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California exclusive remedy ruling preserves workers comp status quo

Posted On: Aug. 29, 2018 7:00 AM CST

California exclusive remedy ruling preserves workers comp status quo

Employers and their partners in the workers compensation sector are breathing a collective sigh of relief after a California Supreme Court ruling firmly preserved the “Grand Bargain” at the heart of the comp system.

The California Supreme Court unanimously ruled in Kirk King et al. v. CompPartners Inc. et al. that the state’s workers compensation system provided the exclusive remedy for an injured worker who filed suit after a physician reviewer working for the utilization review management company determined that the worker’s prescription for Klonopin to treat his anxiety and depression following a work injury was medically unnecessary and decertified the prescription without putting him on a weaning program.

“That sends a very clear signal to California and to the rest of the country that if someone is going to challenge exclusive remedy, they should be prepared to spend money and not succeed,” said Michael Krawitz, New York-based executive vice president and general counsel of York Risk Services Group Inc., the owner of CompPartners. “It’s a good system for everybody. If the exclusive remedy was destroyed, the system would have collapsed and that would be bad for claimants and for the many professionals that work in the industry.”

But the state Supreme Court’s ruling leaves workers injured by mistakes in the utilization review process with little or no recourse outside of the comp system, according to employee representatives.

“I understand the ruling, but I was disappointed by the ruling because I think that there should be better accountability (in) the utilization review process and this gives even less accountability,” said Eric Farber, CEO of law firm Farber & Co. and founder of the Pacific Workers’ Compensation Law Center in Oakland, California. “By allowing them almost a level of immunity for the decisions they make, they don’t have to pay quite as close attention to them.”

In February 2008, Mr. King sustained a back injury while he was at work and suffered chronic pain, which in turn caused him anxiety and depression, according to the ruling. In July 2011, a mental health professional prescribed several psychotropic drugs, including Klonopin, to treat these latter conditions.

Dr. Naresh Sharma, an anesthesiologist employed by CompPartners, conducted a utilization review of Mr. King’s Klonopin prescription in July 2013 and determined that Klonopin was medically unnecessary and decertified the prescription. The decertification did not provide for a weaning regimen nor did Dr. Sharma warn Mr. King of the risks of abruptly ceasing Klonopin, according to the ruling. Mr. King immediately stopped taking the medication and suffered a series of four seizures.

In September 2013, Mr. King sought a new prescription for Klonopin. A month later, Dr. Mohammed Ashraf Ali, a psychiatrist employed by CompPartners, performed a utilization review and also determined that Mr. King’s Klonopin prescription was medically unnecessary. He did not authorize a weaning regimen or warn Mr. King of the risks of abruptly stopping the medication.

In October 2014, Mr. King and his wife filed a complaint in California Superior Court against CompPartners and Dr. Sharma, among others, asserting claims of negligence, professional negligence, intentional and negligent infliction of emotional distress and loss of consortium. The defendants argued that the Kings’ claims were pre-empted by the workers comp statute and alternatively that Dr. Sharma owed no duty of care to Mr. King — arguments the trial court agreed with.

But the Court of Appeals of California, 4th District, Division 2 concluded the failure to warn claim is not pre-empted because it does not directly challenge Dr. Sharma’s medical necessity determination and that Dr. Sharma owed Mr. King a duty of care.

“The Court of Appeal had made an obvious error in finding that the seizures suffered by Mr. King were compensable outside of the workers’ compensation system because there were no allegations that he was working at the time he suffered the seizures,” Ellen Sims Langille, general counsel with the California Workers’ Compensation Institute, said via email. “That was a fundamental misunderstanding of how compensable consequences work.”

“We could have let it go and probably settled the case, but for the sake of the industry, we wanted to change the ruling,” Mr. Krawitz said.

The state Supreme Court determined the appellate court erred in deciding that the claims were not barred by the exclusive remedy provisions of the state’s workers comp statute.

“We’re really grateful that the Supreme Court saw what we thought was the clear right answer,” Mr. Krawitz said. “In many ways, the decision just cemented what everyone thought the status quo was.”

Utilization review physicians will be generally covered by the exclusive remedy rule, according to an analysis of the decision published by Michael Sullivan & Associates L.L.P. on Friday.

“Injured workers may not sue them in civil court for their decisions to deny or modify requested treatment even if the decision was mistakenly made,” the analysis stated. “Injured workers may only seek civil remedies against utilization review physician where they engage in extreme and outrageous conduct and in effect step outside of their normal roles in the workers’ compensation system. Given that utilization reviewers must follow specified procedures in carrying out their duties, it will be very difficult for injured workers to make such claims.”

The state high court did not address an element of the case that some experts considered to be a key issue: whether the utilization review physician has a doctor-patient relationship with the injured worker.

“It seems likely that the Supreme Court sidestepped that difficult issue in order to get the easier answer provided by an analysis under exclusive remedy,” Ms. Langille said.

In addition, two concurring opinions questioned whether current safeguards featured in the workers comp statute were sufficient or if the legislature should implement additional safeguards, including a potential requirement for a weaning plan when a previously approved medication is decertified.

The legislature “clearly designed a fixed role” for the utilization review physician by allowing the physician to review only the information necessary to decide whether the treatment request is warranted under evidence-based nationally recognized standards in the Medical Treatment Utilization Schedule, Ms. Langille said. “A separate requirement to provide medical advice (including a weaning program) would be wholly inconsistent with the original statutory intent,” she said.

Mr. Farber said he hopes the legislature takes up the issue to “attach more accountability” for doctors involved in the utilization review process.

“They don’t have to worry about getting it right, and these are important issues that we should get right,” he said.