were among 47,744 workers comp claims administered by SCIF during that time, the spokeswoman said.
“Our research into the matter revealed that we responded timely to 31 of the cases, but did not respond or responded late in 71 cases,” the spokeswoman said in an emailed statement.
She noted that SCIF's case is being reviewed by the California Department of Workers Compensation.
“State Fund is committed to making sure that we respond timely to every Maximus request for information that we receive to ensure that IMR works as quickly as possible for the injured employees we serve,” the spokeswoman said in the statement.
“In addition to strengthening our regional oversight of IMR requests, we have enhanced our procedures for managing the manifests we receive from Maximus as well our scan/index process. These measures have improved our performance, and today we are current on IMR requests,” she said.
A spokeswoman for Broadspire's parent company, Atlanta-based Crawford & Co., declined comment on the proposed fines, but said in a statement that the TPA is “still in active discussions” with the California workers comp department.
A spokeswoman for Zurich said in a statement that the insurer “has and will continue to fully cooperate with” the California workers comp division and “will not be sharing any additional information.”
Other companies facing fines could not be reached for comment.